AMENDMENT NO. 1 TO





                          AGREEMENT AND PLAN OF MERGER





     THIS IS AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER (the

"Agreement"),dated as of February 12, 2003, by and among ProtoSource

Corporation, a California corporation ("Acquiror"), ProtoSource Acquisition LLC,

a Delaware limited liability company and wholly owned subsidiary of Acquiror

("Newco"), P2i, Inc., a Pennsylvania corporation ("P2i"), and P2i Newspaper,

Inc., a Delaware corporation ("P2i Newspaper").



                                    Recitals



     WHEREAS, Acquiror, P2i and P2i Newspaper have determined that it is in the

best interests of their respective stockholders for P2i Newspaper to merge with

and into Newco upon the terms and subject to the conditions set forth in this

Agreement; and



     WHEREAS, the respective Boards of Directors of Acquiror, P2i, P2i Newspaper

and Newco have each approved this Agreement and the consummation of the

transactions contemplated hereby and approved the execution and delivery of this

Agreement; and



     WHEREAS, the parties wish to amend this Agreement pursuant to the terms of

this Amendment to Agreement;



     NOW, THEREFORE, in consideration of the foregoing premises and

representations, warranties and agreements contained herein, and for good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties hereto hereby agree as follows:



     1.   Amendment to Section 1.1. Section 1.1 of the Agreement is hereby

          amended such that Newco shall be merged with and into P2i Newspaper.

          All other terms and conditions of this section are hereby modified to

          reflect the intent of this change.



     2.   Amendment to Section 1.3. Section 1.3 of the Agreement is hereby

          amended to read in its entirety as follows:



          1.3  Merger Consideration.



               (a) Subject to the provisions of Section 1.3(d) hereafter, the

Merger Consideration, constituting the total purchase price payable to P2i in

connection with the acquisition by merger of P2i Newspaper, shall be delivered

and shall consist exclusively of 193,836 shares of Series A Preferred Stock of

Acquiror (the "Acquiror Stock"). The Merger Consideration shall be reduced by

such number of shares of Acquiror Stock as equal the total fees incurred to

audit the financial statements of P2i or P2i Newspaper, divided by $50.00. In

the event this agreement is terminated for any reason other than a breach solely

by Acquiror or Newco, P2i shall immediately reimburse Acquiror for all

accounting costs incurred in connection with the preparation of financial

statements of P2i or P2i Newspaper which were paid by Acquiror.



<PAGE>



     It is intended that the delivery of the Merger Consideration shall qualify

as a tax-free exchange under the Code.

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