UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 8-K/A


                                 Current report
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported): January 23, 2004


                     PERFORMANCE TECHNOLOGIES, INCORPORATED
             (Exact name of registrant as specified in its charter)


                                    Delaware
                 (State or other jurisdiction of incorporation)


       0-27460                                            16-1158413
(Commission File Number)                   (I.R.S. Employer Identification No.)


205 Indigo Creek Drive, Rochester, New York                  14626
 (Address of principal executive offices)                  (Zip Code)


        (585) 256-0200 (Company's telephone number, including area code)


                                (Not Applicable)
          (Former name or former address, if changed since last report)









     Note:  This Amendment is being filed to amend and correct the  Registrant's
Current Reports on Form 8-K, dated January 14, 2004 and January 23, 2004.


Item 2.  Acquisition or Disposition of Assets.

     On January 23,  2004,  the  Registrant  acquired  substantially  all of the
assets of, and assumed  certain  liabilities  of,  Mapletree  Networks,  Inc., a
corporation organized under the laws of the State of Delaware with its principal
place of business in  Norwood,  Massachusetts.  The  transaction  was  completed
pursuant to the Asset Purchase Agreement by and among Mapletree Networks,  Inc.,
the Registrant, and PTI Massachusetts Corporation, dated as of January 12, 2004,
a copy of which is attached hereto as Exhibit 2.

     The Asset  Purchase  Agreement  provides that the purchase price payable in
connection  with the  transaction  is $8.25  million.  The  purchase  price  was
determined  by arm's length  negotiations  between the  parties.  The payment of
approximately 30% of the purchase price is subject to the future satisfaction of
certain performance conditions. All of the purchase price has been paid, or will
be paid, out of funds that the Registrant has on hand.

     The acquired  assets consist of  intellectual  property  rights  (including
trade secrets, know-how,  inventions,  patents,  copyrights,  designs, technical
processes in works of authorship, source code, object code, design documentation
and procedures for product  generation and testing of all computer  software and
firmware), products and inventory, certain contract rights, furniture, fixtures,
customers lists and certain other assets,  all as set forth in greater detail in
the Asset Purchase Agreement.

     Mapletree  Networks,  Inc. used the acquired  assets in connection with its
business  of  providing  voice,  data and fax  access  technology  for  original
equipment manufacturers.  Through its wholly-owned subsidiary, PTI Massachusetts
Corporation,  the Registrant  intends to continue  using the acquired  assets in
connection with the provision of voice, data and fax access technology solutions
to original equipment manufacturers and other businesses.


Item 7.  Financial Statements and Exhibits.

         (a)      Financial Statements of Business Acquired.

                  None required.

         (b)      Unaudited Pro Forma Combined Financial Statement.

                  None required.

         (c)      Exhibits.

                  (2)      Asset Purchase Agreement by and among Mapletree
                           Networks, Inc., the Registrant, and PTI Massachusetts
                           Corporation, dated as of January 12, 2004. (Copies of
                           omitted exhibits and schedules to the Asset Purchase
                           Agreement will be provided to the Securities and
                           Exchange Commission upon written request.)






                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                    PERFORMANCE TECHNOLOGIES, INCORPORATED

January 30, 2004                    By:  /s/ Donald L. Turrell
                                    -------------------------------------------
                                    Donald L. Turrell
                                    President and Chief Executive Officer



January 30, 2004                    By:  /s/ Dorrance W. Lamb
                                    -------------------------------------------
                                    Dorrance W. Lamb
                                    Chief Financial Officer and
                                    Vice President, Finance






                                Index to Exhibits

     (2)  Asset  Purchase  Agreement  by and  among  Mapletree  Networks,  Inc.,
Performance Technologies, Incorporated, and PTI Massachusetts Corporation, dated
as of January 12, 2004.



                            ASSET PURCHASE AGREEMENT



                                  by and among



                            Mapletree Networks, Inc.,



                     Performance Technologies, Incorporated



                                       and



                          PTI Massachusetts Corporation



                          Dated as of January 12, 2004








                                TABLE OF CONTENTS


                                                                            page

Article I. Definitions.......................................................1

   Section 1.1 Certain Definitions...........................................1
   Section 1.2 Interpretation................................................8
   Section 1.3 Accounting Conventions........................................9

Article II. PURCHASE AND SALE................................................9

   Section 2.1 Purchase and Sale of Assets...................................9
   Section 2.2 Excluded Assets...............................................11
   Section 2.3 Inability to Assign Assumed Contracts.........................12
   Section 2.4 Excluded Liabilities..........................................13
   Section 2.5 Assumption of Certain Liabilities.............................13
   Section 2.6 Purchase Price................................................14
   Section 2.7 Closing.......................................................20

Article III. REPRESENTATIONS AND WARRANTIES OF SELLER........................20

   Section 3.1 Organization and Power; Stock Ownership.......................20
   Section 3.2 Authorization.................................................20
   Section 3.3 Approvals.....................................................20
   Section 3.4 Non-Contravention.............................................20
   Section 3.5 Binding Effect................................................21
   Section 3.6 Seller Subsidiaries...........................................21
   Section 3.7 Financial Statements..........................................21
   Section 3.8 Title.........................................................21
   Section 3.9 Transferred Assets............................................22
   Section 3.10 Compliance With Laws.........................................22
   Section 3.11 Litigation and Claims........................................22
   Section 3.12 Intellectual Property........................................23
   Section 3.13 Adequacy of Technical Documentation..........................26
   Section 3.14 Intellectual Property Rights Granted to Seller...............26
   Section 3.15 Third-Party Interests in Intellectual Property...............26
   Section 3.16 Major Vendors and Customers..................................27
   Section 3.17 Assumed Contracts............................................27
   Section 3.18 Warranties...................................................28
   Section 3.19 Taxes........................................................28
   Section 3.20 Employment Matters...........................................29
   Section 3.21 Employee Benefits............................................30
   Section 3.22 Environmental Matters........................................31
   Section 3.23 Insurance....................................................32
   Section 3.24 Subsequent Changes...........................................32
   Section 3.25 Related-Party Transactions...................................33
   Section 3.26 Accounts Receivable..........................................33
   Section 3.27 Inventory....................................................33
   Section 3.28 Finders' Fees................................................33
   Section 3.29 Disclosure...................................................34

Article IV. REPRESENTATIONS AND WARRANTIES OF BUYER..........................34

   Section 4.1 Organization and Power........................................34
   Section 4.2 Authorization.................................................34
   Section 4.3 Approvals.....................................................34
   Section 4.4 Non-Contravention.............................................35
   Section 4.5 Binding Effect................................................35
   Section 4.6 Finders' Fees.................................................35
   Section 4.7 Compliance With Laws..........................................35
   Section 4.8 Financial Ability.............................................35

Article V. CERTAIN COVENANTS.................................................36

   Section 5.1 Access........................................................36
   Section 5.2 Conduct of Business...........................................36
   Section 5.3 Reasonable Efforts; Further Assurances........................37
   Section 5.4 Corporate Name Change.........................................38
   Section 5.5 Exclusivity...................................................38
   Section 5.6 Confidentiality...............................................39
   Section 5.7 Public Disclosure.............................................40
   Section 5.8 Bulk Sales....................................................40
   Section 5.9 Taxes.........................................................40
   Section 5.10 Determination and Allocation of Consideration................41
   Section 5.11 Non-Competition..............................................42
   Section 5.12 Covenants Not to Sue or Assert Rights........................42
   Section 5.13 Satisfaction of Bank Debt....................................43
   Section 5.14 Certain Contracts............................................43
   Section 5.15 Risk of Loss.................................................43
   Section 5.16 Real Estate Matters..........................................43
   Section 5.17 Statement of Transaction Expenses............................43
   Section 5.18 2003 Audit...................................................43
   Section 5.19 Final Balance Sheet..........................................44
   Section 5.20 Warranty Claims..............................................44
   Section 5.21 Business Plan................................................44
   Section 5.22 VTech Inventory Confirmation.................................45
   Section 5.23 Sharing Data.................................................45

Article VI. COVENANTS AS TO CERTAIN EMPLOYMENT MATTERS.......................46

   Section 6.1 Employees.....................................................46
   Section 6.2 Enforcement of Rights.........................................48
   Section 6.3 Non-Solicitation..............................................48

Article VII. CONDITIONS TO CLOSING...........................................48

   Section 7.1 Conditions to the Obligations of Buyer,
               Acquisition Sub and Seller....................................48
   Section 7.2 Further Conditions to the Obligation of Buyer
               and Acquisition Sub...........................................49
   Section 7.3 Further Conditions to the Obligation of Seller................51

Article VIII. INDEMNIFICATION................................................52

   Section 8.1 Indemnification by Seller.....................................52
   Section 8.2 Indemnification by Buyer......................................53
   Section 8.3 Disposition of Indemnification Escrow.........................53
   Section 8.4 Indemnification Procedures....................................53
   Section 8.5 Indemnification Limitations...................................55

Article IX. TERMINATION......................................................56

   Section 9.1 Termination...................................................56
   Section 9.2 Effect of Termination.........................................57

Article X. IN GENERAL........................................................57

   Section 10.1 Notices......................................................57
   Section 10.2 Amendment; Waiver............................................58
   Section 10.3 No Assignment or Benefit to Third Parties....................58
   Section 10.4 Survival.....................................................59
   Section 10.5 Expenses.....................................................59
   Section 10.6 Schedules, Exhibits, Etc.....................................59
   Section 10.7 Governing Law................................................60
   Section 10.8 Alternate Dispute Resolution.................................60
   Section 10.9 Submission to Jurisdiction...................................60
   Section 10.10 Remedies Cumulative.........................................61
   Section 10.11 Inferences..................................................61
   Section 10.12 Severability................................................61
   Section 10.13 Entire Agreement............................................61
   Section 10.14 Headings....................................................61
   Section 10.15 Counterparts................................................61
   Section 10.16 Facsimiles..................................................62

TABLE OF EXHIBITS AND SCHEDULES..............................................64



                            ASSET PURCHASE AGREEMENT

     THIS  AGREEMENT  is made as of  January  12,  2004 by and  among  Mapletree
Networks,  Inc., a Delaware corporation  ("Seller"),  Performance  Technologies,
Incorporated,   a  Delaware   corporation   ("Buyer"),   and  PTI  Massachusetts
Corporation, a Delaware corporation ("Acquisition Sub").

     WHEREAS, Seller is engaged in the business of providing voice, data and fax
access technology for OEMs (collectively, the "Business"); and

     WHEREAS, the parties desire that Seller sell, transfer,  assign and license
to Acquisition Sub, and that  Acquisition Sub purchase,  license and assume from
Seller certain specified assets and liabilities related to the Business,  all as
more specifically provided herein;

     NOW,   THEREFORE,   in   consideration  of  the  premises  and  the  mutual
representations,  warranties,  covenants and undertakings  contained herein, and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

                              Article I.Definitions

     Section 1.1 Certain Definitions.

     The following terms will,  when used in this Agreement,  have the following
respective meanings:

     "2003 Audit" means the audited  consolidated  balance  sheet,  statement of
operations  and  statement of cash flows of Seller as of and for the fiscal year
ended December 31, 2003, including the notes and schedules thereto, certified by
Ernst & Young LLP (or such other independent auditor mutually agreed to by Buyer
and Seller).

     "Affiliate"  means, with respect to a Person,  any other Person directly or
indirectly controlling, controlled by, or under common control with, such Person
at any time  during the period for which the  determination  of  affiliation  is
being made.  For purposes of this  definition,  the term "control"  means,  with
respect to any Person, the possession,  directly or indirectly,  of the power to
direct or cause the  direction of  management  policies of such Person,  whether
through the ownership of voting securities or by contract or otherwise.

     "Agreement" means this Asset Purchase Agreement, as the same may be amended
or supplemented from time to time in accordance with the terms hereof,  together
with the exhibits and schedules thereto.

     "Ancillary Agreements" means,  collectively,  the Escrow Agreement attached
to this  Agreement as Exhibit A, the Business Plan attached to this Agreement as
Exhibit B, the Indemnification Substitution Agreement attached to this Agreement
as Exhibit C, and the Stockholder Escrow Agreement attached to this Agreement as
Exhibit D, each as more fully described herein.

     "Antitrust  Laws"  means and  includes  the Sherman  Act,  as amended,  the
Clayton Act, as amended,  the  Hart-Scott-Rodino  Antitrust  Improvements Act of
1976,  as  amended,  the Federal  Trade  Commission  Act,  as amended,  national
competition  Laws and all other  U.S.  or  non-U.S.  Laws that are  designed  or
intended to prohibit,  restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.

     "Applicable Employees" is defined in Section 6.1(a)(i) of this Agreement.

     "Approvals"  means,  collectively,   the  consents,   approvals,   waivers,
authorizations,  novations,  notices and filings required in connection with the
consummation of the Transaction  (or of any portion of the  Transaction),  which
are listed on Schedule 1.1.

     "Assumed Contracts" is defined in Section 2.1(c) of this Agreement.

     "Assumed Liabilities" is defined in Section 2.5 of this Agreement.

     "Assumed  License  Agreements"  is  defined in  Section  2.1(c)(i)  of this
Agreement.

     "Benefits Plans" is defined in Section 3.21(a) of this Agreement.

     "Books and  Records"  means  books,  ledgers,  files  (including  personnel
files),   reports,   operating  records,   accounting   records,   price  lists,
correspondence and other forms of information,  in any form or medium,  relating
in any manner to the business, operations or financial or statistical history of
a Person.

     "Business  Plan" means that  certain  plan of  operation  for the  Business
during the period  commencing on the Closing Date and continuing  until December
31, 2004 (unless earlier terminated) attached to this Agreement as Exhibit B.

     "Buyer Benefit Plans" is defined in Section 6.1(d) of this Agreement.

     "Buyer Indemnified Parties" is defined in Section 8.1 of this Agreement.

     "Buyer Losses" is defined in Section 8.1 of this Agreement.

     "Change of Control" means:  (a) with respect to Acquisition Sub, (i) a sale
of substantially all of the assets of Acquisition Sub to a Person who is neither
Buyer nor a wholly owned  subsidiary of Buyer, or (ii) a consolidation or merger
of  Acquisition  Sub or a sale or other  transfer of  beneficial  ownership  (as
defined in the Securities Act) of the equity  securities of Acquisition  Sub, in
one or a series of related transactions, resulting in neither Buyer nor a wholly
owned subsidiary of Buyer beneficially  owning the Acquisition Sub; and (b) with
respect to Buyer,  (i) a sale of  substantially  all of the assets of Buyer to a
Person who is not controlled by Buyer,  (ii) a consolidation  or merger of Buyer
in which the shareholders of Buyer immediately prior to the consummation of such
transaction do not hold at least a majority of the voting power of the surviving
entity,  or (iii) any Person is or becomes the beneficial owner (as defined Rule
13d-3  under the  Securities  Exchange  Act of 1934,  as  amended),  directly or
indirectly,  of securities of Buyer (excluding from the securities  beneficially
owned  by such  Person  any  securities  acquired  directly  from  Buyer  or its
Affiliates)  representing  fifty  percent  (50%) or more of the combined  voting
power of Buyer's then outstanding securities.

     "Chosen Court" is defined in Section 10.9 of this Agreement.

     "Claim"  means any pending  contest,  claim,  charge,  demand,  assessment,
action, cause of action, complaint,  litigation,  proceeding,  hearing or notice
involving any Person.

     "Claim Notice" is defined in Section 8.4(b) of this Agreement.

     "Closing" means the closing and consummation of the Transaction.

     "Closing Consideration" is defined in Section 2.6(a) of this Agreement.

     "Closing Date" is defined in Section 2.7 of this Agreement.

     "Closing  Documents"  means:  (a) with respect to Seller,  all  agreements,
documents and instruments,  including the Ancillary  Agreements,  required to be
delivered  by  Seller at  Closing,  as set forth in  Section  7.2;  and (b) with
respect to Buyer and Acquisition Sub, all agreements, documents and instruments,
including  the  Ancillary  Agreements,  required  to be  delivered  by Buyer and
Acquisition Sub at Closing, as set forth in Section 7.3.

     "COBRA" means the Consolidated  Omnibus Budget  Reconciliation Act of 1985,
as  amended,  section  4980B of the Code and Title I,  Part 6 of ERISA,  and any
similar state group health plan  continuation law, together with all regulations
and proposed regulations promulgated thereunder.

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

     "Confidential Information" means all information of any kind concerning the
Disclosing  Party (as defined in Section 5.6) or any of its Affiliates  obtained
directly  or  indirectly  from the  Disclosing  Party or any of its  Affiliates,
employees,  representatives  or  agents  in  connection  with  the  transactions
contemplated by this Agreement, except information (a) ascertainable or obtained
from public or published  sources,  (b) received from a third party who is under
no obligation  to keep such  information  confidential,  (c) which is or becomes
known to the public  (other  than  through a breach of this  Agreement),  or (d)
which was in the Receiving  Party's (as defined in Section 5.6) possession prior
to disclosure  thereof to the  Receiving  Party and which was not subject to any
obligation to keep such information  confidential.  Any information  relating to
the  Transferred  Assets  and any other  confidential  or  proprietary  business
information  transferred to Buyer hereunder shall,  upon Closing,  be deemed the
sole and exclusive Confidential Information of Buyer.

     "Disclosing Party" is defined in Section 5.6(a) of this Agreement.

     "Disputed Earn Out Notice" is defined in Section 2.6(d) of this Agreement.

     "Earn Out Consideration" is defined in Section 2.6(a) of this Agreement.

     "Earn Out Conditions" is defined in Section 2.6(d) of this Agreement.

     "Earn Out Date" is defined in Section 2.6(d) of this Agreement.

     "Effective Time" is defined in Section 2.7 of this Agreement.

     "Employment Laws" is defined in Section 3.20 of this Agreement.

     "Encumbrances"  means liens,  charges,  encumbrances,  security  interests,
options or any other restrictions or third party rights.

     "Environmental  Law"  means,  collectively,  all  federal,  state and local
statutes, common law, authorizations,  regulations, ordinances, codes, published
guidelines and policies, directives,  judgments, injunctions, decrees and orders
(including all amendments thereto) pertaining to environmental matters including
but not limited to: (A) the  protection,  investigation  or  restoration  of the
environment,  health,  safety  or  natural  resources,  (B) the  handling,  use,
presence, disposal, release or threatened release of any Hazardous Substance, or
(C) air,  indoor air,  noise,  employee  exposure,  water vapor,  surface water,
groundwater,   soil,  natural  resources,   chemical  use,  health,  safety  and
sanitation, or threat of injury to persons or property relating to any Hazardous
Substance.  Without  limiting the  generality of the  foregoing,  "Environmental
Laws"  include  the  Comprehensive  Environmental  Response,   Compensation  and
Liability  Act, the Medical Waste  Tracking Act, the Resource  Conservation  and
Recovery  Act, the Clean Air Act, the Federal Water  Pollution  Control Act, the
Safe Water Drinking Act, the Toxic  Substance  Control Act and the  Occupational
Safety and Health Act.

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

     "ERISA Affiliate" is defined in Section 3.21(f)of this Agreement.

     "Escrow Agent" means JPMorgan Chase Bank.

     "Escrow Agreement" means that certain escrow agreement by and among, Buyer,
Acquisition  Sub,  Seller and JPMorgan  Chase Bank attached to this Agreement as
Exhibit A.

     "Excluded Assets" is defined in Section 2.2 of this Agreement.

     "Excluded Liabilities" is defined in Section 2.4 of this Agreement.

     "Final  Balance  Sheet"  means the audited  consolidated  balance  sheet of
Seller  as of the  Closing  Date,  certified  Ernst & Young  LLP (or such  other
independent  auditor  mutually  agreed to by Buyer and  Seller),  which  will be
prepared within thirty (30) days of Closing.

     "Final Net Asset Value" is defined in Section 2.6(e) of this Agreement.

     "Final Net Asset Value Holdback" is defined in Section 2.6(e)(i)(A) of this
Agreement.

     "Financial  Statements" means: (a) the audited  consolidated balance sheet,
statement of operations  and statement of cash flows of Seller as of and for the
fiscal years ended  December 31, 2000,  2001 and 2002,  including  the notes and
schedules  thereto,  certified by Arthur Andersen LLP, with respect to 2000, and
Ernst & Young  LLP,  with  respect  to 2001 and  2002;  and (b) the  Provisional
Balance Sheet, all of which shall comprise Schedule 3.7(a).

     "GAAP"  means  generally  accepted  accounting   principles,   methods  and
practices, consistently applied, set forth in the opinions and pronouncements of
the Accounting  Principles Board and the American  Institute of Certified Public
Accountants,  and  statements  and  pronouncements  of the Financial  Accounting
Standards Board, the Securities and Exchange  Commission or of such other Person
as may be approved by a significant segment of the U.S.  accounting  profession,
in each case as of the date or period at issue,  and as applied  in the U.S.  to
U.S. companies.

     "Governmental Authorizations" means all licenses, permits, certificates and
other authorizations and approvals of any Governmental Entity required under any
Law to carry on the  Business  as  currently  conducted  or  anticipated  in the
Ordinary Course.

     "Governmental  Entity" means any U.S. or non-U.S.  local, state, federal or
other  government,  including each of their  respective  branches,  departments,
agencies, courts, instrumentalities or other subdivisions.

     "Hazardous  Substance"  means and includes:  (a) any  hazardous  materials,
hazardous wastes,  hazardous substances and toxic substances as those or similar
items are defined under any Environmental  Law; (b) any asbestos or any material
that contains any hydrated  mineral  silicate,  including  chrysolite,  amosite,
crocidolite,  tremolite,  anthophylite  and/or  actinolite,  whether  friable or
non-friable;    (c)   any    polychlorinated    biphenyls   or   polychlorinated
biphenyl-containing  materials or fluids;  (d) radon;  (e) any other  hazardous,
explosive, flammable, infectious, carcinogenic, mutagenic, radioactive, toxic or
noxious substance, material, pollutant,  contaminant or solid, liquid or gaseous
waste; (f) any petroleum, petroleum hydrocarbons,  petroleum products, crude oil
or any fractions  thereof,  natural gas or synthetic  gas; and (h) any substance
that,  whether by its nature or its use,  is or  becomes  subject to  regulation
under any Environmental  Laws or with respect to which any Environmental Laws or
Governmental  Entity  requires  or  will  require  environmental  investigation,
monitoring or remediation.

     "Hired Employees" is defined in Section 6.1(a) of this Agreement.

     "Indemnification  Substitution  Agreement" is defined in Section  7.2(c) of
this Agreement.

     "Indemnified  Parties"  means,  as appropriate  in the context,  either the
Buyer Indemnified  Parties or the Seller  Indemnified  Parties,  which terms are
defined in Article VIII.

     "Indemnifying  Party" means a party  obligated  to provide  indemnification
pursuant to Article VIII.

     "Indemnity Escrow" is defined in Section 2.6(c)(i) of this Agreement.

     "Intellectual Property" means patents, inventions, trade secrets, concepts,
know-how, inventions,  discoveries,  disclosures, copyrights (whether registered
or  unregistered),  works  of  authorship,  trademarks  (whether  registered  or
unregistered),  service marks (whether registered or unregistered),  mask works,
trade names,  trade dress,  product names,  slogans,  logos and Internet  domain
names,  including  registrations  and  applications  for  any of the  foregoing,
software,  firmware,  object  code,  source  code,  specifications,   processes,
drawings, designs, technology,  methods, techniques,  formulae, work papers, and
proprietary   information  and  documents   incorporating  any  similar  rights,
including technical reports and laboratory data (in all media).

     "Inventory" is defined in Section 2.1(d) of this Agreement.

     "Law" means any applicable law (including common law), statute,  ordinance,
rule,  regulation,  code,  order,  judgment,  injunction,  decree or judicial or
administrative  doctrine  that is  promulgated  or  issued  by any  Governmental
Entity.

     "Liability" means any direct or indirect indebtedness,  liability,  damage,
deficiency, obligation or responsibility,  fixed or unfixed, choate or inchoate,
liquidated or unliquidated,  secured or unsecured, accrued, absolute, contingent
or otherwise.

     "Losses"  means  liabilities,  losses,  interest,  penalties and reasonable
costs and expenses associated therewith (including  reasonable  attorneys' fees,
litigation  costs,  fines,  penalties  and expenses of  investigation),  whether
asserted  by a party  to this  Agreement  or by a third  party,  but in no event
includes incidental or consequential damages.

     "Material   Adverse  Effect"  means  a  material   adverse  effect  on  the
Transferred  Assets or on Seller's ability to perform its obligations under this
Agreement,  other  than (a)  effects  that (1)  result  from  changes in general
economic conditions,  (2) are the result of factors generally affecting Seller's
industry or are the result of any changes in any  regulation or statute that has
or would reasonably be expected to have an industry-wide  effect,  or (3) result
from the consummation of the transactions  hereby or any of the actions required
to be taken by Seller hereunder, or (b) any change in GAAP or changes in laws or
regulations or the interpretation thereof.

     "Net Assets" means total assets (excluding cash and cash equivalents) minus
total liabilities, as determined in accordance with GAAP.

     "Net  Asset  Value  Holdback"  is defined  in  Section  2.6(c)(ii)  of this
Agreement.

     "Net  Operating  Profit"  means  income  from  operations,  as set forth in
greater detail in the Business Plan.

     "No-Shop Period" is defined in Section 5.5(a) of this Agreement.

     "Notice Period" is defined in Section 8.4(c) of this Agreement.

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

     "Patents" is defined in Section 2.1(a)(ii) of this Agreement.

     "Permitted  Encumbrances"  means  Encumbrances that secure or constitute an
Assumed  Liability that is recorded on the Books and Records of Seller as of the
Closing Date, as well as (a) mechanic's,  materialmen's,  carrier's,  workman's,
repairmen's  and similar liens,  (b) liens arising under worker's  compensation,
unemployment insurance, social security, retirement and similar legislation, (c)
liens on goods in transit  incurred  pursuant to documentary  letters of credit,
and (d) purchase money liens, in each case arising in the Ordinary Course.

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability company, an association, a trust or any other entity or organization.

     "Potential Material Event" is defined in Section 2.6(d) of this Agreement.

     "Prior Service" is defined in Section 6.1(d) of this Agreement.

     "Products" is defined in Section 2.1(b) of this Agreement.

     "Provisional Balance Sheet" means the unaudited  consolidated balance sheet
of Seller as of  November  30,  2003 or as of such other  later date  before the
Closing Date mutually agreed to by Buyer and Seller.

     "Provisional  Net Asset  Value" is defined in Section  2.6(b)(iii)  of this
Agreement.

     "Purchase Price" is defined in Section 2.6(a) of this Agreement.

     "Purchase Transaction" is defined in Section 5.5(b) of this Agreement.

     "Receiving Party" is defined in Section 5.6(a) of this Agreement.

     "Registration  Rights  Agreement"  is  defined  in  Section  2.6(d) of this
Agreement.

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

     "Seller Indemnified Parties" is defined in Section 8.2 of this Agreement.

     "Seller Losses" is defined in Section 8.2 of this Agreement.

     "Seller Subsidiary" means:  Mapletree Networks Limited, a company organized
under the United Kingdom Companies Act of 1985.

     "Senior Managers" is defined in Section 10.8 of this Agreement.

     "Software" is defined in Section 2.1(a)(i) of this Agreement.


     "Stockholder  Escrow  Agreement"  is  defined  in  Section  7.2(c)  of this
Agreement.

     "Subsidiary" means any Person, 50 percent or more of the outstanding equity
interests of which are owned, directly or indirectly, by another Person.

     "Tax" or "Taxes" means any and all federal, state, 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,  transfer,  franchise,
withholding,  payroll, recapture,  employment, excise and property taxes as well
as public imposts,  fees and social security charges  (including but not limited
to health,  unemployment  and pension  insurance),  together  with all interest,
penalties and additions imposed with respect to such amounts.

     "Tax Return" means any return,  declaration,  report,  claim for refund, or
information  return or statement  relating to Taxes,  including  any schedule or
attachment thereto, and including any amendment thereof.

     "Technical Documentation" is defined in Section 2.1(e) of this Agreement.

     "Trademarks" is defined in Section 2.1(a)(iii) of this Agreement.

     "Transferred Assets" is defined in Section 2.1 of this Agreement.

     "Transferred  Intellectual  Property" is defined in Section  2.1(a) of this
Agreement.

     "Transaction" means, collectively, the purchase and sale of the Transferred
Assets, the assumption of the Assumed Liabilities and the execution and delivery
of the Closing Documents and the other transactions, all as herein provided.

     "U.S." means the United States of America.

     "VTech"  means VTech  Networks  Co.,  Ltd., a company  located in Dongguan,
Guangdong, China, and its Affiliates.

Section 1.2 Iterpretation.

     In this Agreement,  unless the express context otherwise requires:  (a) the
words  "herein,"  "hereof" and  "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision of this Agreement;
(b)  references  to "Article" or "Section"  are to the  respective  Articles and
Sections of this Agreement, and references to "Exhibit" or "Schedule" are to the
respective  Exhibits and Schedules  annexed hereto;  (c) references to a "party"
mean a party to this Agreement and include  references to such party's permitted
successors  and  permitted  assigns;  (d)  references  to a "third party" mean a
Person not a party to this Agreement; (e) the terms "dollars" and "$" means U.S.
dollars;  (f) terms defined in the singular have a comparable  meaning when used
in the plural,  and vice versa;  (g) references to a party's  "knowledge" or any
similar  phrase means with respect to any Person,  the actual  knowledge of such
Person.  In the  case  of  Seller,  knowledge  shall  include  only  the  actual
collective knowledge of Sean Aruda, Ali Bigdeliazari,  Brian Millette (only with
respect to Sections 3.7,  3.10(b),  3.11,  3.12,  3.14,  3.15, 3.17, 3.18, 3.19,
3.20,  3.21 and 3.24),  Liz Gerald (only with respect to Sections 3.7,  3.10(b),
3.11,  3.18,  3.22 and 3.24),  Martin Bond (only with  respect to Sections  3.7,
3.11, 3.17, 3.18 and 3.24) and Joanne Regali (only with respect to Sections 3.7,
3.10(b),  3.11, 3.19,  3.20, 3.21 and 3.24);  h) the masculine  pronoun includes
the feminine and the neuter, and vice versa, as appropriate in the context;  and
(i) wherever  the word  "include,"  "includes"  or  "including"  is used in this
Agreement,  it will be deemed to be followed by the words "without  limitation."

     Section 1.3 Accounting Conventions.

     Except as expressly  provided  otherwise  herein,  all  references  in this
Agreement to  financial  terms will be deemed to refer to such terms as they are
defined under GAAP, consistently applied.

                          Article II. PURCHASE AND SALE

     Section 2.1 Purchase and Sale of Assets.

     On the terms and subject to the  conditions  set forth herein,  at Closing,
Seller will sell, convey,  transfer,  assign and deliver to Acquisition Sub, and
Acquisition  Sub  will  purchase  from  Seller,   all  of  Seller's  and  Seller
Subsidiary's  right,  title and interest in and to the  following  listed assets
(except for those assets that are defined in Section 2.2 as Excluded Assets), in
each  such  case as the  same  exist  on the  Closing  Date  (collectively,  the
"Transferred Assets"):

     (a) all Intellectual Property,  including the following (collectively,  the
"Transferred Intellectual Property"):

          (i)   Trade   secrets,   know-how,  inventions,  patents,  copyrights,
          designs,  technical  processes  in works of  authorship,  source code,
          object  code,   design   documentation   and  procedures  for  product
          generation  and  testing  of  all  computer   software  and  firmware,
          including that listed on Schedule 2.1(a)(i) and including the software
          rules  and  algorithms,   flowcharts,   and  Technical   Documentation
          (collectively, the "Software"), all products owned by Seller or Seller
          Subsidiary including those listed on Schedule 2.1(b) and including all
          proposed or  unimplemented  developments or improvements  thereof (the
          "Products"),  all product development projects, including those listed
          on Schedule  2.1(b),  and all  Internet,  intranet  and World Wide Web
          content,  sites,  domain names and pages,  and all HTML and other code
          related thereto, including those listed on Schedule 2.1(a)(i).

          (ii)  all  patents and patent applications,  including   those  listed
          on Schedule  2.1(a)(ii),  together  with any  division,  continuation,
          continuation-in-part,  continuing prosecution  application,  continued
          examination  application,   reinstatement,   reexamination,   revival,
          reissue,  extension or substitution of any thereof,  and corresponding
          foreign applications,  patents and rights thereto,  including,  in all
          cases, the right to sue for past  infringement  thereof and to collect
          any past or future royalties or other payments in connection therewith
          (collectively, the "Patents");

          (iii) all  trademarks,  service  marks,  trade  names,  trade  dress,
          product names,  slogans and logos,  including those listed on Schedule
          2.1(a)(iii), and corresponding foreign applications,  marks and rights
          thereto,   including,  in  all  cases,  the  right  to  sue  for  past
          infringement  thereof and to collect any past or future  royalties  or
          other   payments   in   connection   therewith   (collectively,    the
          "Trademarks"); and

     (b)  The  Products,  the  Software,  all  product  development    projects,
including those listed on Schedule 2.1(b), and all Internet,  intranet and World
Wide Web content,  sites,  domain  names and pages,  and all HTML and other code
related thereto,  including those listed on Schedule  2.1(a)(i);

     (c)   only  the  following  contracts  and   instruments,   and  no  others
(collectively,  the  "Assumed Contracts"):

          (i) those contracts,  agreements, licenses (whether granted to or by a
          third  party) and other commitments and arrangements, oral or written,
          with  any  Person   respecting  the  ownership,  license, acquisition,
          design,  development,   distribution,   marketing,  use,  maintenance,
          support  or  enhancement of Transferred Intellectual Property, related
          technical  or  user  documentation  or  databases  (including royalty,
          work-for-hire,  consulting,   employment,   dealership  and  franchise
          agreements),  which are listed on  Schedule   2.1(c)(i)  (the "Assumed
          License Agreements"); and

          (ii)   those other agreements, contracts,  subcontracts,    leases and
          subleases of personal property,  arrangements,  commitments,  licenses
          and sublicenses, with customers, suppliers,  resellers,  distributors,
          current,  former or prospective  employees,  employee groups, or other
          third parties, which are listed on Schedule 2.1(c)(ii);

     (d) all inventories of (i) Products (including parts,  components, supplies
and the like for Products);   (ii)   computer  program code  (in all media)  and
materials; (iii) program documentation, including user materials; and   (iv) all
other  unused or reusable  materials,  stores and supplies,  including  those of
the nature or type  reflected  on the Provisional  Balance  Sheet or on Schedule
2.1(d) (the "Inventory");

     (e)  all  technical and  descriptive  materials owned by Seller  or  Seller
Subsidiary in all  media  (other  than  Inventory) relating  to the acquisition,
design, development,  use or  maintenance of Transferred  Intellectual  Property
or the Products, including any compilers, tools, libraries, debuggers and higher
level or  proprietary  language  (the  "Technical  Documentation");

     (f) all   of the furniture,  fixtures,  equipment,  computer  equipment and
hardware,  vehicles, machinery, apparatus, media, tools, appliances, implements,
supplies and other tangible personal property of Seller wherever located,  along
with  all  rights under related    product  warranties,  including any leasehold
improvements  owned by Seller for Seller's leased premises  located in  Norwood,
Massachusetts  for any portion of such premises that   Buyer occupies after  the
Closing;

     (g) all customer  lists and  documentation  (in all media)  relating to the
customers of the Business;

     (h) as the same relate to the other Transferred  Assets enumerated  herein,
all  Books  and  Records,  and  all proprietary  and  non-proprietary   business
information, including  marketing and sales materials and publications,  product
literature,  reports,  plans,  records,   pricing,  cost    and  other  manuals,
advertising  materials,  catalogues,  sales,  service and  maintenance  records,
and training  materials (provided,  however,  that Seller may maintain copies of
all Books and Records);

     (i) to the extent their transfer is permitted  by Law, all  Governmental
Authorizations  which are  required  for the  conduct of the  Business,  and all
applications therefore;

     (j) all Claims  that  Seller  may have  against any  Person  relating to or
arising out of any Transferred Asset or any Hired Employee,  including rights to
recover damages,  settlements,  rights to refunds,  Claims  for  compensation or
benefits, insurance  Claims,  Claims  of  infringement  or past infringement  of
any Intellectual  Property  rights  and  royalty or  similar  rights  related to
any Transferred Intellectual Property;

     (k) the assets,  if any,  that are listed on Schedule  2.1(k);

     (l) all accounts receivable of Seller; and

     (m) all  goodwill of the Business associated  with the foregoing enumerated
Transferred Assets.

     Section 2.2 Excluded Assets.

     Notwithstanding  anything  herein to the contrary,  from and after Closing,
Seller will retain all of its existing right,  title and interest in and to, and
there will be  excluded  from the sale,  conveyance,  assignment  or transfer to
Acquisition  Sub hereunder,  and the  Transferred  Assets will not include,  all
assets  of  Seller  and  Seller  Subsidiary  that  are not  Transferred  Assets,
including, without limitation, the following, in each case as the same exists on
the Closing Date (collectively, the "Excluded Assets"):

     (a) all other agreements,  instruments,  contracts,  subcontracts,  leases,
subleases,  arrangements,  commitments,  licenses,  sublicenses  and independent
     contractor agreements, written or oral, that are not Assumed Contracts;

     (b) all employee compensation,  retirement,  pension,  severance,  deferred
compensation,  health,  welfare or benefit plans and programs, and all funds and
accounts held thereunder;

     (c)  all  real  property,   including  land,   buildings,   structures  and
improvements  thereon,  appurtenances  thereto and interests therein  (including
leasehold or possessory  interests),  and all fixtures constituting part of such
real property, except as provided in Section 2.1(f);

     (d) all refunds,  overpayments  and prepayments of Taxes and duties paid by
Seller,

     (e) all Tax  Returns  of Seller  and all other  Books and  Records  related
thereto;

     (f) all  corporate  minute books and stock  records of Seller and all other
Books and Records related thereto;

     (g) the capital stock of any Subsidiary;

     (h) cash and cash  equivalents;  and

     (i) the assets, if any, that are set forth on Schedule 2.2(i).

     Section 2.3 Inability to Assign Assumed Contracts.

     (a) Notwithstanding anything to the contrary contained in this Agreement or
in any  Closing  Document,  to the  extent  that  the  assignment  or  attempted
assignment to Acquisition Sub of any Assumed  Contract,  or any Claim,  right or
benefit arising thereunder or resulting therefrom,  is prohibited by any Law, or
would  require any consent,  approval,  waiver,  authorization  or novation by a
Governmental   Entity  or  a  Person  and  such   consent,   approval,   waiver,
authorization  or novation has not been obtained  prior to Closing and in a form
reasonably acceptable to Acquisition Sub, or with respect to which any attempted
assignment would be ineffective or would materially  adversely affect the rights
of Seller or Acquisition Sub thereunder, then this Agreement will not constitute
an assignment or attempted assignment thereof, and the same will not be assigned
at Closing.

     (b) Both prior and subsequent to Closing, the parties will use commercially
reasonable  efforts,  and  cooperate  with each other,  to obtain  promptly  all
consents,  approvals,  waivers,   authorizations  or  novations,  including  all
Approvals, for the Assumed Contracts on terms reasonably acceptable to Buyer and
Acquisition  Sub.  Seller will bear and pay the cost of all filing,  recordation
and  similar  fees and Taxes  incurred  after the date  hereof  but prior to the
Closing and payable to  Governmental  Entities in connection  with assignment of
the  Assumed   Contracts,   and  any  additional  fees  or  charges   (howsoever
denominated) incurred prior to the Closing required by any Persons in connection
with the assignment of any Assumed Contract or obtaining any consent,  approval,
waiver, authorization or novation, including any Approval. Acquisition Sub shall
be liable for any such  additional  fees or charges  incurred after the Closing,
provided  that the decision to incur such fees or charges was made by Sean Aruda
or Ali Bigdeliazari.  Notwithstanding anything to the contrary contained in this
Agreement  or in any  Closing  Document,  Seller  shall  not be  deemed  to have
breached  any covenant if it fails to procure any consent to  assignment  of any
Assumed Contract other than those Assumed Contracts described in Section 7.2(k).

     (c) Seller will pay to Acquisition Sub, when received, all income, proceeds
and other monies  received by Seller from third parties to the extent related to
Acquisition Sub's intended rights under any Assumed Contract, as contemplated by
this Section 2.3(c). Once any such consent, approval,  waiver,  authorization or
novation is obtained or made in a form acceptable to Acquisition Sub in its sole
discretion,  Seller will assign such Assumed  Contract to Acquisition  Sub at no
additional cost. Any expenses  incurred by Seller,  and any reasonable  expenses
incurred by Acquisition Sub, in connection with the arrangements contemplated by
this Section 2.3(c) will be borne by Seller.

     (d) The provisions of this Section 2.3 shall not affect the right of  Buyer
and Acquisition  Sub to elect not to consummate the Transaction  contemplated by
this  Agreement if the  conditions  to its  obligations  hereunder  contained in
Article VII hereof have not been otherwise fulfilled.

     Section 2.4 Excluded Liabilities.

     It is expressly  understood and agreed that neither Buyer  nor  Acquisition
Sub  (nor any of their Affiliates)  will assume,  nor will any of them be liable
for, any Liability of Seller, any Seller Subsidiary,  any Affiliate of Seller or
the Business, of any kind or nature, at any time existing or asserted, howsoever
arising, whether or not accrued, whether fixed, contingent or otherwise, whether
known or unknown, liquidated or unliquidated, due or to become due,  and whether
or not recorded on the Books and Records of any Person, unless such Liability is
expressly within the definition of Assumed Liabilities under  Section  2.5.  All
Liabilities that are not expressly within the definition of Assumed  Liabilities
under Section 2.5 are referred to collectively as the "Excluded Liabilities."

      Section 2.5 Assumption of Certain Liabilities.

     It is expressly understood and agreed that, on the terms and subject to the
conditions set forth herein,  Acquisition Sub, severally,  will assume and agree
to satisfy and discharge or perform when due only the following  Liabilities  of
Seller,  at any time  existing or asserted,  howsoever  arising,  whether or not
accrued,  whether  fixed,  contingent  or  otherwise,  whether known or unknown,
liquidated or unliquidated, due or to become due, and whether or not recorded on
the Books and Records of any Person (but no others  Liabilities)  (collectively,
the "Assumed Liabilities"):

     (a) all Liabilities and  obligations for future  performance  arising under
the Assumed  Contracts  to the extent that the  rights  and  benefits  of Seller
thereunder  are after the  Closing  Date,  subject  to  Section  2.3(c)  hereof,
effectively  transferred  or  assigned  to  Acquisition  Sub, or novated for the
benefit of Acquisition Sub;

     (b) all Liabilities  that arise out of or relate to the Transferred  Assets
(other than the Assumed Contracts and Governmental Authorizations) to the extent
such  Liabilities  are attributable to  occurrences  and  circumstances  arising
following Closing;

     (c) all  Liabilities  identified  on the  Final  Balance  Sheet  (including
any  pre-Closing warranty liability for Products),  but only up to the amount of
Liabilities  set forth on the Final Balance Sheet (and, with respect to warranty
liability for Products,  only up to the amount of the warranty reserve set forth
therein).

     Section 2.6 Purchase Price.

     (a) On the terms and subject to the conditions set forth in this Agreement,
the purchase price for the Transferred Assets is eight million two hundred fifty
thousand dollars  ($8,250,000) (the "Purchase Price").  The Purchase Price shall
consist of (i) six million six hundred twenty-five thousand dollars ($6,625,000)
to be paid at Closing  (the  "Closing  Consideration")  and (ii) one million six
hundred twenty-five thousand dollars  ($1,625,000),  in each case as adjusted in
accordance  with the terms of this  Agreement,  to be paid,  if at all, no later
than March 31, 2005 (the "Earn Out Consideration").

     (b)  The  Closing   Consideration   shall  be  subject  to  the   following
adjustments,   which,  as  applied,  shall  yield  the  amount  of  the  Closing
Consideration to be paid to Seller at Closing:

               (i)  the amount of the Closing  Consideration shall be reduced by
               the  aggregate  amounts  of  the  outstanding  current  debt  and
               long-term debt of Seller owed to Comerica  Bank and Comdisco,  as
               reflected in each lender's payoff letter   (in form and substance
               mutually satisfactory to Buyer and Seller)   and those holders of
               the Company's notes listed on Schedule 3.24,  provided that Buyer
               shall repay all such amounts owed to Comerica Bank,  Comdisco and
               the parties listed on Schedule 3.24 at the Closing;

               (ii)  the amount of the Closing Consideration shall be reduced by
               the aggregate amount of the accounts payable of Seller  more than
               forty (40) days past due as of the Closing Date,  as well as the
               aggregate  amount  of  any  accounts  payable of Seller  incurred
               outside the Ordinary Course,  including  accounts payable  due to
               expenses  (including  legal  and  accounting  fees  and expenses)
               associated with the  Transaction  (including the negotiation  and
               execution  of  this  Agreement),   all  as set forth on  Schedule
               2.6(b)(ii); and

               (iii)  subject to later adjustment in accordance with Section 2.6
               (e) of this Agreement,  the amount of  the Closing  Consideration
               shall be increased by the amount,  if any,  by which the value of
               the Net Assets of Seller, as reflected on the Provisional Balance
               Sheet  (the "Provisional  Net  Asset  Value"),  is more than nine
               hundred sixty-nine  thousand  five  hundred  dollars  ($969,500),
               provided,  however,  that no such increase shall be  made to  the
               amount of the Closing  Consideration  if the amount by which  the
               Provisional  Net  Asset  Value exceeds  nine  hundred  sixty-nine
               thousand  five  hundred  dollars   ($969,500)  is less than fifty
               thousand dollars ($50,000).

     (c) On the terms and subject to the conditions set forth in this Agreement,
at Closing, Buyer shall pay the Closing Consideration,  as adjusted, as follows:

               (i)  by  depositing  with  the  Escrow  Agent  the  amount of one
               million  five  hundred   thousand   dollars   ($1,500,000)   (the
               "Indemnity  Escrow")  for  disposition  as provided in the Escrow
               Agreement  and in  accordance  with  Section 8.3 of this
               Agreement;

               (ii) by increasing  the Indemnity  Escrow by the amount,  if any,
               by which the value of the  Provisional  Net  Asset  Value is less
               than nine  hundred  sixty-nine  thousand   five  hundred  dollars
               ($969,500)  (the "Net Asset  Value Holdback") for  disposition as
               provided  for  by  Section  2.6(e)  of this Agreement,  provided,
               however,  that no such retention shall be made if the Net Asset
               Value Holdback is less than fifty thousand dollars ($50,000); and

               (iii)  by  wire  transfers of immediately  available funds in the
               aggregate amount of the balance of the Closing Consideration,  as
               adjusted,  to the accounts designated  in  writing  by  Seller at
               least two (2) business days prior to Closing.

     (d) On or before  March 31,  2005,  Buyer  shall pay to Seller the Earn Out
Consideration  if,  and only if,  all of the  conditions  below  (the  "Earn Out
Conditions") are satisfied on or before March 31, 2005:

               (i)  during the period beginning on the Closing Date,  and ending
               on  December 31, 2004,  the  Business,  on a stand alone basis as
               operated by Acquisition Sub in accordance with the Business Plan,
               shall have total gross revenue exceeding ten million dollars
               ($10,000,000);

               (ii)  during the period beginning on the Closing  Date and ending
               on December 31, 2004, the gross margin,  determined in accordance
               with GAAP, of the Business, on a stand alone basis as operated by
               Acquisition Sub in accordance with the Business Plan, shall be at
               least sixty-two percent (62%); and

               (iii)  the  Business,  on  a  stand  alone basis  as operated  by
               Acquisition  Sub  in  accordance with  the Business  Plan,  shall
               achieve a  Net Operating Profit in each of the following periods:
               (A)  Closing Date to March 31, 2004; (B) April 1, 2004 to June 30
               2004;  (C) July 1, 2004 to September 30, 2004; and (D) October 1,
               2004 toDecember 31, 2004.

     Within two (2) business days of the date on which Buyer determines  whether
the Earn Out  Conditions  are  satisfied,  which shall in no event be later than
March 31,  2005,  but which,  for the  avoidance of doubt and by way of example,
could  be as  early  as April 1,  2004 if the  condition  contained  in  Section
2.6(d)(iii)(A)  fails,  Buyer  shall  provide  Seller  with  a  notice  of  such
determination  in accordance with Section 10.1 of this  Agreement,  which notice
shall  provide  reasonable  detail  for any  determination  that any of Earn Out
Conditions  have not been met. If Buyer  determines that one or more of the Earn
Out  Conditions  have not been  satisfied,  Seller shall have the right to audit
such Books and Records of  Acquisition  Sub and the  Business,  as maintained by
Acquisition Sub during the relevant period or periods, to verify the accuracy of
Buyer's  determination.  Such audit rights shall be subject to reasonable  time,
place and manner restrictions imposed by Buyer.

     If Seller  delivers a written  notice (the  "Disputed  Earn Out Notice") to
Buyer,  stating that Seller objects to Buyer's  determination  that the Earn Out
Conditions have not been satisfied and explaining in reasonable detail the basis
for such  objection,  Seller and Buyer  will  attempt  to  resolve  and  finally
determine and agree upon whether the Earn Out Conditions have been satisfied. If
Buyer and Seller are unable to agree upon whether the Earn Out  Conditions  have
been  satisfied  within 30 days after  deliver of the Disputed  Earn Out Notice,
they will select an independent, nationally recognized accounting firm to make a
determination  as to whether the Earn Out Conditions have been satisfied,  which
accounting  firm  must  be  reasonably  acceptable  to  Seller  and  Buyer.  The
determination  of the  accounting  firm so selected  will be made within 60 days
after such  selection  and will be final and binding on the  parties.  The fees,
costs and expenses of the accounting firm so selected will be borne by the party
the position of which did not prevail in such determination.

     Buyer  shall pay the Earn Out  Consideration  to Seller  upon the breach by
Buyer or  Acquisition  Sub of the covenant set forth in Section 5.21 hereof.  If
Seller  believes that Buyer or Acquisition  Sub is in breach of the covenant set
forth in Section 5.21 hereof,  then Seller shall  deliver a written  notice (the
"Business Plan Breach Notice") to Buyer, setting forth Seller's belief that such
breach has occurred and stating in reasonable detail Seller's basis for alleging
that such a breach has occurred or is occurring.  Buyer or Acquisition Sub shall
have ten (10)  business  days from  Buyer's  receipt of a Business  Plan  Breach
Notice to attempt to cure the alleged  breach  described  in the  Business  Plan
Breach  Notice,  and in no event  shall  the Earn Out  Consideration  be paid to
Seller on account of the alleged  breach  described in the Business  Plan Breach
Notice  until  Buyer or  Acquisition  Sub has had ten (10)  business  days  from
Buyer's  receipt  of the  Business  Plan  Breach  Notice to attempt to cure such
alleged breach.

     Buyer  shall pay a portion  of the Earn Out  Consideration,  as  determined
below,  to Seller  immediately  upon the occurrence of a Change of Control.  The
portion of the Earn Out  Consideration  to be paid,  if at all,  pursuant to the
preceding sentence shall be determined as follows:  (a) if the Change of Control
occurs on or before March 31, 2004, no Earn Out  Consideration  shall be paid by
virtue of the Change of Control; (b) if the Change of Control occurs after March
31,  2004  but on or  before  June  30,  2004,  that  portion  of the  Earn  Out
Consideration  equal  to  ratio  of the  total  gross  revenue  of the  Business
(calculated  as required in Section  2.6(d)(i))  from the period from Closing to
March 31, 2004 to $10,000,000  shall be paid by virtue of the Change of Control,
provided that each of the Earn Out  Conditions is satisfied at such time,  where
the measuring periods in Section 2.6(d)(i) and Section 2.6(d)(ii) are reduced to
the period from Closing to March 31, 2004 and the total gross revenue  target in
Section  2.6(d)(i)  is reduced  to two  million  one  hundred  thousand  dollars
($2,100,000)  and the condition in Section  2.6(d)(iii) is measured only for the
period  described  in clause (A)  thereof;  (c) if the Change of Control  occurs
after June 30, 2004 but on or before  September  30,  2004,  that portion of the
Earn Out  Consideration  equal to the ratio of the total  gross  revenue  of the
Business  (calculated  as  required in Section  2.6(d)(i))  from the period from
Closing to June 30, 2004 to $10,000,000 shall be paid by virtue of the Change of
Control,  provided  that each of the Earn Out  Conditions  is  satisfied at such
time, where the measuring  periods in Section  2.6(d)(i) and Section  2.6(d)(ii)
are  reduced to the period  from  Closing to June 30,  2004 and the total  gross
revenue  target in Section  2.6(d)(i)  is reduced to four  million  four hundred
thousand  dollars  ($4,400,000)  and the  condition  in Section  2.6(d)(iii)  is
measured only for the periods described  clauses (A) and (B) thereof;  or (d) if
the Change of Control occurs after  September 30, 2004 but on or before December
31, 2004, that portion of the Earn Out  Consideration  equal to the ratio of the
total  gross  revenue  of  the  Business  (calculated  as  required  in  Section
2.6(d)(i))  from the period from  Closing to September  30, 2004 to  $10,000,000
shall be paid by virtue of the Change of Control, provided that each of the Earn
Out Conditions is satisfied at such time, where the measuring periods in Section
2.6(d)(i)  and Section  2.6(d)(ii)  are  reduced to the period  from  Closing to
September  30, 2004 and the total gross revenue  target in Section  2.6(d)(i) is
reduced to seven  million  dollars  ($7,000,000)  and the  condition  in Section
2.6(d)(iii)  is measured only for the periods  described in clauses (A), (B) and
(C) thereof. In addition, the payment to Seller of none or a portion of the Earn
Out  Consideration,  as described in the  preceding  sentence,  shall not impair
Seller's  ability to obtain the balance of the Earn Out  Consideration  upon the
fulfillment by Seller of the Earn Out Conditions in accordance  with, and as set
forth in,  Section  2.6(d)  hereof,  and Buyer  shall  cause  the  acquiring  or
surviving  entity  in the  Change  of  Control  to  assume  Buyer's  rights  and
obligations hereto.

     If Buyer is  required  to pay any  portion  of the Earn Out  Consideration,
Buyer shall pay such Earn Out  Consideration  in cash promptly (and in any event
within two business days of the satisfaction of the Earn Out Conditions) by wire
transfer of immediately  available funds to an account  designated in writing by
Seller.

     If any portion of the Earn Out  Consideration is not paid in full when due,
then the unpaid amount of such Earn Out  Consideration  shall bear interest at a
rate of  eleven  and one half  percent  (11.5%)  per annum  until  paid in full.
Interest  shall be payable  monthly in arrears as of the last day of each month.
Notwithstanding  any term herein to the contrary,  the interest rate on the Earn
Out Consideration shall not exceed the maximum rate permitted by law.

     The  amount of the Earn Out  Consideration  shall be  increased  by the net
amount,  if any, by which the amount of the Closing  Consideration was decreased
pursuant to Sections 2.6(c)(ii) and 2.6(e) of this Agreement.

     The  amount of the Earn Out  Consideration  shall be  decreased  by the net
amount,  if any, by which the amount of the Closing  Consideration was increased
pursuant to Sections 2.6(b)(iii) and 2.6(e) of this Agreement.

     If the Earn Out  Conditions  are not satisfied on or before March 31, 2005,
then   Seller   shall  no  longer  have  any  right  to  receive  the  Earn  Out
Consideration,  and Buyer shall be forever relieved of any obligation to pay the
Earn Out  Consideration to Seller.  Notwithstanding  the foregoing,  at any time
after Closing, Buyer may, in its sole discretion, pay the Earn Out Consideration
to Seller,  irrespective  of whether the Earn Out Conditions are satisfied.


     (e) Within  thirty (30)  days of the  Closing,  the final value of the  Net
Assets  of the Business shall be determined  by reference to the  Final  Balance
Sheet  (the "Final Net Asset Value").   For the purpose of calculating the Final
Net  Asset  Value,  the aggregate outstanding current debt and long-term debt of
Seller owed to Comerica Bank,  Comdisco and the parties listed on Schedule 3.24,
as reflected  in each lender's  payoff letter  (in form and  substance  mutually
satisfactory to Buyer and Seller), shall be deemed by the parties to be included
in and to be a part of the Final Balance  Sheet.  Once the Final Net Asset Value
has been  determined, the following  adjustments shall be made, as applicable:

               (i)  If  the Final  Net  Asset Value is less  than  nine  hundred
               sixty-nine  thousand  five  hundred  dollars ($969,500)  and:

                       (A)  the  Indemnity  Escrow  was  increased  pursuant  to
                       Section 2.6(c)(ii)  by an amount equal to the  Net  Asset
                       Value  Holdback,  and  the amount by which the Final  Net
                       Asset Value is less than nine hundred sixty-nine thousand
                       five hundred dollars  ($969,500)  (the  "Final  Net Asset
                       Value  Holdback")  is greater  than the Net  Asset  Value
                       Holdback,  then  Buyer  shall be  entitled  to claim  and
                       receive from the Indemnity  Escrow an amount equal to the
                       Final Net Asset Value Holdback; or

                       (B)   the  Indemnity  Escrow was  increased  pursuant  to
                       Section  2.6(c)(ii)  by an amount equal to the Net  Asset
                       Value Holdback, and the Final Net Asset Value Holdback is
                       less than the Net Asset Value Holdback,  then  (1)  Buyer
                       shall be entitled to claim and receive from the Indemnity
                       Escrow  an  amount equal to the  Final  Net  Asset  Value
                       Holdback  and  (2)  Seller shall be entitled to claim and
                       receive from the Indemnity  Escrow an amount equal to the
                       difference between the Net  Asset Value  Holdback and the
                       Final Net Asset Value Holdback; or

                       (C)  the  amount  of  the  Closing  Consideration was not
                       increased pursuant  to   Section  2.6 (b) (iii)  of  this
                       Agreement,  then  Buyer  shall  be entitled to claim  and
                       receive from the Indemnity Escrow the amount equal to the
                       Final Net Asset Value Holdback; or

                       (D) the amount of the Closing Consideration was increased
                       pursuant to  Section 2.6(b) (iii) of this Agreement, then
                       Buyer shall  be  entitled  to claim and receive from  the
                       Indemnity  Escrow an amount equal to the sum of  (1)  the
                       Final  Net  Asset Value  Holdback and  (2)  the amount by
                       which the Closing Consideration was increased pursuant to
                       Section 2.6(b)(iii) of this Agreement.

               (ii) If the Final Net Asset Value is exactly nine hundred sixty-
               nine thousand five hundred dollars ($969,500), and:

                       (A)  the  Indemnity  Escrow  was  increased  pursuant  to
                       Section  2.6(c)(ii)  by an amount equal to the Net  Asset
                       Value  Holdback,  then  Seller shall be entitled to claim
                       and receive from the Indemnity  Escrow an amount equal to
                       the Net Asset Value Holdback; or

                       (B) the amount of the Closing Consideration was increased
                       pursuant to Section  2.6(b)(iii) of this Agreement,  then
                       Buyer  shall  be entitled  to claim and receive from  the
                       Indemnity  Escrow  the  amount  by  which  the   Closing
                       Consideration  was increased pursuant to  Section  2.6(b)
                       (iii) of this Agreement.

               (iii) If the Final Net  Asset  Value is greater than nine hundred
               sixty-nine thousand five hundred dollars ($969,500), and:

                       (A)  the  Indemnity  Escrow  was  increased  pursuant  to
                       Section 2.6 (c) (ii)  by an amount equal to the Net Asset
                       Value  Holdback,  then  Seller shall be entitled to claim
                       and receive from the Indemnity  Escrow an amount equal to
                       (1) the amount of the Net  Asset Value  Holdback and  (2)
                       Buyer shall pay to Seller   the amount by which the Final
                       Net Asset Value is greater than nine  hundred  sixty-nine
                       thousand five hundred dollars ($969,500); or

                       (B) Buyer did not increase the Indemnity  Escrow pursuant
                       to  Section  2.6(c)(ii)  of this Agreement  by an  amount
                       equal to the  Net  Asset  Value  Holdback  and the amount
                       of the  Closing  Consideration was not increased pursuant
                       to  Section  2.6(b)(iii) of this Agreement,   then  Buyer
                       shall pay to Seller  the amount by which  the  Final  Net
                       Asset  Value   is greater than  nine  hundred  sixty-nine
                       thousand five hundred dollars ($969,500); or

                       (C) the amount of the Closing Consideration was increased
                       pursuant to Section  2.6(b)(iii) of this Agreement,  then
                       such  amount  shall  be  increased,  by  Buyer  paying an
                       appropriate amount to  Seller,  or  decreased,  by  Buyer
                       claiming  and  receiving  an  appropriate amount from the
                       Indemnity Escrow,   as necessary,   so  that such  amount
                       equals the amount of the Final Net Asset Value.

               (iv) Notwithstanding anything in this  Agreement to the contrary,
               no adjustment  shall  be  made  pursuant  to  Section  2.6(e)  of
               this  Agreement if  the  amount of  such  adjustment is less than
               fifty thousand dollars ($50,000).

     An example of the various adjustments  contemplated by Sections 2.6(b), (c)
and (e) of this Agreement is attached  hereto as  Illustration A  ("Illustration
A").  Illustration A is attached for  illustrative  purposes only, and it is not
intended by the parties to be of any binding effect whatsoever.

     Section 2.7 Closing.

     Closing will take place at the offices of Buyer's counsel,  Harter, Secrest
& Emery LLP, 1600 Bausch & Lomb Place, Rochester,  New York, at 9:00 a.m., local
time,  on January  16,  2004,  or on such other  date,  or at such other time or
place,  as the parties may mutually  agree.  The date on which Closing occurs is
called the "Closing Date" and Closing will be effective (the  "Effective  Time")
as of 11:59 p.m.,  Rochester,  New York time, on the Closing Date.  The required
deliveries at Closing are set forth in Article VII.

              Article III. REPRESENTATIONS AND WARRANTIES OF SELLER

     As of the date hereof, Seller represents and warrants to Buyer as follows:

     Section 3.1 Organization and Power; Stock Ownership.

Seller is a corporation  duly organized,  validly  existing and in good standing
under the Laws of the State of  Delaware.  Seller  has all  requisite  corporate
power and authority to enter into this Agreement and the Closing  Documents,  to
perform its  obligations  hereunder and thereunder,  to own, lease,  operate and
transfer  the  Transferred  Assets,  and to carry on the  Business  as now being
conducted.  Seller is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where its ownership or operation of the
Transferred  Assets or its conduct of the Business requires such  qualification,
which  jurisdictions  are listed on Schedule 3.1, except where the failure to be
so qualified would not have a Material Adverse Effect.

     Section 3.2 Authorization.

     Seller has full  corporate  power and authority to execute and deliver this
Agreement and each Closing Document and to perform its obligations hereunder and
thereunder. The execution,  delivery and performance by Seller of this Agreement
and each Closing Document have been duly and validly  authorized by the Board of
Directors  and by the  stockholders  of  Seller,  and  no  additional  corporate
authorization or consent is required in connection therewith.

     Section 3.3 Approvals.

     Except for the Approvals, no consent,  approval,  waiver,  authorization or
novation  is  required  to be  obtained  by  Seller  and no  notice or filing is
required  to be given by Seller  to, or made by Seller  with,  any  Governmental
Entity  or  other  Person  in  connection  with  the  execution,   delivery  and
performance  by Seller  of this  Agreement  and each  Closing  Document  and the
consummation of the Transaction,  except for such the failure of which to obtain
would not reasonably be expected to have a Material Adverse Effect.

     Section 3.4 Non-Contravention.

     The  execution,  delivery and  performance  by Seller of this Agreement and
each Closing Document, and the consummation of the Transaction,  do not and will
not: (a) violate any provision of the  certificate of  incorporation,  bylaws or
other organizational  documents of Seller; (b) assuming the receipt or making of
all  Approvals,  conflict  with,  or result in the  breach of, or  constitute  a
default  under,  or  result in the  termination,  cancellation  or  acceleration
(whether  after the  filing of notice or the lapse of time or both) of any right
or  obligation  of Seller  under,  or a loss of any  benefit to which  Seller is
entitled under, any Assumed Contract or any contract to which Seller is a party,
or  result  in  the  creation  of  any  Encumbrance   (other  than  a  Permitted
Encumbrance) upon any of the Transferred  Assets; or (c) assuming the receipt or
making of all  Approvals,  violate  or result  in a breach  of or  constitute  a
default under any Law, judgment,  injunction, order, decree or other restriction
of any Governmental  Entity to which Seller is subject,  except, with respect to
clauses (b) and (c), any event that would not have a Material Adverse Effect.

     Section 3.5 Binding Effect.

     This  Agreement and each Closing  Document,  when executed and delivered by
Buyer and Seller,  will  constitute  valid and legally  binding  obligations  of
Seller,  enforceable  against  it in  accordance  with their  respective  terms,
subject to bankruptcy, insolvency,  reorganization,  moratorium and similar laws
of general  applicability  relating  to or  affecting  creditors'  rights and to
general equity principles.

     Section 3.6 Seller Subsidiaries.

     Except for the Seller Subsidiary,  Seller has no Subsidiaries.  Seller owns
all of the issued and  outstanding  shares of the capital  stock or other equity
interests of the Seller Subsidiary free and clear of all  Encumbrances.

     Section 3.7 Financial Statements.

     (a) Annexed hereto as Schedule 3.7(a) are each of the Financial Statements.
The Financial  Statements fairly present the financial  position and the results
of the  operations of the Business in all material  respects for the  respective
periods therein stated, and reflect adequate reserves for all known Liabilities,
as of the respective dates therein stated,  and have been prepared in accordance
with GAAP consistently  applied,  except as noted in the footnotes  thereto,  if
any.

     (b) Accounts payable reflected on the Provisional Balance Sheet have arisen
from bona fide transactions and are usual and normal in amount both individually
and in the  aggregate.  Except as set forth on  Schedule  3.7(b),  all  material
Liabilities  reflected on the  Provisional  Balance  Sheet were  incurred in the
Ordinary Course, arose from bona fide transactions,  and are usual and normal in
amount both  individually and in the aggregate.  Except as set forth on Schedule
3.7(b),  all Liabilities of the Business  reflected on the  Provisional  Balance
Sheet can be prepaid without penalty at any time.

     Section 3.8 Title.

     With respect to all of the Transferred Assets,  Seller has and will have at
Closing:  (i) good title to all tangible  property  included in the  Transferred
Assets,  free and clear of all Encumbrances,  except for Permitted  Encumbrances
that are not  material  individually  or in the  aggregate;  and (ii) all right,
title and interest in and to all intangible property included in the Transferred
Assets  (other than  Transferred  Intellectual  Property,  which is addressed in
Section  3.12),  free  and  clear  of  all  Encumbrances  except  for  Permitted
Encumbrances,  and, in the case of the Assumed Contracts,  subject to the rights
of third parties thereunder.

     Section 3.9 Transferred Assets.

     (a) The Transferred  Assets,  when taken together with the Excluded Assets,
constitute all  properties,  assets and leasehold  estates,  real,  personal and
mixed, tangible and intangible,  used or useful in the operation of the Business
on the date hereof and immediately prior to Closing.

     (b) Except as set forth in Schedule 3.9(b),  those Transferred  Assets that
are  tangible  are in all  material  respects  in a good  state  of  repair  and
condition, ordinary wear and tear excepted.

     (c) All of the Inventory  consisting of finished  Products,  and all parts,
components,  supplies and the like for Products,  is good and  marketable in all
material  respects,  and,  except as set forth in  Schedule  3.9(c),  all of the
Software and  Products  included in the  Inventory  are the  respective  current
versions thereof.


     (d) All  prepaid  assets and  security  deposits,  as set forth on Schedule
3.9(d),  arose out of bona fide  transactions in the Ordinary Course and will be
valid assets on the Closing Date.

     Section 3.10 Compliance With Laws.

     (a) The Business has been and is being  conducted  in  compliance  with all
Laws,  except for any  non-compliance  that would  not,  individually  or in the
aggregate  have  a  Material   Adverse  Effect.   Seller  has  all  Governmental
Authorizations necessary for the conduct of the Business as currently conducted,
except for those  Governmental  Authorizations  the  absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.

     (b) To  Seller's  knowledge,  each  of the  premises  of the  Business,  as
currently used, occupied and operated by Seller, conforms to and complies in all
material respects with all covenants,  conditions,  restrictions,  reservations,
land use, zoning, health, fire, water and building codes and other similar Laws,
and no such Laws  prohibit or limit or  condition  the use or  operation of such
premises. To Seller's knowledge, there is no pending,  contemplated,  threatened
or  anticipated  change in the zoning  classification  of any of such  premises.
During  Seller's use,  occupancy and operation of premises of the Business,  the
Seller has operated and maintained  such premises in accordance  with applicable
Laws in all material respects.

     Section 3.11 Litigation and Claims.

     Except as set forth on Schedule 3.11: (a) to Seller's  knowledge,  there is
no  civil,   criminal  or  administrative  Claim  or  investigation  pending  or
threatened  against Seller or Seller  Subsidiary  with respect to or relating to
the Business,  any of the  Transferred  Assets or Assumed  Liabilities;  and (b)
neither  the  Business,  nor  any of the  Transferred  Assets  nor  any  Assumed
Liability is subject to any order, writ, judgment,  award,  injunction or decree
of any Governmental Entity or of any arbitrator.

     Section 3.12 Intellectual Property.

     (a) Except as set forth on Schedule  3.12(a),  Seller owns or has the right
to use pursuant to written license,  sublicense,  agreement or permission all of
the Transferred Intellectual Property.  Except as set forth on Schedule 3.12(a),
each item of  Transferred  Intellectual  Property and Seller's  rights under the
Assumed  License  Agreement will be owned or available for use by right by Buyer
immediately upon Closing,  without the payment of any additional  amounts to any
third party. Upon Closing, to Seller's knowledge, all available patent rights as
to any of the  Transferred  Intellectual  Property or any of the Products may be
pursued exclusively by Buyer.

     (b) Buyer  will  receive  at  Closing,  free and clear of all  Encumbrances
(except  for  Permitted  Encumbrances),  all of Seller's  rights in  Transferred
Intellectual Property and other proprietary information,  processes and formulae
related to the ownership,  maintenance and use of the Transferred Assets and the
conduct of the Business as operated by Seller.

     (c) Except as set forth in Schedule 3.12(c), to Seller's knowledge,  Seller
has not infringed upon,  misappropriated  or otherwise violated (whether through
the use of the Transferred  Intellectual Property or otherwise) any Intellectual
Property   rights  of  any  third  party,   and  Seller  has  not  received  any
communication  that a Claim has been asserted by any Person as to the use of the
Transferred   Intellectual   Property   or  alleging   any  such   infringement,
misappropriation  or violation by Seller  (including  any Claim that Seller must
license or  refrain  from using any  Intellectual  Property  rights of any third
party),  and Seller  does not know of any  reasonably  valid  basis for any such
Claim. Except as set forth in Schedule 3.12(c), to Seller's knowledge,  no third
party has infringed upon,  misappropriated  or otherwise  violated any rights of
Seller with respect to the Transferred  Intellectual  Property.  Seller has made
available  to Buyer all  infringement  studies,  including  opinions of counsel,
prepared by or on behalf of Seller relating to the Transferred Assets.

     (d) Schedule 2.1(a)(i) identifies all Software of Seller that constitutes a
Transferred  Asset.  Seller has made  available  to Buyer  correct and  complete
copies of all such items of  Transferred  Intellectual  Property,  as amended to
date, and has made  available to Buyer correct and complete  copies of all other
written  documentation  evidencing  ownership and prosecution (if applicable) of
each such item.  Except as set forth in Schedule  3.12(d),  with respect to each
such item of Transferred Intellectual Property owned by Seller:

          (i)    the  item  is  not  subject  to  any  outstanding  injunction,
          judgment,  order, decree, ruling, or charge against Seller, and Seller
          does not know of any  reasonably  valid basis for the  issuance of any
          such injunction, judgment, order, decree, ruling, or charge;

          (ii)   no  Claim or investigation  is pending  against  Seller,  which
          challenges the legality, validity, enforceability, use or ownership of
          the item, and Seller does not know of any  reasonably  valid basis for
          any such Claim or investigation; and

          (iii)  Seller has not  agreed to indemnify any  Person  for or against
          any  interference,  infringement,  misappropriation or other violation
          with respect to the item.

     (e) Schedule 2.1(a)(ii) and Schedule  2.1(a)(iii)  identify each Patent and
Trademark  of Seller  that  constitutes  a  Transferred  Asset.  Seller has made
available  to Buyer  correct and  complete  copies of all items  related to such
Transferred Intellectual Property, as amended to date, and has made available to
Buyer correct and complete copies of all other written documentation  evidencing
ownership  and  prosecution  (if  applicable)  of each such item,  including all
applications,  registrations and prosecution  materials.  Except as set forth in
Schedule  3.12(e),  with respect to each such item of  Transferred  Intellectual
Property owned by Seller:

          (i)    the  item  is  not  subject  to  any  outstanding  injunction,
          judgment,  order, decree, ruling, or charge against Seller, and Seller
          does not know of any  reasonably  valid basis for the  issuance of any
          such injunction, judgment, order, decree, ruling, or charge;

          (ii)   no Claim  or investigation  is pending  against  Seller,  which
          challenges the legality, validity, enforceability, use or ownership of
          the item, and Seller does not know of any  reasonably  valid basis for
          any such Claim or investigation;

          (iii)  Seller  has  not agreed to indemnify any Person for or against
          any  interference,  infringement,  misappropriation or other violation
          with respect to the item; and

          (iv)   Seller  has  not taken,  nor  does it  know  of,  any  actions,
          including a sale or offer for sale, the disclosure of which could lead
          to the invalidity of any item disclosed on Schedule 2.1(a)(ii).

     (f) Schedule  2.1(b)  identifies each Product and Seller has made available
to Buyer  correct  and  complete  copies of all items  related  to the same,  as
amended to date, and has made available to Buyer correct and complete  copies of
all  other  written  documentation  evidencing  ownership  and  prosecution  (if
applicable) of each such item,  including all  applications,  registrations  and
prosecution materials.  Except as set forth in Schedule 3.12(f), with respect to
each Product:

          (i)   the  Product is  not  subject  to  any  outstanding  injunction,
          judgment,  order, decree, ruling, or charge against Seller, and Seller
          does not know of any  reasonably  valid basis for the  issuance of any
          such injunction,  judgment,  order, decree,  ruling, or charge against
          Seller;

          (ii)   no  Claim  or  investigation is pending  against Seller,  which
          challenges the legality, validity, enforceability, use or ownership of
          the Product,  and Seller does not know of any  reasonably  valid basis
          for any such Claim or investigation;

          (iii)  Seller  has not  agreed to  indemnify any Person for or against
          any  interference,  infringement,  misappropriation or other violation
          with respect to the Product; and

     (g) with respect to each Assumed License Agreement:

          (i)  the  Assumed  License  Agreement  is  legal,   valid,   binding,
          enforceable  and in full force and effect  with  respect to Seller and
          any other party thereto;

          (ii)  to  Seller's  knowledge,  the  Assumed  License  Agreement  will
          continue to be legal,  valid,  binding,  enforceable and in full force
          and effect with respect to Buyer and any other party thereto following
          the consummation of the Transaction;

          (iii) neither  Seller  nor  any other party  to  the  Assumed  License
          Agreement  is in breach or default,  and no event has  occurred  which
          with notice or lapse of time would  constitute  a breach or default or
          permit termination, modification or acceleration thereunder;

          (iv)  neither  Seller  nor any  other  party  to  the Assumed  License
          Agreement has repudiated any material  provision thereof or threatened
          any breach thereof;

          (v)   to  Seller's  knowledge,   (i)  with  respect  to  each  Assumed
          License Agreement that is a sublicense of Intellectual  Property owned
          by a third party,  the  representations  and  warranties  set forth in
          Sections  3.12(g)(i)  through  3.12(g)(iv)  are true and correct  with
          respect to the underlying  license;  and (ii) to Seller's knowledge no
          Claim or  investigation  is  pending  that  challenges  the  legality,
          validity or  enforceability  of the  Intellectual  Property owned by a
          third party underlying the Assumed License Agreement,  and Seller does
          not  know  of any  reasonably  valid  basis  for  any  such  Claim  or
          investigation.

     (h) Schedule  3.12(h) sets forth the form and placement of the  proprietary
legends and copyright  notices  displayed in or on the Software.  In no instance
has the eligibility of the Software for protection  under  applicable  copyright
law been  forfeited to the public  domain by omission of any required  notice or
any other action.

     (i) Seller has promulgated and used its commercially  reasonable efforts to
enforce the trade secret protection  program set forth in Schedule  3.12(i).  To
Seller's knowledge,  there has been no material violation of such program by any
Person.  The Transferred  Intellectual  Property  (including any source code and
system  documentation  relating  to the  Software):  (i) has at all  times  been
maintained  in  confidence;  and (ii)  has  been  disclosed  by  Seller  only to
employees,  consultants  and third parties  having a "need to know" the contents
thereof in connection  with the  performance of their duties to Seller or in the
conduct of the Business.

     (j)  All  personnel,   including   employees,   agents,   consultants   and
contractors,  who  have  contributed  to  or  participated  in  the  conception,
reduction to practice or development of the Technical Documentation, Transferred
Intellectual  Property  and Products on behalf of Seller  either:  (i) have been
party to a  "work-for-hire"  arrangement or agreement with Seller, in accordance
with applicable federal and state law, that has accorded Seller full, effective,
exclusive and original  ownership  of, and all right,  title and interest in and
to, all tangible and intangible  property thereby arising; or (ii) have executed
appropriate  instruments  of assignment in favor of Seller as assignee that have
conveyed to Seller full,  effective and exclusive  ownership of all right, title
and interest in and to all tangible and intangible property arising thereby.

     Section 3.13 Adequacy of Technical Documentation.

     The Technical Documentation includes the source code, system documentation,
statements of principles of operation and schematics for all of the  Transferred
Intellectual  Property,  as well as any  pertinent  commentary  or  explanation,
including any commentary  contained in any source code, that may be necessary to
render the Technical  Documentation  understandable to an individual  skilled in
the art of computer  programming  with  related  industry  knowledge  and,  with
respect to any Software,  usable by an individual skilled in the art of computer
programming with related industry knowledge.

     Section 3.14 Intellectual Property Rights Granted to Seller.

     (a)  Schedule  3.14(a)  lists  each  license,  sublicense,   agreement  and
permission by which Seller uses or has right,  prospective rights to such rights
or interests in any  Intellectual  Property  owned by a third party.  Seller has
made  available  to Buyer  correct  and  complete  copies of all such  licenses,
sublicenses  and  agreements  (as amended to date).  Seller has not obtained any
such rights in any  Intellectual  Property  under any oral license,  sublicense,
agreement or permission.

     (b) Except as set forth on Schedule  3.14(b),  to Seller's  knowledge,  the
Transferred  Intellectual  Property and the Technical  Documentation  contain no
other programming,  materials or Intellectual  Property in which any third party
may claim superior,  joint or common ownership,  including any right or license.
The Transferred  Intellectual  Property and the Technical  Documentation  do not
contain  derivative  works,  reproductions  or  copies  of  any  programming  or
materials not owned in their entirety by Seller and included in the  Transferred
Assets.

     Section 3.15 Third-Party Interests in Intellectual Property.

     Schedule 3.15 identifies each license, sublicense, agreement and permission
by which a  third-party  has been  granted by Seller  rights or interests in any
Intellectual Property or Technical  Documentation.  Seller has made available to
Buyer correct and complete  copies of all such  agreements (as amended to date).
Seller has not granted any such rights in any  Intellectual  Property  under any
oral license, sublicense,  agreement or permission. The licenses and sublicenses
set forth on  Schedule  3.15  constitute  only  end-user  agreements,  each in a
standard  form  previously  disclosed  to Buyer  and each of  which  grants  the
end-user  thereunder  solely  the  non-exclusive  right  and  license  to use an
identified  Intellectual  Property and related user documentation,  for internal
purposes  only.  There  are  no  contracts,   agreements,   licenses  and  other
commitments   and   arrangements  in  effect  with  respect  to  the  marketing,
distribution,   licensing,   or  promotion  of  the  Inventory,   the  Technical
Documentation,  the  Transferred  Intellectual  Property or the  Products by any
independent sales person, distributor, sublicensor or other re-marketer or sales
organization.

     Section 3.16 Major Vendors and Customers.

     Schedule  3.16 lists each  third-party  licensor,  developer,  re-marketer,
distributor and supplier of property or services to, and each licensee, end-user
or customer  of, the  Business  to whom  Seller paid or billed in the  aggregate
$10,000 (in cash, stock,  services,  debt or other consideration) or more during
2003 prior to the date hereof,  together  with, in each case, the amount paid or
billed during such period. Seller has no reasonable basis for believing that the
consummation  of the  Transaction  will  result  in the loss of any  significant
customer or vendor of the Business.

     Section 3.17 Assumed Contracts.

     (a) Seller has made  available  to Buyer true and  complete  copies of each
Assumed  Contract  that is in  written  form,  and  true  and  complete  written
summaries of each Assumed  Contract that is oral. Each of the Assumed  Contracts
constitutes  the  valid  and  legally  binding  obligation  of  Seller,  and  is
enforceable  against Seller in accordance  with its terms (subject to applicable
bankruptcy,  insolvency  and other  similar laws and except that the remedies of
specific  performance and injunctive relief may be subject to equitable defenses
and the  discretion  of the court  before which any  proceeding  therefor may be
brought).  Each of the Assumed Contracts constitutes the entire agreement of the
respective  parties  thereto  relating  to  the  subject  matter  thereof.   All
obligations  required to be  performed  by Seller under the terms of the Assumed
Contracts by the date hereof have been performed. All obligations required to be
performed  under the terms of the Assumed  Contracts  by the Closing  Date shall
have been  performed in all material  respects.  Neither Seller nor, to Seller's
knowledge,  any other party is in material  breach or violation  of, or material
default  under,  any Assumed  Contract,  and no event has  occurred or failed to
occur  which,  with the  giving  of  notice,  the  lapse of time or both,  would
constitute a material  default under any of the Assumed  Contracts by Seller or,
to Seller's knowledge, any other party under such Assumed Contracts.

     (b)  Except  for the  Approvals,  none of the  Assumed  Contracts  requires
consent or waiver for its assignment to and assumption by Acquisition Sub.

     (c) Except for this Agreement, the Assumed Contracts, the Plans (as defined
in Section 3.21), and any agreements  identified in Schedule  2.2(i),  there are
no: (i) contracts or  commitments  affecting the use or value of the Business or
any of the Transferred  Assets;  (ii)  agreements,  licenses or commitments with
respect to  Transferred  Intellectual  Property  or  affecting  the  Business or
requiring future performance by Seller; (iii) collective  bargaining  agreements
or other  contracts or commitments to or with any labor unions or other employee
representatives,   groups  of  employees,  works  councils  or  the  like;  (iv)
employment  contracts or other  contracts,  agreements or commitments to or with
individual current,  former or prospective employees,  consultants or agents; or
(v) joint  ventures or other  contracts or  commitments  providing  for payments
based in any manner on the  revenues or profits of Seller,  the  Business or any
Transferred Asset.

     Section 3.18 Warranties.

     As of  the  date  of the  Provisional  Balance  Sheet,  the  Seller  had no
Liability  for  replacement  of such  Products  or other  damages in  connection
therewith,  except  to the  extent  of any  warranty  reserve  set  forth on the
Provisional  Balance  Sheet,  which  warranty  reserve is  adequate to cover the
amount of all reasonably anticipated  warranty-related  claims for Products sold
on or before the Closing Date.  Except as set forth on Schedule  3.18, as of the
Closing Date, to Seller's knowledge,  Seller will have no material Liability for
replacement  of such  Products  or other  damages in  connection  therewith.  No
Product sold by Seller is subject to any contractual guaranty, warranty or other
indemnity  beyond  the  applicable  standard  terms  and  conditions  of sale or
license.  Seller has  heretofore  made available to Buyer copies of the standard
terms and  conditions  of sale or license  used by  Seller,  which  contain  all
applicable guaranty, warranty and indemnity provisions.

     Section 3.19 Taxes.

     Except as set forth on Schedule 3.19:

     (a) Seller and Seller  Subsidiary have filed all Tax Returns that they were
required to file. All such Tax Returns were correct and complete in all material
respects. All material Taxes owed by Seller or Seller Subsidiary (whether or not
shown on any Tax Return) have been paid. Neither Seller nor Seller Subsidiary is
the beneficiary of any extension of time within which to file any Tax Return.

     (b) There are (and immediately  following the Effective Time there will be)
no  liens,  pledges,  charges,  claims,  restrictions  on  transfer,  mortgages,
security interests or other encumbrances of any sort (collectively,  "Liens") on
the assets of Seller or Seller  Subsidiary  relating to or attributable to Taxes
other than Liens for Taxes not yet due and payable.

     (c) Seller and Seller  Subsidiary have withheld and paid in connection with
amounts owing to any employee, independent contractor, creditor, stockholder, or
other third party, and all Forms W-2 and 1099 required with respect thereto have
been properly completed and timely filed.

     (d) There is no material  dispute or claim  concerning any Tax liability of
Seller or Seller  Subsidiary  either (A) claimed or raised by any  authority  in
writing or (B) as to which any of the  directors or officers of Seller or Seller
Subsidiary has actual  knowledge  based upon personal  contact with any agent of
such authority,  which if adversely determined,  would result in any Lien on the
assets of Seller or Seller Subsidiary.

     (e)  Section  (e) of  Schedule  3.19 lists all  federal,  state,  local and
foreign  Tax  Returns  filed  with  respect to Seller or Seller  Subsidiary  for
periods  ended on of after  December  31,  1997,  which have been audited or are
currently the subject of an audit.  Neither  Seller nor any of its  Subsidiaries
has waived any  statute  of  limitations  with  respect to a Tax  assessment  or
deficiency.

     Section 3.20 Employment Matters.

     (a) Except as set forth on Schedule  3.20(a):  (i)  neither  Seller nor any
Seller  Subsidiary  or  Affiliate  has entered  into any  collective  bargaining
agreement  or  other  similar   agreement  with  any  employee,   union,   labor
organization  or other  employee  representative  or group of employees  and, to
Seller's  knowledge,  no such  organization  or Person has made or is making any
attempt to organize or represent employees of Seller or any Seller Subsidiary or
Affiliate;  (ii) there is no unfair  labor  practice  charge,  pending  trial of
unfair labor  practice  charges,  unremedied  unfair labor  practice  finding or
adverse decision of the National Labor Relations Board or any other Governmental
Entity,  or any hearing  officer or  administrative  law judge thereof,  against
Seller or any Seller  Subsidiary or Affiliate (or any agent,  representative  or
employee  of Seller or any Seller  Subsidiary  or  Affiliate)  and,  to Seller's
knowledge,  there is no basis for any such unfair labor practice  charge;  (iii)
there is no pending  grievance or  arbitration  and no unsatisfied or unremedied
grievance  or  arbitration  award  against  Seller or any Seller  Subsidiary  or
Affiliate  (or  against  any of their  respective  employees)  and,  to Seller's
knowledge, there is no basis for any such grievance or arbitration;  (iv) during
the three-year period preceding the date hereof, there has not been and there is
not presently pending or existing or, threatened in writing,  any labor dispute,
strike, walkout, slow down, other work stoppage, labor arbitration or proceeding
in respect of the grievance of any employee,  any application or complaint filed
by an  employee  or  union  with  the  National  Labor  Relations  Board  or any
comparable Governmental Entity and, to Seller's knowledge, there is no basis for
any such  grievance,  application or complaint;  (v) there is not pending or, to
Seller's  knowledge,  threatened with respect to Seller or any Seller Subsidiary
or Affiliate (or their respective employees) any labor dispute, strike, walkout,
lockout,  slow down or other work stoppage;  (vi) during the  three-year  period
preceding the date hereof,  there has been no labor  dispute,  strike,  walkout,
lockout,  slow down or other work  stoppage of employees of Seller or any Seller
Subsidiary  or  Affiliate;  (vii) there are no Claims  currently  pending or, to
Seller's  knowledge,  threatened,  against  Seller or any Seller  Subsidiary  or
Affiliate (or any of their  respective  officers,  employees or agents) alleging
the violation of any Laws relating to employment,  equal employment opportunity,
nondiscrimination,  immigration,  wages, hours, benefits, collective bargaining,
the payment of social security and similar Taxes, occupational safety and health
and  plant  closing  (collectively,  "Employment  Laws"),  or  any  other  Claim
whatsoever,  whether based in tort,  contract or Law, arising out of or relating
in any  way to a  Person's  employment  (actual  or  alleged),  application  for
employment or termination of employment with Seller or any Seller  Subsidiary or
Affiliate  and,  to  Seller's  knowledge,  there is no basis for any such Claim;
(viii)  neither  Seller nor any Seller  Subsidiary  or Affiliate  has been found
liable  for  the  payment  of  Taxes,  fines,  backpay,   compensatory  damages,
liquidated damages,  penalties or other amounts, however designated, for failure
to comply with any  Employment  Laws,  and, to Seller's  knowledge,  there is no
basis for any such  Liability;  and (ix) Seller and each Seller  Subsidiary  and
Affiliate has paid all amounts of compensation  due to its respective  employees
and former  employees and has properly  withheld and reported Taxes on the same,
except to the extent that the failure to do so would not  reasonably be expected
to have a Material Adverse Effect.

     (b) Without limiting the generality of Section 3.10, to Seller's knowledge,
Seller and each Seller  Subsidiary or Affiliate is in full  compliance  with all
applicable Employment Laws and contracts relating to employment, including those
relating to wages, hours, working conditions,  hiring,  promotion,  occupational
health and safety  (including those dealing with employee  handling or use of or
exposure to Hazardous  Substances  and the training of employees with respect to
such Hazardous  Substances),  and the payment and withholding of Taxes and other
similar  obligations,  and neither Seller nor any Seller Subsidiary or Affiliate
has received any notice of any violation of any such Employment Law or contract.
Seller and each Seller  Subsidiary or Affiliate is in full  compliance  with all
applicable  affirmative  action  and equal  employment  opportunity  obligations
arising  under  any  Employment  Law or any  contract  or  subcontract  with any
Governmental  Entity or other  Person.  Seller  and each  Seller  Subsidiary  or
Affiliate  has  withheld  from the wages and  salaries  of its  employees  as is
required  by the  Employment  Laws and is not liable for any arrears of wages or
any Tax or penalty in connection therewith.

     (c) No current or former  employee  of Seller or any Seller  Subsidiary  or
Affiliate has any claim against Seller or any Seller Subsidiary or Affiliate (or
any of their respective officers,  employees or agents) under any Employment Law
or contract on account of or for:  (i) wages or salary for any period other than
the current  payroll  period;  (ii)  overtime  pay for any period other than the
current payroll period; (iii) vacation, holiday or other time off or pay in lieu
thereof  (other  than  time  off or pay in lieu  thereof  earned);  or (iv)  any
violation of any  Employment  Law or contract  relating to the payment of wages,
fringe  benefits,  wage  supplements  or hours of work;  and all  liability  for
vacation, holiday and other time off or pay in lieu thereof has been recorded in
the Financial Statements.

     (d)  Except as set  forth on  Schedule  3.20(d)  attached  hereto,  neither
Seller, any Seller Subsidiary or Affiliate,  nor Buyer is, nor immediately after
the Closing will be,  liable for severance pay or any other payment of monies to
any employee of Seller or any Seller  Subsidiary or Affiliate as a result of the
execution of this Agreement or the parties' performance of its terms, or for any
other reason in any way related to the consummation of the Transaction.

     Section 3.21 Employee Benefits.

     (a) Schedule  3.21(a)  lists all formal or informal,  written or unwritten,
employee  benefit  plans and  collective  bargaining,  employment  or  severance
agreements or other similar  arrangements  which Seller, or any ERISA Affiliate,
has ever sponsored, maintained, or to which contributions are made, or for which
obligations  have been  incurred,  for the benefit of  employees of Seller or an
ERISA Affiliate,  including, without limitation, (1) any "employee benefit plan"
(within the meaning of Section  3(3) of ERISA) (the  "Benefit  Plans"),  (2) any
profit-sharing,  incentive  compensation  (whether cash or equity),  commission,
deferred compensation,  bonus, stock option, stock purchase,  pension, retainer,
consulting,  retirement,  severance,  welfare or  incentive  plan,  agreement or
arrangement,  (3) any plan,  agreement  or  arrangement  providing  for  "fringe
benefits" or perquisites to employees,  officers, directors or agents, including
but not limited to benefits  relating to  automobiles,  clubs,  vacation,  child
care, parenting, sabbatical, sick leave, medical, dental, hospitalization,  life
insurance and other types of insurance,  and (4) any employment  agreement.  The
plans,  agreements and arrangements  described in this Section 3.21 are referred
to herein as "Plans".  Copies of all written Plans and written  descriptions  of
all unwritten Plans have been provided or made available to Buyer.

     (b) None of the Plans is (i) a plan subject to Title IV of ERISA or Section
412 of the Code,  (ii) a  "multiemployer  plan"  (within  the meaning of Section
3(37) of ERISA), (iii) a "multiple employer plan" (within the meaning of Section
3(40) of ERISA or Section  413(c) of the  Code),  (iv) a  "voluntary  employees'
beneficiary  association" (within the meaning of Section 501(c)(9) of the Code),
or (v) a "multiple employer welfare  arrangement" (within the meaning of Section
3(40)(A)  of ERISA).

     (c) Neither the Seller nor any ERISA Affiliate has ever  contributed to, or
had an  obligation  to  contribute  to, any plan subject to Title IV of ERISA or
Section 412 of the Code, any "multiemployer plan" (within the meaning of Section
3(37) of ERISA),  any  "multiple  employer  plan" (within the meaning of Section
3(40) of  ERISA or  Section  413(c)  of the  Code),  any  "voluntary  employees'
beneficiary  association" (within the meaning of Section 501(c)(9) of the Code),
or any "multiple  employer welfare  arrangement"  (within the meaning of Section
3(40)(A) of ERISA).

     (d) Each Plan has been administered  materially in accordance with: (i) the
terms of all applicable governing documents;  (ii) the applicable  provisions of
ERISA,  the Code and all other  Laws;  and  (iii)  the  terms of all  applicable
employment,  collective bargaining and other agreements.  Except as set forth in
Schedule 3.11, there are no actions,  suits,  proceedings,  disputes,  Claims or
investigations  pending or, to the  knowledge of Seller,  threatened  against or
involving any Plan, and, to the knowledge of Seller, there are no investigations
by any  Governmental  Entity or other Claims (except routine claims for benefits
payable in the normal  operation  of the plan)  pending or, to the  knowledge of
Seller,  threatened  against or involving  any Plan or  asserting  any rights to
benefits under any Plan.

     (e) With respect to the Plans,  there is no Liability  whatsoever  that the
Buyer shall assume,  or could  reasonably be expected to assume,  as part of the
Transaction or otherwise.

     (f)  "ERISA  Affiliate"  means any Person  that is a member of  "controlled
group of  corporations"  with, or is under "common control" with, or is a member
of the same "affiliated service group" with Seller, as defined in Section 414 of
the Code.

     Section 3.22 Environmental  Matters.

     (a) Seller has complied with all  Environmental  Laws except for violations
that  have not had and  would  not be  reasonably  expected  to have a  Material
Adverse  Effect,  and no Claim or  investigation  has  been  filed or  commenced
against  Seller or the Business  alleging such failure,  nor does Seller know of
any valid basis for such a Claim.

     (b) Except as set forth in Schedule  3.22,  the Business  does not have any
Liability (and the Business has not handled, used, stored,  recycled or disposed
of  any  Hazardous  Substance,  arranged  for  the  disposal  of  any  Hazardous
Substance,  exposed any employee or other Person to any  Hazardous  Substance or
hazardous  condition,  or owned or  operated  any  property  or  facility in any
manner, in each case that could reasonably be expected to form the basis for any
present or future Claim or investigation  giving rise to any such Liability) for
damage  or  remediation  to any  site,  location  or body of water  (surface  or
subsurface),  or for any illness of or personal  injury to any employee or other
Person,  under any Environmental  Law, except to the extent any of the foregoing
have not had and would not be  reasonably  expected  to have a Material  Adverse
Effect.

     Section 3.23 Insurance

     Annexed  hereto  as  Schedule  3.23  is a list  of all  insurance  policies
covering the ownership and operations of the Transferred Assets,  reflecting the
policies'  terms,  identity of insurers,  amounts and coverage.  Such  insurance
provides  coverage for such risks,  and in such amounts,  as are  reasonable and
customary for assets of the same nature and size as the Transferred  Assets. All
of such policies,  or similar  replacement  policies,  are now and will be until
Closing in full force and effect with no premium arrearages.

     Section 3.24 Subsequent Changes.

     Since  September 30, 2003,  there has not occurred any event,  condition or
change in the  operations,  condition  (financial or otherwise) or assets of the
Business that has had, or would be reasonably  expected at a later date to have,
a Material  Adverse  Effect.  Without  limiting the generality of the foregoing,
since September 30, 2003,  except as set forth on Schedule 3.24,  neither Seller
nor any Seller Subsidiary has:

     (a) sold, leased,  transferred,  pledged, encumbered or assigned any of the
assets of the  Business  outside  the  Ordinary  Course;

     (b) entered into any  agreement,  contract,  lease or license (or series of
related agreements,  contracts, leases, and licenses) other than Ordinary Course
sales and purchase orders;

     (c)  accelerated,  terminated,  modified or canceled  any Assumed  Contract
except in the Ordinary  Course;  and to Seller's  knowledge,  no other party has
done so as a result of any default by Seller;

     (d)  made  any   capital   expenditure   (or  series  of  related   capital
expenditures) other than in the Ordinary Course involving more than $25,000;

     (e) made any capital  investment in, any loan to, or any acquisition of the
securities or assets of, any other Person;

     (f) issued any note,  bond or other debt  security  or  created,  incurred,
assumed or guaranteed any indebtedness  for borrowed money or capitalized  lease
obligation;

     (g) canceled,  compromised,  waived or released any material right or Claim
(or series of related material rights and Claims) outside the Ordinary Course;

     (h) granted any license or  sublicense  of any rights under or with respect
to any Transferred Intellectual Property outside the Ordinary Course;

     (i) experienced any material  damage,  destruction or loss to the assets of
the Business not covered by insurance;

     (j) granted any increase in the base  compensation  of any employee or made
any other  material  change in  employment  terms for any  employee,  except for
normal compensation increases made in the Ordinary Course; or

     (k) entered into any  commitment to do any of the  foregoing.

     Section 3.25 Related-Party Transactions.

     Except as  disclosed  in  Schedule  3.25,  neither  Seller  nor any  Seller
Subsidiary is a party to any contract,  agreement, license, lease or arrangement
with, or any other  commitment to, directly or indirectly:  (a) any stockholder,
director,  officer,  Affiliate  or  salaried  employee  of Seller or any  Seller
Subsidiary; or (b) any Person in which any such stockholder,  director,  officer
or salaried employee has a material equity or participating interest.

     Section 3.26 Accounts Receivable.

     Set forth on  Schedule  3.26 is a true,  correct  and  complete  listing of
Seller's  accounts  receivable.  All of the accounts  receivable  (including the
accounts,  obligations,  contracts and  instruments  that underlie such accounts
receivable) set forth on Schedule 3.26 and in the Financial  Statements,  net of
any  reserve  for  doubtful  accounts  shown  thereon,  arose  out of bona  fide
transactions in the Ordinary Course and will be valid, enforceable claims on the
Closing Date.  Seller owns all of the accounts  receivable free of any Claims or
Encumbrances.   Seller  has  not  rescinded,  cancelled,  settled,  modified  or
otherwise   compromised  any  accounts  receivable  on  Schedule  3.26,  or  any
indebtedness due thereunder,  or any guarantee or repurchase  obligation related
thereto, except in the Ordinary Course.

     Section 3.27 Inventory.

     Schedule 2.1(d) is a true,  correct and complete  listing of the Inventory.
All of the Inventory  has been costed and valued,  and presented in all material
respects in the Financial Statements, in accordance with GAAP.

     Section 3.28 Finders' Fees.

     Except for Covington  Associates  LLC, whose fees and expenses will be paid
by Seller and/or Seller's Affiliates in accordance with Seller's and/or Seller's
Affiliates  agreement with such firm (a true, correct and complete copy of which
has been  delivered to Buyer prior to the date  hereof),  there is no investment
banker,  broker,  finder or other  intermediary  who has been  retained by or is
authorized to act on behalf of Seller, any Seller Subsidiary or Seller Affiliate
who might be entitled to any fee or  commission  from Buyer or any  Affiliate of
Buyer in connection with the Transaction.

     Section 3.29 Disclosure.

     The  provisions of this Agreement and the Schedules with respect to Seller,
and the provisions of all other  documents and  information  furnished by Seller
pursuant hereto,  do not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made herein
and therein not misleading.

               Article IV. REPRESENTATIONS AND WARRANTIES OF BUYER

     As of the date hereof, Buyer represents and warrants to Seller as follows:

     Section 4.1 Organization and Power.

     Each of Buyer and Acquisition Sub is a corporation duly organized,  validly
existing and in good standing  under the Laws of the State of Delaware.  Each of
Buyer and  Acquisition  Sub has all requisite  corporate  power and authority to
enter into this Agreement and the Closing Documents,  to perform its obligations
hereunder and thereunder,  to own, lease and operate its assets, and to carry on
its businesses as now being conducted. Each of Buyer and Acquisition Sub is duly
qualified to do business  and is in good  standing as a foreign  corporation  in
each  jurisdiction  where its operation or conduct of its business requires such
qualification,  except  where the  failure to be so  qualified  would not have a
material  adverse  effect on its ability to perform its  obligations  under this
Agreement.

     Section 4.2 Authorization.

     Each of Buyer and Acquisition Sub has full corporate power and authority to
execute and deliver this  Agreement  and each Closing  Document,  and to perform
their  obligations  hereunder  and  thereunder.  The  execution,   delivery  and
performance  by Buyer and  Acquisition  Sub of this  Agreement  and each Closing
Document have been duly and validly authorized by all necessary corporate action
on  the  part  of  Buyer  and  Acquisition  Sub,  and  no  additional  corporate
authorization or consent is required in connection therewith.

     Section 4.3 Approvals.

     No consent, approval,  waiver,  authorization or novation is required to be
obtained by Buyer or  Acquisition  Sub from, and no notice or filing is required
to be given by Buyer or Acquisition  Sub to or made by Buyer or Acquisition  Sub
with, any Governmental  Entity or other Person in connection with the execution,
delivery and performance by each of Buyer and Acquisition Sub of this Agreement,
Closing Document and the consummation of the Transaction.

     Section 4.4 Non-Contravention.

     The execution,  delivery and  performance by Buyer and  Acquisition  Sub of
this  Agreement  and  each  Closing  Document,   and  the  consummation  of  the
Transaction,  do not and will not: (a) violate any  provision of the articles of
incorporation,  bylaws or other organizational documents of Buyer or Acquisition
Sub;  (b)  conflict  with,  or result in the breach of, or  constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the filing of notice or the lapse of time or both) of any right or obligation of
Buyer or  Acquisition  Sub under,  any  agreement,  contract,  lease,  sublease,
arrangement,  commitment or license to which Buyer or Acquisition Sub is a party
or by which any of their assets are bound;  or (c) violate or result in a breach
of or constitute a default under any Law, judgment, injunction, order, decree or
other  restriction of any Governmental  Entity to which Buyer or Acquisition Sub
is subject.

     Section 4.5 Binding Effect.

     This  Agreement and each Closing  Document,  when executed and delivered by
Buyer,  Acquisition Sub and Seller,  will  constitute  valid and legally binding
obligations of Buyer and Acquisition Sub,  enforceable against each of Buyer and
Acquisition  Sub  in  accordance  with  their  respective   terms,   subject  to
bankruptcy, insolvency,  reorganization,  moratorium and similar Laws of general
applicability  relating to or affecting  creditors' rights and to general equity
principles.

     Section 4.6 Finders' Fees.

     Except for Harris  Williams & Co.,  whose fees and expenses will be paid by
Buyer, there is no investment banker,  broker, finder or other intermediary that
has been retained by or is authorized to act on behalf of Buyer or any Affiliate
of Buyer who  might be  entitled  to any fee or  commission  from  Seller or any
Affiliate of Seller in connection with the Transaction.

     Section 4.7 Compliance With Laws.

     To Buyer's  knowledge,  its  business  has been and is being  conducted  in
compliance  with  all  Laws,  except  for any  non-compliance  that  would  not,
individually or in the aggregate have a material adverse effect on its condition
(financial  or  otherwise),  results of operations or its ability to perform its
obligations  under this  Agreement.  Buyer has all  Governmental  Authorizations
necessary  for the conduct of its  business as currently  conducted,  except for
those Governmental  Authorizations the absence of which would not,  individually
or in the aggregate have a material  adverse effect on its condition  (financial
or otherwise),  results of operations or its ability to perform its  obligations
under this Agreement.

     Section 4.8 Financial Ability.

     Buyer  and  Acquisition  Sub  together  have  the  financial   capacity  to
consummate the Transactions, and Buyer and Acquisition Sub understand that under
the terms of this Agreement Buyer's and Acquisition Sub's obligations  hereunder
are not in any way contingent or otherwise  subject to the  availability  of any
financing.

                          Article V. CERTAIN COVENANTS

     Section 5.1 Access.

     Prior to Closing,  Seller will permit Buyer and its representatives to have
access, during regular business hours and upon reasonable advance notice, to the
Books and Records of Seller  relating to the assets,  Liabilities and operations
of the  Business,  to  Seller's  employees  and to the  locations  at which  the
Business is conducted or at which such Books and Records are located, subject to
reasonable  security  regulations  of  Seller , any  Laws  and  such  additional
limitations  as Seller  may  reasonably  require to  prevent  disruption  of its
business.  Seller will furnish, or cause to be furnished, to Buyer any financial
and operating data and other  information  that is available with respect to the
Business as Buyer from time to time reasonably  requests,  and will instruct its
employees,  counsel, independent accountants and financial advisors to cooperate
with Buyer in its investigation of the Business.

     Section 5.2 Conduct of Business.

     (a) During the period from the date hereof to Closing,  except as otherwise
     contemplated by this Agreement or as Buyer  otherwise  consents in writing,
     Seller  will  conduct  the  Business  in the  Ordinary  Course and  without
     limiting the generality of the foregoing will not:

          (i)  incur  or guaranty  any  indebtedness other than  trade  payables
          incurred in the Ordinary Course or pursuant to its existing credit
          facility;

          (ii)  incur,  create  or  assume   any  Encumbrance    (other  than  a
          Permitted   Encumbrance) on any Transferred Assets,  other than in the
          Ordinary Course;

          (iii) acquire or dispose of any Transferred  Assets, other than in the
          Ordinary  Course;

          (iv)  make any change of accounting or accounting practice,  procedure
          or policy, other than any change required by GAAP;

          (v) enter into any  material agreement, contract, lease or license (or
          series of related agreements,  contracts,  leases, and licenses) other
          than those described in Schedule 5.2;

          (vi) accelerate,  terminate,  modify or cancel any Assumed Contract;

          (vii) make  any  capital expenditure   (or  series of related  capital
          expenditures)  involving  more than  $10,000;

          (viii)  fail to maintain the  Transferred Assets that are tangible and
          all  parts  thereof  in  as good  working  order and  condition in all
          material  respects,  ordinary wear and tear excepted;

          (ix) fail  to  keep  in  full  force and  effect its current insurance
          policies or other comparable insurance affecting the Business or the
          Transferred Assets;

          (x) cause or permit  any  Seller Subsidiary  to:  (A) amend any of its
          governing  documents or  instruments;   (B)  issue,  grant or sell any
          shares of its capital stock or other equity interest,  or any options,
          warrants or other rights to purchase  any such shares or  interests or
          securities  convertible  into or exchangeable  therefor;  (C) make any
          distributions to its stockholders;  or (D) acquire any assets or enter
          into any agreements,  contracts,  leases or licenses other than in the
          Ordinary Course;

          (xi) make any capital investment in, any loan to,  or any  acquisition
          of the securities or assets of, any other Person;

          (xii)  issue any note,  bond or other  debt security or create, incur,
          assume or guarantee  any  indebtedness for borrowed  money other  than
          pursuant to its existing  credit  facility or  capitalized  lease
          obligation;

          (xiii) cancel,  compromise,  waive or release any  material  right  or
          Claim (or series of related  rights and Claims)  outside the  Ordinary
          Course;

          (xiv)  dispose  of,  license  or  permit  to  lapse  any rights in any
          Transferred Intellectual Property;

          (xv)  grant any   increase in the  base  compensation  of  any of  its
          employees  or make any  other  material  change  in  benefit  plans or
          employment terms for any of its employees; or

          (xvi) enter into any commitment to do any of the foregoing.

     (b) During the period  from the date  hereof to  Closing,  Seller  will use
     commercially   reasonable   efforts  to  preserve   the  Business  and  the
     Transferred  Assets intact and to preserve for Buyer its relationship  with
     licensors, developers, consultants,  re-marketers, suppliers, distributors,
     customers,  employees and others having regular business relations with it.
     If,  during the period from the date hereof to Closing,  Seller  desires to
     terminate the  employment  of any  employee,  it shall give Buyer three (3)
     business days' prior written notice before making such termination.

     Section 5.3 Reasonable Efforts; Further Assurances.

     (a) During the period from the date hereof to Closing, Seller and Buyer and
     Acquisition Sub will each cooperate and use commercially reasonable efforts
     to  fulfill  the  conditions  precedent  to its own and the other  parties'
     obligations hereunder.

     (b)  Seller  and Buyer and  Acquisition  Sub will  cooperate  and use their
     respective  commercially  reasonable  efforts  to  comply  with all Laws in
     furtherance  of the  Transaction,  including  the  execution of  additional
     agreements,  instruments  and documents  that may be required by local Law.
     Subject to the  provisions  hereof,  from time to time before and after the
     Closing Date, each party will promptly execute, acknowledge and deliver any
     other assurances or documents  reasonably  requested by the other party and
     necessary  for the other party to satisfy its  obligations  hereunder or to
     obtain the benefits contemplated hereby.

     Section 5.4 Corporate Name Change.

     In  furtherance  of  the  purchase  and  sale  of  the  Transferred  Assets
hereunder,  Seller will cause  Seller's  corporate name to be changed, effective
as of the Closing Date, to a name completely dissimilar to "Mapletree  Networks,
Inc."  and thereafter will not  adopt,  use,  cause  to be used  or  approve  or
sanction  the use of such  names,  the name "Mapletree  Networks,  Inc.," or any
other name so similar as to cause confusion or create a likelihood of  confusion
with the name Mapletree Networks,  Inc. or any derivation  thereof, or any other
trade name or assumed name comprising the Transferred Assets.

     Section 5.5 Exclusivity.

     (a) From the date of this  Agreement  until  January 16, 2004 (the "No Shop
     Period"),  or such  earlier  date as this  Agreement  is  terminated  under
     Section 9.1 hereof, except if the board of directors of Seller concludes in
     good faith,  based on consultation with independent  outside counsel,  that
     taking  such action is  necessary  in order for the board of  directors  of
     Seller  to act in a  manner  consistent  with  its  fiduciary  duty  to the
     stockholders of Seller under applicable Laws:

          (i) Buyer will have the exclusive  right to negotiate with Seller with
          respect to a Purchase Transaction; and

          (ii)  Seller  will and will cause each Affiliate and representative of
          Seller to:  (A)  terminate all current  discussions  and  negotiations
          regarding  a Purchase  Transaction  with any party other than Buyer or
          Buyer's  Affiliates;  and (B) not seek or initiate proposals or offers
          from,  enter into,  continue or engage in discussions or  negotiations
          with, or furnish  information to any party other than Buyer or Buyer's
          Affiliates relating to a Purchase Transaction.

     (b) For purposes of this Section 5.5, "Purchase  Transaction" means (i) any
     direct or indirect acquisition, whether by purchase, merger, consolidation,
     stock sale (primary or secondary) or any other structure which would result
     in the sale of any part of Seller's capital stock,  assets or business,  in
     either one or a series of  transactions;  or (ii) any  arrangement  whereby
     effective operating control of Seller's assets,  consolidated business or a
     substantial  portion  thereof is granted to another  party or any change in
     the current composition of Seller's Board of Directors is effected.

     (c) During the  No-Shop  Period,  Seller  will promptly notify Buyer of the
existence  of  any  proposal  or  communication  it  receives  from  any  person
concerning not only a  Purchase  Transaction but also any transaction similar to
that described in subsection  (a)  above for any part of Seller's capital stock,
assets or business.

     (d) Buyer and Seller agree that the certain Memorandum of Agreement between
     Buyer  and  Seller  dated  November  7,  2003  is  hereby   terminated  and
     superseded, in its entirety, by the terms of this Agreement.

     Section 5.6 Confidentiality.

     (a) Seller and Buyer (each,  the  "Receiving  Party")  hereby  covenant and
     agree, each on behalf of itself and on behalf of its Affiliates,  that from
     and after the Closing Date,  Receiving  Party and its  Affiliates  will not
     (unless legally compelled to do so) disclose,  give, sell, use or otherwise
     divulge any  Confidential  Information of the other party (the  "Disclosing
     Party")  or permit  their  respective  employees,  officers,  directors  or
     advisors to do the same. If Receiving  Party or its  Affiliates,  or any of
     their respective employees,  officers, directors or advisors become legally
     compelled to disclose any Confidential  Information,  Receiving Party shall
     provide  Disclosing Party with prompt written notice of such requirement so
     that Disclosing  Party may seek a protective order or other remedy or waive
     compliance with this Section 5.6. In the event that such  protective  order
     or other remedy is not obtained, or Disclosing Party waives compliance with
     this Section 5.6, Receiving Party or its Affiliates,  as applicable,  shall
     furnish  only that  portion of  Confidential  Information  which is legally
     required to be provided and exercise its commercially reasonable efforts to
     obtain assurances that appropriate  confidential treatment will be accorded
     Confidential   Information.   The   confidentiality   and  restrictive  use
     obligations  under this Section 5.6 shall not apply to information which is
     independently  developed by Receiving Party or its Affiliates after Closing
     without  the use or benefit of any  information  that  would  otherwise  be
     Confidential  Information  as shown by records  maintained  in the ordinary
     course of the developing  party's business,  or to any information that, at
     the time of disclosure,  is or  subsequently  becomes  available  publicly;
     provided,  however,  that such  information  was not disclosed in breach of
     this Agreement by Receiving Party,  Receiving  Party's  Affiliates or their
     respective employees, officers, directors or advisors.

     (b) Receiving  Party,  on behalf of itself and on behalf of its  Affiliates
     and  their   respective   employees,   officers,   directors   or  advisors
     acknowledges  that a breach of its  obligations  under this Section 5.6 may
     result in  irreparable  injury  to  Disclosing  Party.  In the event of the
     breach by  Receiving  Party or any of its  Affiliates  or their  respective
     employees,  officers,  directors  or  advisors  of  any of  the  terms  and
     conditions of this Section 5.5 to be performed,  Disclosing  Party shall be
     entitled,  if it so elects,  to institute and prosecute  proceedings in any
     court of  competent  jurisdiction,  either at law or in  equity,  to obtain
     damages for any breach of this  Section  5.5,  or to enforce  the  specific
     performance  thereof by such party or to enjoin  such party from  violating
     the provisions of this Section 5.5 by seeking a temporary restraining order
     or similar relief .

     (c)  Buyer  and  Seller   agree  that  upon   Closing   that  the   certain
     Non-Disclosure  Agreement  between Buyer and Seller dated May 1, 2003, will
     automatically terminate and be superseded, in its entirety, by the terms of
     this Agreement.

     (d) Notwithstanding  the foregoing,  nothing in this Agreement or in any of
     the Closing Documents shall prohibit the disclosure of the tax treatment or
     tax structure of the  transactions  contemplated  by this Agreement and the
     Closing Documents.

     Section 5.7 Public Disclosure.

     Notwithstanding  anything  herein to the contrary, neither party may  issue
or  cause  to  be  issued  a press  release  or  similar  public announcement or
communication,   whether  prior  or  subsequent  to  Closing,   concerning  the
Transaction  or the execution,  performance or terms of this Agreement,   unless
specifically  approved in advance by the other party,  except that  Buyer  shall
make such disclosures as it is required to make pursuant to applicable Law.

     Section 5.8 Bulk Sales.

     If the provisions of article 6 of the Uniform Commercial Code have not been
repealed in each jurisdiction where any of the Transferred  Assets  are located,
Seller and Buyer hereby waive compliance with the provisions of article 6 of the
Uniform  Commercial  Code  in each such jurisdiction  that has not repealed such
article and where any of the  Transferred  Assets are located in connection with
the Transaction.  Seller  will be responsible for all Liabilities arising out of
the parties' waiver of such compliance.

     Section 5.9 Taxes.

     (a)  Responsibility  for the  preparation and filing of Tax Returns and the
     payment  of Taxes  incurred  as a result  of the sale and  transfer  of the
     Transferred  Assets  and  the  Assumed  Liabilities  hereunder  will  be as
     follows:

          (i)  Buyer and Seller will each  prepare and file such Tax Returns  as
          may  be,  respectively,  required  of  them  in  connection  with  all
          excise, sales, use, value added, transfer, stamp, documentary, filing,
          recordation  or other similar  Taxes  incurred as a result of the sale
          and  transfer of the  Transferred  Assets and the Assumed  Liabilities
          hereunder in  accordance  with the form of the  Transaction  or as may
          otherwise be required by a  Governmental  Entity;  provided,  however,
          that the cost of all such Taxes will be borne by Seller;

          (ii)  Seller will be responsible for the preparation and filing of any
          required  income  Tax  Returns  and  the  payment of  all of  Seller's
          income  Taxes  incurred  as a result of the sale and  transfer  of the
          Transferred Assets and the Assumed Liabilities hereunder;

          (iii) Seller will be responsible for the preparation and filing of all
          Tax Returns and the  payment of all other Taxes of any nature incurred
          in the Business  or  relating  to  the Transferred Assets, the Assumed
          Liabilities  and the  Applicable  Employees  for the period up to  and
          including the Closing Date;  and

          (iv) For the period after the Closing Date,  Buyer will be responsible
          for the preparation  and filing of all Tax Returns  and the payment of
          all other Taxes of any nature  incurred or relating to the Transferred
          Assets or the Assumed Liabilities.

     (b) Buyer and Seller  will  provide  each other with such  cooperation  and
     information  as  either  of them  reasonably  may  request  of the other in
     connection with filing any Tax Return,  amended return or Claim for refund,
     determining  a  Liability  for  Taxes  or a right  to  refund  of  Taxes or
     preparation for litigation or investigation of Claims or in connection with
     any audit. Each of Buyer and Seller will retain all Tax Returns,  schedules
     and work papers and all material records or other documents relating to Tax
     matters of the  Business  for the taxable  year of Seller  ending after the
     Closing  Date and for all  previous  years,  until  the  expiration  of the
     statute of  limitations  of the taxable years to which such Tax Returns and
     other  documents  relate (and, to the extent notified by the other party in
     writing,  any  extensions  thereof).  Any  information  obtained under this
     Section 5.9(b) will be kept  confidential  as  contemplated by Section 5.6,
     except as may be otherwise  necessary in connection  with the filing of Tax
     Returns or Claims for refund or in conducting an audit or other  proceeding
     related to the payment of Taxes.

     (c) If in order to prepare  properly  documents  required  to be filed with
     Governmental  Entities or its financial  statements,  it is necessary  that
     either Buyer or Seller be furnished with additional information relating to
     the Transferred  Assets or the Assumed  Liabilities and such information is
     in the  possession  of the  other  party,  such  other  party  will use its
     reasonable  efforts to furnish such  information  in a timely manner to the
     party reasonably requiring such information, at the cost and expense of the
     party requiring such information.

     (d) With respect to all Hired Employees, Seller will cause to be issued IRS
     Form W-2s for that portion of calendar year 2003 ending on the Closing Date
     during which time the Hired Employees were employees of Seller. Buyer shall
     have no obligation to issue any IRS Form W-2s to any Hired Employee for any
     period on or before the Closing Date.

     (e) Seller  and Buyer will file or provide to each other such Tax  Returns,
     forms and other  documents  as may be required or  necessary to minimize or
     obtain an exemption from any excise,  sales,  use,  value added,  transfer,
     stamp, documentary,  filing,  recordation or other similar Taxes that arise
     with respect to the Transferred Assets, or the Assumed Liabilities. Without
     limiting the  generality  of the  foregoing,  on or before the Closing Date
     Buyer  will  provide   Seller  with  any  required   sales  Tax   exemption
     certificates of Buyer required in connection with the Transaction.

     (f)  Notwithstanding any other provision of this Section 5.9, no party will
     have  access to the other  party's  federal,  state or  foreign  income Tax
     Returns or Books and Records relating thereto.

     Section 5.10 Determination and Allocation of Consideration.

     Seller agrees to accept Buyer's allocation of the Purchase Price,  provided
such  allocation  is  in  accordance  with  Section  1060  of the  Code  and  is
otherwise in compliance  with  the  Code.   Buyer  will prepare,  and  Buyer and
Seller will file, an IRS Form 8594 in a timely  fashion in  accordance  with the
rules under section 1060 of the Code and in accordance Buyer's allocation of the
Purchase  Price.  The determination and  allocation  of the Purchase  Price made
pursuant to this Section 5.10  will be  binding  on  Seller  and  Buyer  for all
Tax  reporting purposes.   Neither Seller nor Buyer shall file any tax return or
other document or  otherwise  take any  position that is inconsistent  with  the
allocation determined pursuant to this Section 5.10.

     Section 5.11 Non-Competition.

     (a) For a period of two (2) years following the Closing Date neither Seller
     nor any Seller Subsidiary,  will engage directly or indirectly,  whether as
     owner,  principal,  stockholder,  employee,  consultant  or  in  any  other
     capacity,  in the business of acquiring,  developing,  marketing,  selling,
     distributing,  licensing or maintaining  systems and  application  computer
     programs  competitive  with, or  substitutable  for, any of the Transferred
     Intellectual Property or any of the Products (including derivative works or
     products created by Buyer),  anywhere in the world, except as a customer or
     authorized  distributor of Buyer or otherwise  with Buyer's  consent (which
     may be withheld in Buyer's sole discretion). Seller, for itself and as sole
     stockholder  of the Seller  Subsidiary,  acknowledges  and agrees  that the
     current market for the Transferred  Intellectual  Property and the Products
     extends throughout the entire world and that it is therefore  reasonable to
     prohibit them from competing with Buyer anywhere in the world.

     (b)  An  investment  by  Seller  or  any  Seller  Subsidiary,  directly  or
     indirectly, in less than 5 percent of the publicly traded equity securities
     of any Person the stock of which is  publicly  traded  will not be deemed a
     violation of this Section 5.11.

     (c) If any Governmental  Entity of competent  jurisdiction  determines that
     the  restrictive  covenant  contained  in this  Section  5.11,  or any part
     thereof,  is invalid or unenforceable for any reason,  the remainder of the
     restrictive  covenant  will not thereby be affected  and will be given full
     force and effect, without regard to the invalid portion or portions. If any
     such Governmental Entity determines that the restrictive covenant contained
     in this Section 5.11, or any part thereof, is unenforceable  because of the
     duration or scope of such covenant,  such Governmental Entity will have the
     power to reduce  such  duration or scope and,  in its  reduced  form,  such
     covenant will then be enforceable and will be given full force and effect.

     (d) Seller,  for itself and as sole  stockholder of the Seller  Subsidiary,
     acknowledges  and agrees that the  provisions of this Section 5.11, as they
     apply to Seller and Seller  Subsidiary,  are  reasonable  and  supported by
     adequate  consideration,  that  Buyer  would  not have  entered  into  this
     Agreement  without  having  received the benefit of the  provisions of this
     Section  5.11,  and that  any  breach  of the  provisions  of this  Section
     5.11 would  result in  substantial  and  irreparable  harm to Buyer and its
     Affiliates and, therefore,  that Buyer will be entitled to an injunction to
     prohibit any such breach or  anticipated  breach,  without the necessity of
     posting a bond, cash or otherwise,  in addition to all of their other legal
     and equitable remedies, including the remedies provided by Article VII.

     (e) Seller will cause the Seller  Subsidiary to comply in all respects with
     this Section 5.11.

     Section 5.12 Covenants Not to Sue or Assert Rights.

     Seller  hereby  covenants  not to  sue  Buyer,   its  Affiliates  or  their
successors,  assignees or licensees,  from  and  after  the  Closing  Date,  for
infringement of any Transferred Intellectual Property.   Seller shall not assert
rights,   from  and  after the Closing  Date,   in any Transferred  Intellectual
Property  against  Buyer,   its Affiliates or their  successors,   assignees  or
licensees.

     Section 5.13 Satisfaction of Bank Debt.

     Immediately prior to Closing, Buyer shall pay to Comerica Bank and Comdisco
the aggregate amounts of outstanding  current debt and long-term debt of  Seller
owed to such lenders,  as reflected in each lender's payoff letter  (in form and
substance mutually satisfactory to Buyer and Seller.

     Section 5.14 Certain Contracts.

     If  Seller  fails to  disclose any  written  or  oral license,  sublicense,
agreement,  contract,  permission or other understanding  to  Buyer  that is  a
Transferred Asset in any Schedule hereto that called for the disclosure thereof,
and Buyer later learns of the same,  Buyer may,  in its sole discretion, require
Seller to use commercially reasonable efforts to assign the same.

     Section 5.15 Risk of Loss.

     Seller  will bear  all risk of loss,  destruction  or damage to any of  the
Transferred Assets occurring prior to the Effective Time of the Closing, whether
due to fire, accident or other casualty, willful act, condemnation, riot, act of
God  or otherwise,  and Buyer  will have no responsibility with respect thereto.
Buyer  will  bear all  risk of  loss,  destruction  or  damage  to  any  of  the
Transferred  Assets  occurring on or after the  Effective  Time  of the Closing,
whether due  to fire,  accident or other  casualty,  willful act,  condemnation,
riot,  act of  God  or otherwise,  and  Seller will have no responsibility  with
respect thereto.

     Section 5.16 Real Estate Matters.

     Buyer  and  Seller  will use commercially  reasonable  efforts  to  reach a
mutually  beneficial  agreement  with   the  landlord   of   Seller's   Norwood,
Massachusetts's office space that will allow Buyer or the Affiliates of Buyer to
use a certain portion of that space after the Closing  and will allow Seller  to
vacate all or a portion thereof with no obligation or Liability  with respect to
such  vacated  space attributable to  facts and circumstances arising  after the
Effective Time.

     Section 5.17 Statement of Transaction Expenses.

     Immediately prior to Closing,  Seller shall provide Buyer with a reasonably
detailed listing of  the  aggregate expenses not paid in the ordinary  course by
Seller  in connection with  this Agreement  and the consummation of  all of the
transactions contemplated hereby,  including fees and expenses paid to  Seller's
attorneys, accountants and advisors.

     Section 5.18 2003 Audit.

     If  the  2003  Audit  is required in  order to  satisfy  Buyer's  reporting
obligations  under the  securities laws,  as determined  by  Buyer  in its  sole
discretion, Seller (or those of Seller's successors and assigns who come to hold
Seller's  Books  and Records  in the event that Seller is dissolved)  shall use
commercially  reasonable efforts to cooperate with  Ernst & Young LLP  (or other
independent auditor  mutually agreed upon by Buyer and Seller),  as well as with
Buyer  and its  representatives,  to complete and  deliver  the  2003  Audit  by
February 15, 2004.

     Section 5.19 Final Balance Sheet.

     (a) Seller shall use  commercially  reasonable  efforts to  cooperate  with
     Ernst & Young LLP (or other  independent  auditor  mutually  agreed upon by
     Buyer  and  Seller),  as well as with  Buyer  and its  representatives,  to
     complete and deliver the Final Balance Sheet, along with a detailed listing
     of all  Liabilities  set forth  thereon  (including,  but not  limited  to,
     accounts  payable,  accrued expenses and deferred  revenue),  within thirty
     (30) days of Closing.

     (b) Seller hereby agrees that (i) any accounts  receivable  (including  the
     accounts,  obligations,   contracts  and  instruments  that  underlie  such
     accounts  receivable)  set forth on the  Final  Balance  Sheet,  net of any
     reserve for doubtful  accounts shown thereon,  will have arisen out of bona
     fide transactions in the Ordinary Course and (ii) all of the Inventory will
     be costed and valued,  and presented in all material  respects in the Final
     Balance Sheet, in accordance with GAAP.

     Section 5.20 Warranty Claims.

     Buyer  and  Acquisition  Sub  shall use commercially reasonable efforts  to
resolve favorably all warranty-related Claims for Products sold on or before the
Closing Date that are asserted against Buyer.  However,  the foregoing  is  not
intended by the parties to expand, in any fashion, Buyer's or Acquisition Sub's
liability for warranty-related Claims beyond such liability as is to be assumed
pursuant to Section 2.5 of this Agreement.

     Section 5.21 Business Plan.

     (a) Following the Closing, Buyer and Acquisition Sub shall use commercially
     reasonable  efforts to operate the Business during the period commencing on
     the Closing Date and continuing  until December 31, 2004 in accordance with
     the Business Plan.  Notwithstanding  the foregoing,  and subject to Section
     2.6(d) of this Agreement, Buyer and Acquisition Sub shall have the right to
     terminate  the  Business  Plan and  operate  the  Business  as they see fit
     following  the failure of any of the Earn Out  Conditions,  which,  for the
     avoidance of doubt,  means that Buyer could have the right to terminate the
     Business Plan after March 31, 2004, June 30, 2004 and September 30, 2004 by
     virtue  of a  failure  of the  Earn  Out  Condition  contained  in  Section
     2.6(d)(iii) of this Agreement.

     (b) In furtherance of the  obligation of Buyer and  Acquisition  Sub to use
     their best efforts to operate the Business during the period  commencing on
     the Closing Date and continuing  until December 31, 2004 in accordance with
     the Business  Plan, as set forth above in Section  5.21(a),  as long as the
     possibility  remains that all of the Earn Out  Conditions can be satisfied,
     Buyer and Acquisition Sub shall:

          (i)  maintain  the Business in  Acquisition  Sub, as a separate wholly
          owned subsidiary of Buyer;

          (ii) keep separate accounting books and records for the Business;  and

          (iii) permit the day to day business operations  of the Business to be
          controlled by Sean  Aruda and Ali  Bigdeliazari in accordance with the
          terms of their respective employment agreements of even date herewith.

     (c)  Notwithstanding  anything in this Agreement to the contrary,  and with
     particular reference to Section 2.6(d) of this Agreement, the parties agree
     that:

          (i)  The  termination  without cause of or  the resignation  for  good
          reason by either Sean Aruda or Ali  Bigdeliazari,  in accordance  with
          the  terms of their  respective  employment  agreements  of even  date
          herewith,  shall constitute a breach of Buyer's and Acquisition  Sub's
          covenant  in this  Section  5.21 to operate  the  Business  during the
          period  commencing on the Closing Date and  continuing  until December
          31, 2004 in accordance with the Business Plan; and

          (ii) The  termination  for cause of or  the  resignation  without good
          reason by either Sean Aruda or Ali  Bigdeliazari,  in accordance  with
          the  terms of their  respective  employment  agreements  of even  date
          herewith,  shall not  constitute  a breach of Buyer's and  Acquisition
          Sub's covenant in this Section 5.21 to operate the Business during the
          period  commencing on the Closing Date and  continuing  until December
          31, 2004 in accordance with the Business Plan;

     Section 5.22 VTech Inventory Confirmation.

     Prior to  Closing,  Seller,  at  its sole expense,  shall  cause  VTech  to
provide, as of a date that is not more than five  (5)  days prior to the Closing
Date, the following information:

     (a) all Inventory  that has been purchased by Seller and delivered to VTech
     and is held by  VTech  at its  facilities  in  China,  as  determined  by a
     physical inventory count;

     (b) all Inventory (and, to the extent  applicable,  all parts,  components,
     supplies  and the like for  Products)  that has been  purchased by VTech on
     behalf of Seller  and is held by VTech at its  facilities  in China but for
     which VTech has not billed  Seller,  as determined by a physical  inventory
     count; and

     (c) all other  commitments  made by VTech on behalf of Seller in connection
     with the purchase of parts, components, supplies and the like for Products.

     Two (2) days prior to Closing, Seller shall deliver to Buyer a certificate,
in  form  and  substance reasonably  acceptable  to  Buyer,  setting  forth  the
aforementioned information.

     Section 5.23 Sharing Data.

     Subject to reasonable time, place and manner restrictions imposed by Buyer,
Seller  shall have the  right for a period of  seven  years  following the  date
hereof to have reasonable access to such books,  records and accounts, including
financial and tax information,  correspondence,  production records,  employment
records and  other records that  are  transferred  to  Buyer  pursuant  to  this
Agreement for the purpose of concluding its involvement in the  Business and for
complying with its obligations under applicable securities, tax,  environmental,
employment and other Laws.  Buyer shall not destroy any such books,  records and
accounts,  including financial and tax information,  correspondence,  production
records,  employment  records and other  records without first providing  Seller
with the opportunity  to obtain or copy books,  records and accounts,  including
financial and tax information,  correspondence,  production records,  employment
records and other records.

             Article VI. COVENANTS AS TO CERTAIN EMPLOYMENT MATTERS

     Section 6.1 Employees.

     (a) As used herein, the following terms will have the following  respective
     meanings:

          (i)  "Applicable Employees" means all employees of the Business on the
          date hereof, as set forth on Schedule  6.1 (a) (i).  Seller will cause
          Schedule  6.1(a)(i)  to include  the  title,  current  base  salary or
          compensation and target compensation of each Person listed thereon.

          (ii)  "Hired Employees"  means all Applicable  Employees,  whom  Buyer
          determines,  in its sole  discretion,  to offer employment with Buyer,
          Acquisition  Sub or another  Affiliate  of Buyer and who  accept  such
          employment.  As soon as  practicable  after the date hereof but in any
          event before Closing,  a list of the Hired Employees shall be added to
          this Agreement as Schedule 6.1(a)(ii).

     (b) As soon as practicable after the date hereof, Seller will provide Buyer
     with access to all Applicable Employees for the purpose of making offers of
     employment,  as well as conducting discussions  preparatory thereto. On the
     Closing Date,  Seller will  terminate the employment of each Hired Employee
     and take all such other actions  necessary to allow such Hired Employees to
     work for Buyer, Acquisition Sub or Buyer's Affiliates. Seller will also not
     take any action to prevent  Buyer,  Acquisition  Sub or Buyer's  Affiliates
     from offering  employment or an independent  contractor  arrangement to any
     former employee of Seller.

     (c) Following the Closing,  Buyer or Acquisition  Sub will employ the Hired
     Employees on substantially  the same terms and conditions as such employees
     are employed by Seller  immediately  prior to the Closing  (except for such
     employees  that have  entered  into  employment  agreements  with  Buyer or
     Acquisition Sub to be effective as of the Closing);  provided, that nothing
     herein shall be construed as a limitation of Buyer's or  Acquisition  Sub's
     right to make  decisions as to the retention or  termination  of any of its
     employees  after the Closing,  including  the Hired  Employees,  or Buyer's
     right to modify,  amend or terminate,  in its sole discretion and judgment,
     any such  terms  and  conditions  for its  employees,  including  the Hired
     Employees. Notwithstanding the foregoing, neither Buyer nor Acquisition Sub
     shall,  at any time prior to  ninety-one  (91) days after the Closing Date,
     effect a "plant  closing" or "mass  layoff",  as those terms are defined in
     the Worker  Adjustment and Retraining  Notification Act of 1988, as amended
     (the "WARN Act"),  or take any other act  affecting in whole or in part any
     site of  employment  of Buyer which could result in any liability to Seller
     under the WARN Act or any other applicable foreign, federal, state or other
     law.

     (d) The Plans will not be transferred to Buyer or Acquisition  Sub pursuant
     to this Agreement. Instead, from and after the Closing through December 31,
     2004,  Buyer or  Acquisition  Sub shall provide to the Hired  Employees who
     continue to be employed by Buyer or Acquisition Sub employee benefit plans,
     agreements, programs, policies and arrangements (the "Buyer Benefit Plans")
     that are substantially  comparable in all material respects to the Plans in
     effect  immediately prior to the Closing.  For the purposes of any of Buyer
     Benefit  Plans for which  eligibility  or  vesting of  benefits  depends on
     length of  service,  and for any  benefit  for which the amount or level of
     benefits depends on length of service,  Buyer or Acquisition Sub shall give
     (or cause to be given) to each Hired  Employee full credit for past service
     with  Seller as of and through  the  Closing  Date under the Plans  ("Prior
     Service"),  except that no Hired  Employee  shall receive  credit under any
     Section  401(k)  plan of Buyer or  Acquisition  Sub for Prior  Service.  In
     addition, and without limiting the generality of the foregoing,  each Hired
     Employee   shall  be  given  credit  for  Prior  Service  for  purposes  of
     eligibility to participate,  satisfaction of any waiting periods,  evidence
     of  insurability  requirements,  or the  application  of  any  pre-existing
     condition  limitations.  However,  nothing  herein  shall be construed as a
     limitation  of Buyer's  right to modify,  amend or  terminate,  in its sole
     discretion and judgment, any such Buyer Benefit Plan.

     (e) As soon as practicable after the Closing,  Buyer shall permit the Hired
     Employees to make,  if properly  elected on a form  acceptable  to the plan
     administrator, eligible rollover contributions from Seller's 401(k) Plan to
     a  Section  401(k)  plan of Buyer or  Acquisition  Sub in which  the  Hired
     Employees are entitled to participate pursuant to Section 401(a)(31) of the
     Code (including any outstanding Participant Plan Loans). At or prior to the
     Closing,  Seller  shall  provide  to Buyer a copy of the  Internal  Revenue
     Service  determination  or opinion  letter with respect to the current plan
     document for Seller's 401(k) Plan.

     (f) The parties  intend that Buyer,  Acquisition  Sub, or another member of
     the "Buying Group" (as that term is defined in Treas.  Reg.  ss.54.4980B-9,
     Q&A 2) with respect to the transactions described in this Agreement,  shall
     be responsible  for providing  "COBRA"  continuation  group health coverage
     pursuant  to Section  4980B of the Code and  Sections  601  through  608 of
     ERISA, and the regulations promulgated  thereunder,  to all individuals who
     are "M&A Qualified Beneficiaries" (as defined in Treas. Reg. ss.54.4980B-9,
     Q&A 4) with respect to the transactions described in this Agreement.  In no
     event shall  Seller,  or any other member of the  "Selling  Group" (as that
     term is defined in Treas.  Reg.  ss.54.4980B-9,  Q&A 2) be responsible  for
     providing such "COBRA" continuation group health coverage.  Notwithstanding
     the foregoing,  to the extent, if any, that Buyer or Acquisition Sub incurs
     Liability in connection with providing  "COBRA"  continuation  group health
     coverage  relating to former Seller  employees who were  obtaining  "COBRA"
     continuation  group health coverage prior to the Closing,  Buyer shall have
     the right to recover such Liability against the Indemnification  Escrow, as
     Buyer  Losses,  in accordance  with the  provisions of Article VIII of this
     Agreement.

     (g)  Seller  will be solely  responsible  for,  and Buyer will not have any
     Liability with respect to: (i) all compensation and benefits agreements and
     arrangements  that are not included among the Assumed  Contracts;  (ii) all
     obligations  to employees or former  employees of Seller  (regardless of if
     they are Hired  Employees),  including  any and all  severance,  retention,
     termination and other  compensation or benefit  payments (if any),  damages
     and costs,  and the  applicable  Taxes  related  thereto,  which are or may
     become  payable,  under  any Law,  Employment  Law or  contract;  (iii) all
     employee  retirement,  health,  welfare or benefit  plans and  programs  of
     Seller; and (iv) all obligations with respect to unemployment  compensation
     and workers' compensation from Claims arising on or before the Closing Date
     out of the Claimant's employment by Seller.

     (h) Except as set forth on Schedule 6.1(h) attached hereto, Seller and each
     Hired  Employee  shall  terminate,  effective as of the Closing  Date,  any
     employment  agreements or arrangements of any sort between them that are in
     effect immediately prior to the Closing (and, in each case, shall take such
     further  actions as are necessary to extinguish any rights  thereunder that
     might  otherwise  survive  the  termination  of the  underlying  employment
     agreement or arrangement).

     Section 6.2 Enforcement of Rights.

     At  all times after  Closing,  upon request from Buyer,  Seller will assign
to  Buyer its right to take all reasonable actions to enforce the  provisions of
any employment,  independent contractor or other agreement to which  Seller is a
party to the extent that Buyer deems it necessary for the protection of  Buyer's
rights to the Transferred  Intellectual Property or any other rights acquired by
Buyer hereunder,  including,  Seller's  rights under any  non-competition,  non-
solicitation,  non-disclosure,  assignment of invention and similar  agreements.

     Section 6.3 Non-Solicitation

     During the twenty-four  (24) month period immediately following the Closing
Date, without the prior written consent of Buyer,  Seller will not,  directly or
indirectly, hire or otherwise use or solicit the services of any Person who then
is, or who was during the then-preceding six (6) months, an employee of Buyer or
any Seller Subsidiary and who was an employee of Seller or Seller Subsidiary
thereof immediately prior to Closing.

                       Article VII. CONDITIONS TO CLOSING

     Section 7.1 Conditions to the Obligations of Buyer, Acquisition Sub and
                 Seller.

     The obligations of Buyer,  Acquisition Sub and Seller to effect Closing are
subject to  the satisfaction or waiver by Buyer and  Seller prior to  Closing of
each of the following conditions:

     (a) No Injunctions,  Etc. No Governmental Entity will have enacted, issued,
     promulgated,   enforced  or  entered  any  statute,  rule,  regulation,  or
     judgment,  decree, injunction or other final order that is in effect on the
     Closing Date and prohibits or prevents  Closing or the  consummation of the
     Transaction.

     (b) Business Plan. The Business Plan shall be in existence.

     (c) Escrow  Agreement.  Buyer,  Seller and the Escrow Agent shall have duly
     executed and  delivered  the Escrow  Agreement.

     Section 7.2  Further Conditions to the Obligation of Buyer and Acquisition
                  Sub.

     The obligation of Buyer and Acquisition Sub to effect Closing is subject to
the satisfaction by Seller, or waiver by Buyer prior to Closing,  of each of the
following further conditions:

     (a) Representations  and Warranties.  The representations and warranties of
     Seller  contained  herein will have been true and  correct in all  material
     respects when made,  and will be true and correct in all material  respects
     as of Closing as if made as of Closing  (except  that  representations  and
     warranties  that are made as of a  specific  date need be true and  correct
     only as of such date and except that  representations  and warranties which
     are qualified as to  materiality  shall be true and correct in all respects
     as made and not subject to a double materiality  standard),  and Buyer will
     have  received a  certificate  to such effect  dated the  Closing  Date and
     executed by a duly authorized officer of Seller.

     (b) Covenants. The covenants and agreements of Seller to be performed prior
     to Closing  will have been duly  performed in all  material  respects,  and
     Buyer will have  received a  certificate  to such effect  dated the Closing
     Date and executed by a duly authorized officer of Seller.

     (c) Indemnification  Substitution Agreement.  Seller's stockholders that in
     the  aggregate  shall be entitled to receive at least  eighty-five  percent
     (85%)  of the  Closing  Consideration,  as  adjusted,  assuming  all of the
     Closing  Consideration  were to be  distributed  to Seller's  stockholders,
     shall have  assumed,  on a pro rata several but not joint  basis,  Seller's
     obligations  under  Article  VIII  of  this  Agreement  and  each  of  such
     stockholders  shall  have  entered  into the  Indemnification  Substitution
     Agreement  in  the  form  attached  hereto  as  Exhibit  C to  effect  such
     substitution  of  responsibility  under  Article  VIII of  this  Agreement;
     provided,  however,  that, to the extent stockholders that in the aggregate
     shall be entitled to so receive  eighty-five  percent  (85%) of the Closing
     Consideration,   as   adjusted,   shall   not  have   entered   into   such
     Indemnification  Substitution  Agreement,  this  condition  shall be deemed
     satisfied  provided that Seller  agrees that it will continue to hold,  and
     will not  distribute  until at least  the end of the  period  specified  in
     Section 8.4(i), an amount of the Closing Consideration,  as adjusted, equal
     to  the  difference  between  eighty-five  percent  (85%)  of  the  Closing
     Consideration,  as adjusted,  and the aggregate Closing  Consideration,  as
     adjusted,   that  the  stockholders   entering  into  such  Indemnification
     Substitution   Agreement   shall   be   entitled   to   so   receive   (the
     "Indemnification   Coverage   Gap")  until  such  time  as  an   additional
     stockholder or  stockholders  of the Seller entitled to receive at least an
     amount  equal to the  Indemnification  Coverage  Gap  enter  into an escrow
     agreement in the form attached hereto as Exhibit D (the "Stockholder Escrow
     Agreement").

     (d) No  Material  Adverse  Change.  Between the date hereof and the Closing
     Date,  there  will  not  have  occurred  any  event,  condition  or  change
     (excluding   general  economic   changes)  in  the  operations,   condition
     (financial or otherwise) of the Transferred Assets or the Business that has
     had, or would be  reasonably  expected to at a later date have,  a Material
     Adverse Effect.

     (e) Employees.  Buyer will be satisfied that Sean Aruda, Ali  Bigdeliazari,
     Liz Gerald,  Martin Bond,  Brian  Milette,  Joanne  Regali,  Brian  Copley,
     Michael  Onorato and Hamid  Nakhaee, as well as two-thirds of the remaining
     Hired  Employees,   shall  each  have  agreed  to  be  employed  by  Buyer,
     Acquisition Sub or their Affiliates.

     (f) Master Copy of  Software.  Seller will have  delivered  to Buyer a gold
     master copy that permits  replication  of operable  copies of each Software
     program, in both source code and object code form.

     (g) Lien Searches and Releases.  Seller will have  delivered to Buyer:  (i)
     personal property and Intellectual  Property searches, in a form reasonably
     acceptable  to Buyer and dated within a reasonable  period of time prior to
     Closing, listing all recorded Encumbrances or judgments of record affecting
     the Transferred  Assets and (ii) duly executed documents  sufficient,  when
     filed or  recorded,  to release  any  Encumbrances  (other  than  Permitted
     Encumbrances)   of  any  third-party  or  Affiliate  with  respect  to  the
     Transferred Assets.

     (h) Legal Opinion of Seller's Counsel.  Choate, Hall & Stewart,  counsel to
     Seller, will have furnished to Buyer its written opinion, dated the Closing
     Date,  in form and  substance  reasonably  satisfactory  to Buyer and which
     shall  contain such  opinions as are  customary.  (i)  Required  Approvals.
     Seller will have obtained and  delivered to Buyer all  Approvals  listed on
     Schedule 7.2(i), each in a form reasonably acceptable to Buyer.

     (j) Additional Closing Deliveries.  Seller will have delivered to Buyer the
     following:

          (i)  duly executed bills of sale and other  appropriate  documents  of
          transfer,  in form  and  substance  reasonably  acceptable  to  Buyer,
          transferring to Buyer all tangible  personal  property included in the
          Transferred Assets;

          (ii) duly  executed assignments,  in  form  and  substance  reasonably
          acceptable   to  Buyer,   transferring   to  Buyer   all   Transferred
          Intellectual Property;

          (iii)  subject to  the  provisions  of  Sections 2.3,   duly  executed
          assignments   or,   where   necessary,   subcontracts,   subleases  or
          sublicenses,  in form and  substance  reasonably  acceptable to Buyer,
          transferring to Buyer all Assumed Contracts;

          (iv) Tax clearance  certificates  from each U.S. jurisdiction in which
          Seller  files  any  corporate  Tax  Returns    (to  the  extent  such
          jurisdiction issues such certificates);

          (v)  a  long-form  good  standing  certificate  from   the   Delaware
          Secretary of State  attesting to the  subsistence and good standing of
          Seller in such jurisdiction dated no more than three (3) business days
          prior to the Closing Date;

          (vi) a certificate  signed  by duly authorized  officers of Seller and
          dated  the  Closing  Date  certifying  to  Buyer    (A)    as  to  the
          incumbency and genuineness of the signatures of each officer of Seller
          executing this Agreement and any Closing Document on behalf of Seller,
          (B) the genuineness of the resolutions (attached thereto) of the board
          of  directors  of  Seller  authorizing  the  execution,  delivery  and
          performance of this  Agreement and the Closing  Documents and Seller's
          consummation  of the  Transaction,  and  (C)  the  genuineness  of the
          resolutions   (attached   thereto)  of  the   stockholders  of  Seller
          authorizing the execution,  delivery and performance of this Agreement
          and the Closing Documents and Seller's consummation of the Transaction
          and, if  applicable,  a further  certification  as to compliance  with
          Section 228(e) of the Delaware General  Corporation Law with a copy of
          any notices provided thereunder;

          (vii)  the certificate contemplated by Section 2.7; and

          (viii)  such  other instruments or documents,  in form  and  substance
          reasonably acceptable to Buyer, as may be necessary to effect Closing.

     (k) Seller  shall have  effected  the  assignment  of (i) its OEM  Software
     License  Agreement  with Cisco Systems and (ii) its  agreement  with Signal
     Processing Associates to Acquisition Sub.

     Section 7.3 Further Conditions to the Obligation of Seller.

     The  obligation of Seller to effect  Closing is subject to the satisfaction
by Buyer or Acquisition Sub,  or waiver by Seller  prior to Closing,  of each of
the following further conditions:

     (a) Representations  and Warranties.  The representations and warranties of
     Buyer and Acquisition Sub contained  herein will have been true and correct
     in all  material  respects  when made,  and will be true and  correct as of
     Closing  as  if  made  as  of  Closing  (except  that  representations  and
     warranties  that are made as of a  specific  date need be true and  correct
     only as of such date and except that  representations  and warranties which
     are qualified as to  materiality  shall be true and correct in all respects
     as made and not subject to a double materiality standard),  and Seller will
     have  received a  certificate  to such effect  dated the  Closing  Date and
     executed by a duly authorized officer of Buyer.

     (b) Covenants.  The covenants and agreements of Buyer to be performed prior
     to Closing  will have been duly  performed in all  material  respects,  and
     Seller will have  received a  certificate  to such effect dated the Closing
     Date and executed by a duly authorized officer of Buyer.

     (c) No  Material  Adverse  Change.  Between the date hereof and the Closing
     Date, there will not have occurred any material  adverse change  (excluding
     general  economic  changes)  in the  operations,  condition  (financial  or
     otherwise) or results of operations of Buyer.

     (d)  Payment.  Buyer  will have  caused  the  Closing  Consideration  to be
     delivered at Closing as provided by Section 2.6(b) and the Indemnity Escrow
     to be delivered to the Escrow Agent.

     (e) Legal Opinion of Buyer's Counsel.  Harter, Secrest & Emery LLP, counsel
     for Buyer and  Acquisition  Sub, will have  furnished to Seller its written
     opinion,  dated as of the Closing Date,  in form and  substance  reasonably
     satisfactory  to Seller  and  which  shall  contain  such  opinions  as are
     customary and reasonably acceptable to Seller.

     (f) Employment Agreements.  Buyer will have delivered to each of Sean Aruda
     and Ali Bigdeliazari an agreement setting forth mutually satisfactory terms
     of employment with Acquisition Sub.

     (g) Additional Closing Deliveries.  Buyer will have delivered to Seller the
     following:

          (i)  such  duly   executed   instruments  of   assumption   and  other
          instruments or documents,  in form and substance reasonably acceptable
          to Seller,  as may be necessary to effect the  assumption  by Buyer of
          the Assumed Liabilities;

          (ii) the certificate contemplated by Section 2.7;

          (iii)  long-form  good  standing  certificates  from   the   Delaware
          Secretary of State  attesting to the  subsistence and good standing of
          Buyer  and  Acquisition  Sub in such  jurisdiction  dated no more than
          three (3) business days prior to the Closing Date;

          (iv) a certificate  signed by duly  authorized  officers of Buyer  and
          Acquisition  Sub and dated the Closing Date  certifying to Seller  (A)
          as to the  incumbency  and  genuineness  of  the  signatures  of  each
          officer of Buyer and  Acquisition Sub executing this Agreement and any
          Closing  Document on behalf of Buyer or  Acquisition  Sub, as the case
          may be, (B) the genuineness of the resolutions  (attached  thereto) of
          the board of directors of Buyer and  Acquisition  Sub  authorizing the
          execution,  delivery and performance of this Agreement and the Closing
          Documents and Seller's  consummation of the  Transaction,  and (C) the
          genuineness of the resolutions  (attached  thereto) of the stockholder
          of Acquisition Sub authorizing the execution, delivery and performance
          of this Agreement and the Closing  Documents and the Acquisition Sub's
          consummation of the Transaction;

          (v)  such  other  instruments  or documents,   in form  and  substance
          reasonably acceptable to Buyer, as may be necessary to effect Closing.

                         ARTICLE VIII. INDEMNIFICATION

     Section 8.1 Indemnification by Seller.

     Subject  to  the  further  provisions of this  Article  VIII,   Seller will
indemnify,  defend and  hold  harmless  Buyer,  Buyer's  Affiliates,  and  their
respective directors, officers, attorneys, accountants, agents and employees and
their heirs,  successors  and assigns   (collectively,  the  "Buyer  Indemnified
Parties"),  from, against and in  respect of all  Losses imposed on,  sustained,
incurred or suffered by  or  asserted  against  any  of  the  Buyer  Indemnified
Parties,  directly or indirectly relating to  or  arising  out  of  any  of  the
following (collectively, "Buyer Losses"):

(a) any fact or circumstance  that constitutes a breach of any representation or
warranty of Seller contained herein;

(b) any act or omission that constitutes a  breach of any covenant or  agreement
of Seller contained herein; or

(c) any Excluded Liability.

     Section 8.2 Indemnification by Buyer.

     Subject  to  the further  provisions  of  this  Article  VIII,   Buyer  and
Acquisition Sub, jointly and severally, will indemnify, defend and hold harmless
Seller,   Seller's  Affiliates,   and  their  respective  directors,   officers,
attorneys,  accountants,  agents and employees, and their heirs,  successors and
assigns  (collectively, the "Seller Indemnified Parties"),  from, against and in
respect of any Losses imposed on, sustained, incurred or suffered by or asserted
against any of the Seller Indemnified Parties,  directly or indirectly  relating
to or arising out of any of the following  (collectively, "Seller Losses"):


     (a)  any  fact  or   circumstance   that   constitutes   a  breach  of  any
representation or warranty of Buyer or Acquisition Sub contained herein; or

     (b) any act or  omission  that  constitute  a  breach  of any  covenant  or
agreement of Buyer or Acquisition Sub contained herein; or

     (c) any Assumed Liability.

     Section 8.3 Disposition of Indemnification Escrow.

     Claims  for  indemnification  by  Buyer  under this  Article VIII  shall be
satisfied  first  from  the  Escrow  Amount  to the  extent  and  in  the manner
contemplated by the Escrow Agreement. The escrow period shall terminate on March
31, 2005  (the "Escrow Period"),  provided,  however, that, in the event a Claim
Notice  has  been  delivered  to  the  Escrow  Agent  and  Seller  prior  to the
termination of the Escrow Period in accordance with  Section 8.4  and the Claims
or Losses specified in such  Claim  Notice  have not been resolved or satisfied,
then that portion of the  Indemnity Escrow  necessary to satisfy such unresolved
or  unsatisfied  Claims  or  Losses  shall remain in the  Escrow Fund until such
Claims or Losses have been resolved.

     Section 8.4 Indemnification Procedures.

     (a) During the Escrow Period,  the Buyer  Indemnified  Parties'  Claims for
     indemnification  under this Article VIII will be satisfied first out of the
     Indemnification Escrow, as provided by Section 8.3 of this Agreement.  Once
     the Indemnification Escrow is exhausted,  the Buyer Indemnified Parties may
     assert Claims for indemnification  directly against Seller, subject to this
     Section 8.4.

     (b) In the event that an Indemnified Party has a Claim for  indemnification
     under this Article VIII, or an action,  suit or legal  proceeding for which
     an Indemnifying  Party would be liable to an Indemnified Party hereunder is
     commenced  against an Indemnified  Party by a third party,  the Indemnified
     Party will promptly  (but in no event more than twenty (20) days  following
     commencement  of  any  such  third  party  action,   suit  or  other  legal
     proceeding)  notify the  Indemnifying  Party and the  Escrow  Agent (if the
     Escrow  Agreement  is then in  effect)  of such Claim and the amount or the
     estimated  amount thereof to the extent then feasible  (which estimate will
     not be conclusive of the final amount of such Claim) (the "Claim  Notice");
     provided,  however,  that no failure or delay by any  Indemnified  Party in
     giving  any Claim  Notice  will  relieve  any  Indemnifying  Party from any
     obligation or liability under this Agreement, except to the extent that the
     Indemnifying Party is prejudiced by such failure or delay.

     (c) The  Indemnifying  Party will have thirty (30) days from the  effective
     date of the Claim Notice as determined under Section 10.1 of this Agreement
     (the "Notice  Period") to notify the  Indemnified  Party (i) whether or not
     the  Indemnifying  Party  disputes its liability to the  Indemnified  Party
     hereunder  with respect to such Claim,  and (ii) in the case of a litigated
     Claim,  whether or not it desires to defend the  Indemnified  Party against
     such litigated  Claim.  All reasonable  costs and expenses  incurred by the
     Indemnifying  Party in defending  such  litigated  Claim and all reasonable
     costs  and  expenses  of  the  Indemnified  Party  incurred  prior  to  the
     Indemnifying  Party  assuming such defense will be a Liability of, and will
     be paid by, the Indemnifying Party.

     (d) Except as provided in Section  8.4(e) of this  Agreement,  in the event
     that the  Indemnifying  Party  notifies  the  Indemnified  Party within the
     Notice  Period that it desires to defend the  Indemnified  Party  against a
     litigated Claim,  the  Indemnifying  Party will have the right so to defend
     the  Indemnified  Party by  appropriate  proceedings  with  counsel  of the
     Indemnifying  Party's choosing,  and will have the sole power to direct and
     control such defense.  If any  Indemnified  Party desires to participate in
     any such defense it may do so at its sole cost and expense.

     (e) If the  Indemnifying  Party elects not to defend the Indemnified  Party
     against a  litigated  Claim,  whether by not giving the  Indemnified  Party
     timely notice as provided by Section 8.4(c) of this Agreement or otherwise,
     then the  Indemnified  Party will have the right so to defend the litigated
     Claim by appropriate  proceedings  with counsel of the Indemnified  Party's
     choosing,  and will have the sole power to direct and control such defense.
     The  portion  of such  litigated  Claim  as to  which  the  defense  by the
     Indemnified  Party is unsuccessful  (and the reasonable  costs and expenses
     pertaining  to the  defense  of the  entire  litigated  Claim)  will be the
     Liability of the Indemnifying  Party hereunder.  The Indemnified Party will
     use  commercially  reasonable  efforts in the defense of all such litigated
     Claims  subject to the  limitations  contained  in  Section  8.4(f) of this
     Agreement.

     (f) The Indemnified  Party will not settle any Claim without the consent of
     the Indemnifying  Party,  which consent will not be unreasonably  withheld;
     provided,  however, that the Indemnifying Party will not settle, compromise
     or offer to settle or compromise  any Claim on a basis that would result in
     the imposition of a consent order, injunction or decree that would restrict
     the future  activity or conduct of the  Indemnified  Party or any Affiliate
     thereof  without  the  consent of the  Indemnified  Party or any  Affiliate
     thereof, which consent may be withheld for any reason.

     (g)  To the  extent  that  the  Indemnifying  Party  directs,  controls  or
     participates  in the defense or  settlement  of any  Litigated  Claim,  the
     Indemnified Party will give the Indemnifying Party and its counsel,  during
     normal business hours,  access to the relevant  business  records and other
     documents,  and will permit them to consult with the  employees and counsel
     of the Indemnified Party.

     (h) All  amounts  paid by Seller or Buyer,  as the case may be,  under this
     Article VIII, and all payments to Buyer out of the Indemnification  Escrow,
     will be treated as adjustments to the Purchase Price for Tax purposes.

     (i) No claim for indemnification under this Article VIII shall be made more
     than two (2)  years  after  the  Closing  Date.  This  provision  shall not
     extinguish  claims that are made  within two (2) years of the Closing  Date
     but that remain unresolved on or after the date that is two (2) years after
     the Closing Date.

     Section 8.5 Indemnification Limitations.

     (a) No Indemnifying  Party shall have any Liability  hereunder to indemnify
     the  Indemnified  Party for Buyer Losses or Seller  Losses,  as applicable,
     until the aggregate amount of Buyer Losses or Seller Losses, as applicable,
     exceed   seventy-five   thousand  dollars  ($75,000)  in  which  event  the
     Indemnified Party shall be entitled to indemnification for all such Losses.

     (b) The aggregate  indemnification  obligation of Seller or Buyer hereunder
     for Buyer  Losses or Seller  Losses,  as  applicable,  shall not exceed the
     amount of the Closing Consideration, as adjusted.

     (c) Notwithstanding anything to the contrary contained herein, Seller shall
     not have any  Liability  hereunder  (i) for Buyer  Losses  relating  to any
     breach of the  representations  and  warranties  contained  in Section 3.22
     (Environmental  Matters),  except to the extent such Buyer Losses represent
     amounts  actually  incurred by Buyer for the performance of remedial action
     or the payment of any fine, penalty or damage award in each case ordered by
     Governmental Entity or in reasonable settlement of a claim of noncompliance
     with any  Environmental  Laws asserted by any Governmental  Entity or other
     third party (and  related  out-of-pocket  expenses),  (ii) with  respect to
     Buyer Losses arising out of the breach of any representation or warranty of
     Seller to the  extent  that  Seller  has made a  corresponding  reserve  in
     accordance  with GAAP on the  Provisional  Balance  Sheet, , and (iii) with
     respect to  consequential  damages,  special damages,  incidental  damages,
     indirect damages,  lost profits,  unrealized  expectations or other similar
     items,  nor shall any Buyer Losses be calculated using a "multiplier" or an
     similar method having a similar effect.

     (d) In determining  the foregoing  thresholds and in otherwise  determining
     the amount of any  Losses for which an  indemnified  party is  entitled  to
     assert a claim for indemnification,  the amount of any such Losses shall be
     determined  after  deducting  therefrom  the  amount  of  any  third  party
     recoveries  received by the  indemnifying  party in respect of such Losses.
     The amount of Losses  shall also take into account  third party  recoveries
     by, the  indemnifying  party as a result of the matters  giving rise to the
     Losses. If an  indemnification  payment is received by an indemnified party
     and such indemnified party later receives third party recoveries in respect
     of the related Losses, the indemnified party shall immediately repay to the
     indemnifying  party a sum equal to the lesser of (x) the  actual  amount of
     third party  recoveries  and (y) the actual  amount of the  indemnification
     payment  previously  paid by the  indemnifying  party with  respect to such
     Losses.  Buyer shall use all reasonable  efforts to obtain such  recoveries
     from such third parties and, if requested by Seller, shall deliver evidence
     of such efforts.

     (e) Absent  fraud,  the  indemnification  provided for in this Article VIII
     shall be the sole and exclusive  remedy  available to any party against any
     other party for any Claims or Losses.

                             Article IX.TERMINATION

     Section 9.1 Termination.

     This Agreement may be terminated at any time prior to Closing as follows:

     (a) by mutual agreement of Buyer and Seller;

     (b) by either  Buyer or  Seller  if:  (i)  there is in effect  any Law that
     prohibits or prevents  Closing,  (ii) if Closing  would  violate any order,
     decree or judgment of any Governmental Entity; or (iii) if any Governmental
     Entity issues any final,  non-appeallable order, decree, judgment or ruling
     or  otherwise  attempts to prohibit or prevent the Closing or to modify the
     material terms of the Transaction;

     (c) by Seller  if, as a result of any  action or  inaction  by Buyer or its
     Affiliates,  Closing has not occurred within thirty (30) days following the
     date on which all of the  conditions  to Closing set forth in Sections  7.1
     and 7.2 have become capable of satisfaction (or have been waived);

     (d) by Buyer  if, as a result of any  action or  inaction  by Seller or its
     Affiliates,  Closing has not occurred within thirty (30) days following the
     date on which all of the  conditions  to Closing set forth in Sections  7.1
     and 7.3 have become capable of satisfaction (or have been waived);

     (e) by Buyer upon the occurrence of a Material Adverse Effect; and

     (f) by either party,  by giving written  notice of such  termination to the
     other  party,  if Closing has not occurred on or prior to January 16, 2004;
     provided, however, that such terminating party is not in material breach of
     any of its obligations under this Agreement; and

     (g) by Seller, if Seller's board of directors  concludes in good faith that
     it is  necessary  for such  board to act in a  manner  consistent  with its
     fiduciary duty to the stockholders of Seller under applicable law, provided
     that, Seller shall reimburse Buyer for its reasonable  expenses incurred in
     connection  with this  Agreement  (such  reasonable  expenses not to exceed
     three  hundred  fifty  thousand   dollars   ($350,000)   immediately   upon
     consummation of a Purchase Transaction.


     Section 9.2 Effect of Termination.

     In the event of the termination of this  Agreement,  as provided by Section
9.1, this Agreement will thereupon become void and have no effect,  and no party
will have  any Liability  to  any  other party or their  respective  Affiliates,
directors,  officers or employees,  except for the  obligations of  the  parties
contained in this Section 9.2 and in Sections 5.6 (Confidentiality), 5.7 (Public
Disclosure),  10.1  (Notices),  10.5  (Expenses),  10.7   (Governing Law),  10.8
(Alternative Dispute Resolution),  10.9  (Submission to Jurisdiction)  and 10.13
(Entire Agreement) (and any related definitional provisions set forth in Article
I),  and except that nothing in this  Section  9.2  will relieve any party  from
Liability for any  willful  breach of this  Agreement  that arose  prior to such
termination,  for which Liability the provisions of  Article VIII will remain in
effect in accordance with the provisions and limitations thereof.

                              Article X. IN GENERAL

     Section 10.1 Notices.

     All  notices or other communications given hereunder will be deemed to have
been duly given  and made if in writing and if served by personal delivery  upon
the party for whom it is intended, if delivered by registered or certified mail,
return  receipt requested,  or by  a nationally  recognized,  overnight  courier
service,  or  if  sent  by  facsimile,  provided that the facsimile is  promptly
confirmed  by  telephone  confirmation thereof,  to the party at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such party:

           If to Buyer:       Performance Technologies, Incorporated
                              205 Indigo Creek Drive
                              Rochester, New York 14626
                              Attention: Chief Executive Officer
                              Fax: (585) 256-0791

           with a copy to:    Harter, Secrest & Emery LLP
                              1600 Bausch & Lomb Place
                              Rochester, New York 14604-2711
                              Attention:  Jeffrey H. Bowen, Esq.
                              Fax:  (585) 232-2152






           If to Seller:      before Closing:

                              Mapletree Networks, Inc.
                              315 Norwood Park South
                              Norwood, Massachusetts 02062
                              Attention:  Sean Aruda
                              Fax:  (781) 751-2470

                              after Closing:

                              P. Eric Krauss
                              Pilot House Ventures Group, LLC
                              The Pilot House
                              Lewis Wharf
                              Boston, MA 02110
                              Fax  (617) 854-3401

          in each case
          with a copy to (which shall not constitute notice):

                              Choate, Hall & Stewart
                              53 State Street
                              Boston, Massachusetts 02109-2804
                              Attention:  William C. Rogers, Esq.
                              Fax: (617) 248-4000

     All  such notices  and other communications  shall be  deemed  to have been
given and received effective as of: (i) in the case of personal delivery, on the
date of such delivery; (ii) in the case of registered or certified mail,  return
receipt requested,  on the third  business  day after such  mail is  postmarked;
(iii)  in the case of a nationally recognized, overnight courier service, on the
business day following dispatch; or  (iii)  in the case of a facsimile, provided
that the facsimile is  promptly confirmed by telephone confirmation thereof,  on
the date of such delivery.

     Section 10.2 Amendment; Waiver.

     Any provision of this Agreement  may be amended or waived if such amendment
or waiver is in writing and signed,  in the case of an amendment,  by Buyer  and
Seller,  or in the case of a waiver,  by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power or
privilege  hereunder will  operate as a waiver thereof nor  will any  single  or
partial  exercise thereof  preclude any  other or further exercise of any right,
power or privilege.

     Section 10.3 No Assignment or Benefit to Third Parties.

     No  party may assign any  of its rights or delegate  any of its obligations
under this  Agreement,  by operation  of law or  otherwise,  without  the  prior
written  consent of  the other party,  and any attempt to assign this  Agreement
without such consent will be void and of no force or effect; provided,  however,
that  Seller  may  assign  its  right  to  receive  payments  hereunder  to  its
stockholders.  Nothing in this Agreement  (except for  Section 6.1  and  Article
VIII),  express or implied,  is intended to confer upon any  Person  other  than
Buyer, Acquisition Sub,  Seller or the Indemnified Parties,  or their respective
permitted  successors or permitted  assigns,  any rights or remedies under or by
reason of this  Agreement.  Without  limiting the generality  of the  foregoing,
nothing in  this  Agreement  creates  any rights in  any employees  or groups of
employees.

     Section 10.4 Survival.

     (a) All of the respective  representations and warranties of Seller,  Buyer
     and  Acquisition  Sub contained in this Agreement will survive  Closing and
     continue  if effect  until the date that is two (2) years after the Closing
     Date. All of the respective  covenants and agreements of Seller,  Buyer and
     Acquisition Sub contained in this Agreement will survive Closing.

     (b) If notice of any claim for  indemnification  has been  timely  given in
     accordance with Article VIII, then such claim for indemnification,  and the
     underlying  representations,  warranties,  covenants or agreements, and the
     indemnification obligations that are the subject thereof, will survive (but
     only for the  purpose  of the  resolution  of the  matter  covered  by such
     notice) until such time as such claim is finally resolved.

     Section 10.5 Expenses.

     Except as otherwise expressly provided in  Article  VIII of this Agreement,
whether or not the Transaction  is consummated,  all costs and expenses incurred
in connection  with  this Agreement  and the  Transactions will be borne by  the
party incurring the same.

     Section 10.6 Schedules, Exhibits, Etc.

     (a) Each  Schedule,  Exhibit (when and as executed),  certificate  provided
     hereunder  and  written  disclosure  required  hereby  is  incorporated  by
     reference  into this  Agreement  and will be considered a part hereof as if
     set forth herein in full; provided,  however, that information set forth on
     any   Schedule,   certification   or  written   disclosure   constitutes  a
     representation  and warranty of the party  providing the same,  and not the
     mutual  agreement  of the parties as to the facts  therein  stated.  Unless
     otherwise specifically noted herein, the contents of the Schedules will not
     vary, change or alter the language or substance of the  representations and
     warranties  contained  in this  Agreement  but will qualify and be deemed a
     part  hereof.  Each  Schedule is annexed  hereto on the date hereof and, if
     Buyer  consents,  will be updated as  necessary or amended on or before the
     Closing Date.  Unless otherwise  specifically  noted herein,  all Schedules
     shall  be  deemed  the  sole  responsibility,  obligation,  disclosure  and
     work-product of Seller.

     (b) Each  party's  rights to  indemnification  or other  remedies  provided
     hereby  based  on any  breach  by  the  other  party  (or  parties)  of its
     representations,  warranties, covenants and agreements will not be affected
     by any investigation  conducted with respect to, or any knowledge  acquired
     (or capable of being acquired) by such party at any time, whether before or
     after the  execution  and delivery of this  Agreement or the Closing  Date,
     with respect to the accuracy or inaccuracy of or compliance  with, any such
     representation,  warranty,  covenant or agreement. The due diligence review
     conducted by Buyer and its  representatives  will not relieve Seller of any
     duties concerning its representations,  warranties, covenants or agreements
     contained in this Agreement or in any Ancillary Agreement.

     Section 10.7 Governing Law.

     This  Agreement  will be governed by and construed in accordance  with  the
Laws of the State of New  York  without regard to its principles of conflicts of
laws.

     Section 10.8 Alternate Dispute Resolution.

     If  any dispute arises between  Buyer and  Seller regarding this Agreement,
any  Closing  Document or  the Transaction   (other than a dispute  relating  to
Intellectual  Property  which  the parties reserve all  rights  to  litigate  in
accordance with Section 10.9 of this Agreement, or otherwise address as they may
agree at the time such dispute arises),  the chief executive officer  (or his or
her designee),  on behalf of Buyer,  and P. Eric Krauss on behalf of Seller,  or
their respective designees,  will attempt in good faith  to resolve the dispute.
If  the such Persons have not agreed to a resolution within  fifteen  (15)  days
from the date on which the dispute was first presented to them, either party, by
written  notice to  the other,  may require that  the dispute  be submitted  for
resolution to the chief executive officer (or his or her designee), on behalf of
Buyer,  and  P. Eric  Krauss,   on  behalf  of  Seller,   or   their  designees
(collectively, the "Senior Managers"). The Senior Managers will meet, in person
or by other means mutually  satisfactory  to them,  to  attempt to  resolve  the
dispute within fifteen (15)  days after reference of the matter to them.  If the
Senior  Managers reach a decision within such  fifteen  (15)  day period,  their
decision will  be final  and binding on  the parties for all  purposes.  If  the
Senior Managers fail to resolve the dispute within such period, Buyer and Seller
may, if they then so agree,  refer the matter for arbitration on  such terms  as
they may then agree or, failing that, proceed to litigation.

     Section 10.9 Submission to Jurisdiction.

     Each  party agrees that it may bring any action or proceeding in respect of
any  Claim  arising out of  or  related to  Intellectual  Property  between  the
parties,  whether in  tort or  contract  or at law  or in  equity,  in the  U.S.
District Court for the Western  District of New York,  sitting in Monroe County,
New York (the "Chosen Court")  and, solely in connection with Claims arising out
of  or  related  to  Intellectual  Property,  (a)  irrevocably  submits  to  the
jurisdiction of the Chosen Court,  (b)  waives any objection to laying venue in
any such action or proceeding in the Chosen Court, (c) waives any objection that
the Chosen Court is an inconvenient forum or does not have jurisdiction over any
party, and (d) agrees that service of process in any method specified in Section
10.1 of this Agreement will constitute valid in personam service upon such party
and its permitted successors and  permitted assigns in any action or proceeding
with respect to any  matter  as  to  which  it  has  submitted  to  jurisdiction
hereunder. EACH PARTY HEREBY ACKNOWLEDGES THAT THIS IS A COMMERCIAL TRANSACTION,
THAT THE FOREGOING PROVISIONS FOR CONSENT TO JURISDICTION AND SERVICE OF PROCESS
HAVE BEEN READ,  UNDERSTOOD AND VOLUNTARILY AGREED TO BY SUCH PARTY AND  THAT BY
AGREEING TO SUCH PROVISIONS SUCH PARTY IS WAIVING IMPORTANT LEGAL RIGHTS.

     Section 10.10 Remedies Cumulative.

     The various  rights and remedies herein provided will be cumulative and not
exclusive  of  any other  rights  or remedies herein  provided or  any rights or
remedies provided by Law.

     Section 10.11 Inferences.

     Inasmuch   as  this   Agreement  is  the  result  of  negotiations  between
sophisticated  parties of equal  bargaining power  represented  by counsel,   no
inference in  favor of or against either party will be drawn from the  fact that
any portion of this Agreement has been drafted by or on behalf of such party.

     Section 10.12 Severability.

     The  provisions  of  this  Agreement  will  be  deemed  severable  and  the
invalidity or unenforceability of any  provision will not affect the validity or
enforceability  of  the  other  provisions  hereof.  If  any  provision  of this
Agreement,  or the application  thereof to any  Person  or any circumstance,  is
invalid  or  unenforceable,  (a)  a suitable  and equitable  provision  will  be
substituted  therefor  in  order  to carry out,  so  far  as  may  be  valid and
enforceable,  the intent and purpose of such invalid or unenforceable provision,
and (b) the remainder of this Agreement and the application of such provision to
other  Persons  or  circumstances  will  not be affected  by  such invalidity or
unenforceability,  nor  will  such invalidity  or  unenforceability  affect  the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.

     Section 10.13 Entire Agreement.

     This  Agreement,  including  the  Exhibits, the  Schedules,  the  Ancillary
Agreements  and the other Closing Documents contain the entire agreement between
the parties  with  respect to the subject  matter hereof and supersede all prior
agreements and  understandings,  oral or written,  with respect to such matters,
including, without limitation, that  certain  Memorandum  of  Agreement  between
Buyer and Seller dated November 7, 2003.

     Section 10.14 Headings.

     The  heading  references  herein  and  any  tables of  contents, indexes or
similar items hereto are for convenience purposes only, do not constitute a part
of  this  Agreement,  and  will  not  be  deemed  to  limit or affect any of the
provisions hereof.

     Section 10.15 Counterparts.

     This Agreement may  be executed in one or more counterparts,  each of which
will be  deemed an original,  and all of which will  constitute one and the same
Agreement.

     Section 10.16 Facsimiles.

     The  parties  agree  that  facsimile  copies  of signatures shall be deemed
originals  for  all purposes  hereof and that a party may  produce  such copies,
without the need to produce original signatures,  to prove the existence of this
Agreement in any proceeding brought hereunder.

     Section 10.17 Stockholder Representative.

     The parties agree that if Seller is dissolved after Closing at a time while
Buyer continues to have executory obligations under this Agreement  with respect
to the Earn Out Consideration,  P. Eric Krauss shall serve as the representative
of Seller's  stockholders for the purpose of communicating with  Buyer regarding
such matters (the "Stockholder Representative").  Specifically,  the function of
the  Stockholder  Representative  shall be to facilitate communications  between
Buyer  and  Seller's stockholders and,  if necessary,  to receive and distribute
payments  due  to  Seller  with  respect to the  Earn  Out  Consideration.   The
Stockholder  Representative  shall not have any additional liability under  this
Agreement  by virtue of serving as the Stockholder Representative, nor shall the
Stockholder  Representative  have  any  additional  ability  to  bind  the other
Stockholders  in  connection  with  this  Agreement  by virtue of serving as the
Stockholder Representative.  The  Stockholder Representative shall not be liable
for any act done or omitted hereunder as Stockholder Representative while acting
in  good  faith and in the exercise of reasonable judgment,  and any act done or
omitted  pursuant to the advice  of counsel shall be conclusive evidence of such
good faith. The Stockholder Representative may be changed from time to time upon
not less  than  ten  (10)  days' prior  written  notice to  Buyer  and upon  the
agreement of a majority of Seller's stockholders.





            (The signatures of the parties appear on the next page.)








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



BUYER:                                            SELLER:

Performance Technologies, Incorporated            Mapletree Networks, Inc.


/s/ Donald L. Turrell                             /s/ Sean M. Aruda
-------------------------------------      -------------------------------------
Signature                                         Signature

Donald L. Turrell                                 Sean M. Aruda
-------------------------------------      -------------------------------------
Print Name                                        Print Name

President and Chief Executive Officer             Chief Executive Officer
-------------------------------------      -------------------------------------
Title                                             Title



ACQUISITION SUB:

PTI Massachusetts Corporation


/s/ Donald L. Turrell
-------------------------------------
Signature

Donald L. Turrell
-------------------------------------
Print Name

President and Chief Executive Officer
-------------------------------------
Title











                  [Signature Page to Asset Purchase Agreement]









                         TABLE OF EXHIBITS AND SCHEDULES

   Exhibit A                        Escrow Agreement
   Exhibit B                        Business Plan
   Exhibit C                        Indemnification Substitution Agreement
   Exhibit D                        Stockholder Escrow Agreement

   Schedule 1.1                     Approvals
   Schedule 2.1(a)(i)               Transferred Intellectual Property: Software;
                                    Property, Domain Names, Etc.
   Schedule 2.1(a)(ii)              Transferred Intellectual Property: Patents
   Schedule 2.1(a)(iii)             Transferred Intellectual Property:
                                    Trademarks
   Schedule 2.1(b)                  Transferred Intellectual Property: Products
   Schedule 2.1(c)(i)               Assumed Contracts: License Agreements
   Schedule 2.1(c)(ii)              Assumed Contracts: Other
   Schedule 2.1(d)                  Transferred Assets: Inventory
   Schedule 2.1(k)                  Transferred Assets: Other
   Schedule 2.2(i)                  Excluded Assets: Other
   Schedule 2.6(b)(ii)              Accounts Payable
   Schedule 3.1                     Foreign Qualifications
   Schedule 3.7(a)                  Financial Statements
   Schedule 3.7(b)                  Certain Liabilities
   Schedule 3.8                     Permitted Encumbrances
   Schedule 3.9(b)                  Condition of Transferred Assets
   Schedule 3.9(c)                  Inventory: Certain Software and Products
   Schedule 3.9(d)                  Prepaids and Security Deposits
   Schedule 3.11                    Litigation and Claims
   Schedule 3.12(a)                 Intellectual Property: Ownership and Rights
   Schedule 3.12(c)                 Intellectual Property: Infringement
   Schedule 3.12(d)                 Intellectual Property: Software: Exceptions
   Schedule 3.12(e)                 Intellectual Property: Patents and
                                    Trademarks: Exceptions
   Schedule 3.12(f)                 Intellectual Property: Products Exceptions
   Schedule 3.12(h)                 Intellectual Property: Copyright Notices
   Schedule 3.12(i)                 Intellectual Property: Trade Secret
                                    Protection Program
   Schedule 3.14(a)                 Licenses to Third Parties
   Schedule 3.14(b)                 Third Party Components in Intellectual
                                    Property
   Schedule 3.15                    Third Party Interests in Intellectual
                                    Property
   Schedule 3.16                    Major Vendors and Customers
   Schedule 3.18                    Warranties
   Schedule 3.19                    Tax Matters
   Schedule 3.20(a)                 Employment Matters
   Schedule 3.21(a)                 Employee Benefits: Plans
   Schedule 3.22                    Environmental Matters
   Schedule 3.23                    Insurance
   Schedule 3.24                    Subsequent Changes
   Schedule 3.25                    Related-Party Transactions
   Schedule 3.26                    Accounts Receivable
   Schedule 5.2                     Conduct of the Business: Exceptions
   Schedule 6.1(a)(i)               Applicable Employees
   Schedule 6.1(a)(ii)              Hired Employees
   Schedule 7.2(i)                  Required Approvals

   Illustration A                   Adjustments in Sections 2.6(b), (c) and (e)