EXHIBIT 10.1 AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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CAPITAL GROWTH SYSTEMS, INC. | FRONTRUNNER ACQUISITION, INC. | FRONTRUNNER NETWORK SYSTEMS, CORP.

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Title: EXHIBIT 10.1 AGREEMENT AND PLAN OF MERGER
Governing Law: Illinois Date: 8/13/2004
Law Firm: Shefsky & Froelich Ltd.

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EXHIBIT 10.1

AGREEMENT AND PLAN OF MERGER

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AGREEMENT AND PLAN OF MERGER

DATED AUGUST 9, 2004

BY AND AMONG

CAPITAL GROWTH SYSTEMS, INC.

FRONTRUNNER ACQUISITION, INC.

AND

FRONTRUNNER NETWORK SYSTEMS, CORP.

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AGREEMENT AND PLAN OF MERGER

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

9th day of August, 2004, by and among Capital Growth Systems, Inc., a Florida

corporation ("Parent"); Frontrunner Acquisition, Inc., a Delaware corporation,

and a wholly owned subsidiary of Parent ("Mergeco"), and Frontrunner Network

Systems, Corp., a Delaware corporation ("Target" or "Company"). Certain other

capitalized terms used herein are defined in Article XI or elsewhere throughout

this Agreement.

RECITALS

A. Upon the terms and subject to the conditions set forth herein,

Parent desires to acquire all of the shares of capital stock of the Company (the

"Target Shares"), consisting of Target Preferred Shares and Target Common Shares

(each as defined in Article XI), in exchange for shares of common stock, $0.0001

par value per share, of Parent (the "Parent Common Stock");

B. Parent and the Company have agreed to accomplish this transaction

through a reverse triangular merger whereby Mergeco will merge with and into

Target, and Target will be the surviving corporation (the "Merger");

C. The parties hereto intend that the merger qualify as a

"reorganization" within the meaning of Section 368(a)(1) of the Code; and

D. Each of the Boards of Directors of Target, Parent and Mergeco has

approved this Agreement, and prior to the Closing Date, the Stockholders of the

Company will have approved this Agreement.

NOW, THEREFORE, in consideration of the mutual representations,

warranties, covenants and agreements contained herein, the parties hereto agree

as follows:

ARTICLE I

THE MERGER

1.1 Merger. Upon and subject to the terms and conditions set forth in

this Agreement and in accordance with Delaware General Corporation Law, as

amended ("DGCL"), Mergeco shall be merged with and into Target. Following the

Merger, Target shall continue to exist as the surviving corporation (sometimes

referred to as the "Surviving Corporation") and the separate corporate existence

of Mergeco shall cease.

1.2 Filing and Effective Time. At the Closing, Mergeco and Target shall

file with the Secretary of State of the State of Delaware, a Certificate of

Merger, appropriately completed and executed in accordance with the relevant

provisions of the DGCL. The Merger shall become effective upon filing of the

Certificate of Merger, in accordance with the relevant provisions of the DGCL

(the "Effective Time," and the date thereof hereinafter referred to as the

"Effective Date").

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1.3 Effects of the Merger. The Merger shall have the effects set forth

in the DGCL. Without limiting the generality of the foregoing, and subject

thereto, at the Effective Time, all the rights and property of the Target and

Mergeco shall vest in the Surviving Corporation, and all debts and liabilities

of the Target and Mergeco shall become the debts, liabilities and duties of the

Surviving Corporation. In addition:

(a) The Certificate of Incorporation of Target as in effect at

the Effective Time shall be amended and restated in the form of Exhibit A

attached hereto, and shall thereafter remain in effect until duly amended as

provided therein or by applicable law;

(b) The By-Laws of Target as in effect at the Effective Time

shall be amended and restated in the form of Exhibit B attached hereto, and

shall thereafter remain in effect until duly amended as provided therein or by

applicable law;

shall continue to serve as the officers of the Surviving Corporation until the

earlier of their resignation or removal or until their respective successors are

duly elected and qualified, as the case may be; and

(d) The directors of Mergeco shall become the directors of the

Surviving Corporation until the earlier of their resignation or removal or until

their respective successors are duly elected and qualified, as the case may be.

1.4 Merger Consideration.

(a) In consideration for the Target Shares, the Parent shall (i)

pay in the aggregate $222.18 in exchange for all of shares of 8% Preferred Stock

of the Company ("Senior Preferred") and (ii) all of the shares of (A) Series A

Junior Convertible Preferred Stock of the Company ("Series A Preferred"), (B)

Preferred Stock of the Company (the "Junior Preferred"), (C) the Target Common

Shares and (D) all outstanding unexpired and unexercised options and warrants to

acquire Target Common Shares shall be cancelled and extinguished without

consideration therefore. Subject to the terms and conditions of this Agreement,

as of the Effective Time, by virtue of the Merger and without any action on the

part of Mergeco, the Company or the holder of the Target Shares, the holder of

any options, warrants or other rights to acquire or receive Target Shares, the

following shall occur:

(i) Conversion of 8% Senior Preferred Stock. Each share of

Senior Preferred issued and outstanding immediately prior to the Effective Time

will be canceled and extinguished and be converted automatically into the right

to receive $1.00 per share.

(ii) Series A Junior Convertible Preferred Stock and Preferred

Stock. Each share of Series A Preferred and Junior Preferred issued and

outstanding immediately prior to the Effective Time will be canceled and

extinguished and be entitled to no payment of any kind.

(iii) Cancellation of Company Common Stock. Each Target Common

Share issued and outstanding immediately prior to the Effective Time (other than

any Target Common Shares to be canceled pursuant to Section 1.4(a)(v) and any

Dissenting Target Shares

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(to the extent provided in Section 1.9 of this Agreement)) will be canceled and

entitled to no payment of any kind.

(iv) Cancellation of Options and Warrants. Any outstanding

options, warrants, convertible notes or other convertible securities, or other

right to acquire shares of capital stock of the Company shall be extinguished

and cancelled without conversion or exercise, and shall thereafter be void and

of no further force and effect and shall not represent any right to acquire

shares in the Surviving Corporation or Parent.

(v) Cancellation of Company-Owned Stock. Each share of Target

Shares owned by the Company or any direct or indirect wholly-owned subsidiary of

the Company immediately prior to the Effective Time shall be canceled and

extinguished without any conversion thereof.

(b) The parties hereto further acknowledge that as additional

consideration for the benefit of Target prior to the Effective Time, Parent is

obligated to issue up to 1,000,000 of its shares of Parent Common Stock to

certain creditors of Company to be exchanged for cancellation of indebtedness of

Company to such creditors in an amount in excess of $1,000,000.

1.5 Mergeco Shares. Each share of $0.00001 par value common stock of

Mergeco issued and outstanding to Parent immediately prior to the Effective Time

shall by virtue of the Merger be converted into one share of common stock of the

Surviving Corporation.

1.6 Payment of Merger Consideration.

(a) At the Closing, the Stockholders who own shares of Senior

Preferred shall surrender to Parent their stock certificate(s)

representing their shares of Senior Preferred, accompanied by the

properly completed and duly executed transmittal materials delivered by

Parent. Upon receipt of the stock certificates and transmittal

materials, Parent shall cancel such stock certificates and Parent shall

thereupon issue to the holders of the shares Senior Preferred the sum

of $1.00 per share.

(b) From and after the Effective Time, until so surrendered, the

stock certificates representing shares of Senior Preferred shall be deemed for

all purposes to represent and evidence only the right to receive the per share

consideration set forth in Section 1.4, for each share represented by such

certificates, and no interest shall be paid or accrued on such amount and the

holders of such stock certificates shall cease to have any rights as

stockholders of the Target.

representing the Target Shares other than the Senior Preferred shall be deemed

cancelled and retired, and of no further force and effect, and there shall be no

obligation or requirement for the holders of such Target Shares to surrender

such certificates.

1.7 No Liability. Neither the Parent, nor the Surviving Corporation

shall be liable to any holder of Target Shares who fails to duly tender his, her

or its certificate and transmittal materials for shares or cash delivered to a

public official pursuant to any applicable abandoned property, escheat or

similar law.

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1.8 Lost, Stolen or Destroyed Certificates. In the event any

certificates for Target Shares shall have been lost, stolen or destroyed, Parent

shall issue in exchange for such lost, stolen or destroyed certificates, upon

the making of an affidavit of that fact by the holder thereof, such cash as may

be required pursuant to this Agreement; provided, however, that Parent may, in

its discretion and as a condition precedent to the issuance thereof, require the

owner of such lost, stolen or destroyed certificates to deliver a bond in such

sum as it may reasonably direct as indemnity against any claim that may be made

against Parent, the Company, the Surviving Corporation or the transfer agent

with respect to the certificates alleged to have been lost, stolen or destroyed.

1.9 Appraisal Rights.

(a) Notwithstanding anything herein to the contrary, any Target

Common Shares, Target Junior Preferred Shares and Target Series A Junior Shares

owned by a Dissenting Stockholder ("Dissenting Target Shares") shall not be

converted into the right to receive the consideration hereunder, but such

Dissenting Stockholder shall be entitled to only such payments as are provided

for by the DGCL, which shall be paid by the Surviving Corporation.

(b) Notwithstanding the provisions of this Section 1.9, if any

Dissenting Stockholder shall effectively withdraw or lose (through failure to

perfect or otherwise) his appraisal rights provided for by the DGCL for his

Target Shares, then, as of the Effective Time, such Dissenting Stockholder's

Target Shares shall automatically be converted into the right to receive only

the merger consideration as provided herein, without interest thereon.

prompt notice of any written demands by Dissenting Stockholders, withdrawals of

such demands and any other similar instruments served pursuant to the DGCL and

received by the Company and (ii) the opportunity to discuss with the Company any

negotiations and proceedings with respect to such demands and to participate

with the Company in such negotiations and proceedings. Prior to the Closing

Date, the Company shall not, except with the prior written consent of Parent,

voluntarily make any payment with respect to any demands by Dissenting

Stockholders or settle or offer to settle any such demands.

1.10 The Closing. The Closing of the Merger (the "Closing") shall take

place as soon as the conditions set forth in Articles VII and VIII are satisfied

or at such later date as the parties may agree (the "Closing Date"), at such

place as the parties may agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PARENT

As a material inducement to the Company to enter into this Agreement

and to consummate the transactions contemplated hereby, Parent makes the

following representations and warranties to the Company, the Stockholders and

Principals:

2.1 Corporate Status. Parent is a corporation duly organized, validly

existing and in good standing under the laws of the State of Florida and has

full corporate power and authority to own or lease and to operate and use its

properties and assets and to carry on its business as now conducted.

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2.2 Corporate Power and Authority. Parent has the corporate power and

authority to execute and deliver this Agreement and the Parent Ancillary

Documents, to perform its obligations hereunder and thereunder and to consummate

the transactions contemplated hereby and thereby. Parent has taken all corporate

action necessary to authorize its execution and delivery of this Agreement and

the Parent Ancillary Documents, the performance of its obligations hereunder and

thereunder and the consummation of the transactions contemplated hereby and

thereby. No approval of the stockholders of Parent is required to authorize the

transactions contemplated hereby.

2.3 Enforceability. This Agreement has been duly executed and delivered

by Parent and constitutes a legal, valid and binding obligation of Parent,

enforceable against Parent in accordance with its terms and each of the Parent

Ancillary Documents, upon execution and delivery by Parent, will be a legal,

valid and binding obligation of Parent enforceable in accordance with its terms.

2.4 No Violation. The execution and delivery of this Agreement and the

Parent Ancillary Documents by Parent, the performance by it of its obligations

hereunder and thereunder and the consummation by it of the transactions

contemplated by this Agreement and the Parent Ancillary Documents will not (i)

contravene any provision of its Certificate of Incorporation or By-Laws, (ii)

violate or conflict with any law, statute, ordinance, rule, regulation, decree,

writ, injunction, judgment or order of any Governmental Authority or of any

arbitration award which is either applicable to, binding upon or enforceable

against Parent, (iii) conflict with, result in any breach of, or constitute a

default (or an event which would, with the passage of time or the giving of

notice or both, constitute a default) under, or give rise to a right to

terminate, amend, modify, abandon or accelerate, any Contract which is

applicable to, binding upon or enforceable against Parent, (iv) result in or

require the creation or imposition of any Lien upon or with respect to any of

the property or assets of Parent, or (v) require the consent, approval,

authorization or permit of, or filing with or notification to, any Governmental

Authority, any court or tribunal or any other Person, except the Secretary of

State of the State of Illinois, or the SEC or other filings required to be made

by Parent.

2.5 No Commissions. Parent has incurred no obligation for any finder's

or broker's or agent's fees or commissions or similar compensation in connection

with the transactions contemplated hereby.

2.6 Capitalization. Schedule 2.6 sets forth, with respect to the

Parent, as of the date hereof and as of the Closing Date: (i) the number of

authorized shares of each class and series of its capital stock; (ii) the number

of issued and outstanding shares of each class and series of its capital stock;

and (iii) the number of shares of each class of its capital stock which are held

in treasury. All of the issued and outstanding shares of capital stock of the

Parent (i) have been and will be duly authorized and validly issued and are

fully paid and non assessable, (ii) were and will be issued in compliance with

all applicable state and federal securities laws, and (iii) were not, and will

not be, issued in violation of any preemptive rights or rights of first refusal.

No preemptive rights or rights of first refusal exist or will exist with respect

to the outstanding shares of capital stock of the Parent and no such rights

arise by virtue of or in connection with the transactions contemplated hereby.

Except as set forth on Schedule 2.6, there are no outstanding or authorized

rights, options, warrants, convertible securities, subscription rights,

conversion

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rights, exchange rights or other agreements or commitments of any kind that

could require the Parent to issue or sell any shares of its capital stock (or

securities convertible into or exchangeable for shares of its capital stock).

Except as disclosed or specifically referred to on Schedule 2.6, there are no

outstanding stock appreciation, phantom stock, profit participation or other

similar rights with respect to the Parent.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MERGECO

As a material inducement to the Company to enter into this Agreement

and to consummate the transactions contemplated hereby, Parent and Mergeco

jointly and severally make the following representations and warranties to the

Company:

3.1 Corporate Status. Mergeco is a corporation duly organized, validly

existing and in good standing under the laws of the State of Delaware and has

full corporate power and authority to own or lease and to operate and use its

properties and assets and to carry on its business as now conducted.

3.2 Corporate Power and Authority. Mergeco has the corporate power and

authority to execute and deliver this Agreement and the Mergeco Ancillary

Agreements, to perform its obligations hereunder and thereunder and to

consummate the transactions contemplated hereby and thereby. Mergeco has taken

all action necessary to authorize its execution and delivery of this Agreement,

the performance of its obligations hereunder and thereunder and the consummation

of the transactions contemplated hereby and thereby.

3.3 Enforceability. This Agreement has been duly executed and delivered

by Mergeco and constitutes a legal, valid and binding obligation of Mergeco,

enforceable against Mergeco in accordance with its terms and each of the Mergeco

Ancillary Agreements, upon execution and delivery by Mergeco, will be a legal,

valid and binding obligation of Mergeco enforceable in accordance with its

terms.

3.4 No Violation. The execution and delivery of this Agreement and the

Mergeco Ancillary Agreements by Mergeco, the performance by it of its

obligations hereunder and thereunder and the consummation by it of the

transactions contemplated by this Agreement and the Mergeco Ancillary Agreements

will not (i) contravene any provision of the Articles of Incorporation or

By-Laws of Mergeco, (ii) violate or conflict with any law, statute, ordinance,

rule, regulation, decree, writ, injunction, judgment or order of any

Governmental Authority or of any arbitration award which is either applicable

to, binding upon or enforceable against Mergeco, (iii) conflict with, result in

any breach of, or constitute a default (or an event which would, with the

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

give rise to a right to terminate, amend, modify, abandon or accelerate, any

Contract which is applicable to, binding upon or enforceable against Mergeco,

(iv) result in or require the creation or imposition of any Lien upon or with

respect to any of the property or assets of Mergeco, or (v) require the consent,

approval, authorization or permit of, or filing with or notification to, any

Governmental Authority, any court or tribunal or any other Person, except the

Secretary of State of the State of Illinois, the SEC or other filings required

to be made by Parent.

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3.5 No Commissions. Mergeco has incurred no obligation for any finder's

or broker's or agent's fees or commissions or similar compensation in connection

with the transactions contemplated hereby.

3.6 Mergeco Capitalization. Mergeco's authorized capital stock consists

of one million (1,000,000) shares of common stock, $0.00001 par value, of which

one thousand (1000) shares are issued and outstanding all of which are validly

issued, fully paid and non assessable, and 1,000,000 shares of blank check

preferred stock, $0.00001 par value per share, none of which is authorized or

outstanding. There are no options, warrants, preemptive rights, conversion

privileges or other contracts which give any Person the right to acquire any

capital stock of Mergeco or any interest therein. Parent is the beneficial and

record owner of all of the outstanding shares of common stock of Mergeco, free

and clear of all Liens.

3.7 Business Activity. Mergeco has not engaged in any business activity

of any nature prior to the date of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF

THE COMPANY

As a material inducement to Parent and Mergeco to enter into this

Agreement and to consummate the transactions contemplated hereby, the Company

makes the following representations and warranties to Parent and Mergeco:

4.1 Corporate Status. The Company is a corporation duly organized,

validly existing and in good standing under the laws of the State of Delaware.

The Company has the corporate power and authority to own or lease its property

and to carry on its business as now being conducted. The Company is legally

qualified to transact business and is in good standing as a foreign corporation

in each foreign jurisdiction where the nature of its property and the conduct of

its business requires such qualification, except for such jurisdictions where

the failure to so qualify would not have a material adverse effect on the

financial condition or results of operation of the Company (a "Material Adverse

Effect"). There is no pending or threatened proceeding for the dissolution,

liquidation, insolvency or rehabilitation of the Company.

4.2 Corporate Power and Authority. The Company has full corporate power

and authority to execute and deliver this Agreement and the Company Ancillary

Documents, to perform its obligations hereunder and thereunder and to consummate

the transactions contemplated hereby and thereby. The Company has taken all

corporate action necessary to authorize its execution and delivery of this

Agreement and the Company Ancillary Documents, the performance of its

obligations hereunder and thereunder and the consummation of the transactions

contemplated hereby and thereby.

4.3 Enforceability. This Agreement has been duly executed and delivered

by the Company and constitutes the legal, valid and binding obligation of the

Company, enforceable against it in accordance with its terms and each of the

Company Ancillary Documents, upon execution and delivery by the Company, will be

a legal, valid and binding obligation of the Company enforceable in accordance

with its terms.

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4.4 No Violation. Except as set forth on Schedule 4.4, the execution

and delivery of this Agreement and the Company Ancillary Documents by the

Company, the performance by it of its obligations hereunder and thereunder and

the consummation by it of the transactions contemplated by this Agreement and

the Company Ancillary Documents will not (i) contravene any provision of the

Articles of Incorporation or By-Laws of the Company, (ii) violate or conflict

with any law, statute, ordinance, rule, regulation, decree, writ, injunction,

judgment or order of any Governmental Authority or of any arbitration award

which is either applicable to, binding upon or enforceable against the Company;

(iii) conflict with, result in any breach of, or constitute a default (or an

event which would, with the passage of time or the giving of notice or both,

constitute a default) under, or give rise to a right to terminate, amend,

modify, abandon or accelerate, any Contract which is applicable to, binding upon

or enforceable against the Company, (iv) result in or require the creation or

imposition of any Lien upon or with respect to any of the property or assets of

the Company, or (v) require the consent, approval, authorization or permit of,

or filing with or notification to, any Governmental Authority, any court or

tribunal or any other Person, except the Secretary of State of the State of

Delaware.

4.5 Capitalization. Schedule 4.5 sets forth, with respect to the

Company, (i) the number of authorized shares of each class of its capital stock,

(ii) the number of issued and outstanding shares of each class of its capital

stock, and (iii) the number of shares of each class of its capital stock which

are held in treasury. All of the issued and outstanding shares of capital stock

of the Company (i) are legally and beneficially owned by the Person in such

amounts as set forth each Person's name on Schedule 4.5, (ii) have been duly

authorized and validly issued and are fully paid and non assessable, (iii) were

issued in compliance with all applicable state and federal securities laws, and

(iv) were not issued in violation of any preemptive rights or rights of first

refusal. No preemptive rights or rights of first refusal exist with respect to

the outstanding shares of capital stock of the Company, and no such rights arise

by virtue of or in connection with the transactions contemplated hereby. Except

as disclosed or specifically referred to on Schedule 4.5 there are no

outstanding or authorized rights, options, warrants, convertible securities,

subscription rights, conversion rights, exchange rights or other agreements or

commitments of any kind that could require the Company to issue or sell any

shares of its capital stock (or securities convertible into or exchangeable for

shares of its capital stock). There are no outstanding stock appreciation,

phantom stock, profit participation or other similar rights with respect to the

Company. There are no proxies, voting rights or other agreements or

understandings with respect to the voting or transfer of the outstanding capital

stock of the Company. The Company is not obligated to redeem or otherwise

acquire any of its outstanding shares of capital stock.

4.6 Subsidiaries. The Company does not own, directly or indirectly, any

outstanding voting securities of or other interests in, or control, any other

corporation, partnership, joint venture or other business entity.

4.7 Financial Statements. The Company has delivered to Parent (i) the

unaudited financial statements of the Company for the fiscal year ended March

31, 2004 and (ii) the unaudited financial statements of the Company as of June

30, 2004 for the three months then ended (collectively, the "Financial

Statements"), copies of which are attached as Schedule 4.7 hereto. The balance

sheet dated as of March 31, 2004 included in the Financial Statements is

referred to herein as the "Current Balance Sheet." The Financial Statements have

been prepared

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from the books and records of the Company in accordance with GAAP, except as set

forth on Schedule 4.7. The Financial Statements, fairly present the financial

position of the Company as of the dates of the balance sheets included in the

Financial Statements and the results of the Company's operations for the periods

covered by the statements of operations included in the Financial Statements.

4.8 Changes Since January 1, 2004. Except as disclosed in Schedule 4.8

or as contemplated herein, since March 31, 2004, the Company has not:

(i) issued any capital stock or other securities;

(ii) made any dividends or distribution of or with

respect to its capital stock or other securities or purchased or redeemed any of

its securities;

(iii) paid any bonus to or increased the rate of

compensation of any of its officers or salaried employees or amended any other

terms of employment of such persons;

(iv) sold, leased or transferred any of its properties

or assets other than in the ordinary course of business consistent with past

practice;

(v) made or obligated itself to make capital

expenditures in excess of $5,000 in any one case or $20,000 in the aggregate;

(vi) made any payment in respect of its liabilities

other than in the ordinary course of business consistent with past practice;

(vii) incurred any obligations or liabilities (including

any indebtedness) or entered into any transaction or series of transactions

involving in excess of $50,000 in the aggregate out of the ordinary course of

business, except for this Agreement and the transactions contemplated hereby;

(viii) suffered any theft, damage, destruction or

casualty loss;

(ix) made or adopted any change in its accounting

practice or policies;

(x) waived, canceled, compromised or released any rights

having a value in excess of $10,000 in the aggregate

(xi) terminated, amended or modified any contract,

except in the ordinary course of business or in connection with adoption of

payment programs to Creditors for past due accounts payable;

(xii) made any adjustment to its books and records other

than in respect of the conduct of its business activities in the ordinary course

consistent with past practice;

(xiii) entered into any transaction with any Affiliate

other than intercompany transactions in the ordinary course of business

consistent with past practice;

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(xiv) entered into any employment agreement;

(xv) imposed any security interest or other Lien on any

of its assets;

(xvi) delayed paying any accounts payable, not being

contested in good faith, otherwise than in the ordinary course of business

consistent with past practice; or

(xvii) agreed to do or authorized any of the foregoing.

4.9 Liabilities. Except as set forth on Schedule 4.9, the Company does

not have any liabilities or obligations, whether accrued, absolute, contingent

or otherwise, except (i) to the extent reflected or taken into account in the

Current Balance Sheet and heretofore not paid or discharged, (ii) to the extent

specifically set forth in or incorporated by express reference in any of the

Schedules attached hereto, and (iii) liabilities incurred in the ordinary course

of business consistent with past practice since the date of the Current Balance

Sheet, none of which are past due or arose from a breach of a contract, a

lawsuit, claim or violation of law.

4.10 Litigation. Except for potential creditor claims for past due

accounts payable, there is no action, suit, or other legal or administrative

proceeding or governmental investigation, pending or, to the Company's

Knowledge, threatened, anticipated or contemplated against, by or affecting the

Company or any of its properties or assets, or which question the validity or

enforceability of this Agreement or the transactions contemplated hereby, and to

the Company's knowledge, there is no basis for any of the foregoing. There are

no outstanding orders, decrees or stipulations issued by any Governmental

Authority in any proceeding to which the Company is or was a party which have

not been complied with in full or which continue to impose any material

obligations on the Company.

4.11 Real Estate.

(a) There is no real property legally or beneficially owned by the

Company (the "Owned Real Properties").

(b) Schedule 4.11(b) sets forth a list of all leases, licenses or

similar agreements (the "Leases") relating to the real property (the "Leased

Real Properties") to which the Company is a party (copies of which have

previously been furnished to Parent). The Leases are in full force and effect

and have not been amended. The Company is not in default or breach of any Lease,

and to the Company's Knowledge, no other party is in default or breach of any

Lease. No event has occurred which, with the passage of time or the giving of

notice or both, would cause a material breach of or default by the Company under

any of such Leases.

Properties and the Leased Real Properties (collectively, the "Real Properties"):

(i) The Company has not received written notice of any

pending or threatened condemnation, eminent domain or similar proceedings with

respect to the Real Properties and have no knowledge that any such proceedings

are threatened or contemplated.

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(ii) Except for Permitted Liens, there are no Contracts

granting to any party or parties (other than the Company) the right of use or

occupancy of any portion of the Real Properties. There are no outstanding

options or rights of first refusal to purchase any parcel of the Real

Properties.

(iii) All improvements and buildings on the Owned Real

Properties are in good repair, ordinary wear and tear excepted; and the

structural components and systems (including plumbing, electrical, air

conditioning/heating and sprinklers) are in good working order in all material

respects, ordinary wear and tear and ordinary course maintenance and replacement

excepted.

(iv) The Company has title to the Owned Real Properties,

free and clear of all Liens, and adverse claims of any kind or character, other

than the Permitted Liens.

(v) The Company has not requested, and, to the knowledge

of the Company, there is no pending request for, rezoning of the Owned Real

Properties or any other zoning variance for the Owned Real Properties.

(vi) There are no material pending tax certiorari

proceedings with respect to the Real Properties, or any tax abatements or

exemptions affecting the Real Properties. The Company has received in the twelve

months prior to the Closing Date any notice of, or has any knowledge of, any

proposed increase in the assessed valuation of the Real Properties or of any

proposed public improvement assessment.

(vii) Within the past two years, no casualty has

occurred at the Real Properties.

4.12 Good Title to and Condition of Personal Property Assets. The

Company has good and valid title to all of its Assets, free and clear of any

Liens or restrictions on use. The tangible personal property owned by the

Company and currently in use by the business and operations of the Company is in

good operating condition, normal wear and tear excepted, and has been maintained

in accordance with sound industry practices.

4.13 Personal Property Leases. Schedule 4.13 contains a brief

description of each lease or other Contract with an annual rent exceeding

$20,000 under which the Company is lessee of, or holds or operates, any

machinery, equipment, vehicle or other tangible personal property owned by a

third Person and used in or relating to the Company's business (an "Equipment

Lease"). The assets being leased pursuant to Equipment Leases are is in good

operating condition, normal wear and tear excepted, and has been maintained in

accordance with sound industry practices. The Company has complied in all

material respects with the terms and conditions of each Equipment Lease and, to

the Company's knowledge, all of the covenants to be performed by any other party

thereto have been fully performed and there are no claims for breach or

indemnification or notice of default or termination under any Equipment Lease.

The Company is not, nor will it be, as a result of the execution and delivery of

this Agreement or the performance of its obligations under this Agreement, in

breach of any Equipment Lease.

<PAGE>

4.14 Intellectual Property.

(a) The Company owns all right, title, and interest in (free and

clear of all Liens) all of the Intellectual Property described on Schedule 4.14

("Owned Intellectual Property").

(b) Schedule 4.14 lists (i) all patents and patent applications

and all registered and unregistered trademarks, trade names and service marks,

registered and material unregistered copyrights, and mask works included in the

Owned Intellectual Property, including the jurisdictions in which each such

Owned Intellectual Property right has been issued or registered or in which any

application for such issuance and registration has been filed; (ii) all

licenses, sublicenses and other agreements to which the Company is a party

pursuant to which any Person is authorized to use any Owned Intellectual

Property; and (iii) all licenses, sublicenses and other agreements to which the

Company is a party pursuant to which the Company is authorized to use any

third-party (including without limitation for the purposes of this Section 4.14

any employees of the Company) Intellectual Property which is not Owned

Intellectual Property, or which is incorporated in, is, or forms a part of, any

Owned Intellectual Property (the "Third Party Intellectual Property"). Except as

set forth in Schedule 4.14, no royalties or other continuing payment obligations

are due in respect of the Owned Intellectual Property. Except as set forth in

Schedule 4.14, all patents and registrations or applications therefore included

in Owned Intellectual Property are valid and subsisting and in full force and

effect and are applied for and owned in the name of the Company.

execution and delivery of this Agreement or the performance of its obligations

under this Agreement, in breach of any license, sublicense or other agreement

relating to Owned Intellectual Property.

(d) The Owned Intellectual Property does not dilute, misuse,

infringe, misappropriate or otherwise come into conflict with any Intellectual

Property of any other Person (including without limitation any Employee). No

charge, complaint, demand, notice or claim is pending or has been made to such

effect and the Company has not received written notice so alleging (including

any claim that the Company must license or refrain from using any Intellectual

Property of any other such Person). No action, suit, proceeding, hearing,

investigation, charge, complaint, claim or demand is pending or, to the

Company's Knowledge, threatened, that challenges the legality, validity,

enforceability, use or ownership of any item of Owned Intellectual Property, nor

is any Owned Intellectual Property subject to any outstanding injunction,

judgment, order, decree, ruling or charge.

(e) Except for the Third Party Intellectual Property, all

Intellectual Property used in or necessary to the conduct of the Company's

business as presently conducted or currently contemplated to be conducted by the

Company is Owned Intellectual Property and was written and created solely by

either (i) employees of the Company acting within the scope of their employment

or (ii) by third parties who have validly and irrevocably assigned all of their

rights therein to the Company, and no third party owns or has any right to any

of the Owned Intellectual Property. Except as described in Schedule 4.14, no

person who has licensed Intellectual Property to the Company has ownership

rights or license rights to improvements made by the Company in such

Intellectual Property.

<PAGE>

(f) To the Company's knowledge, no third party has interfered

with, infringed upon, misappropriated, misused, diluted or otherwise come into

conflict with any Owned Intellectual Property.

4.15 Adequacy of the Assets. The Assets, the Leased Assets, and any

Third Party Intellectual Property licensed by the Company, constitutes, in the

aggregate, all of the assets, rights and properties necessary for the conduct by

the Company of its business in the manner in which and to the extent to which

such business is currently being conducted.

4.16 Licenses and Permits. The Company possesses all licenses and

required governmental or official approvals, permits or authorizations

(collectively, the "Permits") necessary to lawfully conduct its business and

operations which Permits are listed on Schedule 4.16. All such Permits are valid

and in full force and effect, the Company is in material compliance with the

requirements thereof, and no proceeding is pending or threatened to revoke or

amend any of them.

4.17 Compliance with Laws.

(a) The Company has complied in all material respects with all

laws, regulations and orders applicable to it, its business, operations, Assets

and Leased Assets. The Company has not been cited, fined or otherwise notified

of any asserted past or present failure to comply with any laws, regulations or

orders and no proceeding with respect to any such violation is pending or

threatened.

(b) The Company has not made any payment of funds in connection

with its business which is prohibited by law, and no funds have been set aside

to be used in connection with its business for any payment prohibited by law.

4.18 Environmental Matters.

(a) The

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