Finova Mezzanine Capital Inc – ‘8-K’ for 1/20/99 – EX-2.01

As of:  Wednesday, 1/20/99   ·   For:  1/20/99   ·   Accession #:  950144-99-406   ·   File #:  814-00154

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Sirrom Capital Corporation                             5     15K 
 2: EX-2.01     Agreement and Plan of Merger                          51    297K 
 3: EX-99.01    Voting Agreement                                      12     46K 

EX-2.01   —   Agreement and Plan of Merger
Exhibit Table of Contents

EX-2.01
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                                                                    EXHIBIT 2.01

================================================================================

AGREEMENT AND PLAN OF MERGER

 AMONG

SIRROM CAPITAL CORPORATION

 THE FINOVA GROUP INC.

 AND FINOVA NEWCO INC.

 Dated as of January 6, 1999

================================================================================

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 TABLE OF CONTENTS

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                                                                                                             PAGE NO.
                                                                                                                     

ARTICLE I                                                                                                            
         THE MERGER.............................................................................................-1-  
         SECTION 1.1.      THE MERGER...........................................................................-1-  
         SECTION 1.2.      SHAREHOLDER MEETING, CLOSING, EFFECTIVE TIME OF THE MERGER...........................-2-  
         SECTION 1.3.      CONVERSION AND CANCELLATION OF SECURITIES............................................-2-  
         SECTION 1.4.      EXCHANGE OF CERTIFICATES.............................................................-3-  
         SECTION 1.5.      EMPLOYEE BENEFIT PLANS; OPTIONS......................................................-5-  
         SECTION 1.6.      NO DISSENTER OR APPRAISAL RIGHTS.....................................................-6-  

ARTICLE II                                                                                                           
         REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................-6-  
         SECTION 2.1.      ORGANIZATION, POWERS AND QUALIFICATIONS..............................................-6-  
         SECTION 2.2.      SUBSIDIARIES.........................................................................-6-  
         SECTION 2.3.      CAPITAL STOCK........................................................................-8-  
         SECTION 2.4.      CHARTER, BYLAWS, MINUTE BOOKS AND RECORDS............................................-8-  
         SECTION 2.5.      AUTHORITY; BINDING EFFECT............................................................-9-  
         SECTION 2.6.      NO CONFLICT; APPROVALS...............................................................-9-  
         SECTION 2.7.      GOVERNMENTAL CONSENTS AND APPROVALS..................................................-9-  
         SECTION 2.8.      SEC REPORTS.........................................................................-10-  
         SECTION 2.9.      FINANCIAL STATEMENTS................................................................-10-  
         SECTION 2.10.     ABSENCE OF CERTAIN CHANGES..........................................................-11-  
         SECTION 2.11.     INDEBTEDNESS; ABSENCE OF UNDISCLOSED LIABILITIES....................................-11-  
         SECTION 2.12.     ASSETS..............................................................................-11-  
         SECTION 2.13.     CONTRACTS...........................................................................-12-  
         SECTION 2.14.     INSURANCE...........................................................................-12-  
         SECTION 2.15.     FINANCING TRANSACTIONS..............................................................-13-  
         SECTION 2.16.     AUTHORIZATIONS; COMPLIANCE WITH LAW.................................................-14-  
         SECTION 2.17.     TAXES...............................................................................-14-  
         SECTION 2.18.     ABSENCE OF LITIGATION; CLAIMS.......................................................-15-  
         SECTION 2.19.     EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.......................................-16-  
         SECTION 2.20.     LABOR MATTERS.......................................................................-17-  
         SECTION 2.21.     ENVIRONMENTAL MATTERS...............................................................-18-  
         SECTION 2.22.     INTELLECTUAL PROPERTY...............................................................-20-  
         SECTION 2.23.     REGULATORY MATTERS..................................................................-21-  
         SECTION 2.24.     ADEQUACY OF DISCLOSURE..............................................................-21-  
         SECTION 2.25.     REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS..................................-21-  
         SECTION 2.26.     BOARD ACTION; VOTE REQUIRED.........................................................-22-  
         SECTION 2.27.     YEAR 2000 COMPLIANT.................................................................-22-  
         SECTION 2.28.     AFFILIATES..........................................................................-23-  
         SECTION 2.29.     OPINION OF FINANCIAL ADVISORS.......................................................-23-  
         SECTION 2.30.     BROKERS AND FINDERS.................................................................-23-  

ARTICLE III                                                                                                          
         REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...............................................-23-  


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         SECTION 3.1.      ORGANIZATION AND POWERS.............................................................-24- 
         SECTION 3.2.      AUTHORITY; BINDING EFFECT...........................................................-24- 
         SECTION 3.3.      NO CONFLICT; APPROVALS..............................................................-24- 
         SECTION 3.4.      GOVERNMENTAL CONSENTS AND APPROVALS.................................................-24- 
         SECTION 3.5.      CAPITAL STOCK.......................................................................-25- 
         SECTION 3.6.      REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS..................................-25- 
         SECTION 3.7.      SEC REPORTS.........................................................................-25- 
         SECTION 3.8.      FINANCIAL STATEMENTS................................................................-26- 
         SECTION 3.9.      ABSENCE OF CERTAIN CHANGES..........................................................-26- 
         SECTION 3.10.     ABSENCE OF LITIGATION; CLAIMS; ABSENCE OF UNDISCLOSED LIABILITIES...................-26- 
         SECTION 3.11.     COMPLIANCE WITH LAW.................................................................-27- 
         SECTION 3.12.     BROKERS AND FINDERS.................................................................-27- 
         Section 3.13.     ADEQUACY OF DISCLOSURE..............................................................-27- 

ARTICLE IV                                                                                                          
         OTHER AGREEMENTS......................................................................................-27- 
         SECTION 4.1.      CONDUCT OF THE COMPANY'S BUSINESS...................................................-27- 
         SECTION 4.2.      PARENT'S UNDERTAKINGS...............................................................-30- 
         SECTION 4.3.      ACCESS TO INFORMATION...............................................................-30- 
         SECTION 4.4.      STOCKHOLDER VOTE; PROXY STATEMENT...................................................-30- 
         SECTION 4.5.      COMMERCIALLY REASONABLE EFFORTS.....................................................-32- 
         SECTION 4.6.      PUBLIC ANNOUNCEMENTS................................................................-32- 
         SECTION 4.7.      NOTIFICATION........................................................................-32- 
         SECTION 4.8.      SUBSEQUENT FINANCIAL STATEMENTS.....................................................-33- 
         SECTION 4.9.      CONTROL OF OPERATIONS...............................................................-33- 
         SECTION 4.10.     REGULATORY AND OTHER AUTHORIZATIONS.................................................-33- 
         SECTION 4.11.     TAX-FREE REORGANIZATION.............................................................-34- 
         SECTION 4.12.     TAKEOVER STATUTE....................................................................-34- 
         SECTION 4.13.     INDEMNIFICATION OF DIRECTORS AND OFFICERS...........................................-34- 
         SECTION 4.14.     NO SOLICITATION.....................................................................-35- 
         SECTION 4.15.     CERTAIN MODIFICATIONS; FINANCIAL AND ACCOUNTING ADJUSTMENTS.........................-36- 
         Section 4.16.     CONTINUING EMPLOYEES................................................................-36- 

ARTICLE V                                                                                                           
         CONDITIONS TO CLOSING.................................................................................-37- 
         SECTION 5.1.      CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND PARENT AND MERGER SUB  ............-37- 
         SECTION 5.2.      CONDITIONS TO THE OBLIGATIONS OF THE COMPANY........................................-38- 
         SECTION 5.3.      CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB..............................-38- 

ARTICLE VI                                                                                                          
         TERMINATION, AMENDMENT AND WAIVER.....................................................................-40- 
         SECTION 6.1.      TERMINATION.........................................................................-40- 
         SECTION 6.2.      EFFECT OF TERMINATION...............................................................-43- 
         SECTION 6.3.      LIQUIDATED DAMAGES..................................................................-43- 
         SECTION 6.4.      AMENDMENT...........................................................................-44- 
         SECTION 6.5.      WAIVER..............................................................................-44- 


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ARTICLE VII                                                                                                
MISCELLANEOUS.........................................................................................-44- 
SECTION 7.1.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................................-44- 
SECTION 7.2.      ENTIRE AGREEMENT....................................................................-44- 
SECTION 7.3.      NOTICES.............................................................................-44- 
SECTION 7.4.      GOVERNING LAW.......................................................................-45- 
SECTION 7.5.      DESCRIPTIVE HEADINGS................................................................-45- 
SECTION 7.6.      PARTIES IN INTEREST.................................................................-46- 
SECTION 7.7.      COUNTERPARTS........................................................................-46- 
SECTION 7.8.      EXPENSES............................................................................-46- 
SECTION 7.9.      PERSONAL LIABILITY..................................................................-46- 
SECTION 7.10.     BINDING EFFECT; ASSIGNMENT..........................................................-46- 
SECTION 7.11.     SEVERABILITY........................................................................-46- 
SECTION 7.12.     LEGAL FEES AND COSTS................................................................-46- 


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AGREEMENT AND PLAN OF MERGER

                  This Agreement and Plan of Merger (this "AGREEMENT"), dated as
of January 6, 1999, is made by and among Sirrom Capital Corporation, a Tennessee
corporation (the "COMPANY"), The FINOVA Group Inc., a Delaware corporation      
("PARENT"), and FINOVA Newco Inc., a Delaware corporation and wholly-owned      
subsidiary of Parent ("MERGER SUB").                                            

 W I T N E S S E T H

       WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company and the sole stockholder of Merger Sub have each approved the       
business combination described herein in which the Company will become a        
subsidiary of Parent as a result of a merger of Merger Sub with and into the    
Company upon the terms and subject to the conditions hereinafter set forth (the 
"MERGER"), pursuant to which each outstanding share of Common Stock, no par     
value ("COMPANY COMMON STOCK"), of the Company will be converted into the right 
to receive shares of Common Stock, par value $.01 per share ("PARENT COMMON     
STOCK"), of Parent in the manner set forth herein;                              

      WHEREAS, the Boards of Directors of Parent and the Company have each
determined that the Merger and the other transactions contemplated hereby are   
consistent with, and in furtherance of, their respective business strategies and
goals and have each approved the Merger upon the terms and conditions set forth 
herein;                                                                         

       WHEREAS, the Board of Directors of Merger Sub and Parent, as the sole
stockholder of Merger Sub have approved and adopted this Agreement.             

   WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under Section 368(a) of the Internal Revenue 
Code of 1986, as amended (the "CODE"); and                                      

WHEREAS, concurrently with the execution and delivery of this 
Agreement, and as a condition and inducement to the willingness of Parent and   
Merger Sub to enter into this Agreement, each director of the Company has       
entered into a Shareholders Agreement dated as of the date hereof (the          
"SHAREHOLDERS AGREEMENT") pursuant to which such holders have agreed, INTER     
ALIA, to vote all his or her shares of Company Common Stock in favor of the     
Merger.                                                                         

 NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions set forth below, the parties   
hereto, intending to be legally bound, hereby agree as follows:                 

 ARTICLE I
THE MERGER

         SECTION 1.1. THE MERGER. Subject to the terms and conditions hereof and
in accordance with the General Corporation Law of the State of Delaware, as     
amended (the "DGCL") and the Tennessee Business Corporation Act, as amended (the
"TBCA"), at the Effective Time (hereinafter defined): (a)                       

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Merger Sub shall be merged with and into the Company and the separate existence 
of Merger Sub shall cease, (b) the Company, as the surviving corporation in the 
Merger (the "SURVIVING CORPORATION"), (i) shall be a wholly-owned subsidiary of 
Parent, (ii) shall continue its corporate existence under the laws of the State 
of Tennessee, and (iii) shall succeed to all rights, assets, liabilities and    
obligations of Merger Sub and the Company in accordance with the DGCL and the   
TBCA; (c) the Amended and Restated Charter of the Company (the "CHARTER"), as in
effect immediately prior to the Effective Time, shall continue as the Charter of
the Surviving Corporation; (d) the Bylaws of Merger Sub, as in effect           
immediately prior to the Effective Time, shall continue as the Bylaws of the    
Surviving Corporation; (e) the directors of Merger Sub immediately prior to the 
Effective Time shall be the directors of the Surviving Corporation; and (f) the 
officers of the Merger Sub immediately prior to the Effective Time shall        
continue as the officers of the Surviving Corporation. From and after the       
Effective Time, the Merger will have all the effects provided by applicable law.

  SECTION 1.2. SHAREHOLDER MEETING, CLOSING, EFFECTIVE TIME OF THE
MERGER. The Company shall submit this Agreement, the Merger and the revocation  
of the Company's election to be treated as a "Business Development Company"     
under the Investment Company Act of 1940, as amended (the "1940 ACT") to the    
holders of Company Common Stock for approval and adoption at the Shareholders   
Meeting (hereinafter defined) to be held as soon as practicable following the   
date of this Agreement in accordance with Section 4.4 hereof. Subject to the    
Merger receiving all requisite shareholder approvals and subject to the other   
provisions of this Agreement, the parties shall hold a closing (the "CLOSING")  
on the next business day (or such later date as the parties hereto may agree)   
following the later of (a) the Shareholders Meeting, or (b) the first business  
day on which the last of the conditions set forth in Article V hereof is        
fulfilled or waived (such later date, the "CLOSING DATE"), at 9:00 A.M. at the  
offices of Morgan, Lewis & Bockius LLP at 1701 Market Street, Philadelphia,     
Pennsylvania, or at such other time or place as the parties agree upon. Within  
two business days after the Closing Date, the parties hereto shall cause the    
Merger to be consummated by filing a certificate of merger (the "DELAWARE       
CERTIFICATE OF MERGER") with the Secretary of State of the State of Delaware and
the articles of merger (the "TENNESSEE ARTICLES OF MERGER") with the Secretary  
of State of the State of Tennessee in such form as required by, and executed in 
accordance with the relevant provisions of, the DGCL and the TBCA, as the case  
may be (the date and time of such filings, or such other date or time agreed    
upon by Parent and the Company and set forth therein, the "EFFECTIVE TIME").    

SECTION 1.3. CONVERSION AND CANCELLATION OF SECURITIES.       

                 (a) At the Effective Time, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than      
Excluded Shares described in Section 1.3(b) hereof), by virtue of the Merger and
without any action on the part of the holder thereof, shall be converted into,  
and become exchangeable for, the right to receive (i) .1634 shares (the         
"EXCHANGE RATIO") of Parent Common Stock ("STOCK CONSIDERATION"); provided,     
however, (x) if the Effective Time shall not have occurred by June 1, 1999, the 
Exchange Ration shall be increased by .0005 shares, and (y) if the Company shall
have entered into a binding agreement for the settlement of the litigation      
referred to in Part II, Item 1 of the Company's Form 10-Q for the Quarter Ended 
September 30, 1998 (the "SETTLEMENT AGREEMENT"), the cost of which to the       
Company is less than $10,000,000, the Exchange Ratio shall be increased by a    
number of shares equal to .00027 times the quotient of (A) $10,000,000 less such
cost of such settlement by the Company, divided by (B) 1,000,000. The           
consideration to be received by the holders of Company Common Stock pursuant to 
this Section 1.3(a) is hereinafter referred to as the "MERGER CONSIDERATION."   

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                 (b) At the Effective Time, each share of Company Common Stock
owned by Parent, Merger Sub or any other direct or indirect subsidiary of Parent
and each share of Company Common Stock owned by the Company or any direct or    
indirect subsidiary of the Company and in each case not held on behalf of third 
parties (collectively, "EXCLUDED SHARES"), shall by virtue of the Merger and    
without any action on the part of the holder thereof, be automatically canceled 
and retired and cease to exist, and no cash, securities or other property shall 
be payable in respect thereof.                                                  

              (c) At the Effective Time, each share of Merger Sub common
stock, par value $.01 per share ("MERGER SUB COMMON STOCK"), issued and         
outstanding immediately prior to the Effective Time shall, by virtue of the     
Merger and without any action by the holder thereof, be converted into one      
validly issued, fully paid and nonassessable common share, no par value, of the 
Surviving Corporation ("SURVIVING CORPORATION COMMON STOCK").                   

               (d) If between the date of this Agreement and the Effective
Time, the outstanding shares of Company Common Stock shall be changed into a    
different number of shares by reason of any reclassification, recapitalization, 
split-up, combination or exchange of shares, or any dividend payable in stock   
shall be declared thereon with a record date within such period, the Merger     
Consideration shall be adjusted accordingly to provide to the holders of Company
Common Stock the same economic effect as contemplated by this Agreement.        

SECTION 1.4. EXCHANGE OF CERTIFICATES.                        

                 (a) Prior to the Closing Date, the Parent shall select a bank
or trust company to act as exchange agent (the "EXCHANGE AGENT") in connection  
with the surrender of certificates evidencing shares of Company Common Stock    
converted into shares of Parent Common Stock pursuant to the Merger. At the     
Effective Time, Parent shall deposit with the Exchange Agent one or more        
certificates representing the aggregate number of shares of Parent Common Stock 
to be issued in the Merger for the Merger Consideration (the "MERGER STOCK"),   
which shares of Merger Stock shall be deemed to be issued at the Effective Time.
At and following the Effective Time, Parent shall deliver to the Exchange Agent 
such cash as may be required from time to time to make payment of cash in lieu  
of fractional shares in accordance with Section 1.4(h).                         

               (b) As soon as practicable after the Effective Time, Parent
shall cause the Exchange Agent to mail to each person who was, at the Effective 
Time, a holder of record of a certificate or certificates that immediately prior
to the Effective Time evidenced outstanding shares of Company Common Stock (the 
"CERTIFICATES"), (i) a letter of transmittal specifying that delivery shall be  
effected, and risk of loss and title to the Certificates shall pass, only upon  
delivery of the Certificates to the Exchange Agent, which shall be in a form and
contain any other provisions as Parent and the Surviving Corporation may        
reasonably agree and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Stock. Upon the proper surrender of     
Certificates to the Exchange Agent, together with a properly completed and duly 
executed letter of transmittal and such other documents as may be required by   
the Exchange Agent, the holder of such Certificate shall be entitled to receive 
in exchange therefor certificates representing the shares of the Merger Stock   
that such holder has the right to receive pursuant to the terms hereof (together
with any dividend or distribution with respect thereto made after the Effective 
Time and any cash paid in lieu of fractional shares pursuant to Section 1.4(h)),
and the Certificate so surrendered shall be canceled. If any portion of the     
Merger Stock is to be paid to a person other than the person who is the record  
holder of the Company Common Stock at the                                       

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Effective Time, it shall be a condition to such payment that the certificate    
evidencing the Company Common Stock so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that it be accompanied by all      
documents required to properly evidence and effect such transfer and by evidence
reasonably satisfactory to the Surviving Corporation and Parent that any        
applicable stock transfer tax has been paid.                                    

          (c) Except as otherwise expressly provided herein, the
Surviving Corporation shall pay all charges and expenses of the Parent, the     
Merger Sub and the Company, including those of the Exchange Agent, in connection
with the exchange of Certificates for shares of Merger Stock. Any Merger Stock  
or other cash delivered to the Exchange Agent pursuant to Section 1.4(a) hereof,
and not exchanged pursuant to Section 1.4(b) hereof for Company Common Stock or 
for fractional interests pursuant to Section 1.4(h) hereof within six months    
after the Effective Time, shall be returned by the Exchange Agent to the        
Surviving Corporation which shall thereafter act as exchange agent subject to   
the rights of holders of Company Common Stock hereunder.                        

              (d) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of shares of Company Common Stock shall 
thereafter be made.                                                             

              (e) None of Parent, Merger Sub, the Company, the Surviving
Corporation or the Exchange Agent will be liable to any holder of shares of     
Company Common Stock for any shares of Merger Stock, dividends or distributions 
with respect thereto, or cash payable in lieu of fractional shares pursuant to  
Section 1.4(h) hereof delivered to a state abandoned property administrator or  
other public official pursuant to any applicable abandoned property, escheat or 
similar law.                                                                    

           (f) If any Certificates shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming  
such Certificates to be lost, stolen or destroyed, the Exchange Agent will      
deliver in exchange for such lost, stolen or destroyed Certificates, the Merger 
Stock for the shares represented thereby, deliverable in respect thereof, as    
determined in accordance with the terms hereof. When authorizing such payment in
exchange for any lost, stolen or destroyed Certificates, the person to whom the 
Merger Stock is to be issued, as a condition precedent to such delivery, shall  
give Parent a bond satisfactory to Parent against any claim that may be made    
against Parent with respect to the Certificates alleged to have been lost,      
stolen or destroyed.                                                            

                (g) No dividend or other distribution declared or made after
the Effective Time with respect to the Merger 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 Merger Stock issuable upon surrender thereof until the 
holder of such Certificate shall surrender such Certificate in accordance with  
Section 1.4(b). Subject to the effect of applicable law, following surrender of 
any such Certificate there shall be paid, without interest, to the record holder
of certificates representing whole shares of Merger Stock issued in exchange    
therefor: (i) at the time of such surrender, the amount of dividends or other   
distributions with a record date after the Effective Time theretofore paid with 
respect to such whole shares of Merger Stock; 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 of such Certificate and a       
payment date subsequent to such surrender payable with respect to such whole    
shares of Merger Stock. No holder of Company Common Stock shall be entitled to  
any interest on any cash amounts payable for fractional interests pursuant to   
Section 1.4(h) hereof.                                                          

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                (h) No certificates or scrip evidencing fractional shares of
Merger Stock shall be issued upon the surrender for exchange of Certificates,   
and such fractional share interests shall not entitle the owner thereof to any  
rights of a stockholder of Parent. In lieu of any such fractional shares, each  
holder of a Certificate previously evidencing Company Common Stock, upon        
surrender of such Certificate for exchange pursuant to this Article I, shall be 
paid an amount in cash (without interest), rounded to the nearest cent,         
determined by multiplying (a) the closing price for a share of Parent Common    
Stock on the NYSE Composite Transaction Tape on the first business day          
immediately following the Effective Time, by (b) the fractional interest to     
which such holder would otherwise be entitled (after taking into account all    
shares of Company Common Stock held of record by such holder at the Effective   
Time).                                                                          

      SECTION 1.5. EMPLOYEE BENEFIT PLANS; OPTIONS. At the Effective Time,
each option or warrant granted by the Company to purchase shares of Company     
Common Stock, which is outstanding and unexercised immediately prior thereto,   
shall be assumed by Parent and converted into an option or warrant to purchase  
shares of Parent Common Stock on the same terms and conditions as are in effect 
for the original option or warrant as of the Closing Date as adjusted as set    
forth below. Each such option or warrant that is converted shall be converted   
into an option or warrant to purchase such number of shares of Parent Common    
Stock at such exercise price as is determined as provided below (and otherwise  
having the same duration and other terms as the original option or warrant):    

                 (a) the number of shares of Parent Common Stock to be subject
to the new option or warrant shall be equal to the product of (i) the number of 
shares of Company Common Stock subject to the original option or warrant, and   
(ii) the Exchange Ratio, the product being rounded, if necessary, up or down, to
the nearest whole share; and                                                    

                 (b) the exercise price per share of Parent Common Stock under
the new option or warrant shall be equal to (i) the exercise price per share of 
Company Common Stock under the original option or warrant divided by (ii) the   
Exchange Ratio, rounded, if necessary, up or down, to the nearest cent.         

The adjustments provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a   
manner consistent with Section 424(a) of the Code. Prior to the Effective Time, 
the Board of Directors of the Company shall take such action as may be required 
under the governing option plans and agreements to effectuate the foregoing.    

                  Prior to the Effective Time, Parent shall reserve for issuance
the number of shares of Parent Common Stock necessary to satisfy Parent's       
obligations under this Section 1.5. Promptly after the Effective Time (but in no
event later than five business days thereafter), Parent shall file with the     
Securities and Exchange Commission (the "SEC") a registration statement on an   
appropriate form under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "SECURITIES ACT"), with respect to the shares of    
Parent Common Stock subject to options to acquire Parent Common Stock issued    
pursuant to this Section 1.5, and shall use its best efforts to maintain the    
current status of the prospectus contained therein, as well as comply with      
applicable state securities or "blue sky" laws, for so long as such options     
remain outstanding.                                                             

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    SECTION 1.6. NO DISSENTER OR APPRAISAL RIGHTS. Pursuant to Section
48-23-102 of the TBCA, the holders of shares of Company Common Stock shall not  
have any dissenters or appraisal rights with respect to this Agreement or the   
Merger.                                                                         

ARTICLE II
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to, and agrees with, Parent and
Merger Sub as follows, except as set forth on a Disclosure Schedule delivered by
the Company concurrently with the execution and delivery of this Agreement (the 
"COMPANY SCHEDULE"), each of which exceptions shall specifically identify the   
relevant subsection hereof to which it relates and shall be deemed to be        
representations and warranties as if made hereunder:                            

       SECTION 2.1. ORGANIZATION, POWERS AND QUALIFICATIONS. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee. The Company has all requisite corporate power   
and authority to carry on its business as it has been and is now being conducted
and to own, lease and operate the properties and assets used in connection      
therewith. The Company is duly qualified as a foreign corporation authorized to 
do business and is in good standing in every jurisdiction in which such         
qualification is required, all of which jurisdictions are disclosed in the      
COMPANY SCHEDULE, except where the failure to be so qualified would not have a  
Company Material Adverse Effect. As used in this Agreement, "COMPANY MATERIAL   
ADVERSE EFFECT" shall mean any fact, condition, event, development or occurrence
which, individually or when taken together with all other such facts,           
conditions, events, developments or occurrences other than changes in the       
general economic conditions and other conditions affecting financial            
institutions or the credit market generally, would reasonably be expected to    
have a material adverse effect on the financial condition, operating results,   
business or prospects of the Company and the Subsidiaries (hereinafter defined),
taken as a whole.                                                               

                  (b) The Company (i) has qualified for and validly elected to
be treated as a business development company under the 1940 Act; such election  
has not been revoked or rescinded and is in full force and effect, and (ii) is  
in compliance with the 1940 Act and the rules and regulations promulgated       
thereunder.                                                                     

          (c) The Company (i) has been licensed by the Tennessee
Department of Financial Institutions to operate as a business industrial        
development company ("BIDCO") under the laws of the State of Tennessee and (ii) 
has been granted a California lenders license by the Department of Corporations 
of the State of California and each such license has not been revoked or        
rescinded and is in full force and effect.                                      

SECTION 2.2. SUBSIDIARIES.                                    

          (a) "SUBSIDIARY" means, with respect to any party, any
corporation, limited liability company, partnership, joint venture, or other    
business association or entity, at least a majority of the voting securities or 
economic interests of which is directly or indirectly owned or controlled by    
such party or by any one or more of its Subsidiaries, except where such         
ownership or control results solely from such party's ownership or control of   
unexercised warrants or convertible debt instruments issued by                  

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such entity. As used in this Agreement, "JOINT VENTURE" means, with respect to  
any party, any corporation, limited liability company, partnership, joint       
venture or other business association or entity in which (i) such party or any  
one or more of its Subsidiaries, directly or indirectly, owns or controls more  
than five percent (5%) and less than a majority of any class of the outstanding 
voting securities or economic interests, or (ii) such party or a Subsidiary of  
such party is a general partner; provided, however, that the term Joint Venture 
shall not include any party, any corporation, limited liability company,        
partnership, joint venture or other business association or entity in which the 
Company or any of its Subsidiaries owns or controls any equity interests solely 
pursuant to a Financing Transaction (hereinafter defined), (collectively,       
"PORTFOLIO COMPANIES").                                                         

                 (b) The COMPANY SCHEDULE lists each Subsidiary and each Joint
Venture of the Company, the jurisdiction of its organization and the amount of  
its securities outstanding and the owners thereof. Each Subsidiary is duly      
organized, validly existing and in good standing under the laws of the          
jurisdiction of its organization. Each Subsidiary has all requisite power and   
authority to carry on its business as it has been and is now being conducted and
to own, lease and operate the assets and properties used in connection          
therewith. Each Subsidiary is duly qualified as a foreign corporation authorized
to do business and is in good standing in every jurisdiction in which such      
qualification is required, all of which jurisdictions are disclosed in the      
COMPANY SCHEDULE except where the failure to be so qualified would not have a   
Company Material Adverse Effect. All issued and outstanding shares of capital   
stock of each Subsidiary have been duly authorized, are validly issued and      
outstanding, are fully paid and nonassessable and were issued in compliance with
all applicable federal and state securities laws, and, except as set forth on   
the COMPANY SCHEDULE, are lawfully owned of record and beneficially by the      
Company or another Subsidiary free and clear of all pledges, liens, claims,     
security interests and other charges or defects in title of any nature          
whatsoever ("LIENS"). There are no existing subscriptions, options, warrants,   
convertible securities, calls, commitments, agreements, conversion rights or    
other rights of any character (contingent or otherwise) calling for or requiring
the issuance, transfer, sale or other disposition of any shares of the capital  
stock of any Subsidiary, or calling for or requiring the issuance of any        
securities or rights convertible into or exchangeable for shares of capital     
stock of any Subsidiary, nor is the Company or any Subsidiary subject to any    
obligation (contingent or otherwise) to repurchase, redeem or otherwise acquire 
shares of capital stock of any Subsidiary, in any case except as set forth in   
the COMPANY SCHEDULE. Except for the Subsidiaries, the Joint Ventures or the    
Portfolio Companies or as set forth in the COMPANY SCHEDULE, neither the Company
nor any Subsidiary directly or indirectly (i) owns or controls any shares of any
corporation nor has any voting securities of, nor the right to share in the     
income or losses of, either of record, beneficially or equitably, any           
association, partnership, limited liability company, joint venture or other     
legal entity, or (ii) is a general partner of any partnership.                  

                  (c) Sirrom Investments Inc. ("SII"), a wholly owned subsidiary
of the Company, has obtained a license from the Small Business Administration   
("SBA") to operate as a small business investment company; such license has not 
been revoked or rescinded and is in full force and effect, and is in compliance 
with the Small Business Investment Act of 1958 and all applicable SBA           
Regulations. SII and Sirrom Funding Corporation ("SFC"), a wholly owned         
subsidiary of the Company, are each registered investment companies under the   
1940 Act; each such registration has not been revoked or rescinded and is in    
full force and effect, and is in compliance with the 1940 Act and the rules and 
regulations promulgated thereunder.                                             

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      SECTION 2.3. CAPITAL STOCK. The Company has authorized capital stock
consisting of 75,000,000 shares of Company Common Stock. As of December 31,     
1998: (i) 37,229,196 shares of Company Common Stock were issued and outstanding,
(ii) no shares of Company Common Stock were held as treasury shares, and (iii)  
7,199,098 shares of the Company Common Stock were reserved for issuance under   
the Company stock option or equity compensation plans (the "COMPANY STOCK       
PLANS") (including 5,707,098 shares reserved for issuance under the Company's   
Amended and Restated 1996 Incentive Stock Option Plan, 4,519,718 of which were  
subject to outstanding options and 1,167,350 of which were reserved for future  
option grants, 1,000,000 shares reserved for issuance under the Company's       
Amended and Restated 1994 Employee Plan, 633,786 of which were subject to       
outstanding options and 358,214 of which were reserved for future grants, and   
492,000 shares reserved for issuance under the Company's Amended and Restated   
1995 Stock Option Plan for Non-Employee Directors, 200,400 of which were subject
to outstanding options and 260,000 of which were reserved for future option     
grants). The COMPANY SCHEDULE lists all option holders, the date each option to 
purchase Company Common Stock was granted, the Company Stock Plan under which   
such options were granted, the number of shares subject to each such option, the
expiration date of each such option and the price at which such option may be   
exercised under the applicable Company Stock Plan. Since December 31, 1998, (i) 
no additional shares of capital stock have been reserved for issuance by the    
Company, (ii) the only issuances of shares of capital stock of the Company have 
been issuances of Company Common Stock upon the exercise of outstanding Company 
stock options listed in the COMPANY SCHEDULE and (iii) no shares of Company     
Common Stock came to be held by the Company as treasury shares. All of the      
issued and outstanding shares of Company Common Stock have been duly authorized 
and are validly issued and outstanding, fully paid and nonassessable, and were  
issued in compliance with all applicable federal and state securities laws, in  
all material respects. No shares of capital stock issued by the Company are or  
were at the time of their issuance subject to preemptive rights. There are no   
existing subscriptions, options, warrants, convertible securities, calls,       
commitments, agreements, conversion rights or other rights of any character     
(contingent or otherwise) calling for or requiring the issuance, transfer, sale 
or other disposition of any shares of the capital stock of the Company or of any
Subsidiary, or calling for or requiring the issuance of any securities or rights
convertible into or exchangeable for shares of capital stock of the Company or  
of any Subsidiary, nor is the Company or any Subsidiary subject to any          
obligation (contingent or otherwise) to repurchase, redeem or otherwise acquire 
shares of capital stock of the Company or any Subsidiary, in any case except as 
set forth on the COMPANY SCHEDULE and as contemplated by this Agreement. There  
are no voting trusts or other agreements or understandings to which the Company 
is a party, nor, to the knowledge of the Company, to which any shareholder of   
the Company is a party, with respect to the voting of capital stock of the      
Company, other than this Agreement, or the Shareholders Agreement.              

       SECTION 2.4. CHARTER, BYLAWS, MINUTE BOOKS AND RECORDS. The copies of
the Charter and all amendments thereto and of the Bylaws, as amended, of the    
Company and the Subsidiaries which have been delivered to Parent are true,      
correct and complete copies thereof as in effect on the date hereof. The minute 
books of the Company and the Subsidiaries which have been made available for    
inspection contain minutes, which are accurate and complete in all material     
respects, of all meetings and accurate consents in lieu of meetings of the Board
of Directors (and any committee thereof) and of the shareholders of the Company 
and the Subsidiaries since the respective dates of incorporation. The books and 
records of the Company and each Subsidiary accurately reflect, in all material  
respects, the transactions to which the Company or the Subsidiary is a party or 
by which their properties are subject or bound, and the assets and liabilities  
of the Company or the Subsidiary.                                               

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       SECTION 2.5. AUTHORITY; BINDING EFFECT. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to      
consummate the transactions contemplated hereby and thereby. All necessary      
action, corporate or otherwise, required to have been taken by or on behalf of  
it by applicable law, its charter document or otherwise to authorize (i) the    
approval, execution and delivery on its behalf of this Agreement and (ii) its   
performance of its obligations under this Agreement and the consummation of the 
transactions contemplated hereby and thereby have been taken, including the     
receipt of the unanimous approval by the Company's Board of Directors, except   
that the adoption of this Agreement must be approved by the affirmative vote of 
a majority of the votes of all outstanding shares of Company Common Stock of    
record on the record date for the Shareholders Meeting ("REQUIRED COMPANY       
SHAREHOLDER APPROVAL"). This Agreement constitutes the Company's valid and      
binding agreement, enforceable against it in accordance with its terms, except  
(a) as the same may be limited by applicable bankruptcy, insolvency, moratorium 
or similar laws of general application relating to or affecting creditors'      
rights, including without limitation, the effect of statutory or other laws     
regarding fraudulent conveyances and preferential transfers, and (b) for the    
limitations imposed by general principles of equity and commercial              
reasonableness.                                                                 

         SECTION 2.6. NO CONFLICT; APPROVALS. Except as set forth in the COMPANY
SCHEDULE, the execution and delivery of this Agreement does not, and the        
consummation of the transactions contemplated hereby and thereby will not, (a)  
violate or conflict with the Company's Charter or Bylaws or the comparable      
organizational documents of any of its Subsidiaries, or (b) constitute a breach 
or default (or an event that with notice or lapse of time or both would become a
breach or default) or give rise to any Lien, third party right of termination,  
cancellation, material modification or acceleration, or loss of any benefit,    
under any Contract (hereinafter defined) to which the Company or any Subsidiary 
is a party or by which it is bound, or (c) subject to the consents, approvals,  
orders, authorizations, filings, declarations and registrations specified in    
Section 2.7 or in the COMPANY SCHEDULE, conflict with or result in a violation  
of any permit, concession, franchise or license or any law, rule or regulation  
applicable to the Company or any of its Subsidiaries or any of their properties 
or assets, except, in the case of clauses (b) and (c), for any such breaches,   
defaults, Liens, third party rights, cancellations, modifications, accelerations
or losses of benefits, conflicts or violations which would not have a Company   
Material Adverse Effect and would not impair the ability of the Company to      
perform its obligations under this Agreement or prevent or delay the            
consummation of any of the transactions contemplated hereby and thereby.        

       SECTION 2.7. GOVERNMENTAL CONSENTS AND APPROVALS. Except as set forth
on the COMPANY SCHEDULE, neither the execution and delivery of this Agreement   
nor the consummation of the transactions contemplated hereby or thereby will    
require any consent, approval, order, authorization, or permit of, or filing    
with or notification to, any local, state, federal or foreign court,            
administrative agency, commission or other governmental or regulatory authority,
agency or instrumentality ("GOVERNMENTAL ENTITY"), except (a) the filing of the 
Registration Statement (hereinafter defined) with the SEC in accordance with the
Securities Act, and the entry of an order by the SEC permitting such            
Registration Statement to become effective, and compliance with applicable state
securities laws, (b) the filing of the Proxy Statement (hereinafter defined) and
related proxy materials with the SEC in accordance with the Securities Exchange 
Act of 1934, as amended, and the rules and regulations thereunder (the "EXCHANGE
ACT"), (c) the filings with and consents of the Commission to withdraw the      
Parent's election to be treated as a business development company and to        
deregister each subsidiary that has registered as an investment company in      
accordance with the 1940 Act, (d) notification pursuant to, and expiration or   
termination of the waiting period under, the Hart-Scott-Rodino Antitrust        
Improvements Act of 1976, as                                                    

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amended, and the rules and regulations thereunder (the "HSR ACT"), (e) the      
filings with and consents or approvals of the SBA, (f) the filings with and     
consent of the Tennessee Department of Financial Institutions and the California
Department of Corporations, (g) the filing and recording of the Delaware        
Certificate of Merger in accordance with the DGCL and the Tennessee Articles of 
Merger in accordance with the TBCA, and (h) where the failure to obtain such    
consents, approvals, authorizations or permits, or to make such filings or      
notifications, would not prevent it from performing its obligations under this  
Agreement without having a Company Material Adverse Effect.                     

     SECTION 2.8. SEC REPORTS. The Company has filed all required forms,
reports and documents with the SEC since January 1, 1995 (collectively, the     
"COMPANY'S SEC REPORTS"), including without limitation the Company's Annual     
Report on Form 10-K for the year ended December 31, 1997 (the "COMPANY 1997 FORM
10-K") and the Company's Quarterly Report on Form 10-Q for the quarter ending   
September 30, 1998. The Company's SEC Reports have complied in all material     
respects with all applicable requirements of the Securities Act and the Exchange
Act. As of their respective dates, none of the Company's SEC Reports, including,
without limitation, any financial statements or schedules included or           
incorporated by reference therein, contained any untrue statement of a material 
fact or omitted to state a material fact required to be stated or incorporated  
by reference therein or necessary to make the statements therein, in light of   
the circumstances under which they were made, not misleading. There have been   
filed as exhibits to, or incorporated by reference in, the Company 1997 Form    
10-K and all subsequently filed Forms 10-Q, all contracts which, as of the date 
thereof, were material as described in Item 601(b)(10) of Regulation S-K except 
as set forth on the COMPANY SCHEDULE. The Company has heretofore delivered to   
Parent, in the form filed with the SEC, all of the Company's SEC Reports.       

        SECTION 2.9. FINANCIAL STATEMENTS. The Company has delivered to Parent
true and complete copies of (a) consolidated balance sheets of the Company and  
Subsidiaries at December 31, 1997 and 1996 and the related consolidated         
statements of earnings, changes in shareholders' equity and statements of cash  
flow for the years then ended, together with the notes thereto, audited by      
Arthur Andersen LLP (the "COMPANY'S AUDITORS"), and (b) unaudited consolidated  
balance sheets of the Company and Subsidiaries at September 30, 1998 and 1997   
and related consolidated statements of income, changes in shareholders' equity  
and statements of cash flow for the periods ended September 30, 1998 and 1997,  
all of which have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the periods involved,       
subject in the case of interim financial statements to normal year-end          
adjustments and to the absence of full footnotes. Such balance sheets, including
the related notes, fairly present the consolidated financial position, assets   
and liabilities (whether accrued, absolute, contingent or otherwise) of the     
Company and Subsidiaries at the dates indicated and such consolidated statements
of income, changes in shareholders' equity and statements of cash flow fairly   
present the consolidated results of operations, changes in shareholders' equity 
and cash flow of the Company and Subsidiaries for the periods indicated. The    
unaudited consolidated financial statements as at and for the periods ended     
September 30, 1998 and 1997 contain all adjustments, which are solely of a      
normal recurring nature, necessary to present fairly the financial position at  
September 30, 1998 and 1997 and the results of operations and changes in        
shareholders' equity and financial position for the periods then ended. The     
audited consolidated balance sheet of the Company and its Subsidiaries at       
December 31, 1997 (the "AUDIT DATE") described above is referred to herein as   
the "COMPANY 1997 BALANCE SHEET." The audited consolidated financial statements 
of the Company and its Subsidiaries as at and for the year ended December 31,   
1997 are referred to herein as the "COMPANY AUDITED FINANCIAL STATEMENTS."      

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      SECTION 2.10. ABSENCE OF CERTAIN CHANGES. (a) Except as described in
the COMPANY SCHEDULE, since September 30, 1998, the Company and the Subsidiaries
have conducted their business solely in the ordinary course consistent with past
practice and policies and procedures, to the extent the Company has adopted any 
such policies and procedures (the "ORDINARY COURSE"). Except as otherwise       
disclosed on the COMPANY SCHEDULE, since September 30, 1998, the Company and the
Subsidiaries have not:                                                          

     (a) suffered any Company Material Adverse Effect;

             (b) been subject to any other events or conditions of any
character that would have a Company Material Adverse Effect or impair the       
ability of the Company to perform its obligations under this Agreement or       
prevent or delay the consummation of any of the transactions contemplated       
hereby;                                                                         

               (c) made any material change to their respective accounting
methods, principles or practices;                                               

            (d) been subject to any revaluation of any assets of the
Company or any of its Subsidiaries that, individually or in the aggregate has   
had, or would reasonably be expected to have a Company Material Adverse Effect, 
including writing down the value of loans, warrants or other securities held by 
the Company;                                                                    

                 (e) incurred any material liabilities, other than liabilities
incurred in the Ordinary Course or discharged or satisfied any material Lien, or
paid any material liabilities, other than in the Ordinary Course or failed to   
pay or discharge when due any liabilities of which the failure to pay or        
discharge has caused or will cause any material damage or risk of material loss 
to it or any of its material assets or properties; or                           

               (f) taken or been subject to any other action or event that
would have required the consent of Parent pursuant to Section 4.1 hereof.       

     SECTION 2.11. INDEBTEDNESS; ABSENCE OF UNDISCLOSED LIABILITIES. The
COMPANY SCHEDULE discloses as of the date hereof all indebtedness for money     
borrowed of the Company or any Subsidiary, accurately disclosing for each such  
indebtedness the payee, the original principal amount of the loan, the current  
unpaid balance of the loan, the interest rate and the maturity date. Except as  
set forth on the COMPANY SCHEDULE, neither the Company nor the Subsidiaries have
any material indebtedness, liability or obligation of any kind (whether known or
unknown, accrued, absolute, asserted or unasserted, contingent or otherwise)    
except (a) as and to the extent reflected, reserved against or otherwise        
disclosed in the Company 1997 Balance Sheet, or (b) for liabilities and         
obligations incurred subsequent to the Audit Date in the ordinary course of     
business and which do not have a Company Material Adverse Effect or impair the  
ability of the Company to perform its obligations under this Agreement or       
prevent or delay the consummation of any of the transactions contemplated       
hereby.                                                                         

        SECTION 2.12. ASSETS. Except as described in the COMPANY SCHEDULE, the
Company and the Subsidiaries have good and marketable title to all their real   
and personal properties and assets, including, without limitation, those assets 
and properties reflected in the Company 1997 Balance Sheet in the amounts and   
categories reflected therein, free and clear of all Liens, except (a) the lien  
of current taxes not yet due and payable, (b) properties, interests, and assets 
disposed of by the Company or any                                               

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Subsidiary since the Audit Date solely in the Ordinary Course, (c) such secured 
indebtedness as is disclosed in the Company 1997 Balance Sheet covering the     
properties referred to therein, and (d) such imperfections of title, easements  
and encumbrances, if any, as are not substantial in character, amount or extent 
and do not materially detract from the value, or interfere with the present or  
proposed use, of the properties subject thereto ("PERMITTED LIENS").            

SECTION 2.13. CONTRACTS.                                      

                 (a) The COMPANY SCHEDULE lists each written or oral contract,
agreement, arrangement, lease, instrument, mortgage or commitment to which the  
Company or a Subsidiary is a party or may be bound or to which their respective 
properties or assets may be subject ("CONTRACT") (i) which is material to the   
Company or a Subsidiary; (ii) which is with any present or former employee or   
for the employment of any person or consultant or which is a non-compete        
arrangement with any employee of the Company or a Subsidiary; (iii) which is a  
severance agreement, program or policy of the Company or a Subsidiary with or   
relating to its employees; (iv) under the terms of which any of the rights or   
obligations of a party thereto will be modified or altered as a result of the   
transactions contemplated hereby or which contain change in control provisions; 
(v) which involves a material commission, representative, franchise,            
distributorship, or sales agency arrangement; (vi) which is a material          
conditional sale or lease arrangement; (vii) which involves a material license, 
or other material arrangement which relates in whole or in part to any material 
software, patent, trademark, trade name, service mark or copyright or to any    
material ideas, technical assistance or other know-how of or used by the Company
or a Subsidiary in the conduct of its business; (viii) which represents any     
material confidentiality or non-disclosure arrangement pursuant to which the    
Company or a Subsidiary has agreed to keep confidential information obtained    
from any other person; (ix) which is an arrangement limiting or restraining the 
Company or any Subsidiary or any successor thereto from engaging or competing in
any manner or in any business; or (x) under which the Company or any Subsidiary 
guarantees the payment or performance by others or in any way is or will be     
liable with respect to material obligations of any other person.                

                 (b) All Contracts are valid and binding and in full force and
effect as to the Company on the date of this Agreement except to the extent they
have previously expired in accordance with their terms or except to the extent  
that their invalidity would not have a Company Material Adverse Effect. None of 
the Company, the Subsidiaries nor, to the Company's knowledge, any other        
parties, have violated any provision of, or committed or failed to perform any  
act which with notice, lapse of time or both would constitute a default under   
the provisions of, any Contract, the termination or violation of which, or the  
default under which, might have a Company Material Adverse Effect. True and     
complete copies of all Contracts listed on the COMPANY SCHEDULE or listed in the
Company 1997 Form 10-K, together with all amendments thereto through the date   
hereof, have been delivered to Parent.                                          

                (c) The Company terminated the Portfolio Purchase Agreement,
dated as of December 4, 1998, by and between the Company and Tandem Capital LLC 
on or before the date hereof pursuant to the terms of such agreement and has    
paid Tandem Capital LLC all liquidated damages or other expenses associated with
the termination of such agreement.                                              

         SECTION 2.14. INSURANCE. The COMPANY SCHEDULE accurately sets forth all
policies of insurance, other than title insurance policies, held by or on behalf
of the Company. The COMPANY SCHEDULE lists all outstanding claims thereunder in 
excess, individually or in the aggregate, of $25,000.                           

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All such policies of insurance are in full force and effect, and no notice of   
cancellation has been received. In the reasonable judgment of the Company, such 
policies are in amounts which are adequate in relation to the business and      
properties of the Company, and all premiums to date have been paid in full.     

SECTION 2.15. FINANCING TRANSACTIONS.                         

          (a) The COMPANY SCHEDULE sets forth for each financing
transaction conducted by the Company or any Subsidiary (the "FINANCING          
TRANSACTIONS") the following information as of September 30, 1998 and as of the 
last day of the month prior to the Closing Date: the name and address of the    
borrower; the principal amount of the loan and the remaining term of the note;  
whether the debt is subordinate; the amount of shares for which a warrant has   
been issued to the Company and the exercise price thereto; the terms and amounts
of any additional equity interest held by the Company or any Subsidiary in the  
borrower; and the value reflected on the Company's books of any debt or equity  
interest in such party.                                                         

               (b) Accurate and complete copies of each of the agreements,
contracts, leases and other instruments entered into by the Company or its      
Subsidiaries, as the case may be, with respect to the Financing Transactions    
(the "FINANCING DOCUMENTS") are in the files of the Company and have been made  
available to Parent. The original execution copy of the Financing Documents are 
in the possession of the Company, a trustee under a securitization transaction  
or a secured lender to the Company. The Company has caused to be filed UCC-1    
financing statements with respect to all or substantially all of the property   
pledged to the Company pursuant to any Financing Transaction and has made such  
other filings or notifications, or taken possession or has obtained certificates
of title, as are necessary to give the Company a perfected security interest in 
and lien upon any such property.                                                

                (c) Each of the Financing Documents is valid and enforceable
in accordance with its terms except as may be limited by bankruptcy laws or     
other similar laws affecting rights of creditors generally or general principals
of commercial reasonableness; the Company is, and to the Company's actual       
knowledge all other parties thereto are, in compliance in all material respects 
with the provisions thereof; the Company is not, and to the Company's actual    
knowledge no other party thereto is, in default in the performance, observance  
or fulfillment of any material obligation, covenant or condition contained      
therein, except as disclosed in the COMPANY SCHEDULE; and, to the Company's     
actual knowledge, no event has occurred which with or without the giving of     
notice or lapse of time, or both, would constitute a default thereunder. Each of
the Financing Documents accurately and completely describes the terms of the    
Financing Transaction and there have been no amendments, modifications or       
waivers that are not reflected therein.                                         

      (d) There has been no adverse determination in any
administrative proceeding or in any court of law, nor any adverse settlement,   
ongoing administrative proceeding or other similar action, which would          
materially impair the ability of the Company to realize the current value of the
Financing Transactions.                                                         

               (e) With respect to each Financing Transaction in which the
Company has been issued securities or warrants to acquire securities, to the    
Company's knowledge, each such security was issued in compliance with the       
requirements of the Securities Act and the Company has not taken any actions    
which would violate the restrictions imposed upon the Company in connection with
such securities under the applicable securities laws, pursuant to contract or   
otherwise.                                                                      

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        SECTION 2.16. AUTHORIZATIONS; COMPLIANCE WITH LAW. (a) The Company and
the Subsidiaries hold all licenses, franchises, certificates, consents, permits,
approvals, certificates of public convenience and necessity, and authorizations 
("AUTHORIZATIONS") from all Governmental Entities and other persons (including  
without limitation all required Authorizations which may be issued or required  
by the SBA, the Internal Revenue Service (the "IRS") or the SEC) which are      
necessary for the lawful conduct of their respective businesses and their use   
and occupancy of their assets and properties in the manner heretofore conducted,
used and occupied, except where the failure to hold any of the foregoing would  
not have a Company Material Adverse Effect or impair the ability of the Company 
to perform its obligations under this Agreement or prevent or delay the         
consummation of any of the transactions contemplated hereby. A complete and     
correct list of the material Authorizations held by the Company and the         
Subsidiaries are set forth in the COMPANY SCHEDULE. All of such Authorizations  
are valid, in good standing and in full force and effect and the Company and the
Subsidiaries have duly performed in all material respects all of their          
respective obligations under such Authorizations. No event has occurred with    
respect to the material Authorizations which permits, or after notice or lapse  
of time or both would permit, revocation or termination thereof or would result 
in any other material impairment of the rights of the holder of any of the      
Authorizations, and no terminations thereof have been, to the knowledge of the  
Company, threatened.                                                            

                 (b) The Company and each of the Subsidiaries is in compliance
with all applicable laws, statutes, ordinances, codes, rules, regulations,      
orders or directives of any Governmental Entities (collectively, "LAWS"), except
where such violations would not have a Company Material Adverse Effect, and the 
Company has not received any notice from a Governmental Entity within five years
of the date hereof of any violation of any Law.                                 

SECTION 2.17. TAXES.                                          

          (a) All federal, state, local and foreign tax returns,
reports, statements and other similar filings required to be filed by the       
Company or the Subsidiaries (the "TAX RETURNS") on or prior to the date hereof  
or with respect to taxable periods ending on or prior to the date hereof with   
respect to any federal, state, local or foreign taxes, assessments,             
deficiencies, fees and other governmental charges or impositions (including,    
without limitation, all income tax, unemployment compensation, social security, 
payroll, sales and use, excise, privilege, property, ad valorem, transfer,      
franchise, license, school and any other tax or similar governmental charge or  
imposition (including interest, penalties or additions with respect thereto)    
under the laws of the United States or any state or municipal or political      
subdivision thereof or any foreign country or political subdivision thereof)    
("TAXES") have been timely filed with the appropriate Governmental Entities in  
all jurisdictions in which such Tax Returns are required to be filed, and all   
such Tax Returns correctly reflect the liabilities of the Company and the       
Subsidiaries for Taxes for the periods, property or events covered thereby.     

                 (b) All Taxes, including, without limitation, those which are
called for by the Tax Returns, or heretofore or hereafter claimed to be due with
respect to taxable periods ending on or before the Effective Time by any taxing 
authority from the Company and the Subsidiaries, have been fully paid or        
properly accrued. Except as set forth in the COMPANY SCHEDULE, the accruals for 
Taxes contained in the Company 1997 Balance Sheet are adequate to cover the tax 
liabilities of the Company and the Subsidiaries as of the Audit Date and include
adequate provision for all deferred taxes, and nothing has occurred subsequent  
to that date to make any of such accruals inadequate.                           

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                  (c) Neither the Company nor the Subsidiaries have received any
notice of assessment or proposed assessment in connection with any Taxes or Tax 
Returns and there are no pending tax examinations of or tax claims asserted     
against the Company or the Subsidiaries or any of their respective assets or    
properties. Neither the Company nor any Subsidiary has extended, or waived the  
application of, any statute of limitations of any jurisdiction regarding the    
assessment or collection of any Taxes.                                          

               (d) There are no Tax liens (other than any lien for current
Taxes not yet due and payable) on any of the assets or properties of the Company
or the Subsidiaries, except to the extent that any such lien would not have,    
individually or in the aggregate, a Company Material Adverse Effect. The Company
has no knowledge of any basis for any additional assessment of any Taxes. The   
Company and the Subsidiaries have made all deposits required by law to be made  
with respect to employees' withholding and other employment taxes, including    
without limitation the portion of such deposits relating to taxes imposed upon  
the Company or the Subsidiaries.                                                

                  (e) The representation and warranties contained in the Company
Tax Certificate (hereinafter defined) are true and correct.                     

            (f) The Company, SII and SFC have each qualified for and
validly elected to be treated as a Regulated Investment Company (a "RIC") under 
Subchapter M of the Code. Each of the Company, SII and SFC have taken all steps 
necessary, including making all required distributions, to maintain such        
entity's status as an RIC. The accruals on the Company's books for distributions
to shareholders are sufficient to satisfy the applicable regulations under      
Subchapter M of the Code for maintenance of its status as a RIC.                

SECTION 2.18. ABSENCE OF LITIGATION; CLAIMS.                  

                (a) Except as set forth in the COMPANY SCHEDULE there are no
claims, actions, suits, proceedings or investigations pending or, to the        
knowledge of the Company, threatened against the Company or any of its          
Subsidiaries, or any properties or rights of the Company or any of its          
Subsidiaries, or with respect to which any director, officer, employee or agent 
is or may be entitled to claim indemnification from the Company or any          
Subsidiary, before any Governmental Entity or arbitrator, which, if decided     
adversely to the Company or such Subsidiary, would have a Company Material      
Adverse Effect or impair the ability of the Company to perform its obligations  
under this Agreement or prevent or delay the consummation of any of the         
transactions contemplated hereby, nor is there any judgement, decree,           
injunction, rule or order of any Governmental Entity or arbitrator outstanding  
against the Company or any of its Subsidiaries having or which, insofar as      
reasonably can be foreseen, in the future would have such effect, nor, to the   
knowledge of the Company, are there any state of facts which could give rise to 
such a claim.                                                                   

          (b) The securities litigation set forth in the COMPANY
SCHEDULE is covered by the Company's director and officer insurance policies, no
insurance carriers of such policies have denied, or threatened to deny, coverage
of such litigation, except as set forth in the COMPANY SCHEDULE, and any amount 
that the Company would owe under such litigation would not exceed the Company's 
total insurance program (excluding deductibles).                                

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SECTION 2.19. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.  

                 (a) The COMPANY SCHEDULE lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, 
as amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,   
deferred compensation, supplemental retirement, severance and other similar     
fringe or employee benefit plans, programs or arrangements, and any current or  
former employment or executive compensation or severance agreements, written or 
otherwise, for the benefit of, or relating to, any employee of the Company, any 
trade or business (whether or not incorporated) which is a member of a          
controlled group including the Company or which is under common control with the
Company (an "ERISA AFFILIATE") within the meaning of Section 414 of the Code, or
any Subsidiary of the Company, as well as each plan with respect to which the   
Company or an ERISA Affiliate could incur liability under Section 4069 (if such 
plan has been or were terminated) or Section 4212(c) of ERISA (together, the    
"EMPLOYEE PLANS"), excluding former agreements under which the Company has no   
remaining obligations and any of the foregoing that are required to be          
maintained by the Company under the laws of any foreign jurisdiction. With      
respect to each Employee Plan, as applicable, a copy of (i) each such written   
Employee Plan (other than those referred to in Section 4(b)(4) of ERISA),       
together with all amendments, trust agreements, insurance policies and service  
agreements; (ii) the three most recently filed Forms 5500 or 5500 C/R and any   
financial statements attached thereto; (iii) the most recent IRS determination  
letter; (iv) the most recent summary plan description; (v) all reports submitted
within the preceding three years by third-party administrators, actuaries,      
investment managers, consultants, or other independent contractors, has been    
furnished to Parent and (vi) with respect to each Employee Plan under which     
health benefits are provided, a statement as to the actual and contingent       
labilities of each such plan to the extent that no insurance or trust fund      
assets are available to provide such benefits.                                  

              (b) (i) Except as set forth in the COMPANY SCHEDULE, or as
required by Section 4980B of the Code, none of the Employee Plans promises or   
provides retiree medical or other retiree welfare benefits to any person and    
none of the Employee Plans is a 'multiemployer plan' as such term is defined in 
Section 3(37) of ERISA; (ii) there has been no breach of any fiduciary duty, as 
described in Section 404 of ERISA, or no 'prohibited transaction', as such term 
is defined in Section 406 of ERISA or Section 4975 of the Code, with respect to 
any Employee Plan, which could be reasonably expected to result in any material 
liability of the Company or any of its Subsidiaries; (iii) all Employee Plans   
are in compliance in all material respects with the requirements prescribed by  
any and all applicable statutes (including ERISA and the Code), orders, or      
governmental rules and regulations currently in effect with respect thereto     
(including all applicable requirements for notification to participants or the  
Department of Labor, the IRS or Secretary of the Treasury), all Employee Plans  
have been operated at all times in all material respects in accordance with     
their terms, and the Company and each of its Subsidiaries have performed all    
material obligations required to be performed by them under, are not in any     
material respect in default under or violation of, and have no knowledge of any 
material default or violation by any other party to, any of the Employee Plans; 
(iv) each Employee Plan (other than a standardized prototype Plan which is      
subject to a favorable IRS opinion) intended to qualify under Section 401(a) of 
the Code and each trust intended to qualify under Section 501(a) of the Code is 
the subject of a favorable determination letter from the IRS, and nothing has   
occurred which may reasonably be expected to impair such determination; (v) all 
contributions required to be made to any Employee Plan pursuant to Section 412  
of the Code, or the terms of the Employee Plan or any collective bargaining     
agreement, have been made on or before their due dates and a reasonable amount  
has been accrued for contributions to each Employee Plan for the current plan   
years; (vi) with respect to each Employee Plan, no 'reportable event' within the
meaning of Section 4043 of ERISA (excluding any such event for which the 30 day 
notice                                                                          

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requirement has been waived under the regulations to Section 4043 of ERISA) nor 
any event described in Section 4062, 4063, 4604 or 4041 of ERISA has occurred;  
(vii) neither the Company nor any ERISA Affiliate has incurred, nor reasonably  
expects to incur, any liability under Title IV of ERISA (other than liability   
for premium payments to the Pension Benefit Guaranty Corporation arising in the 
ordinary course); (viii) neither the Company nor any ERISA Affiliate has        
incurred any liability for any excise, income or other taxes or penalties with  
respect to any Employee Plan, and no event has occurred and no circumstance     
exists that could be reasonably expected to give rise to any such liability;    
(ix) there are no pending or threatened claims against any Employee Plan (other 
than routine claims for benefits) or against any fiduciary of an Employee Plan  
with respect to such plan, nor is there any reasonable basis for such a claim;  
(x) no Employee Plan is presently under audit or examination (nor has notice    
been received of a potential audit or examination) by any governmental entity;  
and (xi) no matters are pending with respect to any Employee Plan under any     
governmental corrective or remedial program.                                    

             (c) The COMPANY SCHEDULE provided pursuant to Section 1.5
hereof sets forth a true and complete list of each current or former employee,  
officer or director of the Company or any of its Subsidiaries who holds any     
option to purchase Company Common Stock as of the date hereof, together with the
number of shares of Company Common Stock which are subject to such option, the  
date of grant of such option, the extent to which such option is vested (or will
become vested within six months from the date hereof, or as a result of, the    
Merger), the option price of such option (to the extent determined as of the    
date hereof), whether such option is intended to qualify as an incentive stock  
option within the meaning of Section 422(b) of the Code (an "ISO"), and the     
expiration date of such option. The COMPANY SCHEDULE also sets forth the total  
number of such ISOs and such nonqualified options.                              

               (d) Except as disclosed on the COMPANY SCHEDULE, any amount
that could be received (whether in cash or property or the vesting of property) 
as a result of any of the transactions contemplated by this Agreement by any    
employee, officer or director of the Company or any of its affiliates who is a  
"disqualified individual" (as such term is defined in Proposed Treasury         
Regulation Section 1.280G-1) under any employment, severance or termination     
agreement, other compensation arrangement or Employee Plan currently in effect  
would not be characterized as an "excess parachute payment" (as such term is    
defined in Section 280G of the Code).                                           

        SECTION 2.20. LABOR MATTERS. There are no controversies pending or, to
the knowledge of the Company, threatened, between the Company or any of its     
Subsidiaries and any of their respective employees. Neither the Company nor any 
of its Subsidiaries is party to any collective bargaining agreement or other    
labor agreement with any union or labor organization and no union or labor      
organization has been recognized by the Company or any of its Subsidiaries as an
exclusive bargaining representative for employees of the Company or any of its  
Subsidiaries. To the Company's knowledge, there is no current union             
representation question involving employees of the Company or any of its        
Subsidiaries, nor does the Company have knowledge of any significant activity or
proceeding of any labor organization (or representative thereof) or employee    
group to organize any such employees. Neither the Company nor any of its        
Subsidiaries has made any commitment not in collective bargaining agreements    
listed on the COMPANY SCHEDULE that would require the application of the terms  
of any collective bargaining agreements entered into by the Company or any of   
its Subsidiaries to Parent, to any Joint Venture of Parent, or to any Subsidiary
of Parent (other than the Company or its Subsidiaries). Except as disclosed in  
the COMPANY SCHEDULE, (a) there is no material active arbitration under any     
collective bargaining agreement involving the Company or any of its             
Subsidiaries, (ii) there is no material unfair labor practice, grievance,       
employment discrimination or other labor or employment                          

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related charge, complaint or claim against the Company or any of its            
Subsidiaries pending before any court, arbitrator, mediator or governmental     
agency or tribunal, or, to the Company's knowledge, threatened, (iii) there is  
no strike, picketing or work stoppage by, or any lockout of, employees of the   
Company or any of its Subsidiaries pending, or to the Company's knowledge,      
threatened, against or involving the Company or any of its Subsidiaries, and    
(iv) there is no active arbitration under any collective bargaining agreement   
involving the Company or any of its Subsidiaries regarding the employer's right 
to move work from one location or entity to another, or to consolidate work     
locations, or involving other similar restrictions on business operations. There
is no proceeding, claim, suit, action or governmental investigation pending or, 
to the knowledge of the Company, threatened, relating to labor matters in       
respect of which any director, officer, employee or agent of the Company or any 
of its Subsidiaries is or may be entitled to claim indemnification from the     
Company or a Subsidiary pursuant to their respective charters or bylaws or under
any indemnification agreements.                                                 

SECTION 2.21. ENVIRONMENTAL MATTERS.                          

               (a) The Company and each of the Subsidiaries is in material
compliance with all applicable Environmental Laws (hereinafter defined) and     
neither the Company nor any of the Subsidiaries has received any written or, to 
the Company's knowledge, oral, communication from any person or Governmental    
Entity that alleges that the Company or any of the Subsidiaries is not in       
compliance with applicable Environmental Laws where such non-compliance would   
have a Company Material Adverse Effect.                                         

                (b) The Company and each of the Subsidiaries has obtained or
has applied for all material Environmental Permits (hereinafter defined)        
necessary for the construction of their facilities or the conduct of their      
operations, and all such material Environmental Permits are effective or, where 
applicable, a renewal application has been timely filed and is pending agency   
approval, and the Company and the Subsidiaries are in material compliance with  
all terms and conditions of such material Environmental Permits. Neither the    
Company nor any of the Subsidiaries has knowledge of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans   
that may interfere with, or prevent, future continued material compliance on the
part of the Company or any of the Subsidiaries with the material Environmental  
Permits. Neither the Company nor any of the Subsidiaries has knowledge of       
matters or conditions that would preclude reissuance or transfer of any material
Environmental Permit, including amendment of such instrument, to Parent or one  
of its Subsidiaries where such action is necessary to maintain compliance with  
Environmental Laws in all material respects.                                    

           (c) Neither the Company nor any of the Subsidiaries has
knowledge of any current Environmental Law or Environmental Permit imposing any 
future requirement which could reasonably be expected to result in the accrual  
of a material cost not disclosed in writing to Parent.                          

             (d) There is no Environmental Claim (hereinafter defined)
pending or, to the knowledge of the Company, threatened (i) against the Company 
or any of the Subsidiaries, (ii) against any person or entity whose liability   
for any Environmental Claim the Company or any of the Subsidiaries has or may   
have retained or assumed either contractually or by operation of law, or (iii)  
against any real or personal property or operations which the Company or any of 
the Subsidiaries owns, leases or manages, in whole or in part.                  

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                 (e) The Company has no knowledge of any Releases (hereinafter
defined) of any Hazardous Material (hereinafter defined) that would be          
reasonably likely to form the basis of any Environmental Claim against the      
Company or any of the Subsidiaries, against any person or entity whose liability
for any Environmental Claim the Company or any of the Subsidiaries has or may   
have retained or assumed either contractually or by operation of law, against   
any person or entity that has executed a guarantee in favor of the Company or in
which the Company has an equity interest or affecting any assets that are       
pledged as collateral to the Company.                                           

         (f) The Company has no knowledge, with respect to any
predecessor of the Company or any of the Subsidiaries, of any Environmental     
Claim pending or threatened, or of any Release of Hazardous Materials that would
be reasonably likely to form the basis of any material Environmental Claim      
against the Company or any of the Subsidiaries.                                 

                (g) To the Company's knowledge, the Company has disclosed to
Parent all facts which the Company reasonably believes form the basis of a      
material current or future cost relating to any environmental matter affecting  
the Company and the Subsidiaries which would or reasonably could have a Company 
Material Adverse Effect.                                                        

                (h) Neither the Company nor any of its Subsidiaries, nor, to
the knowledge of the Company, any owner of premises leased or operated by the   
Company or any of its Subsidiaries has filed any notice with respect to such    
premises under federal, state, local or foreign law indicating past or present  
treatment, storage or disposal of Hazardous Materials, as regulated under 40    
C.F.R. Parts 264- 267 or any state, local or foreign equivalent or is engaging  
or has engaged in business operations involving the generation, transportation, 
treatment, recycling or disposal of any waste regulated under the Environmental 
Laws that pertain to radioactive materials or the nuclear power industry,       
including, without limitation, requirements of Volume 10 of the Code of Federal 
Regulations.                                                                    

                (i) Except as set forth in the COMPANY SCHEDULE, none of the
properties owned, leased or operated by the Company, the Subsidiaries or, to the
knowledge of the Company, any predecessor thereof are now or were in the past,  
listed on the National Priorities list of Superfund Sites, the CERCLIS          
Information System, or any other comparable state or local environmental        
database.                                                                       

              (j) The Merger will not require any governmental approvals
under the Environmental Laws, including those that are triggered by sales or    
transfers of businesses or real property.                                       

(k) As used in this Section 2.20:           

                 (i) "ENVIRONMENTAL CLAIM" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters, 
directives, claims, liens, investigations, proceedings or notices of            
noncompliance or violation (written or oral) by any person or entity (including 
any federal, state, local or foreign Governmental Entity having jurisdiction    
over the Company or the Subsidiaries) alleging potential liability of the       
Company or the Subsidiaries (including, without limitation, potential           
responsibility for or liability for enforcement, investigatory costs, cleanup   
costs, governmental response costs, removal costs, remedial costs, natural      
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (A) the presence, or Release or threatened       
Release into the environment, of any Hazardous Materials at any location,       
whether or not owned, operated, leased                                          

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or managed by the Company or any of the Subsidiaries (including but not limited 
to obligations to clean up contamination resulting from leaking underground     
storage tanks); or (B) circumstances forming the basis of any violation or      
alleged violation by the Company or the Subsidiaries of any Environmental Law;  
or (C) any and all claims by any third party against the Company or the         
Subsidiaries seeking damages, contribution, indemnification, cost recovery,     
compensation or injunctive relief resulting from the presence or Release of any 
Hazardous Materials, but with respect to the foregoing, only if an adverse      
determination would or reasonably could have a Company Material Adverse Effect, 
individually or in the aggregate.                                               

                    (ii) "ENVIRONMENTAL LAWS" means all applicable
foreign, federal, state and local laws (including the common law), rules,       
requirements and regulations relating to pollution, the environment (including, 
without limitation, ambient air, surface water, groundwater, land surface or    
subsurface strata) or protection of human health as it relates to the           
environment including, without limitation, laws and regulations relating to     
Releases of Hazardous Materials, or otherwise relating to the manufacture,      
processing, distribution, use, treatment, storage, disposal, transport or       
handling of Hazardous Materials.                                                

                         (iii) "HAZARDOUS MATERIALS" means (A) any petroleum
or any by-products or fractions thereof, asbestos in any form that is or could  
become friable, urea formaldehyde foam insulation, any form of natural gas,     
explosives, and polychlorinated biphenyls; (B) any chemicals, materials or      
substances, whether waste materials, raw materials or finished products, which  
are now defined as or included in the definition of 'hazardous substances,'     
'hazardous wastes,' 'hazardous materials,' 'extremely hazardous substances,'    
'restricted hazardous wastes,' 'toxic substances,' 'toxic pollutants,'          
'pollutants,' 'contaminants,' or words of similar import under any Environmental
Law; and (C) any other chemical, material or substance, whether waste materials,
raw materials or finished products, regulated or forming the basis of liability 
under any Environmental Law in a jurisdiction in which the Company or any of the
Subsidiaries operates.                                                          

                        (iv) "RELEASE" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or        
migration into the environment (including without limitation ambient air,       
atmosphere, soil, surface water, groundwater or property).                      

SECTION 2.22. INTELLECTUAL PROPERTY.                          

            (a) The Company and each of its Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents, 
trademarks, trade names, service marks, copyrights, and any applications        
therefor, technology, know-how, computer software programs or applications, and 
tangible or intangible proprietary information or materials that are used in its
or any of its Subsidiaries' businesses as currently conducted, and to the actual
knowledge of its executive officers all patents, trademarks, trade names,       
service marks and copyrights held by it and/or its Subsidiaries are valid and   
subsisting, except for any failures to so own, be licensed or possess or to be  
valid and subsisting, as the case may be, that, individually or in the          
aggregate, will not have a Company Material Adverse Effect.                     

              (b) Except as disclosed in the Company's SEC Reports filed
prior to the date hereof or as is not reasonably likely to have a Company       
Material Adverse Effect:                                                        

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                          (i) it and its Subsidiaries are not, nor will any of
them be as a result of the execution and delivery of this Agreement or the      
performance of its obligations hereunder, in violation of any licenses,         
sublicenses and other agreements as to which it or any of its Subsidiaries is a 
party and pursuant to which it or any Subsidiary is authorized to use any       
third-party patents, trademarks, service marks and copyrights ("THIRD-PARTY     
INTELLECTUAL PROPERTY RIGHT");                                                  

                     (ii) to its knowledge, no claims as of the date
hereof with respect to (A) the                                                  
patents, registered and material unregistered trademarks and service marks,     
registered copyrights, trade names, and any applications therefor owned by it or
any of its Subsidiaries (the "OWNED INTELLECTUAL PROPERTY RIGHTS"); (B) any     
trade secrets material to it; or (C) Third-Party Intellectual Property Rights,  
are currently pending or, threatened by any person or entity; and               

                           (iii) to its knowledge, there is no unauthorized use,
infringement or misappropriation of any of the Owned Intellectual Property      
Rights by any third party, including any of its or any of its Subsidiaries'     
employees or former employees.                                                  

SECTION 2.23. REGULATORY MATTERS.                             

                 (a) Except as disclosed in the COMPANY SCHEDULE, there are no
proceedings or investigations pending or, to the Company's knowledge,           
threatened, before any domestic or foreign court, administrative, governmental  
or regulatory body in which any of the following matters are being considered,  
nor has the Company or any of its Subsidiaries received written notice or       
inquiry from any such body, government official, consumer advocacy or similar   
organization or any private party, indicating that any of such matters should be
considered or may become the object of consideration or investigation: (i)      
reduction of principal amount of outstanding loans or warrants; (ii) reduction  
of earnings or (iii) refunds of amounts previously charged to customers.        

                (b) Except as disclosed in the COMPANY SCHEDULE, neither the
Company nor any of its Subsidiaries has any outstanding regulatory commitments  
regarding (i) reduction of principal amount of outstanding loans or warrants;   
(ii) reduction of earnings or (iii) refunds of amounts previously charged to    
customers, to or by any domestic or foreign court, administrative, governmental 
or regulatory body, government official, consumer advocacy or similar           
organization.                                                                   

         SECTION 2.24. ADEQUACY OF DISCLOSURE. The Company has made available to
Parent copies of all documents listed or referred to in the COMPANY SCHEDULE    
hereto or referred to herein. Such copies are, and all documents and materials  
delivered or made available in connection with Parent's investigation of the    
Company in connection with the transactions contemplated hereby are, true and   
complete and include all amendments, supplements and modifications thereto or   
waivers currently in effect thereunder. No representation or warranty by the    
Company in this Agreement nor any certificate, schedule, statement, document or 
instrument furnished or to be furnished to Parent pursuant hereto, or in        
connection with the negotiation, execution or performance of this Agreement,    
contains or will contain any untrue statement of a material fact or omits or    
will omit to state a material fact required to be stated herein or therein or   
necessary to make any statement herein or therein not misleading.               

       SECTION 2.25. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Company for inclusion in the registration statement 
of Parent on Form S-4 pursuant to which shares of Parent Common Stock will be   
registered with the SEC (the "REGISTRATION STATEMENT")                          

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does not and will not contain, at the time the information is supplied and when 
the Registration Statement is declared effective by the SEC, any untrue         
statement of a material fact nor does or will it omit to state any material fact
required to be stated in the Registration Statement or necessary in order to    
make the statements in the Registration Statement not misleading. The           
information supplied by the Company for inclusion in the proxy                  
statement/prospectus (the "PROXY STATEMENT") to be sent to the shareholders of  
the Company in connection with the special meeting of the Company's shareholders
to consider this Agreement and the Merger (the "SHAREHOLDERS MEETING") does not 
and will not, at the time the Proxy Statement is first mailed to shareholders,  
at the time of the Shareholders Meeting, or at the Effective Time, contain any  
statement which, at such time and in light of the circumstances under which it  
was made, is false or misleading with respect to any material fact, or omit to  
state any material fact necessary in order to make the statements made in the   
Proxy Statement not false or misleading or omit to state any material fact      
necessary to correct any statement in any earlier communication with respect to 
the solicitation of proxies for the Shareholders Meeting which has become false 
or misleading; provided, however, that no representation or warranty is made by 
the Company with respect to information related to, or supplied by, the Parent, 
its affiliates or advisors. If at any time prior to the Effective Time any event
relating to the Company or any of its affiliates should be discovered by the    
Company which should be set forth in an amendment to the Registration Statement 
or a supplement to the Proxy Statement, the Company shall promptly inform       
Parent.                                                                         

       SECTION 2.26. BOARD ACTION; VOTE REQUIRED. (a) The Board of Directors
of the Company has unanimously determined that the transactions contemplated by 
this Agreement are in the best interests of the Company and its shareholders and
has resolved to recommend to such shareholders that they vote in favor thereof. 

                (b) The provisions of Section 48-35-205 of the TBCA will not
apply to this Agreement or any of the transactions contemplated hereby or       
thereby. No other "fair price," "moratorium," "control share acquisition" or    
other form of antitakeover statute or regulation (each a "TAKEOVER STATUTE") as 
in effect on the date hereof or any anti-takeover provision in the Company's    
Charter or Bylaws is applicable to the Company, the shares of Company Common    
Stock, the Merger or the other transactions contemplated by this Agreement.     

                 (c) The Company has been advised by each of its directors and
executive officers that each such person intends to vote their respective shares
of Company Common Stock in favor of the approval and adoption of this Agreement 
and the Merger.                                                                 

                 (d) The holders of shares of Company Common Stock do not have
any dissenters or appraisal rights with respect to this Agreement or the Merger 
pursuant to Section 48-23-102 of the TBCA.                                      

SECTION 2.27. YEAR 2000 COMPLIANT. The Company and each of its
Subsidiaries has taken preliminary steps to identify and analyze both internally
developed and acquired software which is material to its operations and utilizes
date embedded codes that may experience operations problems when the Year 2000  
is reached and, where problems have arisen, has made, or have coordinated with  
customers, suppliers, financial institutions and others with which it has       
business relationships that are material to the Company's business to make, all 
necessary modifications to the identified software to make such software Year   
2000 compliant. Except as disclosed in the Company SEC Reports, the Company and 
its Subsidiaries have not incurred, and do not expect to incur, significant     
operating                                                                       

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expenses to be Year 2000 compliant, and business operations have not been       
disrupted and, to the Company's knowledge, its customers have not experienced   
any material interruption of service as a result of making such software Year   
2000 compliant. "YEAR 2000 COMPLIANT" means, with respect to the Company's and  
each Subsidiaries' information technology, the information technology is        
designed to be used prior to, during and after the calendar Year 2000 A.D., and 
the information technology used during each such time period will accurately    
receive, provide and process date/time data (including, without limitation,     
calculating, comparing and sequencing) from, into and between the 20th and 21st 
centuries, including the years 1999 and 2000, and leap-year calculations and    
will not materially malfunction, cease to function, or provide invalid or       
incorrect results as a result of date/time data, to the extent that other       
information technology, used in combination with the information technology     
being acquired, properly exchanges date/time data with it. "INFORMATION         
TECHNOLOGY," means computer software, computer firmware, computer hardware      
(whether general or specific purpose), and other similar or related items of    
automated, computerized, or software system(s) that are used or relied on by the
Company or the Subsidiary in the conduct of its business.                       

        SECTION 2.28. AFFILIATES. Except for the persons listed on the COMPANY
SCHEDULE there are no persons who, to the knowledge of the Company, may be      
deemed to be affiliates of the Company under Rule 145 under the Securities Act. 
Concurrently with the execution and delivery of this Agreement, the Company has 
delivered to Parent an executed letter agreement, substantially in the form of  
Exhibit A hereto, from each of such persons.                                    

       SECTION 2.29. OPINION OF FINANCIAL ADVISORS. The Company has received
the opinions of Goldman Sachs and Robinson Humphrey (the "COMPANY FINANCIAL     
ADVISORS"), each as of the date hereof, to the effect that, as of such date, the
Merger Consideration is fair from a financial point of view to the holders of   
Company Common Stock and a copy of each such opinion has been made available to 
Parent.                                                                         

         SECTION 2.30. BROKERS AND FINDERS. The COMPANY SCHEDULE lists all those
financial advisors, including the Company Financial Advisors, employed or       
retained by the Company and the amounts that are due such persons in connection 
with this Agreement and the transactions contemplated hereby. Neither the       
Company nor any Subsidiary nor any of their respective officers, directors or   
employees has employed any broker or finder or incurred any liability for any   
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated herein, except that the Company has employed those financial       
advisors listed on the COMPANY SCHEDULE pursuant to the terms of engagement     
letters, a true and complete copy of each of which has previously been furnished
to Parent.                                                                      

 ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

             Parent and Merger Sub each represents and warrants to the
Company as follows, except as set forth on a Disclosure Schedule delivered by   
Parent concurrently with the execution and delivery of this Agreement (the      
"PARENT SCHEDULE"), each of which exceptions shall specifically identify the    
relevant subsection hereof to which it relates and shall be deemed to be        
representations and warranties made hereunder:                                  

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    SECTION 3.1. ORGANIZATION AND POWERS. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of 
Delaware. Merger Sub is a corporation duly organized, validly existing and in   
good standing under the laws of the State of Delaware. Each of Parent and the   
Merger Sub has all requisite corporate power and authority to carry on its      
business as it has been and is now being conducted and to own, lease and operate
the properties and assets used in connection therewith.                         

       SECTION 3.2. AUTHORITY; BINDING EFFECT. Each of Parent and Merger Sub
has all requisite corporate power and authority to execute and deliver this     
Agreement and to consummate the transactions contemplated hereby. All necessary 
action, corporate or otherwise, required to have been taken by or on behalf of  
each of Parent and Merger Sub by applicable law, each of their respective       
charter document(s) or otherwise to authorize (i) the approval, execution and   
delivery on their behalf of this Agreement and (ii) their performance of their  
obligations under this Agreement and the consummation of the transactions       
contemplated hereby has been taken. This Agreement constitutes a valid and      
binding agreement of each of Parent and Merger Sub, enforceable against each of 
Parent and Merger Sub in accordance with its terms, except (A) as the same may  
be limited by applicable bankruptcy, insolvency, moratorium or similar laws of  
general application relating to or affecting creditors' rights, including       
without limitation, the effect of statutory or other laws regarding fraudulent  
conveyances and preferential transfers, and (B) for the limitations imposed by  
general principles of equity and commercial reasonableness.                     

         SECTION 3.3. NO CONFLICT; APPROVALS. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby  
will not, (i) violate or conflict with the Parent's or Merger Sub's charter or  
bylaws, or (ii) constitute a breach or default (or an event that with notice or 
lapse of time or both would become a breach or default) or give rise to any     
lien, third party right of termination, cancellation, material modification or  
acceleration, or loss of any benefit, under any contract to which the Parent or 
any subsidiary is a party or by which it is bound, or (iii) subject to the      
consents, approvals, orders, authorizations, filings, declarations and          
registrations specified in Section 3.4 or in the PARENT SCHEDULE in response    
thereto, conflict with or result in a violation of any permit, concession,      
franchise or license or any law, rule or regulation applicable to the Parent or 
any of its subsidiaries or any of their properties or assets, except, in the    
case of clauses (ii) and (iii), for any such breaches, defaults, liens, third   
party rights, cancellations, modifications, accelerations or losses of benefits,
conflicts or violations which would not have a Parent Material Adverse Effect   
and do not impair the ability of the Parent to perform its obligations under    
this Agreement or prevent or delay the consummation of any of the transactions  
contemplated hereby. As used in this Agreement, "PARENT MATERIAL ADVERSE EFFECT"
shall mean any fact, condition, event, development or occurrence which,         
individually or when taken together with all other such facts, conditions,      
events, developments or occurrences, other than changes in the general economic 
conditions and other conditions affecting financial institutions or the credit  
market generally, would reasonably be expected to have a material adverse effect
on the financial condition, operating results, business or prospects of Parent  
and its subsidiaries (hereinafter defined), taken as a whole.                   

       SECTION 3.4. GOVERNMENTAL CONSENTS AND APPROVALS. Except as set forth
on the PARENT SCHEDULE, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will require any       
consent, approval, order, authorization, or permit of, or filing with or        
notification to, any Governmental Entity, except (a) the filing of the          
Registration Statement with the SEC in accordance with the Securities Act and   
the entry of an order by the SEC permitting such                                

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Registration Statement to become effective, and compliance with applicable state
securities laws, (b) the filing of a registration statement with the SEC in an  
appropriate form with respect to the shares of Parent Common Stock subject to   
options to acquire Parent Common Stock issued pursuant to Section 1.5 hereof,   
(c) notification pursuant to, and expiration or termination of the waiting      
period under the HSR Act, (d) the filing and recording of the Certificate of    
Merger in accordance with the DGCL, and (e) where the failure to obtain such    
consents, approvals, authorizations or permits, or to make such filings or      
notifications, would not prevent it from performing its obligations under this  
Agreement without having a Parent Material Adverse Effect.                      

SECTION 3.5. CAPITAL STOCK.                                   

         (a) Parent has authorized capital stock consisting of
100,000,000 shares of Parent Common Stock. As of December 31, 1998: (i)         
55,840,059 shares of Parent Common Stock were issued and outstanding and (ii)   
2,714,616 shares of Parent Common Stock were held as treasury shares. All of the
issued and outstanding shares of Parent have been duly authorized and are       
validly issued and outstanding, fully paid and nonassessable, and were issued in
compliance with all applicable Federal and state securities laws. No shares of  
capital stock issued by Parent are or were at the time of their issuance subject
to preemptive rights. The shares of Parent Common Stock to be delivered to the  
Stockholders at the Effective Time, when delivered in accordance with the terms 
of this Agreement, will be valid and legally issued shares of Parent capital    
stock, fully paid and nonassessable and, subject to registration under the      
Securities Act and approval for listing by The New York Stock Exchange (the     
"NYSE"), all of such shares will be approved for quotation on the principal     
stock exchange on which Parent Common Stock is traded.                          

              (b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, of which 1,000 shares are outstanding. All of the 
issued and outstanding shares of Merger Sub are owned beneficially, and of      
record by Parent.                                                               

      SECTION 3.6. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Parent for inclusion in the Registration Statement  
shall not contain, at the time the Registration Statement is declared effective 
by the SEC, any untrue statement of a material fact or omit to state any        
material fact required to be stated in the Registration Statement or necessary  
in order to make the statements in the Registration Statement not misleading.   
The information supplied by the Parent for inclusion in the Proxy Statement     
shall not, at the time the Proxy Statement is first mailed to shareholders, at  
the time of the Stockholders Meeting, or at the Effective Time, contain any     
statement which, at such time and in light of the circumstances under which it  
was made, is false or misleading with respect to any material fact, or omit to  
state any material fact necessary in order to make the statements made in the   
Proxy Statement not false or misleading or omit to state any material fact      
necessary to correct any statement in any earlier communication with respect to 
the solicitation of proxies for the Stockholders Meeting which has become false 
or misleading; provided, however, that no representation or warranty is made by 
the Parent with respect to information related to, or supplied by, the Company, 
its affiliates or advisors. If at any time prior to the Effective Time any event
relating to the Parent or any of its affiliates should be discovered by the     
Parent which should be set forth in an amendment to the Registration Statement  
or a supplement to the Proxy Statement, the Parent shall promptly inform the    
Company.                                                                        

        SECTION 3.7. SEC REPORTS. Parent has filed all required forms, reports
and documents with the SEC since January 1, 1995 (collectively, the "PARENT'S   
SEC REPORTS"), including without limitation                                     

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Parent's Annual Report on Form 10-K for the year ended December 31, 1997 and the
Parent's Quarterly Report on Form 10-Q for the quarter ending September 30,     
1998. The Parent's SEC Reports have complied in all material respects with all  
applicable requirements of the Securities Act and the Exchange Act. As of their 
respective dates, none of Parent's SEC Reports, including, without limitation,  
any financial statements or schedules included or incorporated by reference     
therein, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or     
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.                                     

    SECTION 3.8. FINANCIAL STATEMENTS. The Parent has delivered to the
Company true and complete copies of (a) consolidated balance sheets of the      
Parent and its subsidiaries at December 31, 1997 and 1996 and the related       
consolidated statements of earnings, changes in stockholders' equity and        
statements of cash flow for the years then ended, together with the notes       
thereto, audited by Deloitte & Touche LLP (the "PARENT'S AUDITORS") and (b)     
unaudited consolidated balance sheets of Parent and its subsidiaries at         
September 30, 1998 and 1997 and related consolidated statements of income,      
changes in shareholders' equity and statements of cash flows for the periods    
ended September 30, 1998 and 1997, all of which have been prepared in accordance
with GAAP consistently applied throughout the periods involved, subject in the  
case of interim financial statements to normal year-end adjustments and to the  
absence of full footnotes. Such balance sheets, including the related notes,    
fairly present the consolidated financial position, assets and liabilities      
(whether accrued, absolute, contingent or otherwise) of the Parent and its      
subsidiaries at the dates indicated and such consolidated statements of income, 
changes in stockholders' equity and statements of cash flow fairly present the  
consolidated results of operations, changes in stockholders' equity and cash    
flow of the Parent and its subsidiaries for the periods indicated. The unaudited
consolidated financial statements as at and for the periods ended September 30, 
1998 and 1997 contain all adjustments, which are solely of a normal recurring   
nature, necessary to present fairly the financial position at September 30, 1998
and 1997 and the results of operations and change in shareholders' equity and   
financial position for the periods then ended. The audited consolidated balance 
sheet of Parent and its subsidiaries at December 31, 1997 described above is    
referred to herein as the "PARENT 1997 BALANCE SHEET."                          

        SECTION 3.9. ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed
on the PARENT SCHEDULE, since September 30, 1998, the Parent and its            
subsidiaries have not been subject to any other events or conditions of any     
character that would have a Parent Material Adverse Effect or impair the ability
of Parent to perform its obligations under this Agreement or prevent or delay   
the consummation of any of the transactions contemplated hereby.                

     SECTION 3.10. ABSENCE OF LITIGATION; CLAIMS; ABSENCE OF UNDISCLOSED
LIABILITIES. There are no claims, actions, suits, proceedings or investigations 
pending or, to the knowledge of Parent, threatened against Parent or any of its 
subsidiaries, or any properties or rights of Parent or any of its subsidiaries, 
before any Governmental Entity or arbitrator, which, if decided adversely to    
Parent or such subsidiary, would have a Parent Material Adverse Effect or impair
the ability of Parent to perform its obligations under this Agreement or prevent
or delay the consummation of any of the transactions contemplated hereby, nor is
there any judgement, decree, injunction, rule or order of any Governmental      
Entity or arbitrator outstanding against Parent or any of its subsidiaries      
having or which, insofar as reasonably can be foreseen, in the future would have
such effect. Neither Parent nor its Subsidiaries have any material indebtedness,
liability or obligation of any kind (whether known or unknown, accrued,         
absolute, asserted or unasserted, contingent or otherwise) except (a) as and to 
the extent reflected,                                                           

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reserved against or otherwise disclosed in the Parent 1997 Balance Sheet, or (b)
for liabilities and obligations incurred subsequent to December 31, 1997 in the 
ordinary course of business and which do not have a Parent Material Adverse     
Effect or impair the ability of the Parent to perform its obligations under this
Agreement or prevent or delay the consummation of any of the transactions       
contemplated hereby.                                                            

        SECTION 3.11. COMPLIANCE WITH LAW. Parent and each of its Subsidiaries
is in compliance with all applicable Laws, except where such violations would   
not have a Parent Material Adverse Effect.                                      

      SECTION 3.12. BROKERS AND FINDERS. Neither the Parent nor any of its
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in  
connection with the transactions contemplated herein, except that the Parent has
employed Credit Suisse First Boston as its financial advisor.                   

        SECTION 3.13. ADEQUACY OF DISCLOSURE. The Parent has made available to
Company copies of all documents listed or referred to in the PARENT SCHEDULE    
hereto or referred to herein. Such copies are, and all documents and materials  
delivered or made available in connection with Company's investigation of the   
Parent in connection with the transactions contemplated hereby are, true and    
complete and include all amendments, supplements and modifications thereto or   
waivers currently in effect thereunder. No representation or warranty by the    
Parent in this Agreement nor any certificate, schedule, written statement,      
document or instrument furnished or to be furnished to Company pursuant hereto, 
or in connection with the negotiation, execution or performance of this         
Agreement, contains or will contain any untrue statement of a material fact or  
omits or will omit to state a material fact required to be stated herein or     
therein or necessary to make any statement herein or therein not misleading.    

ARTICLE IV
OTHER AGREEMENTS

       SECTION 4.1. CONDUCT OF THE COMPANY'S BUSINESS. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,     
unless Parent shall otherwise consent in writing, and except as otherwise       
expressly contemplated hereby or on the COMPANY SCHEDULE, the business of the   
Company and the Subsidiaries shall be conducted only in, and such entities shall
not take any action except in, the Ordinary Course; the Company and its         
Subsidiaries will use their commercially reasonable efforts to preserve         
substantially intact the business organization of the Company and its           
Subsidiaries, to keep available the services of those of its present officers,  
employees and consultants and to preserve the present relationships of the      
Company and its Subsidiaries with customers, suppliers and other persons with   
which the Company and the Subsidiaries have significant business relations; and 
the Company and its Subsidiaries will advise each of its respective officers of 
their fiduciary duty to the Company prior to the Effective Time to operate the  
business in due course, maintain the confidentiality of information arising from
or generated by the business of the Company and to avoid taking any action which
would have a Company Material Adverse Effect. By way of amplification and not   
limitation, except as otherwise expressly contemplated by this Agreement or the 
COMPANY SCHEDULE, the Company agrees on behalf of itself and its Subsidiaries   
that, without the prior written consent of Parent, they will, between the date  
of this Agreement and the Effective Time:                                       

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               (a) not directly or indirectly do any of the following: (i)
amend or propose to amend its Charter or Bylaws; (ii) split, combine or         
reclassify any outstanding shares of its capital stock, or declare, set aside or
pay any dividend payable in cash, stock, property or otherwise with respect to  
such shares; (iii) redeem, purchase, acquire or offer to acquire any shares of  
its capital stock; (iv) issue, sell, pledge or dispose of, or agree to issue,   
sell, pledge or dispose of, any additional shares of, or securities convertible 
or exchangeable for, or any options, warrants or rights of any kind to acquire  
any shares of, its capital stock of any class or other property or assets       
whether pursuant to any rights agreement, stock option plans described in the   
COMPANY SCHEDULE or otherwise, PROVIDED, HOWEVER, that (a) the Company may issue
options in the Ordinary Course, which options shall have an exercise price per  
share of not less than (i) the Starting Price (hereinafter defined) divided by  
(ii) the Exchange Ratio, the product being rounded, if necessary, up or down, to
the nearest cent, and shall be granted in accordance with the amounts and       
limitations set forth in the COMPANY SCHEDULE and (b) the Company may issue     
shares of Company Common Stock pursuant to currently outstanding options        
referred to in the COMPANY SCHEDULE in response to Section 2.3 above; (v)       
accelerate, amend or change the period of exerciseability of options or         
restricted stock granted under any of the Company Stock Plans or authorize cash 
payments in exchange for any options granted under any of such plans except as  
required by the terms of such plans or any related agreements in effect as of   
the date of this Agreement, or (vi) enter into any contract, agreement,         
commitment or arrangement with respect to any of the matters set forth in this  
paragraph (a);                                                                  

           (b) not, directly or indirectly (i) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership,  
limited liability company or other business organization or division thereof or 
enter into or acquire any interest in any Joint Venture; (ii) issue, sell,      
pledge, dispose of or encumber any assets (including without limitation         
licenses, Authorizations or rights) of the Company or the Subsidiaries or enter 
into any securitization transactions, excluding transactions between the Company
and its Subsidiaries and any transactions required under the Company's current  
credit facilities; (iii) incur any indebtedness for borrowed money or issue any 
debt securities; provided, however, the Company may incur indebtedness under the
Company's current credit facilities up to an amount of such facilities on the   
date of this Agreement and any transactions made pursuant to the Company's      
current credit facilities, (iv) make any commitments or agreements for capital  
expenditures or capital additions or betterments exceeding in the aggregate     
$100,000, except such as may be involved in ordinary repair, maintenance or     
replacement of its assets; (v) enter into or modify any material contract, lease
or agreement except in the Ordinary Course; (vi) terminate, modify, assign,     
waive, release or relinquish any material contract rights, including those      
arising under any Financing Documents except in the Ordinary Course or under any
insurance policies, or amend any material rights or claims not in the Ordinary  
Course or except as expressly provided herein; (vii) settle or consent to the   
settlement of any litigation if such settlement, together with any related      
litigation or claims, would cost the Company or any Subsidiary, directly or     
indirectly (including pursuant to any indemnification obligations) more than    
$10,000,000, provided, however, that the Company may settle any litigation      
arising out of its relationships with the Portfolio Companies in the Ordinary   
Course; (viii) other than in prior consultation with the Parent, restructure or 
materially change the Company's or any Subsidiary's investment security         
portfolio through purchases, sales or otherwise, or the manner in which such    
portfolio is classified or reported, except in the Ordinary Course; (ix)        
purchase any securities or create any loans in the Tandem Capital division, (x) 
purchase any securities or create any loans for an amount exceeding $65,000,000 
per quarter in the aggregate or $5,000,000 for any single borrower, or (xi)     
enter into any contract, agreement, commitment or arrangement with respect to   
any of the matters set forth in this paragraph (b);                             

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                  (c) not, directly or indirectly (i) initiate any litigation or
arbitration proceeding, except in the Ordinary Course, (ii) revalue any of its  
assets, including writing down the value of inventory or writing off notes or   
accounts receivable, other than in the Ordinary Course, or as required by GAAP  
or any applicable laws, (iii) make any material change to their respective      
accounting methods, principles or practices, or (iv) settle or compromise any   
Tax liability, or prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt any  
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods;                    

                  (d) not, directly or indirectly, (i) grant any increase in the
salary or other compensation of its employees except in the Ordinary Course or  
grant any bonus to any employee or enter into any employment agreement or make  
any loan to or enter into any material transaction of any other nature with any 
officer or employee of the Company, except as disclosed on the COMPANY SCHEDULE 
or on the letter to Parent dated January 4, 1999; (ii) take any action to       
institute any new severance or termination pay practices with respect to any    
directors, officers or employees of the Company or to increase the benefits     
payable under its severance or termination pay practices; (iii) adopt or amend, 
in any respect, except as may be required by applicable law or regulation, any  
bonus, profit sharing, compensation, stock option, restricted stock, pension,   
retirement, deferred compensation, employment or other employee benefit plan,   
agreement, trust, fund, plan or arrangement for the benefit or welfare of any   
directors, officers or employees;                                               

                  (e) use reasonable best efforts to cause the persons listed on
the COMPANY SCHEDULE to enter into employment/consulting agreements prior to    
Closing in the form substantially set forth in Exhibit B hereto, containing the 
terms set forth opposite such person's name on the COMPANY SCHEDULE;            

             (f) not, directly or indirectly, take or omit to take any
action that is reasonably likely to result in a breach of any contract,         
commitment or obligation if the result would, individually or in the aggregate, 
have a Company Material Adverse Effect;                                         

                (g) not, directly or indirectly, take any action which would
cause its representations and warranties contained herein if made on and as of  
the date of such action or agreement, untrue or incorrect in any material       
respect;                                                                        

                  (h) not, directly or indirectly, take (and will use reasonable
efforts to prevent any affiliate of the Company from taking) or agree in writing
or otherwise to take any action which could reasonably be expected to adversely 
affect or delay the ability of any of the parties to obtain any approval of any 
governmental or regulatory body required to consummate the transactions         
contemplated hereby;                                                            

                  (i) not, directly or indirectly, take (and will use reasonable
efforts to prevent any affiliate of the Company from taking) or agree in writing
or otherwise to take, (i) any of the actions described in this Section 4.l, or  
(ii) any action which could prevent it from performing, or cause it not to      
perform, its obligations under this Agreement, or (iii) any action that would   
cause the Merger not to be treated as a reorganization within the meaning of    
Section 368(a) of the Code;                                                     

                (j) the Company shall make sufficient distributions in order
to: (i) qualify as a RIC for the year ended December 31, 1998; and (ii) avoid   
imposition of federal excise tax for the years ended                            

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October 31, 1998 (with respect to capital gain net income) and December 31, 1998
(with respect to ordinary income);                                              

             (k) from January 1, 1999 until the Closing, except to the
extent necessary to maintain its status as an RIC for the year ended December   
31, 1998 and avoid federal excise tax for any period ending on or before        
December 31, 1998, the Company shall operate and conduct its affairs as if it   
were a C corporation and not an RIC for federal income tax purposes; and        

          (l) use reasonable best efforts to cause the Company's
accountants to perform such activities in connection with the quarterly         
preparation and review of the Company's interim financial statements as they    
have historically performed.                                                    

  SECTION 4.2. PARENT'S UNDERTAKINGS. Parent will not, directly or
indirectly, take (and will use reasonable efforts to prevent any affiliate of   
the Company from taking) any action that would cause the Merger not to be       
treated as a reorganization within the meaning of Section 368(a) of the Code or 
any action which would cause any of the Parent's representations and warranties 
in this Agreement to be untrue or incorrect in any material respect, or prevent 
it from performing or cause it not to perform, its obligation under this        
Agreement. Parent shall as promptly as practicable following the date hereof    
apply for approval for listing of Parent Common Stock to be issued pursuant to  
the Merger on the NYSE upon official notice of issuance. Parent shall establish 
a Retention Plan substantially in accordance with the terms and provisions set  
forth in the PARENT SCHEDULE.                                                   

        SECTION 4.3. ACCESS TO INFORMATION. Between the date of this Agreement
and the Closing Date, the Company will (a) give Parent and its authorized       
representatives access, during regular business hours upon reasonable notice, to
all offices and other facilities and to all of its books and records, (b) permit
Parent to make such reasonable inspections as it may require, and (c) cause its 
officers and those of its Subsidiaries to furnish Parent with such financial and
operating data and other information with respect to the business and properties
of the Company, as Parent may from time to time reasonably request and as the   
Company may have on hand or be able to produce without undue hardship,          
including, without limitation, such of the foregoing as parent deems necessary  
for it to complete, prior to Closing, a due diligence review and valuation of   
all of the Company's Financing Transactions. Between the date of this Agreement 
and the Closing Date, Parent will cause its officers and those of its           
Subsidiaries to furnish the Company with all financial and operating data and   
other information with respect to the business and properties of Parent, as     
Company may from time to time reasonably request and as Parent may have on hand 
or be able to produce without undue hardship, provided, that the requested      
information is of a type customarily provided to the Company's underwriters in  
connection with a public offering of securities. All such access and information
obtained by Parent or Company and their respective authorized representatives   
shall be subject to the terms and conditions of the letter agreement between the
Company and Parent dated May 20, 1998 (the "CONFIDENTIALITY AGREEMENT").        

SECTION 4.4. STOCKHOLDER VOTE; PROXY STATEMENT.               

             (a) As promptly as practicable after the date hereof, the
Company shall take all action necessary in accordance with Rules 14a-1 ET. SEQ. 
of the Exchange Act, the 1940 Act, the rules of the NYSE, the DGCL, the TBCA,   
and its Charter and Bylaws to call, give notice of, convene and hold the        
Shareholders Meeting as promptly as practicable (unless such date shall be      
delayed due to circumstances reasonably beyond the control of the parties) to   
consider and vote upon the approval and                                         

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adoption of this Agreement and the transactions contemplated hereby, including  
the revocation of the Company's status as a business development company under  
the 1940 Act, and for such other purposes as may be necessary or desirable.     
Subject to Section 4.4(b), the Board of Directors of the Company shall use its  
commercially reasonable efforts to solicit and secure from its shareholders such
approval and adoption of this Agreement and the transactions contemplated       
hereby, which efforts may include, without limitation, soliciting shareholder   
proxies therefor and to advise the other party upon its request, from time to   
time, as to the status of the shareholder vote then tabulated.                  

             (b) As promptly as practicable after the date hereof, the
Company and Parent shall jointly prepare and file with the SEC preliminary proxy
materials of the Company under the Exchange Act with respect to the Merger, and 
a preliminary prospectus of Parent with respect to Parent Common Stock to be    
issued in the Merger and will thereafter use their respective best efforts to   
respond to any comments of the SEC with respect thereto and to cause the        
Registration Statement to become effective, and the Proxy Statement and proxy to
be mailed to the Company's shareholders, as promptly as practicable. The Proxy  
Statement shall include the unqualified recommendation of the Company's Board of
Directors that the Company's shareholders vote in favor of the approval and     
adoption of this Agreement and the transactions contemplated hereby, provided   
that the Board of Directors of the Company may fail to make such recommendation 
or may withdraw, modify or amend such recommendation in a manner adverse to the 
Parent, if (but only if) the Board of Directors, after consultation with and    
based upon the advice of independent legal counsel, determines that the making  
of such recommendation or the failure to so withdraw, modify or amend such      
recommendation would constitute a breach of the fiduciary duties of such        
director to the shareholders of the Company.                                    

                 (c) As soon as practicable after the date hereof, the Company
and Parent shall prepare and file any other filings required to be filed by each
under the Exchange Act or any other federal or state securities laws relating to
the Merger and the transactions contemplated hereby (collectively "OTHER        
FILINGS") and will use their best efforts to respond to any comments of the SEC 
or any other appropriate government official with respect thereto.              

                  (d) The Company and Parent shall cooperate with each other and
provide to each other all information necessary in order to prepare the         
Registration Statement, the Proxy Statement and the Other Filings (collectively,
the "SEC TRANSACTION FILINGS") and shall provide promptly to the other party any
information that such party obtains that could necessitate amending any such    
document.                                                                       

          (e) The Company and Parent will notify the other party
promptly of the receipt of any comments from the SEC or its staff or any other  
appropriate government official and of any requests by the SEC or its staff or  
any other appropriate government official for amendments or supplements to any  
of the SEC Transaction Filings or for additional information and will supply the
other party with copies of all correspondence between the Company or any of its 
representatives or Parent and any of its representatives, as the case may be, on
the one hand, and the SEC or its staff or any other appropriate government      
official, on the other hand, with respect thereto. If at any time prior to the  
Effective Time, any event shall occur that should be set forth in an amendment  
of, or a supplement to, any of the SEC Transaction Filings, the Company and     
Parent agree promptly to prepare and file such amendment or supplement and to   
distribute such amendment or supplement as required by applicable law,          
including, in the case of an amendment or supplement to the Proxy Statement,    
mailing such supplement or amendment to the Company's shareholders. Parent shall
not be required to maintain the effectiveness of the                            

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Registration Statement for the purpose of resale by shareholders of the Company 
who may be affiliates of the Company or Parent pursuant to Rule 145 under the   
Securities Act.                                                                 

                  (f) The information provided and to be provided by the Company
and Parent for use in SEC Transaction Filings shall at all times prior to the   
Effective Time be true and correct in all material respects and shall not omit  
to state any material fact required to be stated therein or necessary in order  
to make such information not false or misleading, and the Company and Parent    
each agree to promptly correct any such information provided by it for use in   
the SEC Transaction Filings that shall have become false or misleading. The SEC 
Transaction Filings, when filed with the SEC or any appropriate government      
official, shall comply as to form in all material respects with all applicable  
requirements of law.                                                            

            (g) The Company and the Parent shall cooperate with each
other, provide to each other all information necessary for the preparation of   
any presentations to any rating agency and participate, to the extent requested 
in any reviews or discussions with any rating agency.                           

   SECTION 4.5. COMMERCIALLY REASONABLE EFFORTS. Except as otherwise
provided herein, each of the parties hereto agrees to use its commercially      
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under        
applicable laws, statutes, ordinances, codes, rules and regulations to          
consummate and make effective the transactions contemplated by this Agreement in
the most expeditious manner practicable, including but not limited to the       
satisfaction of all conditions to the Merger, and to consummate the Merger as   
promptly as practicable, but in no event later than July 15, 1999.              

         SECTION 4.6. PUBLIC ANNOUNCEMENTS. The Company and Parent shall consult
with each other before issuing any press release or otherwise making any public 
statements with any news media with respect to this Agreement or any of the     
transactions contemplated hereby and shall not issue any such press release or  
make any such public statement without the prior consent of the other party,    
which consent shall not be unreasonably withheld; provided, however, that a     
party may, without the prior consent of the other party, issue such press       
release or make such public statement as may be required by law or the          
applicable rules of any stock exchange, including the NYSE, if it has used its  
commercially reasonable efforts to consult with the other party and to obtain   
such party's consent but has been unable to do so in a timely manner; PROVIDED, 
FURTHER, that nothing contained herein shall prevent any party from promptly    
making all filings with Governmental Entities and all disclosure as may, in its 
good faith judgment, be required or advisable in connection with the execution  
and delivery of this Agreement or the consummation of the transactions          
contemplated hereby (in which case the disclosing party shall advise the other  
parties and provide them with a copy of the proposed disclosure or filing prior 
to making the disclosure or filing). In this regard, the parties shall make a   
joint public announcement of the Merger and the transactions contemplated       
thereby immediately upon the signing of this Agreement.                         

         SECTION 4.7. NOTIFICATION. Each party hereto shall, in the event of, or
promptly after obtaining knowledge of the occurrence or threatened occurrence   
of, any fact or circumstance that would cause or constitute a breach of any of  
its representations and warranties set forth herein, give notice thereof to the 
other parties and shall use its best efforts to prevent or promptly to remedy   
such breach, provided, however, that none of such notices shall be deemed to    
modify, amend or supplement the representations and warranties of the such party
or the disclosure schedules of such party for the purposes of Article V hereof, 
unless the other party shall have consented thereto in writing.                 

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SECTION 4.8. SUBSEQUENT FINANCIAL STATEMENTS. (a) Prior to the
Effective Time, the Company will consult with Parent prior to (i) making        
publicly available its financial results for any period and (ii) the filing of, 
and will timely file with the SEC, each Annual Report on Form 10-K, Quarterly   
Report on Form 10-Q and Current Report on Form 8-K required to be filed by the  
Company under the Exchange Act and the rules and regulations promulgated        
thereunder and will promptly deliver to the Parent copies of each such report   
filed with the SEC. All such reports will comply in all material respects with  
all the applicable requirements of the Securities Act and the Exchange Act. All 
contracts which are required to be filed as exhibits to, or incorporated by     
reference in, the Company's 1998 Form 10-K will be filed or incorporated by     
reference. As of their respective dates, none of such reports shall contain any 
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the  
circumstances under which they were made, not misleading. The respective audited
financial statements and unaudited interim financial statements of the Company, 
included in such reports will fairly present the financial position of the      
Company and its subsidiary as of the dates thereof and the results of its       
operations and cash flows for the periods then ended in accordance with         
generally accepted accounting principles applied on a consistent basis and,     
subject, in the case of unaudited interim financial statements, to normal       
year-end adjustments and any other adjustments described therein.               

     (b) The Parent will timely file with the SEC, each Annual Report on
Form 10-K, Quarterly Report on Form 10-Q and Current Report on Form 8-K required
to be filed by the Parent under the Exchange Act and the rules and regulations  
promulgated thereunder and will promptly deliver to the Company copies of each  
such report filed with the SEC. All such reports will comply in all material    
respects with all the applicable requirements of the Securities Act and the     
Exchange Act. As of their respective dates, none of such reports shall contain  
any untrue statement of a material fact or omit to state a material fact        
required to be stated therein or necessary to make the statements therein, in   
light of the circumstances under which they were made, not misleading. The      
respective audited financial statements and unaudited interim financial         
statements of the Parent, included in such reports will fairly present the      
financial position of the Parent as of the dates thereof and the results of its 
operations and cash flows for the periods then ended in accordance with         
generally accepted accounting principles applied on a consistent basis and,     
subject, in the case of unaudited interim financial statements, to normal       
year-end adjustments and any other adjustments described therein.               

         SECTION 4.9. CONTROL OF OPERATIONS. Nothing contained in this Agreement
shall give Parent, directly or indirectly, the right to control or direct the   
Company's operations prior to the Effective Time. Prior to the Effective Time,  
each of the Company and Parent shall exercise, consistent with the terms and    
conditions of this Agreement, complete control and supervision over its         
respective operations.                                                          

   SECTION 4.10. REGULATORY AND OTHER AUTHORIZATIONS. (a) Each party
hereto agrees to use commercially reasonable efforts to comply with all legal   
requirements which may be imposed on such party with respect to the Merger and  
to obtain all Authorizations, consents, orders and approvals of Governmental    
Entities and non-governmental third parties that may be or become necessary for 
(i) its respective execution and delivery of, and the performance of its        
respective obligations pursuant to, this Agreement and (ii) the ownership of the
Surviving Corporation by Parent, and each party will cooperate fully with the   
other parties in promptly seeking to obtain all such authorizations, consents,  
orders and approvals. Without limitation, the Company and Parent shall each make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act 
no later than 20 days after the date hereof and                                 

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shall promptly respond to any request for additional information with respect   
thereto. Each such filing shall request early termination of the waiting period 
imposed by the HSR Act.                                                         

                  (b) Notwithstanding anything else to the contrary contained in
this Agreement, Parent shall have no obligation to oppose, challenge or appeal  
any suit action or proceeding by any Governmental Entity before any court or    
governmental authority, agency or tribunal, domestic or foreign or any order or 
ruling by any such body (i) seeking to restrain or prohibit or restraining or   
prohibiting the consummation of the Merger or any of the other transactions     
contemplated by this Agreement, (ii) seeking to prohibit or limit or prohibiting
or limiting the ownership, operation or control by the Company, Parent or any of
their respective Subsidiaries of any portion of the business or assets of the   
Company, Parent or any of their respective Subsidiaries or seeking to compel or 
compelling the Company, Parent or any of their respective Subsidiaries to       
dispose of, grant rights in respect of, or hold separate any portion of the     
business or assets of the Company, Parent or any of their respective            
subsidiaries. Neither the Company nor any of its Subsidiaries shall take or     
agree to take any of the actions described in the immediately preceding sentence
without the prior written consent of Parent.                                    

       SECTION 4.11. TAX-FREE REORGANIZATION. Each of Parent and the Company
will use its best efforts to cause the Merger to qualify as a "reorganization"  
within the meaning of Section 368(a) of the Code, and to enable its respective  
counsel to render the opinions contemplated by Sections 5.2(c) and 5.3(h). Each 
party shall make and shall use its best efforts to cause those of its respective
officers and shareholders that counsel to the parties shall reasonably request  
to make, such representations and certifications as counsel to the parties shall
reasonably request to enable them to render such opinion, including, without    
limitation, the representations of Parent contained in a certificate of Parent  
(the "PARENT TAX CERTIFICATE") in a form satisfactory to Morgan, Lewis & Bockius
LLP and representations of the Company contained in a certificate of the Company
(the "COMPANY TAX CERTIFICATE") in a form satisfactory to Morgan, Lewis &       
Bockius LLP.                                                                    

      SECTION 4.12. TAKEOVER STATUTE. If any Takeover Statute shall become
applicable to the transactions contemplated hereby each of the Company and      
Parent and the members of their respective Boards of Directors shall grant such 
approvals and take such actions as are reasonably necessary so that the         
transactions contemplated hereby may be consummated as promptly as practicable  
on the terms contemplated hereby and otherwise act to eliminate or minimize the 
effects of such statute or regulation on the transactions contemplated hereby.  

       SECTION 4.13. INDEMNIFICATION OF DIRECTORS AND OFFICERS. For a period
of four years after the Effective Time (or, if any claim or claims are asserted 
or made within such four year period, until the final disposition of such claim,
if longer), Parent shall, or shall cause the Company, as the Surviving          
Corporation, to (a) maintain in effect the current or similar provisions        
regarding indemnification of officers and directors contained in the Charter and
Bylaws of the Company, and (b) indemnify the directors and officers of the      
Company to the maximum extent to which the Company is permitted to indemnify    
such officers and directors under its charter and bylaws and applicable law.    
Parent hereby agrees, as of the Effective Time, to guarantee the Company's      
indemnification obligations set forth in the preceding sentence. For the period 
of time of such indemnification obligations, Parent shall cause the Company to  
maintain in effect the director and officer insurance policies in effect on the 
date hereof, or in the event that Parent shall consent to increase the amount of
coverage thereunder, such policies with such increased coverage in effect as of 
Effective Time; provided, however, that Parent may substitute therefor policies 
of at least the same coverage and amounts containing terms and conditions which 
are                                                                             

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not less advantageous than such policy and provided, further, that Parent shall 
not be obligated to provide such coverage to the extent that the cost of such   
coverage exceeds 150% of the cost of the current annual premium of such coverage
immediately prior to the Effective Time (which the Company represents is no more
than $119,000).                                                                 

         SECTION 4.14. NO SOLICITATION. (a) Without the prior written consent of
Parent, from and after the date hereof, the Company will not, and will not      
authorize or permit any of the Subsidiaries or their officers, directors,       
employees, financial advisors, agents and other representatives                 
("REPRESENTATIVES") to, directly or indirectly, (i) solicit, initiate or        
encourage (including by way of furnishing non-public information) or take any   
other action to facilitate knowingly any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to an Acquisition       
Proposal (as defined herein) from any person or (ii) engage in any discussion or
negotiations relating to any Acquisition Proposal; PROVIDED, HOWEVER, that      
notwithstanding any other provision hereof, the Company may, (A) at any time    
prior to the time the Company's shareholders shall have voted to approve this   
Agreement engage in discussions or negotiations with a third party (and may     
furnish such third party information concerning the Company and its business,   
properties and assets to such party) who (without any solicitation, initiation, 
encouragement, discussion or negotiation, directly or indirectly, by or with the
Company or the Representatives after the date hereof) makes an unsolicited bona 
fide written Acquisition Proposal if, and only to the extent that, (1) the third
party has first made an Acquisition Proposal that is financially superior, with 
respect to the holders of the Company Common Stock generally, to the            
transactions contemplated by this Agreement and has demonstrated that the funds 
necessary for the Acquisition Proposal are reasonably likely to be available (as
determined in good faith in each case by the Company's Board of Directors after 
consultation with its financial advisors) (such an Acquisition Proposal, a      
"SUPERIOR PROPOSAL"), and the Company's Board of Directors shall conclude in    
good faith, after considering applicable provisions of state law on the basis of
advice of outside counsel, that such action is necessary for the Board of       
Directors to avoid breaching its fiduciary duties to the shareholders of the    
Company under applicable law, and (2) prior to furnishing such information to or
entering into discussions or negotiations with such person or entity, the       
Company receives from such person or entity an executed confidentiality         
agreement in substantially the same form as the Confidentiality Agreement, and  
(3) the Company shall have fully complied with this Section 4.14; and/or (B)    
comply with Rule 14e- 2 promulgated under the Exchange Act with regard to a     
tender or exchange offer. As used herein, "ACQUISITION PROPOSAL" shall mean a   
proposal or offer for a tender or exchange offer, merger, consolidation or other
business combination involving the Company or any Subsidiary of the Company or  
any proposal to acquire in any manner a substantial equity interest in, or a    
substantial portion of the assets of, the Company or any Subsidiary thereof.    

             (b) The Company shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or       
negotiation with any parties conducted heretofore by the Company or its         
Representatives with respect to the foregoing. The Company shall notify Parent  
orally and in writing of any such inquiries, offers or proposals (including,    
without limitation, the terms and conditions of any such proposal and the       
identity of the person making it), within 24 hours of the receipt thereof, shall
keep Parent informed of the status and details of any such inquiry, offer or    
proposal, and shall give Parent at least three business days prior written      
notice of (i) any meeting of the Board of Directors of the Company to take any  
action with respect to an Acquisition Proposal or to withdrawing or modifying,  
in a manner adverse to Parent, its recommendation to the Company's shareholders 
in favor of approval of the Merger, and (ii) any confidentiality or similar     
agreement to be entered into with any person making such inquiry, offer or      
proposal.                                                                       

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                 (c) During the period from the date of this Agreement through
the Effective Time, the Company shall not terminate, amend, modify or waive any 
provision of any confidentiality or standstill agreement to which it or any of  
its Subsidiaries is a party. During such period, the Company shall enforce, to  
the fullest extent permitted under applicable law, the provisions of any such   
agreement, including, but not limited to, by obtaining injunctions to prevent   
any breaches of such agreements and to enforce specifically the terms and       
provisions thereof in any court of the United States of America or of any state 
having jurisdiction.                                                            

SECTION 4.15. CERTAIN MODIFICATIONS; FINANCIAL AND ACCOUNTING 
ADJUSTMENTS. Prior to the Effective Time, the Company and Parent shall consult  
with respect to business practices and policies and shall make such             
modifications or changes to the Company's practices or policies as may be       
mutually agreed upon and approved by the parties. The Company shall make (a) the
modifications and financial adjustments set forth in the COMPANY SCHEDULE, being
those modifications and adjustments necessary, as of December 31, 1998, to      
prepare the financial statements of the Company as of such date in accordance   
with GAAP and (b) provided that it has been advised in writing that all         
conditions to Parent's obligations hereunder have been satisfied or waived,     
those additional modifications and financial adjustments required to be made    
prior to Closing in order to prepare the financial statements of the Company, as
of the quarter end immediately preceding the Closing Date, in accordance with   
GAAP, which additional modifications and financial adjustments shall be made    
after the Company shall have consulted with the Parent regarding same,          
including, without limitation, Parent's due diligence review and valuation of   
all the Company's Financing Transactions performed by Parent prior to Closing   
pursuant to Section 4.3. The Company and Parent shall also consult with respect 
to the character, amount and timing of other restructuring charges and financial
adjustments to be taken by the Company as mutually agreed upon and approved by  
the parties, and shall take such charges and make such adjustments in accordance
with generally accepted accounting principles. The Company's representations,   
warranties and covenants contained in this Agreement shall not be deemed to be  
untrue or breached in any respect for any purpose as a consequence of any       
modifications or changes to such policies or practices or any financial         
adjustments which may be undertaken in accordance with this Section 4.15.       

    SECTION 4.16. CONTINUING EMPLOYEES. (a) From and after the Closing
Date, Parent shall, or shall cause the Surviving Corporation to, provide        
benefits to continuing employees of the Company and its Subsidiaries            
("CONTINUING EMPLOYEES") that, in the aggregate, are no less favorable than the 
benefits such Continuing Employees were entitled to immediately prior to the    
Effective Time. Notwithstanding the foregoing, nothing in this Section 4.16     
shall require (i) the continuation of any benefit plan of any variety or prevent
the amendment or termination thereof (subject to the provision, in the          
aggregate, of the benefits as provided in the preceding sentence) or (ii) Parent
or the Surviving Corporation to continue or maintain the employment of any      
Continuing Employee.                                                            

         (b) With respect to any benefits plans of Parent or its subsidiaries in
which the Continuing Employees participate after the Closing Date, Parent shall,
or shall cause the Surviving Corporation to: (i) waive any limitations to       
pre-existing conditions, exclusions and waiting periods with respect to         
participation and coverage requirements applicable to the Continuing Employees  
under any welfare benefit plan, as defined in Section 3(1) of ERISA, in which   
such employees may be eligible to participate after the Closing Date (provided, 
however, that no such waiver shall apply to a pre-existing condition of any     
Continuing Employee who was, as of the Closing Date, excluded from participation
in a Company benefit plan by nature of such pre-existing condition), (ii)       
provide each Continuing Employee with credit                                    

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for any co-payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements under any welfare       
benefit plan in which such employees may be eligible to participate after the   
Closing Date, and (iii) recognize all service of the Continuing Employees with  
the Company for all welfare benefit purposes, except (i) for those benefit plans
of Parent for which the Company Employees were ineligible to participate or for 
which there are no comparable plans at the Company and (ii) to the extent such  
treatment would result in duplicative accrual on or after the Closing Date of   
benefits for the same period of service.                                        

 ARTICLE V
 CONDITIONS TO CLOSING

      SECTION 5.1. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND PARENT
AND MERGER SUB. The respective obligations of the Company, on the one hand, and 
Parent and Merger Sub, on the other hand, to consummate the transactions        
contemplated hereby are subject to the requirements that:                       

            (a) SHAREHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the requisite vote of the shareholders of the Company in
accordance with the TBCA and the Charter of the Company.                        

              (b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by 
any court of competent jurisdiction or other legal or regulatory restraint or   
prohibition shall have been issued and be in effect (i) restraining or          
prohibiting the consummation of the Merger or any of the transactions           
contemplated hereby or (ii) prohibiting or limiting the ownership, operation or 
control by the Company, Parent or any of their respective subsidiaries of any   
portion of the business or assets of the Company, Parent or any of their        
respective subsidiaries, or compelling the Company, parent or any of their      
respective Subsidiaries to dispose of, grant rights in respect of, or hold      
separate any portion of the business or assets of the Company, parent or any of 
their respective subsidiaries (except as contemplated by Section 4.10(b)        
hereof); nor shall any action have been taken by a Governmental Entity or any   
federal, state or foreign statute, rule, regulation, executive order, decree or 
injunction shall have been enacted, entered, promulgated or enforced by any     
Governmental Entity or arbitrator, which is in effect and has the effect of     
making the Merger illegal or otherwise prohibiting the consummation of the      
Merger.                                                                         

                 (c) NO LITIGATION. There shall not be any litigation or other
proceeding pending (exclusive of the litigation referred to in Section 2.18(b)  
hereof) or threatened against the Company or any of its Subsidiaries which, in  
the reasonable opinion of Parent, would restrain or invalidate the transactions 
contemplated by this Agreement, would impair the ability of either party to     
perform its obligations under this Agreement, prevent or delay the consummation 
of any transaction contemplated thereby or would prevent Parent from realizing, 
in its reasonable opinion, in all material respects the economic benefits of the
transactions contemplated by this Agreement that Parent currently anticipates   
receiving therefrom.                                                            

                  (d) HSR ACT. Any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.          

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                (e) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective under the Securities Act and no stop orders with   
respect thereto shall have been issued, and Parent shall have received all      
requisite authorizations under all applicable state securities or blue sky laws 
necessary to consummate the transaction.                                        

           (f) NYSE LISTING. Approval for listing by the NYSE upon
official notice of issuance of Parent Common Stock to be issued in the Merger   
shall have been received by Parent.                                             

SECTION 5.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the transactions contemplated hereby   
are subject to the further requirements that:                                   

              (a) REPRESENTATIONS AND WARRANTIES. The representations of
Parent set forth in the Agreement shall be true and correct (without regard to  
any materiality qualifier contained therein) in all material respects as of the 
date of this Agreement and (except to the extent such representations speak of  
an earlier date) as of the Closing Date as though made on and as of the Closing 
Date. The Company shall have received a certificate signed on behalf of Parent  
by the Chairman, President and Chief Executive Officer, Executive Vice          
President- Corporate Development and the Chief Financial Officer or the Vice    
President - Controller, Financial Accounting of the Parent to the foregoing     
effect.                                                                         

              (b) PERFORMANCE OF OBLIGATIONS. Each of the obligations of
Parent and the Merger Sub to be performed on or before the Closing Date pursuant
to the terms of this Agreement shall have been duly performed in all material   
respects on or before the Closing Date and at the Closing the Company shall have
received a certificate signed on behalf of Parent by the Executive Vice         
President- Corporate Development and the Chief Financial Officer or the Vice    
President - Controller, Financial Accounting of the Parent to the foregoing     
effect.                                                                         

                (c) TAX OPINION. Bass, Berry & Sims PLC shall have delivered
to the Company its written opinion, dated as of the Closing Date, in form and   
substance reasonably satisfactory to the Company, substantially to the effect   
that (i) the Merger constitutes a reorganization under Section 368(a) of the    
Code, (ii) Parent, Merger Sub and the Company will each be a party to that      
reorganization within the meaning of Section 368(b) of the Code, (iii) Parent,  
Merger Sub and the Company will not recognize any gain or loss for U.S. federal 
income tax purposes as a result of the Merger and (iv) the shareholders of the  
Company will not recognize any gain or loss for U.S. Federal income tax purposes
upon their exchange of the Company Common Stock solely for Parent Common Stock  
pursuant to the Merger (except with respect to cash received in lieu of a       
fractional share interest in Parent Common Stock).                              

               (d) ABSENCE OF MATERIAL ADVERSE EFFECT.  No Parent Material
Adverse Effect shall have occurred.                                             

      SECTION 5.3. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the transactions         
contemplated hereby are subject to the further requirements that:               

              (a) REPRESENTATIONS AND WARRANTIES. The representations of
Company set forth in the Agreement shall be true and correct (without regard to 
any materiality qualifier contained therein) in all material respects and the   
representations of the Company set forth in Section 2.14(c) shall be true and   

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correct as of the date of this Agreement and (except to the extent such         
representations speak of an earlier date) as of the Closing Date as though made 
on and as of the Closing Date. Parent shall have received a certificate signed  
on behalf of Company by the Chief Executive Officer and the Chief Financial     
Officer of the Company to the foregoing effect.                                 

                  (b) PERFORMANCE OF OBLIGATIONS. Each of the obligations of the
Company to be performed on or before the Closing Date pursuant to the terms of  
this Agreement shall have been duly performed in all material respects on or    
before the Closing Date. At the Closing Parent shall have received a certificate
signed on behalf of Company by the Chief Executive Officer and the Chief        
Financial Officer of the Company to the foregoing effect.                       

                (c) ABSENCE OF MATERIAL ADVERSE EFFECT.  No Company Material
Adverse Effect shall have occurred.                                             

                  (d) NO EQUITY RIGHTS IN SURVIVING CORPORATION. There shall not
be any securities, rights, warrants, options, or other instruments outstanding  
which, after consummation of the Merger, would be convertible into or           
exercisable for securities of the Surviving Corporation, and Parent shall be    
satisfied that all outstanding options and warrants of the Company will become  
options or warrants solely with respect to Parent Common Stock on the terms     
described in Section 1.5 hereof.                                                

                 (e) REGULATORY CONSENTS. All authorizations, consents, orders
or approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any governmental body, agency or official (all of the       
foregoing, "REGULATORY CONSENTS") which are necessary for the consummation of   
the transactions contemplated hereby, other than immaterial Regulatory Consents 
the failure to obtain which would have no material adverse effect on the        
consummation of the transactions contemplated hereby and no Company Material    
Adverse Effect, are listed on the COMPANY SCHEDULE and shall have been filed,   
have occurred or have been obtained (all such permits, approvals, filings and   
consents and the lapse of all such waiting periods being referred to as the     
"REQUISITE REGULATORY APPROVALS") and all such Requisite Regulatory Approvals   
shall be in full force and effect, provided, however, that a Requisite          
Regulatory Approval shall not be deemed to have been obtained if in connection  
with the grant thereof there shall have been an imposition by any state or      
federal governmental body, agency or official of any condition, requirement,    
restriction or change of regulation, or any other action directly or indirectly 
related to such grant taken by such governmental body, which would reasonably be
expected to either have a Company Material Adverse Effect or prevent Parent from
realizing, in its reasonable opinion, in all material respects the economic     
benefits of the transactions contemplated by this Agreement that Parent         
currently anticipates receiving therefrom.                                      

                (f) NON-REGULATORY CONSENTS. The Company shall have obtained
the consent or approval of any person whose consent or approval shall be        
required under any agreement or instrument which the Company is bound or to     
which the Company's assets or business are subject or affected in order to      
permit the consummation of the transactions contemplated hereby, except those   
which the failure to obtain would not, individually or in the aggregate, have a 
Material Adverse Effect on the Company; provided, that the Parent shall have    
received the right to use, and ownership of the Harris Williams name. The Parent
shall have obtained the consent or approval of any person whose consent or      
approval shall be required under any agreement or instrument which the Parent is
bound or to which the Parent's assets or business are subject or affected in    
order to permit the consummation of the transactions contemplated hereby, except
those which the failure to obtain would not, individually or in the aggregate,  

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have a Parent Material Adverse Effect; provided that the Parent shall have      
obtained the necessary consents that this Agreement and the transactions        
contemplated hereby shall not be considered "change of control" events under the
Employment and Noncompetition Agreements, dated May 16, 1996, between the       
Company and Chris Williams and the Employment and Noncompetition Agreements,    
dated May 16, 1996, between the Company and Hiter Harris.                       

           (g) TAX OPINION. Morgan, Lewis & Bockius LLP shall have
delivered to Parent its written opinion, dated as of the Closing Date, in form  
and substance reasonably satisfactory to Parent, substantially to the effect    
that (i) the Merger constitutes a reorganization under Section 368 of the Code, 
(ii) Parent, Merger Sub and the Company will each be a party to that            
reorganization within the meaning of Section 368(b) of the Code, and (iii)      
Parent, Merger Sub and the Company will not recognize any gain or loss for U.S. 
federal income tax purposes as a result of the Merger.                          

                  (h) EMPLOYMENT/ CONSULTING ARRANGEMENTS. Each person listed on
the COMPANY SCHEDULE shall have entered into an employment agreement as         
contemplated by Section 4.1(e), and each person listed on the COMPANY SCHEDULE  
shall have entered into a severance agreement in the form of Exhibit C hereto   
and a confidentiality, noncompetition and nonsolicitation agreement in the form 
of Exhibit D hereto.                                                            

                 (i) 401(k) PLAN TERMINATION. The Company and its Subsidiaries
shall have taken all appropriate corporate action necessary to have terminated  
their retirement and profit sharing plans maintained pursuant to Section 401(k) 
of the Code or otherwise so that a distribution of assets under such plan may be
made to all participants and beneficiaries of such plan.                        

ARTICLE VI
 TERMINATION, AMENDMENT AND WAIVER

        SECTION 6.1. TERMINATION. This Agreement may be terminated (by written
notice by the terminating party to the other party) and the transactions        
contemplated hereby may be abandoned at any time prior to the Closing Date:     

           (a) By mutual written consent of each of Parent and the
Company;                                                                        

               (b) By either Parent or the Company if the Merger shall not
have been consummated on or before July 15, 1999 (the "TERMINATION DATE");      
provided, however, that the right to terminate this Agreement under this Section
6.1(b) shall not be available to any party whose failure to fulfill any         
obligation under this Agreement has been the cause of, or resulted in, the      
failure of the Closing or the Effective Time to occur on or before the          
Termination Date;                                                               

                (c) By either Parent or the Company if a Governmental Entity
or arbitrator shall have issued an order, decree or ruling or taken any other   
action (which order, decree or ruling the parties shall use their commercially  
reasonable efforts to lift), in each case permanently restraining, enjoining or 
otherwise prohibiting the transactions contemplated by this Agreement, and such 
order, decree, ruling or other action shall have become final and nonappealable;

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                  (d) By Parent if the Company shall have breached, or failed to
comply with, in any material respect any of its obligations under this Agreement
or any representation or warranty made by the Company shall have been incorrect 
in any material respect when made or shall have since ceased to be true and     
correct in any material respect, and such breach, failure or misrepresentation  
is not cured within 30 days after notice thereof and such breaches, failures or 
misrepresentations, individually or in the aggregate, result or would reasonably
be expected to result in a Company Material Adverse Effect, and by the Company  
if the Parent shall have breached, or failed to comply with, in any material    
respect any of its obligations under this Agreement or any representation or    
warranty made by the Parent shall have been incorrect in any material respect   
when made or shall have since ceased to be true and correct in any material     
respect, and such breach, failure or misrepresentation is not cured within 30   
days after notice thereof and such breaches, failures or misrepresentations,    
individually or in the aggregate, result or would reasonably be expected to     
result in a Parent Material Adverse Effect;                                     

              (e) By Parent (i) if there has been a breach of any of the
representations, warranties, covenants or agreements set forth in Section       
2.18(b), 4.1(b)(vii), 4.15, (ii) if Parent shall have determined, in its sole   
discretion, that the Company has failed to make the additional modifications and
financial adjustments required to be made by the Company prior to the Closing   
pursuant to Section 4.15(b) or (iii) if the Company's directors and officers    
insurance policy, including any insurance binders currently in effect, is       
revoked, in whole or in part, prior to the Effective Time and the Company has   
not procured equivalent substitute insurance satisfactory to Parent.            

                (f) By Parent after the occurrence of an event which results
in a Company Material Adverse Effect or by the Company after the occurrence of  
an event which results in a Parent Material Adverse Effect;                     

                 (g) By Parent if the Board of Directors of the Company or any
committee of the Board of Directors of the Company (i) shall withdraw or modify 
in any manner adverse to Parent its approval or recommendation of this          
Agreement, (ii) within 15 business days after Parent's request, shall fail to   
reaffirm such approval or recommendation; provided that such a request is made  
after the Board of Directors of Company has taken any of the actions specified  
in clause (ii) of Section 4.14(a) hereof with respect to an Acquisition Proposal
and such Acquisition Proposal has not been rejected by such Board of Directors  
or withdrawn, (iii) shall approve or recommend any acquisition of a material    
portion of its assets or any tender offer for shares of its capital stock, in   
each case, other than by Parent or an affiliate thereof, (iv) a tender offer or 
exchange offer for any of the outstanding shares of the Company Common Stock    
shall have been commenced or a registration statement with respect thereto shall
have been filed (other than by Parent or an affiliate thereof) and the Board of 
Directors of the Company shall have recommended that the shareholders of the    
Company tender their shares in such tender or exchange offer or publicly        
announced its intention to take no position with respect to such tender or      
exchange offer, or (v) shall resolve to take any of the actions specified in    
this clause (g);                                                                

               (h) By either Parent or the Company if the Required Company
Shareholder Approval shall fail to have been obtained at the Shareholders       
Meeting, including any adjournments thereof;                                    

               (i) by the Company at any time during the five business day
period beginning on the Determination Date, if both of the following conditions 
are satisfied:                                                                  

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                           (1) the Average Closing Price as of the Determination
      Date shall be less than the product of $54.25 (the "STARTING PRICE")
and .75; and                                                  

                         (2) (i) the number obtained by dividing the Average
         Closing Price as of the Closing Date by the Starting Price (such number
         being referred to herein as the "PARENT RATIO") shall be less than (ii)
      the number obtained by dividing the Index Price on the Determination
        Date by the Index Price on the Starting Date and subtracting 0.10 from
   such quotient (such number being referred to herein as the "INDEX
RATIO");                                                      

subject to the following four sentences. If the Company elects to exercise its  
termination right pursuant to the immediately preceding sentence, it shall give 
prompt written notice to Parent, which notice by the Company shall be           
irrevocable. During the five-day period commencing with its receipt of such     
notice, Parent shall have the option, of adjusting the Exchange Ratio to equal  
the lesser of (i) a number equal to a quotient (rounded to the nearest          
one-ten-thousandth), the numerator of which is the product of 0.75, the Starting
Price and the Exchange Ratio (as then in effect) and the denominator of which is
the Average Closing Price as of the Determination Date, and (ii) a number equal 
to a quotient (rounded to the nearest one-ten-thousandth), the numerator of     
which is the Index Ratio multiplied by the Exchange Ratio (as then in effect)   
and the denominator of which is the Parent Ratio. If Parent makes an election   
contemplated by the preceding sentence, within such five-day period it shall    
give prompt written notice to the Company of such election and the revised      
Exchange Ratio, whereupon no termination shall have occurred pursuant to this   
Section 6.1(i) and this Agreement shall remain in effect in accordance with its 
terms (except as the Exchange Ratio shall have been so modified), and any       
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to  
refer to the Exchange Ratio as adjusted pursuant to this Section 6.1(i). For    
purposes of this Section 6.1(i), the following terms shall have the meanings    
indicated:                                                                      

     "Average Closing Price" means the average of the last reported sale
prices per share of Parent Common Stock as reported on the NYSE Composite       
Transaction Tape for the ten consecutive trading days ending at the close of    
business on the Determination Date.                                             

"Determination Date" means the fifth trading day on the NYSE  
immediately preceding the date on which all conditions to the Closing set forth 
in Article V shall have been satisfied or waived (other than conditions that by 
their terms, cannot be satisfied until the Closing Date).                       

     "Index Price" on a given date means closing price of the Standard &
Poor's Financial Index as of 4:00 pm as reported on Bloomberg Information       
Services.                                                                       

        In the event that between the date of this Agreement and the Effective
Time, the issued and outstanding shares of Parent Common Stock shall have been  
affected or changed into a different number of shares of Parent Common Stock or 
a different class of shares as a result of a stock split, reverse stock split,  
stock dividend, spin-off, extraordinary dividend, recapitalization,             
reclassification or other similar transaction with a record date within such    
period, the prices of Parent Common Stock shall be appropriately adjusted for   
purposes of applying this Section 6.1(i).                                       

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SECTION 6.2. EFFECT OF TERMINATION.                           

                 (a) In the event of termination of this Agreement as provided
in Section 6.1 hereof, this Agreement shall forthwith become void and there     
shall be no liability on the part of any of the parties, except as set forth in 
the last sentence of Section 4.3 and Section 4.6 hereof, 6.2(b) and (c) and 6.3.

                  (b) If this Agreement is terminated (i) by the Parent pursuant
to Section 6.1(d) or (h) hereof or by Company pursuant to Section 6.1(h) hereof 
and (x) at the time of such termination or prior to the Shareholders Meeting    
there shall have been an Acquisition Proposal (whether or not such offer shall  
have been rejected or shall have been withdrawn prior to the time of such       
termination or of the Stockholders Meeting) and (y) within one year after       
termination of the Agreement the Company shall have entered into an agreement   
with respect to, or consummated, an Acquisition Proposal, or (ii) by Parent     
pursuant to Section 6.1(d) due to a willful breach by the Company of any of its 
obligations, representations or warranties under this Agreement and either (x)  
or (y) of clause (i) above has occurred, or (iii) by Parent pursuant to Section 
6.1(g), then the Company shall pay to Parent a cash termination fee of $13.8    
million (the "TERMINATION FEE") less any Liquidated Damages, if any, previously 
paid pursuant to Section 6.3 hereof within one business date of the following   
date, as applicable:                                                            

                       (1) if such amount is payable under the preceding
clause (i) of this Section 6.2(b), the earliest date that the 
         conditions set forth in subclauses (x) and (y) of such clause (i) shall
have occurred;                                                

                       (2) if such amount is payable under the preceding
clause (ii) of this Section 6.2(b), the earliest date that the
        condition set forth in either subclause (x) or (y) of subclause (i) of
this Section 6.2(b) shall have occurred; or                   

                       (3) if such amount is payable under the preceding
clause (iii) of this Section 6.2(b), the date of termination. 

          (c) If the Company fails to promptly pay to Parent any
Termination Fee due under Section 6.2(b), Company shall pay the costs and       
expenses (including reasonable legal and expert fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal action,     
taken to collect payment, together with interest on the amount of any unpaid fee
at the publicly announced base rate of Citibank, N.A. from the date such fee was
required to be paid.                                                            

     SECTION 6.3. LIQUIDATED DAMAGES. If this Agreement is terminated by
either Parent or Company, pursuant to Section 6.1(d) hereof, due to a willful   
breach by the other party of any of its obligations, representations or         
warranties under this Agreement, the breaching party agrees to pay the other    
party liquidated damages equal to all expenses incurred by such other party in  
connection with the negotiation, execution and performance of the transactions  
contemplated hereby (including without limitation all fees and expenses payable 
to the party's financial advisers and counsel), not to exceed $3,000,000. The   
parties agree that the foregoing damages shall constitute liquidated damages and
not a penalty. Receipt of the foregoing damages shall constitute the sole and   
exclusive remedy of the terminating party, at law or in equity, and shall       
terminate each party's rights under this Agreement; provided, however, that     
Parent shall also be entitled to receive any Termination Fee due or which become
due pursuant Section 6.2(b)(ii). Each of the parties hereto acknowledges and    
agrees that this                                                                

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Section 6.3 has been agreed upon, after negotiation, as reasonable under the    
circumstances and that the foregoing damages constitute a reasonable estimate of
the damages of the parties.                                                     

         SECTION 6.4. AMENDMENT. This Agreement may be amended by Parent and the
Company pursuant to a writing adopted by action taken by Parent and the Company 
at any time before the Effective Time; provided, however, that, after approval  
of this Agreement by the shareholders of the Company, no amendment may be made  
which would alter or change the amount or kinds of consideration to be received 
by the holders of Company Common Stock upon consummation of the Merger or which 
would materially and adversely affect the holders of Company Common Stock,      
except to the extent approved by the shareholders of the Company. This Agreement
may not be amended except by an instrument in writing signed by the Parties.    

       SECTION 6.5. WAIVER. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or 
other acts of the other parties, (b) waive any inaccuracies in the              
representations and warranties contained herein or in any document delivered    
pursuant hereto and (c) waive compliance with any of the agreements or          
conditions contained herein. Any agreement on the part of a party to any such   
extension or waiver shall be valid only as against such party and only if set   
forth in an instrument in writing signed by such party and any such waiver shall
not be deemed to apply to any other circumstances.                              

 ARTICLE VII
 MISCELLANEOUS

SECTION 7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The  
representations and warranties contained herein shall not survive beyond the    
Closing Date. This Section 7.1 shall not limit any covenant or agreement of the 
parties hereto which by its terms requires performance after the Closing Date.  

      SECTION 7.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and       
supersedes all prior written and oral and all contemporaneous oral agreements   
and understandings with respect to the subject matter hereof.                   

      SECTION 7.3. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered  
in person, by telecopy, or by registered or certified mail (postage prepaid,    
return receipt requested) or by overnight courier service to the respective     
parties as follows:                                                             

IF TO PARENT OR MERGER SUB:                                   

The FINOVA Group Inc.                       
1850 N. Central Avenue                      
P.O. Box 2209                               
Phoenix, Arizona  85002-2209                
Telecopy:  (602) 207-1019                   
Attention:  Glenn Gray                      

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AND:                                        

Telecopy:  (602) 207-4099                   
Attention:  Richard Lieberman               

WITH A COPIES TO:                           

Morgan, Lewis & Bockius LLP                 
1701 Market Street                          
Philadelphia, PA   19103                    
Telecopy: (215) 963-5299                    
Attention: N. Jeffrey Klauder               

IF TO THE COMPANY:                          

Sirrom Capital Corporation                  
St. Cloud Corner                            
500 Church Street                           
Suite 200                                   
Nashville, Tennessee  37219                 
Telecopy:  (615) 256-9958                   
Attention:  Maria-Lisa Caldwell             

WITH A COPY TO:                             

Bass, Berry & Sims PLC                      
2700 First American Center                  
Nashville, TN  37238                        
Telecopy:  (615) 742-6262                   
Attention:  Bob F. Thompson                 

or to such other address as the party to whom notice is given may have          
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on        
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the first business day at the place of which such notice or communication is 
received following the day on which such notice or communication was sent. Any  
notice or communication sent by registered or certified mail shall be deemed    
effective on the fifth business day at the place from which such notice or      
communication was mailed following the day in which such notice or communication
was mailed.                                                                     

     SECTION 7.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws          
applicable thereto.                                                             

        SECTION 7.5. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.                      

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        SECTION 7.6. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this       
Agreement, express or implied, is intended to confer upon any other person      
(including without limitation any employee of the Company or any Subsidiary) any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 4.10 (which is intended to be for the benefit of the persons 
provided for therein, and may be enforced by such persons).                     

SECTION 7.7. COUNTERPARTS. This Agreement may be executed in  
counterparts, each of which shall be deemed to be an original, but all of which 
shall constitute one and the same agreement.                                    

       SECTION 7.8. EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with the transactions contemplated by this  
Agreement shall be paid by the party incurring such expenses except that Parent 
and the Company shall share equally (i) the registration fees payable with      
respect to filing the Proxy Statement and Registration Statement, and (ii) all  
printing and mailing expenses incurred with respect to the Proxy Statement and  
Registration Statement.                                                         

        SECTION 7.9. PERSONAL LIABILITY. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of  
any direct or indirect shareholder of any party hereto or any officer, director,
employee, agent, representative or investor of any party hereto.                

         SECTION 7.10. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to
the benefit of be binding upon the parties hereto and their respective legal    
representatives and successors. This Agreement may not be assigned by any party 
hereto.                                                                         

       SECTION 7.11. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or            
unenforceable in any jurisdiction, the remainder hereof, and the application of 
such provision to such person or circumstance in any other jurisdiction or to   
other persons or circumstances in any jurisdiction, shall not be affected       
thereby, and to this end the provisions of this Agreement shall be severable.   

        SECTION 7.12. LEGAL FEES AND COSTS. If any party hereto institutes any
action or proceeding, whether before a court or arbitrator, to enforce any      
provision of this Agreement, the prevailing party therein shall be entitled to  
received from the losing party reasonable attorneys' fees and costs incurred in 
such action or proceeding, whether or not such action or proceeding is          
prosecuted to judgment.                                                         

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         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and 
year first above written.                                                       

 THE FINOVA GROUP INC.

 By: /s/ GLENN E. GRAY
                            ----------------------------------------
        Name:  Glenn E. Gray
         Title: Vice President

FINOVA NEWCO INC.   

 By: /s/ GLENN E. GRAY
                            ----------------------------------------
        Name:  Glenn E. Gray
         Title: Vice President

      SIRROM CAPITAL CORPORATION

    By: /s/ CARL W. STRATTON
                            ----------------------------------------
          Name: Carl W. Stratton
                  Title: Chief Finanical Officer

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		7/15/99		36		44
		6/1/99		6
Filed on / For Period End:		1/20/99
		1/6/99		1		5
		1/4/99		33
		1/1/99		34
		12/31/98		12		40			10-K,  10-K/A
		12/4/98		16
		10/31/98		34
		9/30/98		6		30			10-Q
		5/20/98		34
		12/31/97		14		31			10-K,  3
		9/30/97		14		30			10-Q
		12/31/96		14		30			10-K
		5/16/96		44
		1/1/95		14		29
									List all Filings