AGREEMENT AND PLAN OF MERGER



         This Agreement and Plan of Merger (this "Agreement") is entered into as

of March 7, 1997, by and among Tuboscope Vetco International Corporation, a

Delaware corporation ("Parent"), FGS Acquisition Corp., a Texas corporation and

wholly owned subsidiary of Parent ("Merger Sub"), Fiber Glass Systems, Inc., a

Texas corporation (the "Company"), and the stockholders of the Company named in

the signature pages hereof (the "Company Stockholders").



                                    RECITALS



         A. The Boards of Directors of Parent, Merger Sub and the Company each

have determined that the merger of Merger Sub with and into the Company, upon

the terms and subject to the conditions set forth herein, is fair to, and in the

best interests of, their respective corporations and stockholders.



         B. The Company Stockholders collectively own all of the outstanding

capital stock of the Company.



         C. The merger provided for herein is intended to qualify as a

reorganization under the provisions of Section 368 of the Internal Revenue Code

of 1986, as amended (the "Code"), for federal income tax purposes.



         D. Parent, Merger Sub and the Company desire to make certain

representations, warranties, covenants, and agreements in connection with, and

to establish various conditions precedent to, the merger provided for herein.



                                    AGREEMENT



         NOW, THEREFORE, in consideration of the foregoing and the

representations, warranties, covenants and agreements set forth in this

Agreement, the parties hereto agree as follows:



                                    ARTICLE I



                                   THE MERGER



         1.1 The Merger. Upon the terms and subject to the conditions of this

Agreement, at the Effective Time (as defined below), Merger Sub shall be merged

(the "Merger") with and into the Company in accordance with the Texas Business

Corporation Act (the "TBCA"). As a result of the Merger, the separate corporate

existence of Merger Sub shall cease and the Company shall continue as the

surviving corporation (the "Surviving Corporation").



         1.2 Closing. Unless this Agreement shall have been terminated and the

transactions contemplated herein abandoned pursuant to Section 9.1 and assuming

the satisfaction or, if permissible, waiver of the conditions set forth in

Article VI, the closing of the Merger (the "Closing") shall take place at 1:00

p.m. on the first business day on or by which all of the conditions to

consummation of the Merger provided in Article VI hereof shall have been





                                       1

{PAGE}   2









satisfied or, if permissible, waived at the offices of Jackson & Walker, L.L.P.,

112 East Pecan Street, Suite 2100, San Antonio, Texas 78205, unless another date

or place is agreed to in writing by the parties hereto.



                  Effective Time. Upon the terms and subject to the conditions

hereof, Articles of Merger (the "Articles of Merger") shall be duly prepared,

executed and acknowledged by the parties hereto and thereafter delivered to the

Secretary of State of the State of Texas for filing as provided in the TBCA, as

soon as practicable on or after the Closing. The Merger shall become effective

upon the filing of the Articles of Merger with the Secretary of State of the

State of Texas or at such time thereafter as is provided in the Articles of

Merger (the "Effective Time").



         1.3 Effect of the Merger. At the Effective Time, the Merger shall have

the effects set forth in the TBCA. Without limiting the generality of the

foregoing, and subject thereto, at the Effective Time, all properties, rights,

privileges, powers and franchises of the Company and Merger Sub shall vest in

the Surviving Corporation, and all debts, liabilities and duties of the Company

and Merger Sub, subject to the restrictions contained herein, shall become the

debts, liabilities and duties of the Surviving Corporation.



         1.4 Articles of Incorporation; Bylaws. At the Effective Time, the

articles of incorporation and bylaws of Merger Sub in effect at the Effective

Time shall be the articles of incorporation and bylaws of the Surviving

Corporation, in each case until amended in accordance with applicable law.



         1.5 Directors and Officers. At the Effective Time, the officers and

directors of Merger Sub immediately prior to the Effective Time shall become the

officers and directors of the Surviving Corporation.



                                   ARTICLE II



                            CONVERSION OF SECURITIES



         2.1 Conversion of Securities. At the Effective Time, by virtue of the

Merger and without any action on the part of the parties hereto or the holders

of any securities of the Company:



                  (a)The shares of common stock, no par value, of the Company

(the "Company Common Stock") which are issued and outstanding immediately prior

to the Effective Time shall be converted into and represent the right to receive

(i) 1,689,542 shares (the "Share Consideration") of common stock, par value $.01

per share, of Parent (the "Parent Common Stock"), (ii) cash (the "Cash

Consideration") in the amount of $906,869.01 and (iii) the 1997 Earnout (as

defined herein), if any, as provided in Section 2.2 (the "Earnout

Consideration," and together with the Share Consideration and the Cash

Consideration, the "Merger Consideration"). The Share Consideration and Cash

Consideration shall be allocated among the stockholders of the Company as set

forth in Exhibit A and the Earnout Consideration shall be allocated among the

stockholders of the Company as set forth in Section 2.2.



                  (b) Each share of Company Common Stock owned by or held in the

treasury of the Company and each share of Company Common Stock owned by Parent

or any direct or





                                       2

{PAGE}   3







indirect wholly owned subsidiary of the Company or Parent immediately prior to

the Effective Time shall be automatically cancelled and extinguished without any

conversion thereof and shall cease to exist and no payment or consideration

shall be made or delivered with respect thereto.



                  (c) Each share of capital stock of Merger Sub which is issued

and outstanding immediately prior to the Effective Time shall be converted into

and become one validly issued, fully paid and nonassessable share of common

stock, par value $.01 per share, of the Surviving Corporation.



         2.2 1997 Earnout.



                  (a) On or before March 31, 1998, Ernst & Young, L.L.P., or

another nationally recognized accounting firm reasonably acceptable to Parent

and the Company Stockholders (the "Auditors"), shall prepare and deliver to

Parent and the Stockholder Representative (as defined herein) an income

statement of the Surviving Corporation for the 1997 fiscal year, including the

portion of such year from December 28, 1996 through the Closing (the "1997

Income Statement"), which statement shall set forth the Surviving Corporation's

EBITDA (as defined below) for such calendar year (the "1997 EBITDA") and a

reasonably detailed calculation of the 1997 Earnout Amount (as defined below).

The 1997 Income Statement shall be prepared by the Surviving Corporation in

accordance with generally accepted accounting principles ("GAAP") in accordance

with past practices and shall fairly and accurately present the EBITDA of the

Surviving Corporation for the calendar year ended December 31, 1997 (and shall

not include adjustments to reflect the allocation of the purchase price). The

determination of the 1997 EBITDA by the Auditors shall be final and binding on

the parties hereto. For purposes of this Agreement, "EBITDA" shall be mean

earnings before interest, taxes, depreciation and amortization, but excluding

the expenses and related items listed on Exhibit G (the "Excluded Expenses").

The parties both agree that the Auditors shall audit the Excluded Expenses in

accordance with generally accepted auditing standards in accordance with past

practices with respect to the Company.



                  (b) The "1997 Earnout Amount" shall be a number of shares of

Parent Common Stock, not to exceed 750,000 shares in accordance with past

practices, equal to:





                      750,000 x (1977 EBITDA - $6,000,000)

                                 ------------------------

                                        $1,250,000



                           (i) If the 1997 Earnout Amount is a positive number

of shares, then Parent shall promptly deliver to each Company Stockholder, but

in no event later than May 31, 1998, pro rata based on the number of shares of

Company Common Stock held by each such holder immediately prior to the Effective

Time, the Earnout Consideration to be received by such Company Stockholder

pursuant to this Section 2.2. The Earnout Consideration to be delivered to each

Company Stockholder pursuant to this Section 2.2(b) shall consist of cash and

shares of Parent Common Stock in the percentages set forth in Exhibit A. For

purposes of computing any cash to be paid pursuant to this Section 2.2(b)(i),

all shares of Parent Common Stock shall be valued at $15.00 per share.







                                       3

{PAGE}   4







                           (ii) If the 1997 Earnout Amount is equal to or less

than zero shares, then the Company Stockholders shall not be entitled to receive

any Earnout Consideration pursuant to this Section 2.2.



                  (c) Parent agrees that during the 1997 Earnout Amount period

it will permit the Company to operate and carry on its business in the ordinary

course consistent with past practices provided that such operations do not

impair the value of the Company in Parent's reasonable judgment.



         2.3 Exchange of Certificates. (a) As of the Effective Time, Parent

shall deposit or cause to be deposited with or for the account of a bank or

trust company to be designated by Parent, which is reasonably acceptable to the

Company (the "Exchange Agent"), for the benefit of the holders of shares of the

Company Common Stock, for exchange through the Exchange Agent in accordance with

this Article II, (i) certificates evidencing the shares of Parent Common Stock

representing the Share Consideration issuable in exchange for Shares of Company

Common Stock pursuant to Section 2.1(a)(i) and (ii) cash in the aggregate amount

sufficient to pay the aggregate Cash Consideration for shares of Company Common

Stock converted pursuant to Section 2.1(a)(ii) (the shares and cash so

deposited, together with any dividends or distributions with respect to such

shares, being hereinafter referred to as the "Exchange Fund"). The Exchange

Agent shall, pursuant to irrevocable instructions, deliver the shares of Parent

Common Stock and cash required to be delivered pursuant to Sections 2.1 out of

the Exchange Fund to holders of shares of Company Common Stock. Except as

contemplated by Section 2.3(f), the Exchange Fund shall not be used for any

other purpose. The Exchange Agent shall invest cash in the Exchange Fund, on a

daily basis, as directed by Parent. Any interest, dividends or other income

earned on the investment of cash or other property held in the Exchange Fund

shall be for the account of and payable to Parent.



                  (b) As soon as practicable (and in no event later than 20 days

after the Effective Date), the Exchange Agent shall mail to each holder of

record of a certificate or certificates which immediately prior to the Effective

Time evidenced outstanding shares of Company Common Stock (the "Certificates"),

(i) a letter of transmittal (which shall specify that delivery shall be

effected, and risk of loss and title to the Certificates shall pass, only at or

following the Effective Time and only upon delivery of the Certificates to the

Exchange Agent and which shall be in form and substance reasonably satisfactory

to Parent) and (ii) instructions for use in effecting the surrender of the

Certificates in exchange for the Merger Consideration with respect to the shares

of Company Common Stock represented thereby. Upon surrender of a Certificate for

cancellation to the Exchange Agent, together with such letter of transmittal,

duly executed, and such other customary documents as may be required pursuant to

such instructions, the holder of such Certificate shall be entitled to receive

in exchange therefor (A) certificates evidencing that number of whole shares of

Parent Common Stock which such holder has the right to receive in accordance

with Section 2.1 in respect of the shares of Company Common Stock formerly

evidenced by such Certificate, (B) cash which such holder has the right to

receive in accordance with Section 2.1 in respect of the shares of Company

Common Stock formerly evidenced by such Certificate, (C) any cash payment in

lieu of fractional shares that the holder of such Certificate is entitled to

receive pursuant to Section 2.3(e) and (D) any dividends or other distributions

to which such holder is entitled pursuant to Section 2.3(c), and the Certificate

so surrendered shall be cancelled. In the event of a transfer of ownership of

shares of Company









                                       4

{PAGE}   5







Common Stock which is not registered in the transfer records of the Company,

certificates evidencing the proper number of shares of Parent Common Stock and

cash may be issued and paid in accordance with this Article II to a transferee

if the Certificate evidencing such shares of Company Common Stock is presented

to the Exchange Agent, accompanied by all documents required to evidence and

effect such transfer and by evidence reasonably satisfactory to Parent that any

applicable stock transfer taxes have been paid. Certificates surrendered for

exchange by any person constituting an "affiliate" of the Company for purposes

of Rule 145(c) of the Securities Act of 1933, as amended (the "Securities Act"),

shall not be exchanged until Parent has received a written agreement from such

person as provided in Section 6.8. Until surrendered as contemplated by this

Section 2.3, each Certificate shall be deemed at any time after the Effective

Time to represent and evidence only the right to receive upon such surrender the

Merger Consideration with respect to the shares of Company Common Stock formerly

represented thereby in accordance with this Section 2.3.



                  (c) Notwithstanding any other provision of this Agreement, no

dividends or other distributions declared or made after the Effective Time with

respect to shares of Parent Common Stock with a record date after the Effective

Time shall be paid to the holder of any unsurrendered Certificate with respect

to the shares of Parent Common Stock which such holder is entitled to receive,

and no Cash Consideration or cash in lieu of fractional shares shall be paid to

any such holder, until the holder of such Certificate shall surrender such

Certificate for exchange as provided herein. Subject to the effect of applicable

laws, following surrender of any such Certificate for exchange as provided

herein, there shall be paid to the holder of the certificates evidencing whole

shares of Parent Common Stock issued in exchange therefor, without interest, (i)

as promptly as reasonably practicable following such surrender, the amount of

any cash payable in lieu of fractional shares of Parent Common Stock to which

such holder is entitled pursuant to Section 2.3(e) and the amount of dividends

or other distributions with a record date after the Effective Time theretofore

payable (and not paid) with respect to such whole shares of Parent Common Stock,

in each case less the amount of any withholding taxes which may be required

thereon, and (ii) at the appropriate payment date, the amount of dividends or

other distributions with a record date after the Effective Time but prior to

surrender and a payment date occurring after surrender payable with respect to

such whole shares of Parent Common Stock, less the amount of any withholding

taxes which may be required thereon.



                  (d) The shares of Parent Common Stock issued and cash paid

upon the surrender for exchange of shares of Company Common Stock in accordance

with the terms hereof shall be deemed to have been made in full satisfaction of

all rights pertaining to such shares of Company Common Stock.



                  (e) No certificates or scrip representing fractional shares of

Parent Common Stock shall be issued in connection with the Merger, and such

fractional share interests will not entitle the owner thereof to vote or to any

rights as a stockholder of Parent. In lieu of any such fractional shares, each

holder of Company Common Stock upon surrender of a Certificate for exchange

pursuant to this Section 2.3 shall be paid an amount in cash (without interest),

rounded to the nearest cent, determined by multiplying (i) $15.00 by (ii) the

fractional interest to which such holder would otherwise be entitled (after

taking into account all shares of Company Common Stock then held of record by

such holder).







                                       5

{PAGE}   6







                  (f) Any portion of the Exchange Fund which remains

undistributed to the holders of Company Common Stock as of the date which is 12

months after the Effective Time shall be delivered to Parent, upon demand, and

any holders of Company Common Stock who have not theretofore complied with this

Article II shall thereafter look only to Parent (as unsecured general creditors

thereof) for payment of the Merger Consideration, and any cash in lieu of

fractional shares and any unpaid dividends or distributions with respect to

Parent Common Stock, to which they are entitled pursuant hereto.



                  (g) Parent or the Exchange Agent shall be entitled to deduct

and withhold from the consideration otherwise payable pursuant to this Agreement

to any holder of shares of Company Common Stock such amounts as Parent or the

Exchange Agent is required to deduct and withhold with respect to the making of

such payment under the Code, or any provision of state, local or foreign tax

law. To the extent that amounts are so withheld by Parent or the Exchange Agent,

such withheld amounts shall be treated for all purposes of this Agreement as

having been paid to the holder of the shares of Company Common Stock in respect

of which such deduction and withholding was made by Parent or the Exchange

Agent.



                  (h) In the event that any Certificate shall have been lost,

stolen or destroyed, upon the making of an affidavit of that fact by the person

claiming such Certificate to be lost, stolen or destroyed and, if required by

Parent, the posting by such person of a bond in such reasonable amount as Parent

may direct as indemnity against any claim that may be made against it with

respect to such Certificate, the Exchange Agent will issue in exchange for such

lost, stolen or destroyed Certificate the Merger Consideration, and any cash in

lieu of fractional shares and any unpaid dividends or distributions with respect

to the Per Share Consideration to which they are entitled pursuant hereto.



                  (i) From and after the Effective Time, the stock transfer

books of the Company shall be closed, and there shall be no further registration

of transfers of shares of Company Common Stock on the books and records of the

Company or the Surviving Corporation. If, after the Effective Time, any

Certificates are presented to the Exchange Agent or the Surviving Corporation

for any reason, they shall be cancelled and exchanged as provided in this

Article II.



         2.4 Stockholder Representative. Holders of a majority of the

outstanding shares of Company Common Stock (as their ownership existed as of the

Closing) may, by written notice to Parent, designate an individual or entity as

the Stockholder Representative for purposes of Section 2.2 (the "Stockholders

Representative"), which individual or entity need not be a holder of Company

Common Stock. Holders of a majority of the outstanding shares of Company Common

Stock may also remove the Stockholder Representative and/or designate a

successor, in which event written notice of such removal or designation shall be

given to Parent. If no Stockholder Representative is so designated, Parent shall

designate an individual or entity to act in such capacity.







                                       6

{PAGE}   7





                                  ARTICLE III



                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                          AND THE COMPANY STOCKHOLDERS



         For purposes of this Article III, references to the Company shall

include, without limitation, the Company and the Company Subsidiary (as defined

herein). The Company and the Company Stockholders hereby represent and warrant

to Parent and Merger Sub as of the date hereof as follows:



         3.1 Due Organization. The Company is a corporation duly organized,

validly existing and in good standing under the laws of the State of Texas and

has all requisite power and authority to own, lease and operate its properties

and conduct its business as it is presently being conducted. Star Composites

International, Inc., a wholly owned subsidiary of the Company (the "Company

Subsidiary"), is duly organized, validly existing and in good standing under the

laws of the United States Virgin Islands and has all requisite power and

authority to own, lease and operate its properties and conduct its business as

it is presently being conducted. Each of the Company and the Company Subsidiary

is duly qualified to do business as a foreign corporation or other entity and is

in good standing in each jurisdiction in which such qualification is necessary

under the applicable law as a result of the conduct of its business or the

ownership of its properties, except where the failure to be so qualified would

not have a Material Adverse Effect (as defined below) on the Company. Each

jurisdiction in which the Company or the Company Subsidiary is qualified to do

business as a foreign corporation or other entity is listed in Section 3.1 of

the Disclosure Schedule. For purposes of this Agreement, a "Material Adverse

Effect" shall mean changes, developments or occurrences which, individually or

in the aggregate, have materially adversely affected or would have a material

adverse effect on the business, prospects, assets, profits, sales, financial

position or results of operations of the entity concerned.



         3.2 Capitalization of the Company. The authorized capital stock of the

Company consists of 1,300,000 shares divided into (a) one class of 1,000,000

shares of Common Stock, no par value, and (b) one class of 300,000 shares of

Preferred Stock, par value $10.00 per share; provided, however, 21,249 shares of

Series A Preferred Stock were redeemed and cancelled by the Company and are not

available for reissuance. As of the date hereof, there were outstanding

59,738.94 shares of Company Common Stock, the record and, to the knowledge of

the Company and the Company Stockholders, beneficial owners of which are set

forth in Section 3.2 of the Disclosure Schedule. All such outstanding capital

stock is duly authorized, validly issued, fully paid and nonassessable. The

Company has no other outstanding securities, including, but not limited to,

Preferred Stock, options, warrants or other securities convertible into or

exercisable for shares of the Company's capital stock or other securities of the

Company. The Company has not issued any other shares of capital stock, nor

repurchased, redeemed or otherwise acquired any shares of its capital stock.



         3.3 Subsidiaries. The Company directly owns all of the outstanding

capital stock of the Company Subsidiary. Except for its interest in the Company

Subsidiary, the Company does not own any stock, partnership interest, joint

venture interest or any other security or ownership







                                       7

{PAGE}   8







interest issued by any other corporation or by any partnership, limited

liability company, organization or other entity.



         3.4 Authorization. The Company has all requisite corporate power and

authority to execute and deliver this Agreement, to perform its obligations

hereunder and to consummate the Merger and the other transactions contemplated

hereby to be consummated by the Company. The execution, delivery and performance

of this Agreement by the Company and the consummation by the Company of the

Merger and the other transactions contemplated hereby have been duly and validly

authorized by all necessary corporate action on the part of the Company and no

other corporate proceedings on the part of the Company are necessary to

authorize the execution, delivery and performance of this Agreement or the

consummation of the Merger or the other transactions contemplated hereby. This

Agreement has been duly executed and delivered by the Company and constitutes

the legal, valid and binding obligation of the Company, enforceable against the

Company in accordance with its terms, except as such enforceability may be

limited by any applicable bankruptcy, insolvency, reorganization, moratorium or

other similar laws affecting the enforcement of creditors' rights generally, and

except as the availability of equity remedies may be limited by the application

of general principles of equity (regardless of whether such equitable principles

are applied in a proceeding at law or in equity).



         3.5 No Conflict or Violation. The execution and delivery of this

Agreement by the Company do not, and the performance by the Company of its

obligations hereunder and the consummation by the Company of the Merger and the

other transactions pursuant hereto will not, (a) conflict with or violate the

articles of incorporation or bylaws or other organizational documents of the

Company, (b) conflict with or violate any material law, statute, rule,

regulation, order, judgment, writ, injunction or decree applicable to the

Company or any of its respective properties or assets or (c) result in a

violation or breach of or constitute a default under (or an event which with the

giving of notice or the lapse of time or both would constitute a default under),

require any consent, approval or authorization under, result in the loss of a

material benefit or result in any provision becoming applicable or effective

under, or give rise to any right of termination, amendment, acceleration or

cancellation of, or result in the creation of a lien or other encumbrance on any

property or asset of the Company or any of its subsidiaries pursuant to, any

note, bond, mortgage, indenture, contract, agreement, lease, license, permit,

franchise or other instrument or obligation to which the Company or any of its

subsidiaries is a party or by which the Company or any of its subsidiaries or

any material property or asset of the Company or any of its subsidiaries may be

bound or affect, except in the case of each of clauses (b) and (c) for any such

conflicts, violations, breaches, defaults or other occurrences which would not,

individually or in the aggregate, be reasonably likely to result in a Material

Adverse Effect on the Company.



         3.6 Consents and Approvals. No consent, approval, authorization or

permit of, or declaration, filing or registration with, any federal, state,

local, foreign or other governmental, judicial or regulatory authority (each a

"Governmental Entity"), or any other person or entity, is required to be made or

obtained by the Company in connection with the execution, delivery and

performance of this Agreement and the consummation of the transactions

contemplated hereby, except for (a) the filing and recordation of appropriate

merger documents as required by Texas law, and (b) the pre-merger notification

and report requirements of the Hart-Scott-Rodino







                                       8

{PAGE}   9







Antitrust Improvements Act of 1976, as amended and the rules and regulations

thereunder (the "HSR Act").



         3.7 Financial Statements. The financial statements of the Company as of

and for the periods ended December 30, 1994, December 29, 1995 and December 27,

1996 (the "Financial Statements") (i) are complete and accurate in all material

respects and are consistent with the books and records of the Company (which are

complete and accurate in all material respects), (ii) have been prepared in

accordance with GAAP consistently applied as of the dates and for the periods

covered thereby, and (iii) fairly present, in accordance with GAAP consistently

applied as of the dates and for the periods covered thereby, the financial

condition, results of operations and cash flows of the Company as of the dates

and for the periods then ended and include no change in the application of

accounting principles; provided, however, that the financial statements as of

and for the period ended December 30, 1994 are reviewed, but unaudited and do

not include footnote disclosures in accordance with GAAP (which omitted footnote

disclosures are not, in the aggregate, material). The Financial Statements are

attached hereto as Section 3.7 of the Disclosure Schedule.



         3.8 No Undisclosed Liabilities. The Company has no liabilities,

obligations, debts or commitments of any nature (absolute, accrued, contingent

or otherwise), matured or unmatured ("Liabilities"), except (i) Liabilities

which are adequately reflected or reserved against in the Financial Statements

or (ii) Liabilities disclosed in Section 3.8 of the Disclosure Schedule.



         3.9 No Changes. Except as disclosed in Section 3.9 of the Disclosure

Schedule, since December 29, 1996 (the "Interim Date") the Company has conducted

its business only in the ordinary course. Without limiting the generality of the

foregoing sentence, except as disclosed in Section 3.9 of the Disclosure

Schedule, since the Interim Date there has not been:



                  (a) any change in the financial condition, assets,

liabilities, net worth, business or prospects of the Company, except changes in

the ordinary course of business, none of which, individually or in the

aggregate, is in excess of $20,000;



                  (b) any material damage, destruction or loss, whether or not

covered by insurance, adversely affecting the properties in the aggregate or

business of the Company, or any material deterioration in the operating

condition of the Company's assets;



                  (c) any mortgage, pledge or subjection to lien, charge or

encumbrance of any kind of any of the Company's assets, tangible or intangible

in excess of $20,000 in the aggregate;



                  (d) any strike, walkout, labor trouble or any other new or

continued event, development or condition of any character which has or could

have a Material Adverse Effect on the Company;



                  (e) any declaration, setting aside or payment of a dividend or

other distribution in respect of any of the capital stock of the Company, or any

direct or indirect redemption, purchase or other acquisition of any capital

stock of the Company or any rights to purchase such capital stock or securities

convertible into or exchangeable for such capital stock;







                                       9

{PAGE}   10







                  (f) issuance by the Company of, or commitment of the Company

to issue, any shares of stock or other equity securities or obligations or

securities convertible into or exchangeable for shares of stock or other equity

securities;



                  (g) (i) any increase in the salaries or other compensation

payable or to become payable to, or any advance (excluding advances for ordinary

business expenses) or loan to, any officer, director, employee or stockholder of

the Company, (ii) or any increase in, or any addition to, other benefits

(including without limitation any bonus, profit sharing, pension or other plan)

to which any of the Company's officers, directors, employees or stockholders may

be entitled, or any payments to any pension, retirement, profit sharing, bonus

or similar plan, (iii) any other payment of any kind to or on behalf of any such

officer, director, employee or stockholder other than payment of base

compensation and reimbursement for reasonable business expenses in the ordinary

course of business, (iv) the adoption, creation or amendment of any Plan by the

Company, (v) an employment agreement (written or verbal) made by the Company to

which the Company is a party or (vi) any other change in employment terms for

any of the officers of the Company or, except in the ordinary course of

business, of any of the employees or agents of the Company;



                  (h) any making or authorization of any capital expenditures in

excess of $20,000;



                  (i) any cancellation or waiver of any right material to the

operation of the Company's business or any cancellation or waiver of any debts

or claims of substantial value or any cancellation or waiver of any debts or

claims against any Related Party;



                  (j) any sale, transfer or other disposition of any assets of

the Company, except sales of assets in the ordinary course of business;



                  (k) acceleration, amendment, cancellation or termination or

threatened cancellation or termination of any Contract, license or other

instrument to which the Company is a party or by which the Company is bound (i)

involving an affiliate of the Company, (ii) involving payments in excess of

$20,000 in the aggregate or (iii) that are otherwise material to the Company;



                  (l) any payment, discharge or satisfaction of any Liability by

the Company, other than the payment, discharge or satisfaction, in the ordinary

course of business, of Liabilities shown or reflected on the Financial

Statements, or incurred in the ordinary course of business since the Interim

Date;



                  (m) any delay or failure to repay when due any obligation of

the Company in excess of $10,000;



                  (n) any adverse change or any overt threat of any adverse

change in the Company's relations with, or any loss or threat of loss of, any of

the Company's customers, clients or suppliers;







                                       10

{PAGE}   11





                  (o) any write-offs as uncollectible of any notes or accounts

receivable of the Company or write-downs of the value of any assets by the

Company other than in immaterial amounts;



                  (p) any change by the Company in any method of accounting or

keeping its books of account or accounting practices;



                  (q) any creation, incurrence, assumption or guarantee by the

Company of any Liabilities in excess of $20,000, or any creation, incurrence,

assumption or guarantee by the Company of any indebtedness for money borrowed;



                  (r) any payment, loan or advance of any amount to or in

respect of, or any sale, transfer or lease of any properties or assets (whether

real, personal or mixed, tangible or intangible) to, or entering into of any

agreement, arrangement or transaction with, any stockholder of the Company, any

of the officers or directors of the Company, any affiliate or relative of any

stockholder of the Company, the Company or any of their respective officers or

directors, or any business or entity in which any stockholder of the Company,

the Company, any of the officers or directors of the Company or any affiliate or

relative of any such person has any direct or material indirect interest (a

"Related Party");



                  (s) any disposition or license of or failure to keep in effect

any rights in, to or for the use of any patent, trademark, service mark, trade

name or copyright, or any disclosure to any person not an employee or Related

Party or other disposal of any trade secret, process or know-how used by the

Company in its business;



                  (t) any amendment to the organizational documents of the

Company or the Company Subsidiary;



                  (u) a failure to maintain in full force and effect

substantially the same level and types of insurance coverage as in effect on the

Interim Date;



                  (v) any agreement (either oral or written) by the Company or

any of its officers or directors to do any of the foregoing; or



                  (w) any other event or condition of any character that

individually or in the aggregate has a Material Adverse Effect, or any other

event or condition not otherwise disclosed herein or in the Disclosure Schedule

(other than events or conditions affecting the economy generally) known to the

Company that it is reasonable to expect will, individually or in the aggregate,

have a Material Adverse Effect in the future.



         The Company has not entered into any written or oral agreement which

would result into any of the above.



         3.10 Accounts Receivable. All of the accounts and notes receivable of

the Company are reflected in the Financial Statements and, together with all

notes receivable of the Company arising since the Interim Date, represent bona

fide claims of the Company against debtors for sales, services performed or

other changes arising on or before the date hereof and have arisen in the

ordinary course of business.







                                       11

{PAGE}   12





         3.11 Title to Assets. Section 3.11 of the Disclosure Schedule contains

a list of all real property (including, without limitation, offices, buildings,

manufacturing facilities, warehouses, improvements and other structures) owned

or leased by, or used in the business of the Company (the "Facilities") and any

rights that the Company may have in real property (including, without

limitation, easements and rights-of-way and access). Section 3.11 of the

Disclosure Schedule identifies all material tangible personal property and

rights in material tangible personal property of Company. The Company's

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC