AGREEMENT AND PLAN OF MERGER


This Agreement and Plan of Merger (this "Agreement") is made and entered into as
of May 23, 2003, by and among InnerSpace Corporation, a Delaware corporation
("InnerSpace"), SurfNet New Media, Inc., an Arizona corporation and wholly owned
subsidiary of InnerSpace (the "Purchaser"), and SurfNet Media Group, Inc., an
Arizona corporation (the "Company").

                                    RECITALS

A. The Company, InnerSpace and the Purchaser believe it advisable and in their
   respective best interests to effect a merger of the Company and the
   Purchaser pursuant to this Agreement (the "Merger").

B. The Board of Directors and shareholders of the Company has approved this
   Agreement and the Merger as required by applicable law.

C. The Boards of Directors of InnerSpace and the Purchaser and the sole
   shareholder of the Purchaser have approved this Agreement and the Merger as
   required by applicable law.

D. It is intended that the Merger will qualify as a reorganization under
   Section 368(a) of the Internal Revenue Code of 1986, as amended (the
   "Code").

E. It is intended that certain shareholders of the Company will enter into
   voting agreements with InnerSpace in connection with the Merger
   concurrently herewith.

                                   AGREEMENT

In consideration of the terms hereof, the parties hereto agree as follows:

                                   ARTICLE 1
                                   THE MERGER

1.1 THE MERGER. Upon the terms and subject to the conditions hereof, (a) at the
    Effective Time (as defined in Section 1.3 hereof) the separate existence of
    the Company shall cease and the Company shall be merged with and into the
    Purchaser (the Purchaser as the surviving corporation after the Merger is
    sometimes referred to herein as the "Surviving Corporation"), and (b) from
    and after the Effective Time, the Merger shall have all the effects of a
    merger under the laws of the State of Arizona and other applicable law.

1.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the
    closing of the Merger pursuant to this Agreement (the "Closing") shall take
    place on or before June 6, 2003 (the "Closing Date") after the satisfaction
    or waiver of the conditions set forth in Articles 5 and 6 at 10:00 a.m.
    local time at such location as InnerSpace and the Company shall agree.



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1.3 EFFECTIVE DATE AND TIME. On the Closing Date and subject to the terms and
    conditions hereof, Articles of Merger, together with an officers'
    certificate, complying with the applicable provisions of the Arizona
    Corporations Code ("Arizona Law") shall be delivered for filing to the
    Arizona Corporations Commission. The Merger shall become effective on the
    date (the "Effective Date") and at the time (the "Effective Time") of the
    filing of the Articles of Merger with the Arizona Corporations Commission
    or at such other time as may be specified in the Articles of Merger as
    filed. If the Arizona Corporations Commission requires any changes in the
    Articles of Merger as a condition to filing or issuing its certificate to
    the effect that the Merger is effective, InnerSpace, the Purchaser and the
    Company will execute any necessary revisions incorporating such changes,
    provided such changes are not inconsistent with and do not result in any
    material change in the terms of this Agreement.

1.4 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The Articles of
    Incorporation of the Purchaser, as in effect immediately prior to the
    Effective Time, shall become the Articles of Incorporation of the Surviving
    Corporation.

1.5 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of the Purchaser, as in
    effect immediately prior to the Effective Time, shall become the Bylaws of
    the Surviving Corporation.

1.6 DIRECTORS AND OFFICERS. At the Effective Time, the directors and officers
    of both InnerSpace and the Surviving Corporation shall be the directors and
    officers of the Purchaser immediately prior to the Effective Time, and such
    directors and officers shall hold office in accordance with and subject to
    the Articles of Incorporation and Bylaws of the Surviving Corporation. The
    directors and officers of InnerSpace and the Purchaser shall be set forth
    in a voting agreement, substantially in the form attached hereto as Exhibit
    3.22 (the "Voting Agreement").

                                   ARTICLE 2
                 MERGER CONSIDERATION AND CONVERSION OF SHARES

2.1 MERGER CONSIDERATION. For purposes of this Agreement, the term "Merger
    Consideration" shall mean 3,500,000 shares of common stock, par value
    $0.0001 per share, of InnerSpace ("InnerSpace Common Stock").

2.2 EXCHANGE RATIO; INTERWEST ESCROW SHARES. As of the Effective Time, by
    virtue of the Merger and without any action on the part of the holders
    thereof:

        (a) All shares of any class of capital stock of the Company held by the
            Company as treasury shares shall be canceled.


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        (b) Each issued and outstanding share of Common Stock of the Company (the
            "Company Common Stock"), other than shares of Company Capital Stock,
            if any, for which dissenters' rights are perfected in compliance with
            applicable law, shall be converted into the right to receive from
            InnerSpace a number of shares of InnerSpace Common Stock determined by
            dividing (i) the number of shares comprising the Merger Consideration
            by (ii) the Fully Diluted Common Stock Number. The "Fully Diluted
            Common Stock Number" shall mean the total number of shares of Company
            Common Stock outstanding immediately prior to the Effective Time on a
            fully diluted basis, which calculation assumes (x) the exercise of all
            outstanding rights, warrants or options, vested or unvested, to
            acquire Company Capital Stock, regardless of restrictions on exercise,
            and (y) the conversion of all outstanding securities and notes
            convertible at any time into Company Common Stock, regardless of
            restrictions on conversion (such rights, warrants, options and
            convertible securities referenced in clauses (x) and (y) being
            referred to herein as "Stock Purchase Rights"). The quotient as
            derived above shall be referred to herein as the "Exchange Ratio." The
            number of shares of InnerSpace Common Stock to be issued to each
            holder of Company Capital Stock in existence immediately prior to the
            Effective Time or reserved for issuance to each holder of Stock
            Purchase Rights (collectively, the "Shareholders") under this Section
            2.2(b) shall be calculated by aggregating all shares of Company Common
            Stock held by each such Shareholder and Stock Purchase Rights held by
            each such security holder, so that such number of shares of InnerSpace
            Common Stock to be issued or reserved for issuance shall be equal to
            the sum of the number of shares of Company Common Stock and the shares
            reserved for issuance pursuant to Stock Purchase Rights multiplied by
            the Exchange Ratio, rounded up to the nearest whole number for each
            fractional share that is one half or greater and rounded down to the
            nearest whole number for each fractional share that is less than
            one-half.

        (c) Notwithstanding the foregoing, 10% of that number of shares comprising
            the Merger Consideration (the "Interwest Escrow Shares") shall be
            deposited in escrow (the "Interwest Escrow") with Interwest Transfer
            Co., Inc. ("Interwest Escrow Agent"), to be held and administered in
            accordance with an Escrow Agreement, in substantially the form of
            Exhibit 2.2(c) hereto (the "Interwest Escrow Agreement"), such
            Interwest Escrow Shares to be withheld and deducted, pro rata, from
            the shares of InnerSpace Common Stock otherwise issuable to each
            Shareholder. By approving the Merger at a special meeting of the
            shareholders or by written consent or by delivering their certificates
            representing shares of Company Capital Stock to Interwest in
            accordance with the provisions of Section 2.3, the Shareholders shall
            agree to be bound with respect to the indemnification obligations of
            the Shareholders and the procedures set forth in Article 9. In the
            event of fractional shares, each Shareholder shall round up such
            fractional share that is one-half or greater to the nearest whole
            number and deposit into escrow a full share of InnerSpace Common Stock



                                       3



            for such fractional share and round down to the nearest whole number
            for each fractional share that is less than one-half. The Interwest
            Escrow Agent in book entry form shall hold the Interwest Escrow
            Shares. Notwithstanding the escrow of the Interwest Escrow Shares,
            dividends or other distributions declared and paid on such shares
            shall continue to be paid by InnerSpace to the holders of Interwest
            Escrow Shares and all voting rights with respect to such shares shall
            inure to the benefit of and be enjoyed by such stockholders. Any
            securities received by the Interwest Escrow Agent in respect of any
            Interwest Escrow Shares held in escrow as a result of any stock split
            or combination of shares of InnerSpace Common Stock, payment of a
            stock dividend or other stock distribution in or on shares of
            InnerSpace Common Stock, or change of InnerSpace Common Stock into any
            other securities pursuant to or as a part of a merger, consolidation,
            acquisition of property or stock, separation, reorganization or
            liquidation of InnerSpace, or otherwise, shall be held by the
            Interwest Escrow Agent as, and shall be included within the definition
            of, Interwest Escrow Shares. The Interwest Escrow Shares shall be
            available to satisfy any indemnification obligations pursuant to
            Article 9 for the Survival Period (as defined in Section 9.1).

        (d) Each outstanding option to purchase shares of Company Common Stock or
            stock purchase right set forth on Schedule 2.2(d), whether or not
            vested or exercisable (each, an "Option" or "Stock Purchase Right"),
            shall be assumed by InnerSpace and shall constitute an option to
            acquire, on the same vesting terms, and on substantially the same
            other terms and conditions as were applicable under such assumed
            Option or Stock Purchase Right, that number of shares of InnerSpace
            Common Stock equal to the product of the Common Stock Exchange Ratio
            and the number of shares of Company Common Stock subject to such
            Option or Stock Purchase Right rounded up to the nearest whole number
            for each fractional share that is one half or greater and rounded down
            to the nearest whole number for each fractional share that is less
            than one-half, at a price per share(rounded to the nearest $0.01)
            equal to the aggregate exercise price for the shares of Company Common
            Stock subject to such Option or Stock Purchase Right divided by the
            number of full shares of InnerSpace Common Stock deemed to be
            purchasable pursuant to such Option or Stock Purchase Right; provided,
            however, that in the case of any Option to which Section 421 of the
            Code applies by reason of its qualification under Section 422 of the
            Code, the option price, the number of shares purchasable pursuant to
            such Option and the terms and conditions of exercise of such Option
            shall be determined in order to comply with Section 424 of the Code.

        (e) Holders of shares of Company Capital Stock who have complied with all
            the requirements for perfecting dissenters' rights, as required under
            Arizona Law, shall be entitled to their rights under Arizona Law with
            respect to such shares (the "Dissenting Shares"). Notwithstanding the
            foregoing, if any holder of Dissenting Shares shall effectively
            withdraw or lose (through failure to perfect or otherwise) the right
            to dissent, then, as of the later of the Effective Time and the




                                       4



            occurrence of such event, such holder's shares shall automatically be
            converted into and represent only the right to receive the shares of
            InnerSpace Common Stock to which such holder is then entitled under
            this Agreement and Arizona Law, without interest thereon and upon
            surrender of the certificate representing such shares. Notwithstanding
            any provision of this Agreement to the contrary, any Dissenting Shares
            held by a Shareholder who has perfected dissenter's rights for such
            shares in accordance with Arizona Law shall not be converted in
            InnerSpace Common Stock pursuant to this Section 2.2.

        (f) If, prior to the Effective Time, InnerSpace recapitalizes through a
            split-up of its outstanding shares of capital stock into a greater
            number, or a combination of its outstanding shares of capital stock
            into a lesser number, reorganizes, reclassifies or otherwise changes
            its outstanding shares of capital stock into the same or a different
            number of shares of other classes of capital stock, or declares a
            dividend on its outstanding shares of capital stock payable in shares
            or securities convertible into shares, the number of shares of
            InnerSpace Common Stock into which the shares of Company Capital Stock
            are to be converted, and the number of shares of InnerSpace Common
            Stock issuable upon the exercise of each assumed Option, will be
            adjusted appropriately so as to maintain the proportionate interests
            of the holders of the Company Capital Stock and Options and the
            holders of shares of capital stock of InnerSpace.

2.3 EXCHANGE OF CERTIFICATES

        (a) As soon as practicable after the Effective Date, Interwest, as
            exchange agent (the "Exchange Agent"), shall make available, and each
            Shareholder will be entitled to receive, in no event more than five
            business days after surrender to the Exchange Agent of a letter of
            transmittal attached hereto as Exhibit 2.3(a) (the "Letter of
            Transmittal") together with documents delivered as required therein,
            including certificates representing shares of Company Capital Stock
            for cancellation, certificates representing the number of shares of
            InnerSpace Common Stock that such Shareholder is entitled to receive
            pursuant to Section 2.2 hereof; provided, however, that the Interwest
            Escrow Shares shall (i) be retained by Interwest in accordance with
            the provisions of the Interwest Escrow Agreement, (ii) not be issued
            in certificated form and (iii) be held by Interwest in book entry
            form. In the event that any certificates representing shares of
            Company Capital Stock shall have been lost, stolen or destroyed, upon
            the making of an affidavit of that fact by the Shareholder claiming
            such certificate to be lost, stolen or destroyed, InnerSpace shall
            issue in exchange for such lost, stolen or destroyed certificate the
            shares of InnerSpace Common Stock that such Shareholder is entitled to
            receive pursuant to Section 2.2 hereof; provided, however, that
            InnerSpace may in its discretion and as a condition precedent to the
            issuance thereof, require such Shareholder to provide InnerSpace with
            an indemnity agreement against any claim that may be made against
            InnerSpace with respect to the certificate alleged to have been lost,
            stolen or destroyed. The shares of InnerSpace Common Stock that each



                                       5



            Shareholder shall be entitled to receive in connection with the Merger
            pursuant to Section 2.2 and the Interwest Escrow Shares shall be
            deemed to have been issued at the Effective Time. No interest shall
            accrue on the Merger Consideration. If the Merger Consideration (or
            any portion thereof) is to be delivered to any person other than the
            person in whose name the certificate or certificates representing
            shares of Company Capital Stock surrendered in exchange therefor is
            registered, it shall be a condition to such exchange that the person
            requesting such exchange shall pay to InnerSpace any transfer or other
            taxes required by reason of the payment of the Merger Consideration to
            a person other than the registered holder of the certificate or
            certificates so surrendered, or shall establish to the satisfaction of
            InnerSpace that such tax has been paid or is not applicable.
            Notwithstanding anything to the contrary, neither InnerSpace nor any
            other party hereto shall be liable to a holder of shares of Company
            Capital Stock for any Merger Consideration delivered to a public
            official pursuant to applicable law, including, without limitation,
            abandoned property, escheat and similar laws.

        (b) InnerSpace or the Exchange Agent will be entitled to deduct and
            withhold from the Merger Consideration such amounts as InnerSpace or
            the Exchange Agent are required to deduct and withhold with respect to
            the making of such payment under the Code, or any provision of state,
            local or foreign tax law. To the extent that amounts are so withheld,
            such amounts will be treated for all purposes of this Agreement as
            having been paid to the former holder of the Company Capital Stock in
            respect of whom such deduction and withholding were made by InnerSpace
            or the Exchange Agent.

2.4 NO FURTHER TRANSFERS. After the Effective Time, there shall be no transfers
    of any shares of Company Capital Stock on the stock transfer books of the
    Surviving Corporation. If, after the Effective Time, certificates formerly
    representing shares of Company Capital Stock are presented to the Surviving
    Corporation, they shall be forwarded to InnerSpace and be canceled and
    exchanged in accordance with this Section 2.4, subject to applicable law in
    the case of Dissenting Shares.

2.5 NO FRACTIONAL SHARES. No certificates or scrip representing fractional
    shares of InnerSpace Common Stock shall be issued by virtue of the Merger,
    and no dividend, stock split or other distribution with respect to
    InnerSpace Common Stock shall relate to any such fractional interest, and
    any such fractional interests shall not entitle the owner thereof to vote
    or to any rights of a security holder.

2.6 SHAREHOLDER REPRESENTATIVE

        (a) By approving the Merger at a special meeting of shareholders or by
            written consent of the shareholders, each Shareholder shall have
            irrevocably authorized and appointed the chief executive officer of
            the Surviving Corporation or if there is no chief executive officer
            the next highest ranking officer ("Shareholder Representative"), with
            full power of substitution and resubstitution, as such Shareholder's



                                       6


            representative and true and lawful attorney-in-fact and agent to act
            in such Shareholder's name, place and stead as contemplated by Article
            9 and to execute in the name and on behalf of such Shareholder the
            Interwest Escrow Agreement and any other agreement, certificate,
            instrument or document to be delivered by such Shareholder in
            connection with the Interwest Escrow Agreement.

        (b) The Shareholder Representative shall not be liable for any act done or
            omitted hereunder or under the Interwest Escrow Agreement as the
            Shareholder Representative while acting in good faith and in the
            exercise of reasonable judgment. The Shareholders on whose behalf the
            Interwest Escrow Shares were contributed to the Interwest Escrow shall
            indemnify the Shareholder Representative and hold the Shareholder
            Representative harmless against any loss, liability or expense
            incurred without gross negligence or bad faith on the part of the
            Shareholder Representative and arising out of or in connection with
            the acceptance or administration of the Shareholder Representative's
            duties hereunder and under the Interwest Escrow Agreement, including
            the reasonable fees and expenses of any legal counsel retained by the
            Shareholder Representative.

        (c) A decision, act, consent or instruction of the Shareholder
            Representative shall constitute a decision of the Shareholders and
            shall be final, binding and conclusive upon the Shareholders; and the
            Interwest Escrow Agent and the Indemnified Parties (as defined herein)
            may rely upon any such decision, act, consent or instruction of the
            Shareholder Representative as being the decision, act, consent or
            instruction of the Shareholders. The Interwest Escrow Agent and the
            Indemnified Parties are hereby relieved from any liability to any
            person for any acts done by them in accordance with such decision,
            act, consent or instruction of the Shareholder Representative.

2.7 TAX FREE REORGANIZATION

        (a) Except as otherwise required by the Internal Revenue Service (the
            "IRS") pursuant to a determination (as defined in Section 1313 of the
            Code) or otherwise, or by applicable law, the parties shall not take a
            position on any tax returns inconsistent with the treatment of the
            Merger for tax purposes as a reorganization within the meaning of
            Section 368(a)(1)(A) of the Code by reason of Section 368(a)(2)(D) of
            the Code, in the case of the merger of the Company with and into the
            Purchaser with the Purchaser being the surviving corporation, by
            reason of Section 368(a)(2)(E) of the Code, in the case of any merger
            of the Purchaser with and into the Company with the Company being the
            surviving corporation, or by reason of Section 368(a)(1)(A) itself, in
            the case of the merger of the Company with and into InnerSpace.

        (b) In addition, InnerSpace represents, solely for tax purposes, now, and
            as of the Closing Date, the following: (i) prior to the Merger, it
            will be in "control" of Purchaser within the meaning of Section 368(c)




                                       7



            of the Code; (ii) except for reorganizations under Section
            368(a)(1)(F) of the Code or a merger with InnerSpace, it has no
            present plan or intention to liquidate the Company or to merge the
            Company with or into another corporation, to sell, distribute or
            otherwise dispose of the Company Capital Stock, except for transfers
            of stock described in Section 368(a)(2)(C) of the Code or Treasury
            Regulation Section 1.368-2(k)(2), or to cause the Company to sell or
            otherwise dispose of any of its assets except for dispositions made in
            the ordinary course of business or transfers described in Section
            368(a)(2)(C) or Treasury Regulation Section 1.368-2(k)(2); and (iii)
            that it presently intends to continue the Company's historic business
            or use a significant portion of the Company's business assets in
            business in a manner that satisfies the continuity of business
            enterprise requirement set forth in Treasury Regulation Section
            1.368-1(d). Notwithstanding the foregoing, neither InnerSpace nor the
            Purchaser makes any representation or warranty with respect to any Tax
            consequences to the Company or its shareholders arising under this
            Agreement or as a result of the transactions contemplated hereby.

        (c) The Company represents that it has not taken any action that would
            prevent the Merger from meeting the requirement under Section
            368(a)(2)(E) of the Code that "substantially all of the assets" of the
            Company must be acquired in the Merger.

                                   ARTICLE 3
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as is otherwise set forth in the Schedules attached hereto, and in order
to induce InnerSpace and the Purchaser to enter into and perform this Agreement
and the other agreements and certificates that are required to be executed
pursuant to this Agreement (collectively, the "Operative Documents"), the
Company represents and warrants to InnerSpace and the Purchaser as of the date
of this Agreement and as of the Closing as follows in this Article 3.

3.1 ORGANIZATION. The Company is a corporation duly organized, validly existing
    and in good standing under the laws of the State of Arizona. The Company
    has all requisite corporate power and authority to own, operate and lease
    its properties and assets, to carry on its business as now conducted and as
    currently proposed to be conducted, and to enter into and perform its
    obligations under this Agreement and the other Operative Documents to which
    the Company is a party, and to consummate the transactions contemplated
    hereby and thereby. The Company is duly qualified and licensed as a foreign
    corporation to do business and is in good standing in each jurisdiction in
    which the character of the Company's properties occupied, owned or held
    under lease or the nature of the business conducted by the Company makes
    such qualification or licensing necessary, except where the failure to be
    so qualified or in good standing would not have a Company Material Adverse
    Effect. For purposes of this Agreement, the term "Company Material Adverse
    Effect" shall mean any change, event or effect that is or is reasonably
    likely to be materially adverse to the Company's business, operations,



                                       8



    assets, liabilities, condition (financial or otherwise) or prospects;
    provided, however, that a Company Material Adverse Effect shall not include
    any change, event or effect that relates to or results from (i) the
    announcement or other disclosure or consummation of the transactions
    contemplated by this Agreement; (ii) a general economic downturn; or (iii)
    an economic downturn in the Company's industry which does not
    disproportionately affect the Company.

3.2 ENFORCEABILITY. The Company has full corporate power and authority to
    execute, deliver and perform its obligations under this Agreement and each
    of the other Operative Documents to which it is a party and each of the
    certificates, instruments and documents executed or delivered by it
    pursuant to the terms of this Agreement. All corporate action on the part
    of the Company and its officers, directors and shareholders necessary for
    the authorization, execution, delivery and performance of this Agreement
    and the other Operative Documents to which the Company is a party, the
    consummation of the Merger, and the performance of all the Company's
    obligations under this Agreement and the other Operative Documents to which
    the Company is a party has been taken or will be taken as of or prior to
    the Effective Time. All such corporate action on the part of the Company's
    Board of Directors has been taken. This Agreement has been, and each of the
    other Operative Documents to which the Company is a party at the Closing
    will have been, duly executed and delivered by the Company, and this
    Agreement is, and each of the other Operative Documents to which the
    Company is a party will be at the Closing, a legal, valid and binding
    obligation of the Company, enforceable against the Company in accordance
    with its terms, except as to the effect, if any, of (a) applicable
    bankruptcy and other similar laws affecting the rights of creditors
    generally, (b) rules of law governing specific performance, injunctive
    relief and other equitable remedies, and (c) the enforceability of
    provisions requiring indemnification in connection with the offering,
    issuance or sale of securities.

3.3 CAPITALIZATION

        (a) The authorized capital stock of the Company consists of 10,000,000
            shares of no par value Company Common Stock.

        (b) As of the date of this Agreement, the issued and outstanding capital
            stock of the Company consisting solely of Company Common Stock is
            7,766,653 shares, all of which shares are held of record on the date
            of this Agreement and, to the knowledge of the Company, beneficially
            by the Shareholders as set forth on Schedule 3.3(b). Such outstanding
            shares are, and immediately prior to the Closing will be duly
            authorized and validly issued, fully paid and nonassessable, and
            issued in compliance with all applicable federal and state securities
            laws. True and correct copies of the stock records of the Company,
            showing all issuances and transfers of shares of capital stock of the
            Company since inception, have been provided to InnerSpace.

        (c) As of the date of this Agreement, other than the Options and other
            Stock Purchase Rights set forth on Schedule 2.2(d) reflecting 863,961
            shares of Company Common Stock reserved for issuance, there are no



                                       9


            outstanding rights of first refusal or offer, preemptive rights, other
            Stock Purchase Rights or other agreements, either directly or
            indirectly, for the purchase or acquisition from the Company or any of
            its shareholders of any shares of Company Capital Stock or any
            securities convertible into or exchangeable for shares of Company
            Capital Stock. Schedule 2.2(d) accurately reflects the number of such
            Options and other Stock Purchase Rights outstanding as of the date of
            this Agreement, the grant or issue dates, vesting schedules and
            exercise or conversion prices thereof, and, in each case, the
            identities of the holders and an indication of their relationships to
            the Company (if any exist other than as a security holder). The
            Company has delivered to InnerSpace or its counsel true and correct
            copies of the stock option agreements relating to Options granted
            thereunder, all other agreements with respect to such other Stock
            Purchase Rights, and all material deviations therefrom. Schedule
            2.2(d) also identifies all Options or other Stock Purchase Rights that
            have been offered in connection with any employee or consulting
            agreement but that, as of the date hereof, have not been issued or
            granted. All Options and other Stock Purchase Rights have been granted
            or issued at fair market value, as determined by the Company's Board
            of Directors at the date of grant or issuance.

        (d) The Company is not a party or subject to any agreement or
            understanding, and, to the knowledge of the Company, there is no
            agreement or understanding between any Persons that affects or relates
            to the voting or giving of written consents with respect to any
            securities of the Company or the voting by any director of the
            Company.

        (e) No Shareholder or any affiliate thereof is indebted to the Company,
            and the Company is not indebted to any Shareholder or any affiliate
            thereof.

        (f) The Company is not under any contractual or other obligation to
            register any of its presently outstanding securities or any of its
            securities that may hereafter be issued.

        (g) The Company has not granted any rights of refusal or co-sale.

3.4 SUBSIDIARIES AND AFFILIATES. The Company does not own and has not in the
    past owned, directly or indirectly, any ownership, equity, or voting
    interest in, or otherwise control or controlled, any corporation,
    partnership, limited liability company, joint venture or other entity, and
    has no agreement or commitment to purchase any such interest.

3.5 NO APPROVALS; NO CONFLICTS. The execution, delivery and performance by the
    Company of this Agreement and the other Operative Documents to which the
    Company is a party and the consummation of the transactions contemplated
    hereby and thereby will not (a) constitute a violation (with or without the
    giving of notice or lapse of time, or both) of any provision of law or any
    judgment, decree, order, regulation or rule of any court or other



                                       10



    governmental authority applicable to the Company, (b) require any consent,
    approval or authorization of, or declaration, filing or registration with,
    any person, corporation, partnership, joint venture, association,
    organization, other entity or governmental or regulatory authority (a
    "Person"), except (i) compliance with applicable securities laws, (ii) the
    filing of all documents necessary to consummate the Merger with the
    Delaware Secretary of State and the Arizona Corporations Commission, (iii)
    the approval by the Shareholders of the transactions contemplated hereby,
    as provided under Arizona Law and the Articles of Incorporation and Bylaws
    of the Company, and (iv) the filing of all documents necessary to roll-up
    each Company Subsidiary, (c) result in a default (with or without the
    giving of notice or lapse of time, or both) under, or acceleration or
    termination of, or the creation in any party of the right to accelerate,
    terminate, modify or cancel, any agreement, lease, note or other
    restriction, encumbrance, obligation or liability to which the Company is a
    party or by which it is bound or to which any assets of the Company are
    subject, (d) result in the creation of any Encumbrance (as defined in
    Section 3.9(d)) upon any material assets of the Company or, to the
    knowledge of the Company, upon any outstanding shares or other securities
    of the Company, (e) conflict with or result in a breach of or constitute a
    default under any provision of the Articles of Incorporation or Bylaws of
    the Company, or (f) invalidate or adversely affect any permit, license or
    authorization currently material to the conduct of the business of the
    Company.

3.6 FINANCIAL STATEMENTS. The Company will use its best efforts to deliver by
    May 31, 2003 to InnerSpace (a) audited balance sheets and statements of
    income and expense of the Company as of or for the fiscal years ended
    February 28, 2002 and 2001, and (b) an unaudited balance sheet, statement
    of income and expense and statement of cash flow of the Company as of and
    for the three-month period ended February 28, 2003. All the foregoing
    financial statements are herein referred to as the "Financial Statements."
    The balance sheet of the Company as of February 28, 2003 is herein referred
    to as the "Company Balance Sheet." The Financial Statements have been
    prepared in conformity with generally accepted accounting principles in the
    United States ("GAAP") on a basis consistent with prior accounting periods
    and fairly present the financial position, results of operations and
    changes in financial position of the Company as of the dates and for the
    periods indicated. The Company has no liabilities or obligations of any
    nature (absolute, contingent or otherwise) that are not fully reflected or
    reserved against in the Company Balance Sheet and that would be required
    under GAAP to be reflected or reserved, except liabilities or obligations
    incurred since the date of the Company Balance Sheet in the ordinary course
    of business and consistent with past practice that are not in excess of
    $5,000 in the aggregate or $1,000 individually. The Company maintains
    standard systems of accounting that are adequate for its business. The
    Company is not a guarantor, indemnitor, surety or other obligor of any
    indebtedness of any other Person. The Company's practices with respect to
    capitalizing software development costs, as reflected in the Financial
    Statements, are reasonable, in accordance with industry standards and
    consistent with the advice of the Company's independent accountants.

3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except (i) as set forth in Schedule
    3.7 and (ii) for transactions specifically contemplated in this Agreement,




                                       11


    since the date of the Company Balance Sheet, neither the Company nor any of
    its officers or directors in their representative capacities on behalf of
    the Company have:

        (a) taken any action or entered into or agreed to enter into any
            transaction, agreement or commitment other than in the ordinary course
            of the Company's business as currently conducted and as proposed to be
            conducted;

        (b) forgiven or canceled any indebtedness or waived any claims or rights
            of material value (including, without limitation, any indebtedness
            owing by any shareholder, officer, director, employee or affiliate of
            the Company);

        (c) granted, other than in the ordinary course of business and consistent
            with past practice, any increase in the compensation of directors,
            officers, employees or consultants who already held such positions at
            that time (including any such increase pursuant to any employment
            agreement or bonus, pension, profit-sharing, lease payment or other
            plan or commitment) or any increase in the compensation payable or to
            become payable to any director, officer, employee or consultant;

        (d) suffered any change having or reasonably likely to have a Company
            Material Adverse Effect;

        (e) borrowed or agreed to borrow any funds, incurred or become subject to,
            whether directly or by way of assumption or guarantee or otherwise,
            any obligations or liabilities (absolute, accrued, contingent or
            otherwise) individually in excess of $1,000 or in excess of $10,000 in
            the aggregate, except liabilities and obligations (i) that are
            incurred in the ordinary course of business and consistent with past
            practice or (ii) that would not be required to be reflected or
            reserved against in a balance sheet prepared in accordance with GAAP,
            or increased, or experienced any change in any assumptions underlying
            or methods of calculating, any bad debt, contingency or other
            reserves;

        (f) paid, discharged or satisfied any material claims, liabilities or
            obligations (absolute, accrued, contingent or otherwise) other than
            the payment, discharge or satisfaction in the ordinary course of
            business and consistent with past practice of claims, liabilities and
            obligations reflected or reserved against in the Company Balance Sheet
            or incurred in the ordinary course of business and consistent with
            past practice since the date of the Company Balance Sheet, or prepaid
            any obligation having a fixed maturity of more than 90 days from the
            date such obligation was issued or incurred;

        (g) knowingly permitted or allowed any of its property or assets (real,
            personal or mixed, tangible or intangible) to be subjected to any
            mortgage, pledge, lien, security interest, encumbrance, restriction or
            charge, except in the ordinary course of business and consistent with
            past practice;



                                       12



        (h) purchased or sold, transferred or otherwise disposed of any of its
            material properties or assets (real, personal or mixed, tangible or
            intangible);

        (i) disposed of or permitted to lapse any rights to the use of any
            trademark, trade name, patent or copyright, or disposed of or
            disclosed to any Person without obtaining an appropriate
            confidentiality agreement from any such Person any trade secret,
            formula, process or know-how not theretofore a matter of public
            knowledge;

        (j) made any single capital expenditure or commitment in excess of $5,000
            for additions to property, plant, equipment or intangible capital
            assets or made aggregate capital expenditures in excess of $20,000 for
            additions to property, plant, equipment or intangible capital assets;

        (k) made any change in accounting methods or practices or internal control
            procedure;

        (l) issued any capital stock or other securities, or declared, paid or set
            aside for payment any dividend or other distribution in respect of its
            capital stock, or redeemed, purchased or otherwise acquired, directly
            or indirectly, any shares of capital stock or other securities of the
            Company, or otherwise permitted the withdrawal by any of the holders
            of Company Capital Stock of any cash or other assets (real, personal
            or mixed, tangible or intangible), in compensation, indebtedness or
            otherwise, other than payments of compensation in the ordinary course
            of business and consistent with past practice;

        (m) paid, loaned or advanced any amount to, or sold, transferred or leased
            any properties or assets (real, personal or mixed, tangible or
            intangible) to any of the Company's shareholders, officers, directors
            or employees or any affiliate of any of the Company's shareholders,
            officers, directors or employees, except compensation paid to officers
            and employees at rates not exceeding the rates of compensation paid
            during the fiscal year last ended and except for advances for travel
            and other business-related expenses; or

        (n) agreed, whether in writing or otherwise, to take any action described
            in this Section 3.7.

3.8 TAXES

        (a) (i) All Tax Returns (as defined below) required to be filed by or on
            behalf of the Company, to the knowledge of the Company have been filed
            on a timely basis with the appropriate governmental authority in all
            jurisdictions in which such Tax Returns are required to be filed, and,
            to the Knowledge of the Company, all Taxes (as defined below) of the
            Company (whether or not reflected on any Tax Return) have been fully
            and timely paid; (iii) no waivers of statutes of limitation have been
            given or requested with respect to the Company in connection with any




                                       13


            Tax Returns covering the Company with respect to any Taxes payable by
            it; (iv) no taxing authority in a jurisdiction where the Company does
            not file Tax Returns has made a claim, assertion, or threat to the
            Company that the Company is or may be subject to taxation by such
            jurisdiction; (v) the Company has duly and timely withheld from
            employee salaries, wages and other compensation and paid over to the
            appropriate governmental authority all amounts required to be so
            withheld and paid over for all periods under all applicable laws; and
            no amounts have been or would be required to be withheld with respect
            to the lapse of restrictions on Company Capital Stock; (vi) there are
            no liens with respect to Taxes on any of the Company's property or
            assets other than liens for current Taxes not yet payable; (vii) there
            are no Tax rulings, requests for rulings, or closing agreements
            relating to the Company which could affect the liability for Taxes or
            the amount of taxable income of the Company for any period (or portion
            of a period) after the date hereof; and (viii) any adjustment of Taxes
            of the Company made by the IRS in any examination which is required to
            be reported to the appropriate state, local or foreign taxing
            authorities has been reported, and any additional Taxes due with
            respect thereto have been paid. "Taxes" means all foreign, federal,
            state, county or local taxes, charges, fees, levies, imposts, duties,
            and other assessments, including, but not limited to, any income,
            alternative minimum or add-on tax, estimated, gross income, gross
            receipts, sales, use, transfer, transactions, intangibles, ad valorem,
            value-added, franchise, registration, title, license, capital, paid-up
            capital, profits, withholding, payroll, employment, excise, severance,
            stamp, occupation, premium, real property, recording, personal
            property, federal highway use, commercial rent, environmental
            (including, but not limited to, taxes under Section 59A of the Code)
            or windfall profit tax, custom, duty or other tax, governmental fee or
            other like assessment or charge of any kind whatsoever, together with
            any interest, penalties or additions to tax; and "Tax" means any of
            the foregoing Taxes. "Tax Returns" means any return, declaration,
            report, claim or refund, information return, statement, or other
            similar document relating to Taxes, including any schedule or
            attachment thereto, and including any amendment thereof.

        (b) There is no dispute or claim concerning any Tax liability of the
            Company either (i) claimed or raised by any authority in writing or
            (ii) as to which any of the directors and officers (and employees
            responsible for Tax matters) of the Company have knowledge based on
            contact or correspondence with any agent of such authority.

3.9 PROPERTY.

        (a) The Company owns no real property other than the leasehold interests
            described on Schedule 3.9(a), which contains a complete and accurate
            list of all real property owned, leased or currently being used by the
            Company (the "Real Property"). The Company has delivered to InnerSpace




                                       14



            or its counsel true and complete copies of all written leases,
            subleases, rental agreements, contracts of sale, tenancies or licenses
            relating to the Real Property and written summaries of the terms of
            any oral leases, subleases, rental agreements, contracts of sale,
            tenancies or licenses to which the Real Property is subject.

        (b) The personal property of the Company is located on the premises at
            2245 W. University Drive, Suite 9, Tempe, Arizona (the "Personal
            Property"). The Company has delivered to InnerSpace or its counsel
            true and complete copies of all leases, subleases, rental agreements,
            contracts of sale, tenancies or licenses to which the Personal
            Property is subject.

        (c) The Real Property and the Personal Property include all the properties
            and assets (whether real, personal or mixed, tangible or intangible)
            (other than, in the case of the Personal Property, property rights
            with an individual value of less than $500 and the Technology and IP
            Rights) reflected in the Company Balance Sheet (except for such
            properties or assets sold since the date of the Company Balance Sheet
            in the ordinary course of business and consistent with past practice)
            and all the properties and assets purchased by the Company since the
            date of the Company Balance Sheet (other than, in the case of the
            Personal Property, property rights with an individual value of less
            than $500 and the Technology and the IP Rights). The Real Property and
            the Personal Property include all material property used in the
            business of the Company, other than the Technology and IP Rights. The
            Company's offices and other structures and its Personal Property are
            of a quality consistent with industry standards, are in good operating
            condition and repair, normal wear and tear excepted, are adequate for
            the uses to which they are being put, and comply in all material
            respects with applicable safety and other laws and regulations.

        (d) The Company's leasehold interest in each parcel of the Real Property
            is free and clear of all liens, mortgages, pledges, deeds of trust,
            security interests, charges, encumbrances and other adverse claims or
            interests of any kind (each, an "Encumbrance"), except for
            Encumbrances related to Taxes not yet due and payable. Each lease of
            any portion of the Real Property is valid, binding and enforceable in
            accordance with its terms against the parties thereto and, to the
            Company's knowledge, any other Person with an interest in such Real
            Property, the Company has performed in all material respects all
            obligations imposed upon it thereunder, and neither the Company nor,
            to the Company's knowledge, any other party thereto is in default
            thereunder, nor is there any event which with notice or lapse of time,
            or both, would constitute a default thereunder by the Company or, to
            the Company's knowledge, by any other party. The Company has not
            granted any lease, sublease, tenancy or license of, or entered into
            any rental agreement or contract of sale with respect to, any portion
            of the Real Property.

        (e) The Personal Property is free and clear of all Encumbrances and, other
            than leased Personal Property, the Company owns such Personal
            Property. Each lease, license, rental agreement, contract of sale or




                                       15


            other agreement to which the Personal Property is subject is valid,
            binding and enforceable in accordance with its terms against the
            parties thereto, the Company has performed in all material respects
            all obligations imposed upon it thereunder, and neither the Company
            nor, to the Company's knowledge, any other party thereto is in default
            thereunder, nor is there any event which with notice or lapse of time,
            or both, would constitute a default by the Company or, to the
            Company's knowledge, any other party thereunder. The Company has not
            granted any lease, sublease, tenancy or license of any portion of the
            Personal Property, except in the ordinary course of business.

3.10 CONTRACTS

        3.10.1 MATERIAL CONTRACTS. To the knowledge of the Company, Schedule 3.10.1
               contains a complete and accurate list of all contracts, agreements and
               understandings, oral or written, to which the Company is currently a
               party or by which the Company is currently bound providing for
               potential payments by or to the Company in excess of $1,000,
               including, without limitation, security agreements, license
               agreements, software development agreements, distribution agreements,
               joint venture agreements, reseller agreements, credit agreements and
               instruments relating to the borrowing of money (collectively, the
               "Material Contracts"). All Material Contracts are valid, binding and
               enforceable in accordance with their terms against the Company and, to
               the Company's knowledge, each other party thereto (except as to the
               effect, if any, of (a) applicable bankruptcy and other similar laws
               affecting the rights of creditors generally, (b) rules of law
               governing specific performance, injunctive relief and other equitable
               remedies, and (c) the enforceability of provisions requiring
               indemnification in connection with the offering, issuance or sale of
               securities), and are in full force and effect, the Company has
               performed in all material respects all obligations imposed on it
               thereunder, and neither the Company nor, to the Company's knowledge,
               any other party thereto is in default thereunder, nor to the Company's
               knowledge is there any event which with notice or lapse of time, or
               both, would constitute a default by the Company or, to the Company's
               knowledge, any other party thereunder. True and complete copies of
               each written Material Contract (or written summaries of the terms of
               any oral Material Contract) have been delivered to InnerSpace or its
               counsel by the Company. Except as set forth on Schedule 3.10.1, the
               Company has no:

                (a) contracts with directors, officers, shareholders, employees, agents,
                    consultants, advisors, salespeople, sales representatives,
                    distributors or dealers that cannot be canceled by the Company within
                    30 days' notice without liability, penalty or premium, any agreement
                    or arrangement providing for the payment of any bonus or commission
                    based on sales or earnings, or any compensation agreement or
                    arrangement affecting or relating to former employees of the Company;




                                       16


                (b) employment agreement, whether express or implied, or any other
                    agreement for services that contains severance or termination pay
                    liabilities or obligations;

                (c) noncompetition agreement or other arrangement that would prevent the
                    Company from carrying on its business anywhere in the world;

                (d) notice that any party to a Material Contract intends to cancel,
                    terminate or refuse to renew such contract (if such contract is
                    renewable);

                (e) material dispute with any of its suppliers, customers, distributors,
                    licensors or licensees;

                (f) product distribution agreement, development agreement, or license
                    agreement as licensor or licensee (except for standard nonexclusive
                    software licenses granted to end-user customers in the ordinary course
                    of business, the form of which has been provided to InnerSpace, or
                    standard licenses purchased by the Company for off-the-shelf
                    software);

                (g) joint venture contract or arrangement or any other agreement that
                    involves a sharing of profits with other persons;

                (h) instrument evidencing indebtedness for borrowed money by way of a
                    direct loan, sale of debt securities, purchase money obligation,
                    conditional sale or guarantee, or otherwise, except for trade
                    indebtedness incurred in the ordinary course of business, and except
                    as disclosed in the Financial Statements or Schedule 3.10.1(h); and

                (i) agreements or commitments to provide indemnification.

        3.10.2 REQUIRED CONSENTS. The execution and delivery of this Agreement and
               the performance of the obligations of the Company hereunder will not
               constitute a default under any Material Contract and do not require
               the consent of any other party to any Material Contract, except for
               those consents listed on Schedule 3.10.2, all of which will be
               obtained on or prior to the Closing.

3.11 CLAIMS AND LEGAL PROCEEDINGS. Except as set forth in Schedule 3.11, there
     are no claims, actions, suits, arbitrations, investigations or proceedings
     pending or involving or, to the Company's knowledge, threatened against the
     Company before or by any court or governmental or nongovernmental
     department, commission, board, bureau, agency or instrumentality, or any
     other Person. To the Company's knowledge, there is no valid basis for any
     claim, action, suit, arbitration, proceeding or investigation before or by
     any Person. There are no outstanding or unsatisfied judgments, orders,
     decrees or stipulations to which the Company is a party.

3.12 LABOR AND EMPLOYMENT MATTERS.




                                       17



        3.12.1 LABOR DISPUTES. There are no material labor disputes, employee
               grievances or disciplinary actions pending or, to the Company's
               knowledge, threatened against or involving the Company or any of its
               present or former employees. The Company is not engaged in any unfair
               labor practice and has no liability for any arrears of wages or Taxes
               or penalties for failure to comply with any such provisions of law. To
               the Company's knowledge, no employee (or person performing similar
               functions) of the Company is in material violation of any employment
               agreement, noncompetition agreement, patent disclosure agreement,
               invention assignment agreement, proprietary information agreement or
               other contract or agreement relating to the relationship of such
               employee with the Company or any other party.

        3.12.2 COMPENSATION AMOUNTS AND GROUP INSURANCE. Schedule 3.12.2 lists (a)
               the names and current compensation amounts of all directors and
               officers of the Company; (b) the names of and wage rates for all
               nonsalaried and nonofficer salaried employees of the Company by
               classification, and all union contracts (if any); (c) all group
               insurance programs in effect for employees of the Company; and (d) the
               names and current compensation packages of all independent contractors
               and consultants of the Company. The Company is not in default with
               respect to any of its obligations referred to in clause (b) above and
               has no, and will not incur any, material obligation or liability for
               severance or back pay owed through or by virtue of the Merger. All
               employees of the Company are employed on an "at will" basis.

3.13 INTELLECTUAL PROPERTY

        3.13.1 GENERAL. The Company owns or is licensed or otherwise possesses the
               right to use the following as required to conduct its business as now
               conducted and as proposed to be conducted except where the failure to
               own, license or possess the right to use would not have a Company
               Material Adverse Effect, individually or in the aggregate: (a) all
               products, tools, computer programs, specifications, source code,
               object code, graphics, devices, techniques, algorithms, methods,
               processes, procedures, packaging, trade dress, formulae, drawings,
               designs, improvements, discoveries, concepts, user interfaces, "look
               and feel," software, development and other tools, content, inventions
               (whether or not patentable or copyrightable and whether or not reduced
               to practice), designs, logos, themes, know-how, concepts and other
               technology that are now, or during the two years prior to the date of
               this Agreement have been, developed, produced, used, marketed or sold
               by the Company (collectively, the "Technology-Related Assets"); and
               (b) all intellectual property and other proprietary rights in the
               Technology-Related Assets, including, without limitation, all trade
               names, trademarks, domain names, service marks, logos, brand names and
               other identifiers, trade secrets, copyrights, and domestic and foreign
               letters patent, and the registrations, applications, renewals,
               extensions and continuations (in whole or in part) thereof, all
               goodwill associated therewith, and all rights and causes of action for
               infringement, misappropriation, misuse, dilution or unfair trade
               practices associated therewith.





                                       18



        3.13.2 COMPANY TECHNOLOGY. Schedule 3.13.2 sets forth a list that is
               complete in all material respects of all products and tools developed,
               produced, used, marketed or sold by the Company since its inception
               (collectively, the "Products"). Except for the Third Party
               Technologies (as defined in Section 3.13.3), the Company owns all
               right, title and interest in and to the following technology used to
               conduct its business as currently conducted or as proposed to be
               conducted (collectively, the "Technology"), free and clear of all
               Encumbrances (other than interests in licenses granted by the Company,
               all of which are either disclosed in Schedule 3.13.2 or, under the
               terms of this Agreement, are not required to be so disclosed): (a) the
               Products, together with any and all codes, techniques, software tools,
               formats, designs, user interfaces, content and "look and feel"
               embodied therein prior to the date of Closing; (b) any and all
               updates, enhancements, corrections, modifications, improvements and
               new releases developed or obtained by or for the Company to the items
               set forth in clause (a) above prior to the date of Closing; (c) any
               and all technology and work in progress developed or obtained by or
               for the Company related to the items set forth in clauses (a) and (b)
               above prior to the date of Closing; and (d) all inventions,
               discoveries, processes, designs, trade secrets, know-how and other
               confidential or proprietary information developed or obtained by or
               for the Company related to the items set forth in clauses (a), (b) and
               (c) above prior to the date of Closing. The Technology, excluding the
               Third Party Technologies, is sometimes referred to herein as the
               "Company Technology."

        3.13.3 THIRD PARTY TECHNOLOGY. Schedule 3.13.3 sets forth a list that is
               complete in all material respects, subject to the exception(s) set
               forth therein, of all Technology used in the Company's business as
               currently conducted or as proposed to be conducted for which the
               Company does not own all right, title and interest (collectively, the
               "Third Party Technologies"), and all material license agreements or
               other material contracts pursuant to which the Company has the right
               to use (in the manner used by the Company in its business as currently
               conducted or as proposed to be conducted) the Third Party Technologies
               (the "Third Party Licenses"), indicating, with respect to each of the
               Third Party Technologies listed therein, the licensor thereof, if any,
               and the Third Party License applicable thereto. The Company has the
               right to use (to the full extent permitted by the terms of such
               licenses) all Third Party Technology that is used in the Company's
               business as currently conducted or as proposed to be conducted. All
               Third Party Licenses are in full force and effect and are valid and
               binding against the Company and, to the Company's knowledge, are valid
               and binding against each other party thereto (but, with respect to
               such other parties only, subject to bankruptcy and similar laws,
               general principles of equity or similar legal theories of
               unenforceability), and the Company and, to the Company's knowledge,
               each other party thereto have performed in all material respects their
               obligations thereunder as required as of the date of the Closing, and
               neither the Company nor, to the Company's knowledge, any other party
               thereto is in material default thereunder, nor to the Company's
               knowledge has there occurred any event or circumstance which with





                                       19



               notice or lapse of time or both would constitute a material default or
               material event of default on the part of the Company or, to the
               Company's knowledge, any other party thereto or give to any other
               party thereto the right to terminate or modify any Third Party License
               for default, except where the failure to have the right to use the
               Third Party Technology or the failure of any Third Party License to be
               in full force and effect, valid, or binding, or the occurrence of any
               event of default or other event giving the other party the right to
               terminate or modify any Third Party License for default would not have
               a Company Material Adverse Effect, individually or in the aggregate.
               The Company has not received notice that any party to any Third Party
               License intends to cancel, terminate or elect not to renew (if
               renewable by its terms) such Third Party License, except where the
               occurrence of such cancellation, termination or non-renewal would not
               have a Company Material Adverse Effect, individually or in the
               aggregate.

        3.13.4 TRADEMARKS. Schedule 3.13.4 sets forth a list that is complete in
               all material respects of (a) all trademarks, trade names, brand names,
               service marks, logos or other identifiers used on or in connection
               with Products or otherwise used by the Company in its business as
               currently conducted or as proposed to be conducted and which are owned
               or claimed to be owned by the Company (collectively, the "Company
               Marks"), and (b) all trademarks, trade names, brand names, service
               marks, logos or other identifiers used on or in connection with
               Products or otherwise used by the Company in its business as currently
               conducted or as proposed to be conducted and which are not owned or
               claimed to be owned by the Company (the "Licensed Marks"). The Company
               has full legal and beneficial ownership, free and clear of any
               Encumbrances (other than interests in licenses granted by the Company,
               all of which are either disclosed under the terms of this Agreement,
               are not required to be so disclosed), of all rights conferred by use
               of the Company Marks in connection with the Products or otherwise in
               the Company's business as currently conducted and, as to those Company
               Marks that have been registered by or for the Company in the United
               States Patent and Trademark Office, by federal registration of the
               Company Marks, except where the failure to own or be free and clear of
               Encumbrances would not have a Company Material Adverse Effect,
               individually or in the aggregate. The Company has the right to use the
               Licensed Marks as required to conduct its business as now conducted,
               except where the failure to have such right would not have a Company
               Material Adverse Effect, individually or in the aggregate.

        3.13.5 INTELLECTUAL PROPERTY RIGHTS. Schedule 3.13.5 sets forth all
               patents, patent applications, copyright registrations (and
               applications therefor) and trademark registrations (and applications
               therefor) filed or obtained by or for the Company with respect to the
               Company Technology and the Company Marks (collectively, the "IP
               Registrations"). The Company owns all right, title and interest, free
               and clear of any Encumbrances (other than interests in licenses
               granted by the Company, all of which are disclosed under the terms of
               this Agreement, are not required to be so disclosed), in and to the IP
               Registrations, and the Company owns all right, title and interest, or





                                       20



               otherwise possesses sufficient legally enforceable rights to conduct
               its business as currently conducted and as proposed to be conducted,
               free and clear of any Encumbrances (other than interests in licenses
               granted by the Company, all of which are disclosed under the terms of
               this Agreement, are not required to be so disclosed) in and to any
               other rights in or to any copyrights (registered or unregistered),
               rights in the Company Marks (registered or unregistered), trade secret
               rights and other intellectual property rights (including, without
               limitation, rights of enforcement) contained or embodied in the
               Company Technology and the Company Marks (collectively, the "IP
               Rights").

        3.13.6 MAINTENANCE OF RIGHTS. The Company has not conducted its business,
               and has not used or enforced (or, to its knowledge, failed to use or
               enforce) the IP Rights, in a manner that has resulted or will result
               in the abandonment, cancellation or unenforceability of any material
               item of the IP Rights or the IP Registrations, and to the Company's
               knowledge the Company has not taken (or, to its knowledge, failed to
               take) any action that has resulted or will result in the forfeiture or
               relinquishment of any material item of the IP Rights or IP
               Registrations, except where such abandonment, cancellation,
               unenforceability, forfeiture or relinquishment would not have a
               Company Material Adverse Effect, individually or in the aggregate. The
               Company has not entered into any material agreements granting to any
               third party any rights or permissions to use any of the Technology or
               the IP Rights. To the Company's knowledge, except pursuant to a
               written nondisclosure agreement or other reasonably prudent
               safeguards, (a) no third party has received from the Company any
               information maintained or required to be maintained as confidential by
               the Company relating to the Technology or the IP Rights, and (b) the
               Company is not under any contractual or other obligation to disclose
               to any third party any information maintained or required to be
               maintained as confidential by the Company relating to the Company
               Technology.

        3.13.7 THIRD PARTY INFRINGEMENT. No claim has been made (whether written,
               oral or otherwise) challenging the Company's ownership or rights in
               any material item of the Company Technology or the IP Rights or
               claiming that any other person or entity has any legal or beneficial
               ownership with respect thereto; (b) all the IP Rights are legally
               valid and enforceable without any material qualification, limitation
               or restriction on their use (to the fullest extent permitted by law
               and except for licenses granted by the Company which are either
               disclosed under the terms of this Agreement, are not required to be so
               disclosed) and no claim has been made (whether written, oral or
               otherwise) challenging the validity or enforceability of any material
               item of the IP Rights; and (c) to the Company's knowledge, no other
               person or entity is infringing or misappropriating any part of the IP
               Rights or otherwise making any unauthorized use of the Company
               Technology.



                                       21



        3.13.8 INFRINGEMENT BY THE COMPANY. (a) The use of any of the Company
               Technology in the Company's business as currently conducted or as
               proposed to be conducted does not and will not infringe, violate or
               constitute a misappropriation of any right, title or interest
               (including, without limitation, any patent, copyright, trademark or
               trade secret right) held by any other person or entity, and no claims
               have been made with respect thereto; (b) the use of any of the Company
               Marks, and other IP Rights in the Company's business as currently
               conducted or as proposed to be conducted does not and will not
               infringe, violate or constitute a misappropriation of any right, title
               or interest (including, without limitation, any patent, copyright,
               trademark or trade secret right) held by any other person or entity,
               and no claims have been made with respect thereto; and (c) no claims
               have been made (whether written, oral or otherwise) regarding any
               infringement, misappropriation, misuse, or abuse of, or other
               interference with, any third party intellectual property or
               proprietary rights (including, without limitation, infringement of any
               patent, copyright, trademark or trade secret right of any third party)
               by the Company, the Company Technology, the Company Marks, the IP
               Rights, or the Company's use of the Licensed Marks or claiming that
               any other entity has any claim of infringement with respect thereto.

        3.13.9 CONFIDENTIALITY. (a) The Company has not disclosed any source code
               regarding the Technology to any person or entity other than an
               employee of the Company or under a written nondisclosure agreement;
               (b) the Company has at all times maintained and diligently enforced
               commercially reasonable procedures to protect all information
               maintained or required to be maintained as confidential by Company
               relating to the Technology, and the Company's use of the Company
               Technology in its business as currently conducted or proposed to be
               conducted does not and will not breach any agreement between the
               Company and a third party to maintain information as confidential; (c)
               the Company is not under any contractual or other obligation to
               disclose the source code or any other information maintained or
               required to be maintained as confidential by the Company included in
               or relating to the Technology, except, as to such confidential
               information only, where such disclosure of confidential information is
               made pursuant to written nondisclosure agreements or covenants entered
               in the ordinary course of its business and which are disclosed in
               Section 3.13.6 under the terms of this Agreement are not required to
               be so disclosed therein; and (d) the Company has not deposited any
               source code relating to the Technology into any source code escrows or
               similar arrangements.

       3.13.10 WARRANTY AGAINST DEFECTS. Except where such failure to conform
               would not have a Company Material Adverse Effect, individually or in
               the aggregate, and solely with respect to the Company Technology, the
               Company has used reasonable commercial efforts to design the
               Technology to substantially conform to the specifications set forth in
               such Schedule ("Specifications").

       3.13.11 DOMAIN NAMES. Schedule 3.13.11 sets forth a list of all Internet
               domain names used by the Company in its business as presently




                                       22



               conducted or proposed to be conducted (collectively, the "Domain
               Names"). The Company has a valid registration with the domain name
               authority or authorities with which the Domain Names are registered,
               and to the Company's knowledge, after the date of the Closing the
               Surviving Corporation will have, subject to any transfer requirements
               or restrictions imposed by InterNIC or any other domain name
               registration authorities having jurisdiction, and the payment of any
               fees and execution of all transfer documents as required by such
               authorities, and subject to the transferability or nontransferability
               of any agreement with such authorities relating to the Domain Names, a
               valid registration with the domain name authority or authorities with
               which the Domain Names are registered.

       3.13.12 INDEMNIFICATION. The Company has not entered into any agreement to
               indemnify any Person (other than shareholders, directors and/or
               officers of the Company) against any claim of infringement by the
               Technology or IP Rights or any other third party intellectual property
               right relating to the Technology.

       3.13.13 INFRINGEMENT ACTION. The Company has not entered into any material
               agreement granting any Person the right to bring any infringement
               action with respect to, or otherwise to enforce, any of the Technology
               or IP Rights.

       3.13.14 RESTRICTIONS ON INTELLECTUAL PROPERTY. To the Company's knowledge,
               except in their capacity on behalf of the Company, none of the
               Company's officers or employees has entered into any agreement
               inconsistent with the Company's rights to the Company Technology
               regarding know-how, trade secrets, assignment of rights in inventions,
               or prohibition or restriction of competition or solicitation of
               customers, or any other similar restrictive agreement or covenant,
               inconsistent with the Company's rights to the Company Technology,
               whether written or oral, with any Person other than the Company during
               the period in which such officer or employee was employed with or
               engaged by the Company.

3.14 CORPORATE BOOKS AND RECORDS. To the knowledge of the Company, the Company
     has furnished to InnerSpace or its representatives for their examination
     true and complete copies of (a) the Articles of Incorporation and Bylaws of
     the Company as currently in effect, including all amendments thereto, (b)
     the minute books of the Company, and (c) the stock records of the Company.

3.15 LICENSES, PERMITS, AUTHORIZATIONS, ETC. The Company has received all
     currently required governmental approvals, authorizations, consents,
     licenses, orders, registrations and permits of all agencies, whether
     federal, state, local or foreign, the failure to obtain of which would have
     a Company Material Adverse Effect. The Company has not received any
     notifications of any asserted present failure by it to obtain any such
     governmental approval, authorization, consent, license, order, registration
     or permit, or past and unremedied failure to obtain such items.




                                       23



3.16 COMPLIANCE WITH LAWS. The Company is in compliance with all federal, state,
     local and foreign laws, rules, regulations, ordinances, decrees and orders
     applicable to it, to its employees or to the Real Property and the Personal
     Property, including, without limitation, all such laws, rules, regulations,
     ordinances, decrees and orders relating to intellectual property
     protection, equal employment opportunity, securities and investor
     protection matters, labor and employment matters, except where the failure
     of the Company to so comply would not have a Company Material Adverse
     Effect. The Company has not received any notification of any asserted
     present or past unremedied failure by the Company to comply with any of
     such laws, rules, regulations, ordinances, decrees or orders.

3.17 INSURANCE. Schedule 3.17 sets forth a true and correct list of all
     insurance policies maintained by the Company. The Company maintains
     commercially reasonable levels of (a) insurance on its property (including
     leased premises) that insures against loss or damage by fire or other
     casualty and (b) insurance against liabilities, claims and risks of a
     nature and in such amounts as are normal and customary in the Company's
     industry for companies of similar size and financial condition. All
     insurance policies of the Company are in full force and effect, all
     premiums with respect thereto covering all periods up to and including the
     date this representation is made have been paid, and no notice of
     cancellation or termination has been received with respect to any such
     policy or binder. Such policies or binders are sufficient for compliance
     with all requirements of law currently applicable to the Company and of all
     agreements to which the Company is a party, will remain in full force and
     effect through the respective expiration dates of such policies or binders
     without the payment of additional premiums, and will not in any way be
     affected by, or terminate or lapse by reason of, the transactions
     contemplated by this Agreement. The Company has not been refused any
     insurance with respect to its assets or operations, nor has any insurance
     carrier to which it has applied for any such insurance or with which it has
     carried insurance limited its coverage.

3.18 BROKERS OR FINDERS. Except with respect to Sundance Capital Partners, LLC,
     the Company has not incurred, and will not incur, directly or indirectly,
     as a result of any action taken by or on behalf of the Company, any
     liability for brokerage or finders' fees or agents' commissions or any
     similar charges in connection with the Merger, this Agreement or any
     transaction contemplated hereby.

3.19 BANK ACCOUNTS. Schedule 3.19 sets forth the names and locations of all
     banks, trust companies, savings and loan associations and other financial
     institutions at which the Company maintains safe deposit boxes or accounts
     of any nature and the names of all Persons authorized to draw thereon, make
     withdrawals therefrom or have access thereto.

3.20 INSIDER INTERESTS. Except as set forth on Schedule 3.20, no Shareholder or
     officer or director of the Company has any interest (other than as a
     Shareholder) (a) in any Real Property, Personal Property, Technology or IP
     Rights used in or pertaining to the business of the Company, including,
     without limitation, inventions, patents, trademarks or trade names, or (b)
     in any agreement, contract, arrangement or obligation relating to the
     Company, its present or prospective business or its operations. Except as




                                       24



     set forth on Schedule 3.22, there are no agreements, understandings or
     proposed transactions between the Company and any of its officers,
     directors, shareholders, affiliates or any affiliate thereof. The Company
     and its officers and directors and, to the knowledge of the Company, its
     shareholders have no interest, either directly or indirectly, in any
     entity, including, without limitation, any corporation, partnership, joint
     venture, proprietorship, firm, licensee, business or association (whether
     as an employee, officer, director, shareholder, agent, independent
     contractor, security holder, creditor, consultant or otherwise) that
     presently (i) provides any services, produces and/or sells any products or
     product lines, or engages in any activity that is the same, similar to or
     competitive with any activity or business in which the Company is now
     engaged or proposes to engage; (ii) is a supplier, customer or creditor; or
     (iii) has any direct or indirect interest in any asset or property, real or
     personal, tangible or intangible, of the Company or any property, real or
     personal, tangible or intangible, that is necessary or desirable for the
     present or currently anticipated future conduct of the Company's business.

3.21 FULL DISCLOSURE. No information furnished by the Company to InnerSpace or
     its representatives in connection with this Agreement (including, but not
     limited to, the Financial Statements and all information in the other
     Exhibits hereto) or the other Operative Documents contains any untrue
     statement of a material fact or omits to state a material fact necessary in
     order to make the statements so made or information so delivered not
     misleading.

3.22 VOTING AGREEMENTS. As of the date hereof, beneficial holders of not less
     than two-fifths of the outstanding shares of Company Common Stock have
     executed and delivered to InnerSpace the Voting Agreement substantially in
     the form attached hereto as Exhibit 3.22.

                                   ARTICLE 4
         REPRESENTATIONS AND WARRANTIES OF INNERSPACE AND THE PURCHASER

In order to induce the Company to enter into and perform this Agreement and the
other Operative Documents, InnerSpace and the Purchaser jointly and severally
represent and warrant to the Company as follows in this Article 4:

4.1 ORGANIZATION. InnerSpace is a corporation duly organized validity existing
    and in good standing under the laws of the state of Delaware. The Purchaser
    is a corporation validly existing and in good standing under the laws of
    the State of Arizona. Each of InnerSpace and the Purchaser has all
    requisite corporate power and authority to own, operate and lease its
    respective properties and assets, to carry on its respective business as
    now conducted, and as proposed to be conducted and to enter into and
    perform its obligations under this Agreement and the other applicable
    Operative Documents to which InnerSpace or the Purchaser is a party, and to
    consummate the transactions contemplated hereby and thereby. Each of
    InnerSpace and the Purchaser is duly qualified and licensed as a foreign
    corporation to do business and is in good standing in each jurisdiction in
    which the character of properties occupied, owned or held under lease by
    InnerSpace or the Purchaser, as applicable, or the nature of the business




                                       25



    conducted by InnerSpace or the Purchaser, as applicable, makes such
    qualification or licensing necessary, except where the failure to be so
    qualified or in good standing would not have an InnerSpace Material Adverse
    Effect on the business, operations, assets, liabilities, condition
    (financial or other) or prospects of InnerSpace. For purposes of this
    Agreement, the term "InnerSpace Material Adverse Effect" shall mean any
    change, event or effect that is or is reasonably likely to be materially
    adverse to InnerSpace's business, operations, assets, liabilities,
    condition (financial or otherwise) or prospects; provided, however, that a
    InnerSpace Material Adverse Effect shall not include any change, event or
    effect that relates to or results from (i) the announcement or other
    disclosure or consummation of the transactions contemplated by this
    Agreement; (ii) a general economic downturn; (iii) an economic downturn in
    InnerSpace's industry which does not disproportionately affect InnerSpace,
    or (iv) changes in the trading prices of InnerSpace Common Stock. Each of
    InnerSpace and the Purchaser has full corporate power and authority to
    execute, deliver and perform this Agreement and the other Operative
    Documents to which it is a party, and to carry out the transactions
    contemplated hereby and thereby. InnerSpace holds of record and all the
    issued and outstanding shares of capital stock of the Purchaser
    beneficially.

4.2 ENFORCEABILITY. InnerSpace and the Purchaser each have full corporate power
    and authority to execute, deliver and perform their obligations under this
    Agreement and each of the other Operative Documents to which they are a
    party and each of the certificates, instruments and documents executed or
    delivered by them pursuant to the terms of this Agreement. All corporate
    action on the part of InnerSpace and the Purchaser and their respective
    officers, directors and stockholders necessary for the authorization,
    execution, delivery and performance of this Agreement and the other
    applicable Operative Documents to which InnerSpace or the Purchaser is a
    party, the consummation of the Merger and the performance of all of their
    respective obligations under this Agreement and the other applicable
    Operative Documents to which InnerSpace or the Purchaser is a party has
    been taken or will be taken prior to the Effective Time. This Agreement has
    been, and each of the other Operative Documents to which InnerSpace is a
    party will have been at the Closing, duly executed and delivered by
    InnerSpace, and this Agreement is, and each of the other Operative
    Documents to which InnerSpace is a party will be at the Closing, a legal,
    valid and binding obligation of InnerSpace, enforceable against InnerSpace
    in accordance with its terms, except as to the effect, if any, of (a)
    applicable bankruptcy and other similar laws affecting the rights of
    creditors generally, (b) rules of law governing specific performance,
    injunctive relief and other equitable remedies, and (c) the enforceability
    of provisions requiring indemnification in connection with the offering,
    sale or issuance of securities. This Agreement has been, and each of the
    other Operative Documents to which the Purchaser is a party will have been
    at the Closing duly executed and delivered by the Purchaser, and this
    Agreement is, and each of the other Operative Documents to which the
    Purchaser is a party will be at the Closing, a legal, valid and binding
    obligation of the Purchaser, enforceable against the Purchaser in
    accordance with its terms, except as to the effect, if any, of (i)
    applicable bankruptcy and other similar laws affecting the rights of
    creditors generally, (ii) rules of law governing specific performance,
    injunctive relief and other equitable remedies, and (iii) the




                                       26



    enforceability of provisions requiring indemnification in connection with
    the offering, sale or issuance of securities.

4.3 SUBSIDIARIES AND AFFILIATES. Other than Purchaser, InnerSpace does not own
    and has not in the past owned, directly or indirectly, any ownership,
    equity, or voting interest in, or otherwise control or controlled, any
    corporation, partnership, limited liability company, joint venture or other
    entity, and has no agreement or commitment to purchase any such interest.

4.4 TAXES AND INSURANCE. InnerSpace, since inception, has generated no taxable
    income, has filed no Tax Returns and has maintained no insurance policies.

4.5 PROPERTY. InnerSpace owns no real property, personal property or leasehold
    interest.

4.6 SECURITIES. The InnerSpace Common Stock to be issued pursuant to this
    Agreement has been, or will be prior to the Effective Time, duly authorized
    for issuance, and such InnerSpace Common Stock, when issued and delivered
    to the Shareholders pursuant to this Agreement, shall be validly issued,
    fully paid and nonassessable.

4.7 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS. The
    execution, delivery and performance of this Agreement and the other
    Operative Documents by the Purchaser and InnerSpace, as applicable, and the
    consummation by them of the transactions contemplated hereby and thereby
    will not (a) constitute a violation (with or without the giving of notice
    or lapse of time, or both) of any provision of law applicable to InnerSpace
    or the Purchaser; (b) require any consent, approval or authorization of any
    Person, except (i) compliance with applicable securities laws, and (ii) the
    filing of all documents necessary to consummate the Merger with the
    Delaware Secretary of State and the Arizona Corporations Commission; (c)
    result in a default (with or without the giving of notice or lapse of time,
    or both) under, or acceleration or termination of, or the creation in any
    party of the right to accelerate, terminate, modify or cancel, any
    agreement, lease, note or other restriction, encumbrance, obligation or
    liability to which InnerSpace or the Purchaser is a party or by which it is
    bound or to which any assets of InnerSpace or the Purchaser are subject; or
    (d) conflict with or result in a breach of or constitute a default under
    any provision of the Certificate of Incorporation or Bylaws of InnerSpace
    or of the Purchaser.

4.8 CAPITALIZATION. The authorized capital stock of InnerSpace consists of
    25,000,000 shares of InnerSpace Common Stock, par value $0.0001 per share
    of which 16,000,000 shares are expected to be issued and outstanding prior
    to the date the reverse split referred to in Section 6.9 is effectuated,
    and 5,000,000 shares of preferred stock, par value $0.0001 per share, of
    which none are expected to be issued or outstanding. Such issued and
    outstanding shares of InnerSpace Common Stock are or will be validly
    issued, fully paid and nonassessable.

4.9 SEC DOCUMENTS. True and complete copies of its Annual Report on Form 10-KSB
    for the fiscal year ended February 28, 2002, and all Forms 10-QSB and 8-K




                                       27



    filed after the date of such Form 10-K (collectively, the "SEC Documents")
    are available for electronic review on the EDGAR database maintained by the
    Securities and Exchange Commission (the "Commission"). As of their
    respective filing dates, each of the SEC Documents complied in all material
    respects with the requirements of the Securities Exchange Act of 1934, as
    amended (the "Exchange Act"), and the rules and regulations of the
    Commission promulgated thereunder, and did not at the time they were filed
    with the SEC contain any untrue statement of a material fact or omit to
    state a material fact required to be stated therein or necessary in order
    to make the statements therein, in the light of the circumstances under
    which they are made, not misleading.

4.10 ABSENCE OF CERTAIN CHANGES. Since the November 30, 2002 financial
     statements included in the SEC Documents, there has not been any change,
     which by itself or in conjunction with all other such changes, has had or
     could reasonably be expected to have an InnerSpace Material Adverse Effect,
     except as disclosed in the SEC Documents.

4.11 FINANCIAL STATEMENTS. The financial statements (including any related notes
     thereto) contained in the SEC Documents (i) have been prepared in
     accordance with the published rules and regulations of the SEC and
     generally accepted accounting principles applied on a consistent basis
     throughout the periods involved (except as may be indicated in the notes
     thereto) and (ii) fairly present the financial position of InnerSpace as of
     the dates thereof and the results of operations and cash flows for the
     periods indicated, except that any unaudited interim financial statements
     were or will be subject to normal and recurring year-end adjustments and
     may omit footnote disclosure as permitted by regulations of the SEC.

4.12 LIABILITIES. Except as set forth in Schedule 4.12, InnerSpace does not have
     any direct or indirect material obligation or liability (the "Liabilities")
     that would be reasonably likely to have a Material Adverse Effect other
     than (a) Liabilities fully and adequately reflected or reserved against it
     in the SEC Reports, and (b) Liabilities incurred since November 30, 2002,
     in the ordinary course of business. Since November 30, 2002, there has been
     no change, event, circumstance or other occurrence with respect to
     InnerSpace, its assets or properties that could reasonably be expected to
     have a Material Adverse Effect.

4.13 NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS. Except as set forth in
     Schedule 4.13, InnerSpace has not received notice of a default and is not
     in default under, or with respect to, any material contractual obligation
     nor does any condition exist that with notice or lapse of time or both
     would constitute a default thereunder. Except as described in the SEC
     Reports or Schedule 4.13, all material contracts, agreements,
     understandings and arrangements, whether written or oral (collectively, the
     "Contracts") are valid, subsisting, in full force and effect and binding
     upon InnerSpace and the other parties thereto, and InnerSpace has paid in
     full or accrued all amounts due thereunder and has satisfied in full or
     provided for all of its liabilities and obligations thereunder, except to
     the extent that the failure of any such payment or liability could not
     reasonably be expected to have a Material Adverse Effect. To the knowledge




                                       28



     of InnerSpace and except as described in the SEC Reports or Schedule 4.13,
     no other party to any such Contract is in default thereunder, nor does any
     condition exist that with notice or lapse of time or both would constitute
     a default by such other party thereunder, except, to the extent that such
     default could not reasonably be expected to have a Material Adverse Effect.

4.14 LITIGATION. Except as disclosed in the SEC Reports or Schedule 4.14, there
     are no actions, suits, proceedings, claims, complaints, disputes,
     arbitrations or investigations pending or, to the knowledge of InnerSpace,
     threatened at law, in equity, in arbitration or before any governmental
     authority against InnerSpace or any of its property or assets which, could
     reasonably be expected to have a Material Adverse Effect.

4.15 INTELLECTUAL PROPERTY. InnerSpace owns or is licensed or otherwise
     possesses the right to use the following as required to conduct its
     business as now conducted and as proposed to be conducted except where the
     failure to own, license or possess the right to use would not have a
     InnerSpace Material Adverse Effect, individually or in the aggregate: (a)
     all products, tools, computer programs, specifications, source code, object
     code, graphics, devices, techniques, algorithms, methods, processes,
     procedures, packaging, trade dress, formulae, drawings, designs,
     improvements, discoveries, concepts, user interfaces, "look and feel,"
     software, development and other tools, content, inventions (whether or not
     patentable or copyrightable and whether or not reduced to practice),
     designs, logos, themes, know-how, concepts and other technology that are
     now, or during the two years prior to the date of this Agreement have been,
     developed, produced, used, marketed or sold by InnerSpace (collectively,
     the "InnerSpace Technology-Related Assets"); and (b) all intellectual
     property and other proprietary rights in the InnerSpace Technology-Related
     Assets, including, without limitation, all trade names, trademarks, domain
     names, service marks, logos, brand names and other identifiers, trade
     secrets, copyrights, and domestic and foreign letters patent, and the
     registrations, applications, renewals, extensions and continuations (in
     whole or in part) thereof, all goodwill associated therewith, and all
     rights and causes of action for infringement, misappropriation, misuse,
     dilution or unfair trade practices associated therewith.

4.16 CORPORATE BOOKS AND RECORDS. InnerSpace has furnished to the Company or its
     representatives for their examination true and complete copies of (a) the
     Articles of Incorporation and Bylaws of the Company as currently in effect,
     including all amendments thereto, (b) the minute books of the Company, and
     (c) the stock transfer books of the Company. Such minutes reflect all
     meetings of InnerSpace's stockholders, Board of Directors and any
     committees thereof since the Company's inception, and such minutes
     accurately reflect in all material respects the events of and actions taken
     at such meetings. Such stock transfer books accurately reflect all
     issuances and transfers of shares of capital stock of the Company since its
     inception.

4.17 BANK ACCOUNTS. Schedule 4.17 sets forth the names and locations of all
     banks, trust companies, savings and loan associations and other financial
     institutions at which InnerSpace maintains safe deposit boxes or accounts
     of any nature and the names of all Persons authorized to draw thereon, make
     withdrawals therefrom or have access thereto.




                                       29



4.18 COMPLIANCE WITH LAWS. InnerSpace is in compliance, with all requirements of
     any law, regulation or rule applicable to it or its property or assets and
     all orders and consent decrees issued by any court or governmental
     authority against InnerSpace, except to the extent that such default could
     not reasonably be expected to have a Material Adverse Effect. InnerSpace
     has all licenses, permits and approvals of any governmental authority that
     are necessary for the conduct of the business of InnerSpace and all such
     permits are in full force and effect and no violations are or have recorded
     in respect of any permit, except to the extent that the failure of any such
     permit to be in full force and effect or any such violation could not
     reasonably be expected to have a Material Adverse Effect.

4.19 INSIDER INTERESTS. No Stockholder or officer or director of InnerSpace has
     any interest (other than as a Stockholder) (a) in any Real Property,
     Personal Property, Technology or IP Rights used in or pertaining to the
     business of InnerSpace, including, without limitation, inventions, patents,
     trademarks or trade names, or (b) in any agreement, contract, arrangement
     or obligation relating to InnerSpace, its present or prospective business
     or its operations. Except as set forth on Schedule 4.19, there are no
     agreements, understandings or proposed transactions between InnerSpace and
     any of its officers, directors, Stockholders, affiliates or any affiliate
     thereof. InnerSpace and its officers and directors and, to the knowledge of
     InnerSpace, its Stockholders have no interest, either directly or
     indirectly, in any entity, including, without limitation, any corporation,
     partnership, joint venture, proprietorship, firm, licensee, business or
     association (whether as an employee, officer, director, Stockholder, agent,
     independent contractor, security holder, creditor, consultant or otherwise)
     that presently (i) provides any services, produces and/or sells any
     products or product lines, or engages in any activity that is the same,
     similar to or competitive with any activity or business in which InnerSpace
     is now engaged or proposes to engage; (ii) is a supplier, customer or
     creditor; or (iii) has any direct or indirect interest in any asset or
     property, real or personal, tangible or intangible, of InnerSpace or any
     property, real or personal, tangible or intangible, that is necessary or
     desirable for the present or currently anticipated future conduct of
     InnerSpace's business.

4.20 EMPLOYEE BENEFIT PLANS. Except as provided in Section 4.20, InnerSpace does
     not maintain or contribute to, or has not since its inception, maintained
     or contributed to, or have any liability with respect to, any benefit plan,
     arrangement, policy, program, agreement or commitment maintained by the
     Company subject to Title IV of ERISA or Section 412 of the Code or any
     "multiple employer plan" within the meaning of the Code or ERISA.

4.21 BROKERS OR FINDERS. Except with respect to Brewster Financial Group,
     InnerSpace has not incurred, and will not incur, directly or indirectly, as
     a result of any action taken by or on behalf of the Company, any liability
     for brokerage or finders' fees or agents' commissions or any similar
     charges in connection with the Merger, this Agreement or any transaction
     contemplated hereby.




                                       30




4.22 INFORMATION SUPPLIED BY INNERSPACE. None of the information supplied or to
     be supplied by InnerSpace in connection with any written consent by or
     meeting of the Stockholders (collectively, "Stockholder Materials"),
     including the SEC Documents, at the date such information was supplied,
     contained or will contain any untrue statement of a material fact or
     omitted or will omit to state any material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they are made, not materially misleading;
     provided, however, that InnerSpace makes no representations or warranties
     regarding information furnished by or related to the Company.

4.23 FULL DISCLOSURE. No information furnished by InnerSpace or the Purchaser to
     the Company or its representatives in connection with this Agreement or the
     other Operative Documents contains any untrue statement of a material fact
     or omits to state a material fact necessary in order to make the statements
     so made or information so delivered not misleading.

                                   ARTICLE 5
      CONDITIONS PRECEDENT TO OBLIGATIONS OF INNERSPACE AND THE PURCHASER

The obligations of InnerSpace and the Purchaser to perform and observe the
covenants, agreements and conditions hereof to be performed and observed by them
at or before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by InnerSpace:

5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
    warranties of the Company contained herein (including, without limitation,
    applicable Exhibits or Schedules) and in the other Operative Documents
    shall have been true and correct in all material respects when made and,
    except (a) for changes contemplated by this Agreement and the other
    Operative Documents and (b) to the extent that such representations and
    warranties speak as of an earlier date, shall be true and correct as of the
    Closing Date in all material respects as though made on that date.

5.2 PERFORMANCE OF AGREEMENTS. The Company shall have performed in all material
    respects all obligations and agreements and complied in all material
    respects with all covenants contained in this Agreement or any other
    Operative Document to be performed and complied with by it at or prior to
    the Closing.

5.3 COMPLIANCE CERTIFICATE. InnerSpace shall have received a certificate of the
    President and the Chief Financial Officer of the Company, dated the Closing
    Date, in form and substance satisfactory to InnerSpace, certifying that the
    conditions to the obligations of InnerSpace and the Purchaser in Sections
    3.1, 3.2 and 3.5 have been fulfilled.

5.4 APPROVALS AND CONSENTS. All transfers of material permits or material
    licenses and all material approvals of or notices to public agencies,
    federal, state, local or foreign, the granting or delivery of which is



                                       31



    necessary for the consummation of the transactions contemplated hereby and
    by the other Operative Documents, or for the continued operation of the
    Company as now operated, shall have been obtained, and all waiting periods
    specified by law shall have passed. All consents listed on Schedules 3.5
    and 3.10.2 required in connection with a reverse triangular merger should
    have been obtained and delivered.

5.5 PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE. InnerSpace shall have
    received a certificate of the Secretary of the Company, in form and
    substance satisfactory to InnerSpace, as to the authenticity and
    effectiveness of the actions of the Board of Directors and Shareholders
    authorizing the Merger and the transactions contemplated by this Agreement
    and the other Operative Documents. Copies of the Company's Articles of
    Incorporation, certified by the Arizona Corporations Commission, and
    Bylaws, certified by the Secretary of the Company, shall be attached to
    such certificate.

5.6 COMPLIANCE WITH LAWS. The consummation of the transactions contemplated by
    this Agreement and the other Operative Documents shall be legally permitted
    by all laws and regulations to which InnerSpace, the Purchaser or the
    Company is subject.

5.7 SHAREHOLDER APPROVAL. The principal terms of this Agreement shall have been
    approved by the Company's shareholders as required by the Company's
    Articles of Incorporation and applicable law.

5.8 LEGAL PROCEEDINGS. No order of any court or administrative agency shall be
    in effect which enjoins, restrains, conditions or prohibits consummation of
    the transactions contemplated by this Agreement or any other Operative
    Document, and no litigation, investigation or administrative proceeding
    shall be pending which would enjoin, restrain, condition or prevent
    consummation of the transactions contemplated by this Agreement or any
    other Operative Document.

5.9 AFFILIATE LETTERS. The Company shall have delivered or caused to be
    delivered to InnerSpace an affiliate letter from each of those Persons who
    were, on the date on which the requisite number of consents or votes has
    been obtained to approve the Merger, "affiliates" of the Company within the
    meaning of Rule 145 of the rules and regulations promulgated under the
    Securities Act.

5.10 RIGHTS OF REFUSAL. Any and all rights of refusal, co-sale rights and
     registration rights, if any, for the benefit of the holders of Company
     Capital Stock or Stock Purchase Rights of the Company shall have
     terminated.

5.11 EXERCISE OF STOCK PURCHASE RIGHTS; CONVERSION OF CONVERTIBLE SECURITIES.
     Any and all Stock Purchase Rights and any and all securities and notes
     convertible at any time into Company Common Stock, vested and unvested, and
     regardless of restrictions on exercise or conversion, shall have been
     exercised or converted, as the case may be, for shares of Company Capital
     Stock prior to the Effective Time, except for the convertible promissory



                                       32



     note, Options and other Stock Purchase Rights assumed by InnerSpace
     pursuant to Section 2.2(d).

5.12 DISSENTER RIGHTS. Holders of not more than 10% of the outstanding shares of
     Company Common Stock shall have not voted in favor of the Merger or not
     consented thereto in writing and shall have delivered before the Effective
     Time timely written notice of such holders' intent to demand payment as
     dissenting shareholders for such shares in accordance with Arizona Law.

5.13 INVESTMENT BANKING AGREEMENT. The Company shall have executed the
     Investment Banking Agreement with Sundance Capital Partners, LLC attached
     as Exhibit 5.13

5.14 STOCK PURCHASE AGREEMENT. InnerSpace shall have executed the Stock Purchase
     Agreement with Sundance Capital Fund I, LP attached as Exhibit 5.14
     providing for the issuance of 1,900,000 shares of Common Stock for the
     consideration and on the terms described therein.

5.15 SUNDANCE ESCROW AGREEMENT. In connection with the Stock Purchase Agreement
     described at Section 5.14, Sundance Capital Fund I, LP shall have executed
     an escrow agreement with InnerSpace on the terms described therein.

5.16 VOTING AGREEMENT. The Founders (as hereinafter defined), the Company and
     Sundance Capital Fund I, LP shall have executed the Voting Agreement
     described at Section 3.22. For purposes hereof, "Founders" means the
     shareholders of the Company who have signed the Voting Agreement.

5.17 SUNDANCE WARRANT AGREEMENT. The Surviving Corporation shall have executed
     the Warrant Agreement and the Registration Right Agreement relating to the
     issuance of a Warrant to Sundance Capital Partners, LLC attached as
     Exhibits 5.17(a) and 5.17(b).

5.18 ASSUMPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT. Sundance Capital
     Fund I, LP and the Company shall have executed the Assumption Agreement
     attached as Exhibit 5.18(a) and the Surviving Corporation shall have
     executed the Registration Rights Agreement attached as Exhibit 5.18(b).

5.19 WARRANT AGREEMENT AND MUTUAL SETTLEMENT AGREEMENT AND RELEASE. The
     Surviving Corporation and Nova Redwood, LLC shall have executed the Warrant
     Agreement attached as Exhibit 5.19(a) and the Company and Nova Redwood, LLC
     shall have executed the Mutual Settlement Agreement and Release attached as
     Exhibit 5.19(b).

5.20 VOICEAMERICA AGREEMENT. The Company and Voice America, LLC shall have
     executed the Voice America Agreement attached as Exhibit 5.20.




                                       33



                                   ARTICLE 6
               CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

The obligations of the Company to perform and observe the covenants, agreements
and conditions hereof to be performed and observed by them at or before the
Closing shall be subject to the satisfaction of the following conditions, which
may be expressly waived only in writing signed by the Company.

6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
    warranties of InnerSpace and the Purchaser contained herein and in the
    other Operative Documents shall have been true and correct in all material
    respects when made and, except for (a) changes contemplated by this
    Agreement and the other Operative Documents and (b) to the extent that such
    representations and warranties speak as of an earlier date, shall be true
    and correct in all material respects as of the Closing Date as though made
    on that date.

6.2 PERFORMANCE OF AGREEMENTS. InnerSpace and the Purchaser shall have
    performed in all material respects all obligations and agreements and
    complied in all material respects with all covenants contained in this
    Agreement or any other Operative Document to be performed and complied with
    by them at or prior to the Closing.

6.3 COMPLIANCE CERTIFICATE. The Company shall have received a certificate of an
    officer of InnerSpace, dated the Closing Date, substantially in form and
    substance reasonably satisfactory to the Company, certifying that the
    conditions to the obligations of the Company in Sections 4.1, 4.2, 4.6 and
    4.7 have been fulfilled.

6.4 LEGAL PROCEEDINGS. No order of any court or administrative agency shall be
    in effect which enjoins, restrains, conditions or prohibits consummation of
    the transactions contemplated by this Agreement or any other Operative
    Document, and no litigation, investigation or administrative proceeding
    shall be pending which would enjoin, restrain, condition or prevent
    consummation of the transactions contemplated by this Agreement or any
    other Operative Document.

6.5 APPROVALS AND CONSENTS. All transfers of material permits or material
    licenses and all material approvals of or notices to public agencies,
    federal, state, local or foreign, the granting or delivery of which is
    necessary for the consummation of the transactions contemplated hereby and
    by the other Operative Documents or for the continued operation of the
    Company as now operated, shall have been obtained, and all waiting periods
    specified by law shall have passed. All consents listed on Schedules 3.5
    and 3.10.2 required in connection with a reverse triangular merger shall
    have been obtained and delivered.

6.6 COMPLIANCE WITH LAWS. The consummation of the transactions contemplated by
    this Agreement and the other Operative Documents shall be legally permitted
    by all laws and regulations to which InnerSpace, the Purchaser or the
    Company is subject.



                                       34



6.7 INVESTMENT BANKING AGREEMENT. The Company shall have executed an Investment
    Banking Agreement with Sundance Capital Partners, LLC attached as Exhibit
    5.13.

6.8 STOCK PURCHASE AGREEMENT. InnerSpace shall have executed a Stock Purchase
    Agreement with Sundance Capital Fund I, LP providing for the issuance of
    1,900,000 shares of Common Stock for the consideration and on the terms
    described therein.

6.9 SUNDANCE ESCROW AGREEMENT. In connection with the Stock Purchase Agreement
    described at Section 6.8, InnerSpace shall have executed an escrow
    agreement with Sundance Capital Fund I, LP on the terms described therein.

6.10 VOTING AGREEMENT. The Founders, the Company and Sundance Capital Fund I, LP
     shall have executed the Voting Agreement described at Section 3.22.

6.11 SUNDANCE WARRANT AGREEMENT. The Surviving Corporation shall have executed
     the Warrant Agreement and the Registration Rights Agreement relating to the
     issuance of a Warrant to Sundance Capital Partners, LLC attached as
     Exhibits 5.17(a) and 5.17(b).

6.12 ASSUMPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT. Sundance Capital
     Fund I, LP and the Company shall have executed the Assumption Agreement
     attached as Exhibit 5.18(a) and the Surviving Corporation shall have
     executed the Registration Rights Agreement attached as Exhibit 5.18(b).

6.13 WARRANT AGREEMENT AND MUTUAL SETTLEMENT AGREEMENT AND RELEASE. The
     Surviving Corporation and Nova Redwood, LLC shall have executed the Warrant
     Agreement attached as Exhibit 5.19(a) and the Company and Nova Redwood, LLC
     shall have executed the Mutual Settlement Agreement and Release attached as
     Exhibit 5.19(b).

6.14 ASSUMPTION AGREEMENT. Sundance Capital Fund I, LP shall have executed the
     Assumption Agreement attached as Exhibit 5.18(a).


                                   ARTICLE 7
                                   COVENANTS

Between the date of this Agreement and the Effective Time, or such later period
as set forth in Sections 7.5, 7.8 and 7.9, the parties covenant and agree as set
forth in this Article 7.

7.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Unless InnerSpace
    shall otherwise agree in writing, the business of the Company shall be




                                       35



    conducted in and only in, and the Company shall not take any action except
    in, the ordinary course of business and in a manner consistent with past
    practice and in accordance with applicable law; and the Company shall use
    commercially reasonable efforts to preserve intact the business
    organization of the Company, to keep available the services of the current
    officers, employees and consultants of the Company and to preserve the
    current relationships of the Company with, and the goodwill of, customers,
    suppliers and other Persons with which the Company has significant business
    relations. By way of amplification and not limitation, except as otherwise
    contemplated by this Agreement, the Company shall not, between the date of
    this Agreement and the Effective Time, directly or indirectly do any of the
    following without the prior written consent of InnerSpace:

        (a) amend or otherwise change its Articles of Incorporation or Bylaws,
            other than to effect a change in the Company's corporate name;

        (b) except for the issuance of shares of Company Capital Stock upon the
            exercise or conversion of currently outstanding Stock Purchase Rights,
            issue, sell, contract to issue or sell, pledge, dispose of, grant,
            encumber or authorize the issuance, sale, pledge, disposition, grant
            or Encumbrance of (i) any assets of the Company, except in the
            ordinary course of business and in a manner consistent with past
            practice, (ii) any shares of capital stock of any class of the
            Company, or (iii) any options, warrants, convertible securities or
            other rights of any kind to acquire any shares of such capital stock,
            or any other ownership interest (including, without limitation, any
            phantom interest) of the Company;

        (c) declare, set aside, make or pay any dividend or other distribution,
            payable in cash, stock or other securities, property or otherwise,
            with respect to any of its capital stock;

        (d) reclassify, combine, split, subdivide, redeem, purchase or otherwise
            acquire, directly or indirectly, any of its capital stock or other
            securities other than as provided in Section 6.10;

        (e) (i) acquire (including, without limitation, by merger, consolidation,
            or acquisition of stock or assets) any corporation, partnership, other
            business organization or division thereof or any material amount of
            assets; (ii) incur any indebtedness for borrowed money or issue any
            debt securities or assume, guarantee or endorse, or otherwise as an
            accommodation become responsible for, any obligations of any Person,
            or make any loans or advances, except in the ordinary course of
            business and consistent with past practice; (iii) enter into any
            contract or agreement other than in the ordinary course of business,
            consistent with past practice; (iv) authorize any single capital
            expenditure which is in excess of $1,000 or capital expenditures which
            are, in the aggregate, in excess of $10,000 for the Company taken as a
            whole; (v) enter into any agreement in which the obligation of the
            Company exceeds $1,000 or which shall not terminate or be subject to
            termination for convenience within 30 days following execution; (vi)




                                       36



            license any Technology or IP Rights; or (vii) enter into or amend any
            contract, agreement, commitment or arrangement with respect to any
            matter set forth in this subsection (e);

        (f) enter into or amend any employment, consulting or agency agreement, or
            increase the compensation payable or to become payable to any of its
            officers, employees, agents or consultants, or grant any severance or
            termination pay to, or enter into any employment or severance
            agreement with, any director, officer or other employee of the
            Company, or establish, adopt, enter into or amend any collective
            bargaining, bonus, profit sharing, thrift, compensation, stock option,
            restricted stock, pension, retirement, deferred compensation,
            employment, termination, severance, benefit, Employee Benefit Plan or
            other plan, agreement, trust, fund, policy or arrangement for the
            benefit of any director, officer or employee; provided, however, that
            the Company shall terminate prior to any enrollment thereunder and
            prior to the Closing Date its Code section 401(k) plan;

        (g) take any action, other than reasonable and usual actions in the
            ordinary course of business and consistent with past practice, with
            respect to accounting methods, policies or procedures (including,
            without limitation, procedures with respect to the payment of accounts
            payable and collection of accounts receivable);

        (h) make any Tax election or settle or compromise any Tax liability;

        (i) pay, discharge or satisfy any claim, liability or obligation
            (absolute, accrued, asserted or unasserted, contingent or otherwise),
            other than the payment, discharge or satisfaction in the ordinary
            course of business and consistent with past practice;

        (j) take any action that would or is reasonably likely to result in any of
            the representations or warranties of the Company set forth in this
            Agreement being untrue in any material respect, or in any covenant of
            the Company set forth in this Agreement being breached, or in any of
            the conditions to the Merger specified in Article 5 hereof not being
            satisfied; or

        (k) agree to do any of the foregoing.

7.2 ACCESS TO INFORMATION; CONFIDENTIALITY. From the date hereof to the
    Effective Time, each party shall, and shall cause its officers, directors,
    employees and agents to, afford the officers, employees and agents of the
    other party access at all reasonable times to its officers, employees,
    agents, properties, offices, plants and other facilities, books and records
    and shall furnish the other party with all financial, operating and other
    data and information as the other party, through its officers, employees or
    agents, may reasonably request. From the date hereof until the Effective
    Time, each party shall provide the other party with its monthly and other
    financial as they become available internally, all of which financial




                                       37




    statements shall fairly present its financial position and results of
    operations as of the dates and for the periods therein specified. No
    investigation pursuant to this Section 7.2 shall affect any representation
    or warranty in this Agreement of any party hereto or any condition to the
    obligations of the parties hereto.

7.3 NO ALTERNATIVE TRANSACTIONS. Unless this Agreement shall have been
    terminated in accordance with its terms, the Company shall not, directly or
    indirectly, through any officer, director, agent or otherwise, solicit,
    initiate or encourage the submission of any proposal or offer from any
    Person relating to any acquisition or purchase of all or any material
    portion of the assets of, or any equity interest in, the Company or any
    business combination with the Company or participate in any negotiations
    regarding, or furnish to any other Person any information with respect to,
    or otherwise cooperate or negotiate in any way with, or assist or
    participate in, facilitate or encourage, any effort or attempt by any other
    Person to do or seek any of the foregoing. The Company shall notify
    InnerSpace promptly if any such proposal or offer, or any inquiry or
    contact with any Person with respect thereto, is made and shall, in any
    such notice to InnerSpace, indicate in reasonable detail the identity of
    the Person making such proposal, offer, inquiry or contact and the terms
    and conditions of such proposal, offer, inquiry or contact. The Company
    agrees not to release any third party from, or waive any provision of, any
    confidentiality or standstill agreement (e.g. agreement not to invest in or
    seek change of control of the Company) to which the Company is a party.

7.4 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice to the
    other parties of (a) the occurrence or nonoccurrence of any event which
    would be likely to cause any representation or warranty made by such party
    contained in this Agreement to be untrue or inaccurate in any material
    respect and (b) any material failure by such party to comply with or
    satisfy any covenant, condition or agreement to be complied with or
    satisfied by such party hereunder; provided, however, that the delivery of
    any notice pursuant to this Section 6.4 shall not limit or otherwise affect
    the rights or remedies available to the parties hereunder.

7.5 FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS. Upon the terms and subject
    to the conditions hereof, each of the parties hereto shall use 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 and regulations to consummate and make effective the
    transactions contemplated hereby, including, without limitation, using its
    commercially reasonable efforts to obtain all waivers, licenses, permits,
    consents, approvals, authorizations, qualifications and orders of
    governmental authorities and of other Persons as are necessary for the
    consummation of the transactions contemplated hereby and to fulfill the
    conditions to the Merger. In case at any time after the Effective Time any
    further action is necessary or desirable to carry out the purposes of this
    Agreement or the other Operative Documents, each party to this Agreement
    shall use commercially reasonable efforts to promptly take all such action.
    After the Closing, each party hereto, at the request of and without any
    further cost or expense to the other parties, will take any further actions
    necessary or desirable to carry out the purposes of this Agreement or any





                                       38



    other Operative Document, to vest in the Surviving Corporation full title
    to all properties, assets and rights of the Company, and to effect the
    issuance of the InnerSpace Common Stock to the Shareholders pursuant to the
    terms and conditions hereof.

7.6 SHAREHOLDER APPROVAL. The Company will seek the approval at a special
    meeting of its shareholders or the written consent of such shareholders at
    the earliest practicable date approving this Agreement, the other Operative
    Documents, the Merger and related matters, which approval will be
    recommended by the Board of Directors of the Company.

7.7 DISCLOSURE. The Company will furnish to its shareholders all information
    relating to the Merger necessary to satisfy all requirements of applicable
    state and federal securities laws. The Company and InnerSpace each shall be
    solely responsible for any statement, information or omission relating to
    it or its affiliates based on written information furnished by it. The
    Company and InnerSpace will not provide or publish to the Shareholders any
    material concerning them or their affiliates that violate the Securities
    Act or the Exchange Act with respect to the transactions contemplated
    hereby.

7.8 DISSENTING SHARES. Prior to the Closing Date, the Company shall furnish
    InnerSpace with the name and address of each Shareholder who, prior to the
    Closing, has requested appraisal rights pursuant to Arizona Law and the
    number of Dissenting Shares owned by such Shareholder.

7.9 PUBLICITY. No party hereto shall issue any press release or otherwise make
    any statements to any third party with respect to this Agreement or the
    transactions contemplated hereby, other than the issuance by InnerSpace and
    the Company of a joint press release announcing this Agreement and the
    transactions contemplated hereby or as required by law.

7.10 AUDITED FINANCIAL STATEMENTS. By May 31, 2003, the Company shall have
     exercised its best efforts to deliver to InnerSpace an audited balance
     sheet, an audited statement of income and expenses, an audited statement of
     cash flow and an audited statement of shareholders equity of the Company as
     of and for the fiscal year ended February 28, 2003. These audited financial
     statements shall not reflect any material adverse change from the Financial
     Statements as, at and for the same periods.

7.11 INTERWEST ESCROW AGREEMENT. Prior to the exchange of certificates described
     in Section 2.3, the Shareholder Representative, on behalf of the
     Shareholders, and the Interwest Escrow Agent shall have executed and
     delivered the Interwest Escrow Agreement to InnerSpace.

7.12 REVERSE STOCK SPLIT. Prior to the exchange of certificates described in
     Section 2.3, InnerSpace will complete a 1 for 10 reverse stock split such
     that, prior to the issuance of shares in connection therewith, InnerSpace
     will have 3,500,000 shares issued and outstanding.




                                       39




7.13 EMPLOYEE STOCK PLAN. As soon as practicable, the Board of Directors of the
     Surviving Corporation will adopt an employee stock plan, reserving for
     issuance thereunder a pool of 4,666,500 shares to be granted to the
     Surviving Corporation's key executives and other individuals pursuant to
     the terms set forth therein.

                                    ARTICLE 8
                       TERMINATION, AMENDMENT AND WAIVER

8.1 TERMINATION. This Agreement may be terminated and the Merger may be
    abandoned at any time prior to the Effective Time (notwithstanding any
    approval of this Agreement by the Shareholders):

        (a) by mutual written consent;

        (b) by either the Company or InnerSpace, if the Merger has not been
            consummated by June 30, 2003; provided, however, that the right to
            terminate this Agreement under this subsection (b) shall not be
            available to any party (i) whose failure to fulfill or cause to be
            fulfilled any obligation under this Agreement has been the cause of,
            or resulted in, the failure of the Effective Time to occur on or
            before such date or (ii) for a period of 10 business days after the
            expiration by its terms of any temporary restraining order ("TRO")
            prohibiting or enjoining the Merger or a ruling on any preliminary
            injunction motion relating to such TRO;

        (c) by either the Company or InnerSpace, if there shall be any law or
            regulation that makes consummation of the Merger illegal or if any
            judgment, injunction, order or decree enjoining InnerSpace, the
            Purchaser or the Company from consummating the Merger is entered and
            such judgment, injunction, order or decree shall become final and
            nonappealable; provided, however, that the party seeking to terminate
            this Agreement pursuant to this subsection (c) shall have used all
            reasonable efforts to remove such judgment, injunction, order or
            decree;

        (d) by the Company, in the event of a material breach by InnerSpace of any
            representation, warranty or agreement contained herein which has not
            been cured or is not curable by June 30, 2003;

        (e) by InnerSpace, in the event of a material breach by the Company of any
            representation, warranty or agreement contained herein which has not
            been cured or is not curable by June 30, 2003.

8.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement
    pursuant to Section 8.1 hereof, there shall be no further obligation on the
    part of any party hereto, except that nothing herein shall relieve any
    party from liability for any willful breach hereof.




                                       40




8.3 AMENDMENT. This Agreement may not be amended except by an instrument in
    writing signed by InnerSpace, the Purchaser and the Company; provided,
    however, that after approval of this Agreement by the Company's
    shareholders, no amendment will be made which by applicable law requires
    the further approval of the Company's shareholders without obtaining such
    further approval.

8.4 WAIVER. At any time prior to the Effective Time, InnerSpace may (a) extend
    the time for the performance of any obligation or other act of the Company,
    (b) waive any inaccuracy in the representations and warranties of the
    Company contained herein or in any document delivered pursuant hereto, or
    (c) waive compliance with any agreement of the Company or any condition to
    the obligations of InnerSpace and the Purchaser contained herein. At any
    time prior to the Effective Time, the Company may (a) extend the time for
    the performance of any obligation or other act of InnerSpace or the
    Purchaser, (b) waive any inaccuracy in the representations and warranties
    of InnerSpace or the Purchaser contained herein or in any document
    delivered pursuant hereto, or (c) waive compliance with any agreement of
    InnerSpace or the Purchaser or any condition to the obligations of the
    Company contained herein. Any such extension or waiver shall be valid only
    if set forth in an instrument in writing signed by the party or parties to
    be bound thereby.

                                    ARTICLE 9
                          SURVIVAL AND INDEMNIFICATION

9.1 SURVIVAL. All representations and warranties contained in this Agreement or
    in the other Operative Documents or in any certificate delivered pursuant
    hereto or thereto shall survive the Closing for a period of 12 months after
    the Effective Time (the "Survival Period"); provided, however, that any
    claim based on fraud shall survive the Closing indefinitely. The covenants
    and agreements contained in this Agreement or in the other Operative
    Documents shall survive the Closing and shall continue until all
    obligations with respect thereto shall have been performed or satisfied or
    shall have been terminated in accordance with their terms. The waiver of
    any condition based on the accuracy of any representation or warranty, or
    on the performance of or compliance with any covenant or obligation, will
    not affect the right to indemnification or any other remedy based on such
    representations, warranties, covenants and obligations.

9.2 INDEMNIFICATION BY THE HOLDERS OF INNERSPACE CAPITAL STOCK. Subject to the
    limitations set forth in this Article 9, from and after the Closing, each
    Shareholder shall indemnify and hold InnerSpace, its officers, directors
    and affiliates (as "affiliate" is defined in Rule 12b-2 of the Exchange
    Act) harmless from and against, and shall reimburse the indemnified parties
    for, any and all losses, damages, debts, liabilities, obligations,
    judgments, orders, awards, writs, injunctions, decrees, fines, penalties,
    Taxes, costs or expenses (including, but not limited to, any reasonable
    legal or accounting fees or expenses and any Taxes or other costs or
    damages arising under, caused by or related to Section 280G of the Code or
    any comparable provision of state, local or foreign law) ("Losses") arising
    out of (i) any inaccuracy or misrepresentation in, or breach of, any
    representation or warranty made by the Company or such Shareholder in this





                                       41




    Agreement or in any other Operative Document or (ii) any failure by the
    Company or such Shareholder to perform or comply, in whole or in part, with
    any covenant or agreement in this Agreement or in any other Operative
    Document.

9.3 THRESHOLD AND LIMITATIONS; ADJUSTMENT OF MERGER CONSIDERATION

        (a) Innerspace, each Shareholder and the Company, as the case may be shall
            not be entitled to receive any indemnification payment with respect to
            any claims for indemnification under this Article 9 ("Claims") until
            the aggregate Losses for which the indemnified parties would otherwise
            be entitled to receive indemnification exceed $25,000 (the
            "Threshold"); provided, however, that once such aggregate Losses
            exceed the Threshold, the indemnified parties shall be entitled to
            indemnification for the aggregate amount of all Losses without regard
            to the Threshold.

        (b) (i) Except for Losses based upon a claim of fraud, the obligation of
            the Shareholders to indemnify InnerSpace under Section 9.2 shall be
            InnerSpace's sole remedy under this Agreement or under any other
            Operative Document against the Shareholders. Except as otherwise
            provided in Sections 9.5(b)(ii) and 9.5(b)(iii) such indemnity
            obligations shall be limited to 10% of the Base Amount in the
            aggregate (the "Initial Loss Limit"), and at no time shall such
            indemnity obligations of any Shareholder exceed such Shareholder's pro
            rata portion of the Interwest Escrow Shares constituting the Initial
            Loss Limit (as determined in accordance with Section 9.5(d) below).
            (ii) Notwithstanding any other provision of this Agreement to the
            contrary, the indemnity obligations of the Shareholders under Section
            9.2 for Losses (A) based upon claims arising in connection with
            Section 3.14 and (B) relating to any third party with whom the Company
            has executed a nondisclosure or similar agreement shall be limited to
            the Interwest Escrow Shares, and at no time shall any Shareholder's
            indemnity obligations under Section 9.2 exceed such Shareholder's pro
            rata portion of the Interwest Escrow Shares (as determined in
            accordance with Section 9.5(d) below). (iii) Notwithstanding any other
            provision of this Agreement to the contrary, the indemnity obligations
            of the Shareholders under Section 9.2 for Losses based upon claims of
            fraud shall not be limited.

        (c) An indemnifying party shall not be obligated to defend and hold
            harmless an indemnified party, or otherwise be liable to such party,
            with respect to any claims made by the indemnified party after the
            expiration of the applicable time period as set forth in Section 9.1
            hereof. Notwithstanding the foregoing, indemnity may be sought after
            the expiration of the Survival Period pursuant to this Article 9 if a
            Claim Notice (as defined in Section 9.5(a) hereof) shall have been
            delivered to the indemnifying party prior to the expiration of the
            Survival Period.




                                       42




        (d) The indemnification obligations of the Shareholders under this Article
            9 shall be satisfied by means of the release from escrow to InnerSpace
            of Interwest Escrow Shares in accordance with the provisions of the
            Interwest Escrow Agreement. The number of Interwest Escrow Shares to
            be released from escrow to InnerSpace in payment of any Claims shall
            be determined by dividing (x) the aggregate dollar amount of such
            Claims by (y) the Closing Price. The aggregate value of Claims paid by
            means of such release to InnerSpace of Interwest Escrow Shares shall
            be deemed to reduce the total Merger Consideration otherwise payable
            to the Shareholders pursuant to Section 1.7 of this Agreement. Any
            such Claims shall be deemed to reduce the Interwest Escrow Shares, pro
            rata with respect to each Shareholder, as determined by reference to
            the number of shares comprising the Merger Consideration such
            Shareholder is entitled to receive in the Merger as compared to all
            other Shareholders; provided, however, that any Claims paid with
            respect to any Loss related to any representation, warranty, covenant
            or agreement of a Shareholder shall not result in a pro rata reduction
            of the Interwest Escrow Shares but shall reduce only the Interwest
            Escrow Shares of such Shareholder.

9.4 INDEMNIFICATION BY INNERSPACE AND PURCHASER. Subject to the limitations set
    forth in this Article 9, from and after the Closing InnerSpace and
    Purchaser shall indemnify and hold the Shareholders and the Company, its
    officers, directors and affiliates (as "affiliate" is defined in Rule 12b-2
    of the Exchange Act (the "Company") harmless from and against, and shall
    reimburse Shareholder or Company for, any and all losses, damages, debts,
    liabilities, obligations, judgments, orders, awards, writs, injunctions,
    decrees, fines, penalties, Taxes, costs or expenses (including, but not
    limited to, any reasonable legal or accounting fees or expenses and any
    Taxes or other costs or damages arising under, caused by or related to
    Section 2806 of the Code or comparable provision of state, local or foreign
    law) ("Losses") arising out of (i) any inaccuracy or misrepresentation in,
    or breach of, any representation or warranty made by InnerSpace or
    Purchaser in this Agreement or in any other Operative Document or (ii) any
    failure by InnerSpace or Purchaser to perform or comply, in whole or in
    party, with any covenant or agreement in this Agreement or in any other
    Operative Document.

9.5 PROCEDURE FOR INDEMNIFICATION

        (a) An indemnified party shall give written notice (the "Claim Notice") of
            any Claim for indemnification under this Article 9 to the indemnifying
            party, reasonably promptly after the assertion against an indemnified
            party of any claim by a third party (a "Third Party Claim") or, if
            such Claim is not in respect of a Third Party Claim, reasonably
            promptly after the discovery of facts upon which the indemnified party
            intends to base a Claim for indemnification pursuant to this Article
            9.5.

        (b) The procedures to be followed by the indemnified party with respect to
            contesting whether a Claim is an indemnifiable Claim shall be as set
            forth in the Interwest Escrow Agreement.




                                       43




        (c) (i) Subject to the rights of or duties to any insurer or other third
            party having potential liability therefor, the indemnifying party,
            shall have the right, upon written notice to the indemnified party
            within 30 days after receipt of the notice from the indemnified party
            of any Third Party Claim, to assume the defense or handling of such,
            Third Party Claim, at the indemnifying party's sole expense, in which
            case the provisions of Section 9.5(c)(ii) hereof shall govern;
            provided, however, that, notwithstanding the foregoing, the
            indemnified party may elect to assume the defense and handle any such
            Third Party Claim if it determines in good faith that the resolution
            of such Third Party Claim could result in an adverse impact on the
            business, operations, assets, liabilities (absolute, accrued,
            contingent or otherwise), condition (financial or otherwise) or
            prospects of indemnified party, in which case the provisions of
            Section 9..5(d)(ii) hereof shall govern. (ii) The indemnifying party,
            on behalf of the indemnifying party, shall select counsel reasonably
            acceptable to the indemnified party in connection with conducting the
            defense or handling of such Third Party Claim, and the indemnifying
            party shall defend or handle the same in consultation with the
            indemnified party and shall keep the indemnified party timely apprised
            of the status of such Third Party Claim. The indemnifying party shall
            not, without the prior written consent of the indemnified party, agree
            to a settlement of any Third Party Claim, unless (A) the settlement
            provides an unconditional release and discharge of the indemnified
            party and the indemnified party is reasonably satisfied with such
            discharge and release and (B) the indemnified party shall not have
            reasonably objected to any such settlement on the ground that the
            circumstances surrounding the settlement could result in an adverse
            impact on the business, operations, assets, liabilities (absolute,
            accrued, contingent or otherwise), condition (financial or otherwise)
            or prospects of the indemnified party. The indemnified party shall
            cooperate with the indemnifying party and shall be entitled to
            participate in the defense or handling of such Third Party Claim with
            its own counsel and at its own expense.

        (d) (i) If (A) the indemnifying party does not give written notice to the
            indemnified party pursuant to Section 9.5(c)(i) within 30 days after
            receipt of the notice from the indemnified party of any Third Party
            Claim of the indemnifying party's election to assume the defense or
            handling of such Third Party Claim or (B) indemnified party elects to
            assume the defense and the handling of such Third Party Claim pursuant
            to Section 9.5(c)(i), the provisions of Section 9.5(d)(ii) hereof
            shall govern. (ii) The indemnified party may, at the indemnifying
            party's expense (which shall be paid from time to time by the
            indemnifying party, on behalf of the indemnifying party, as such
            expenses are incurred by the indemnified party), select counsel, after
            consultation with the indemnifying party, in connection with
            conducting the defense or handling of such Third Party Claim and
            defend or handle such Third Party Claim in such manner as the
            indemnified party may deem appropriate; provided, however, that the
            indemnified party shall keep the indemnifying party timely apprised of
            the status of such Third Party Claim and shall not settle such Third




                                       44




            Party Claim without the prior written consent of the indemnifying
            party, which consent shall not be unreasonably withheld. If the
            indemnified party defends or handles such Third Party Claim, the
            indemnifying party shall cooperate with the indemnified party and
            shall be entitled to participate in the defense or handling of such
            Third Party Claim with its own counsel and at its own expense.

9.6 REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided, the
    indemnification provisions of this Article 9 are the sole and exclusive
    remedy of any party to this Agreement for a breach of any representation,
    warranty or covenant contained herein. Notwithstanding the preceding
    sentence, each of the parties acknowledges and agrees that the other
    parties hereto would be damaged irreparably in the event any of the
    provisions of this Agreement are not performed in accordance with their
    specific terms or otherwise are breached. Accordingly, each of the parties
    hereto agrees that the other parties hereto shall be entitled to an
    injunction to prevent breaches of the provisions of this Agreement and to
    enforce specifically this Agreement and the terms and provisions hereof
    (including the indemnification provisions hereof) in any competent court
    having jurisdiction over the parties, in addition to any other remedy to
    which they may be entitled at law or in equity.

                                   ARTICLE 10
                                     GENERAL

10.1 EXPENSES. Provided the transactions contemplated by this Agreement are
     consummated, the Surviving Corporation shall pay all fees and expenses
     (including, without limitation, legal and accounting fees and expenses)
     incurred by the parties hereto incident to the negotiation, preparation and
     execution of this Agreement and the other Operative Documents.

10.2 NOTICES. Any notice, request or demand desired or required to be given
     hereunder shall be in writing given by personal delivery, confirmed
     facsimile transmission, or overnight courier service, in each case
     addressed as respectively set forth below or to such other address as any
     party shall have previously designated by such a notice. The effective date
     of any notice, request or demand shall be the date of personal delivery,
     the date on which successful facsimile transmission is confirmed or the
     date actually delivered by a reputable overnight courier service, as the
     case may be, in each case properly addressed as provided herein and with
     all charges prepaid.

                  TO INNERSPACE OR THE PURCHASER:

                    InnerSpace Corporation
                    6595G Roswell Road, Suite 222
                    Atlanta, Georgia  30328
                    Attention: Chief Executive Officer

                  With a copy to:





                                       45





                    Robert D. Arkin, P.C.
                    6595G Roswell Road, Suite 222
                    Atlanta, GA  30328
                    Attention:  Robert D. Arkin


                   TO THE COMPANY:

                    SurfNet Media Group, Inc.
                    2245 West University Drive, Suite 9
                    Tempe, AZ  85281
                    Attention:  President

                  With a copy to:

                    Lerch & DePrima, P.L.C.
                    1700 E. Thomas Road, Suite B
                    Phoenix, AZ  85016
                    Attention:  Anthony E. DePrima

10.3 SEVERABILITY. If any term or other provision of this Agreement is invalid,
     illegal or incapable of being enforced by any rule of law, or public
     policy, all other conditions and provisions of this Agreement shall
     nevertheless remain in full force and effect so long as the economic or
     legal substance of the transactions contemplated hereby is not affected in
     any manner adverse to any party. Upon such determination that any term or
     other provision is invalid, illegal or incapable of being enforced, the
     parties hereto shall negotiate in good faith to modify this Agreement so as
     to effect the original intent of the parties as closely as possible in a
     mutually acceptable manner in order that the transactions contemplated
     hereby be consummated as originally contemplated to the fullest extent
     possible.

10.4 ENTIRE AGREEMENT. This Agreement and the other Operative Documents
     constitute the entire agreement among the parties with respect to the
     subject matter hereof and thereof and supersede all prior agreements and
     undertakings, both written and oral, among the parties, or any of them,
     with respect to the subject matter hereof and thereof.

10.5 ASSIGNMENT. This Agreement shall not be assigned prior to the Closing by
     operation of law or otherwise.

10.6 PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely
     to the benefit of the parties hereto and their respective successors,
     heirs, legal representatives and permitted assigns, and nothing in this
     Agreement, express or implied, is intended to or shall confer upon any
     other Person any right, benefit or remedy of any nature whatsoever under or
     by reason of this Agreement.




                                       46




10.7 GOVERNING LAW. This Agreement shall be governed by, and construed in
     accordance with, the laws of the State of Delaware applicable to contracts
     executed in and to be performed in that state. All actions and proceedings
     arising out of or relating to this Agreement shall be heard and determined
     in any Delaware court.

10.8 HEADINGS. The descriptive headings contained in this Agreement are included
     for convenience of reference only and shall not affect in any way the
     meaning or interpretation of this Agreement.

10.9 COUNTERPARTS. This Agreement may be executed and delivered (including by
     facsimile transmission) in one or more counterparts, and by the different
     parties hereto in separate counterparts, each of which when executed and
     delivered shall be deemed to be an original but all of which taken together
     shall constitute one and the same agreement. To expedite the process of
     entering into this Agreement, the parties acknowledge that Transmitted
     Copies of this Agreement will be equivalent to original documents until
     such time as original documents are completely executed and delivered.
     "Transmitted Copies" will mean copies that are reproduced or transmitted
     via photocopy, facsimile or other process of complete and accurate
     reproduction and transmission.

10.10 WAIVER OF JURY TRIAL. Each of InnerSpace, the Company and the Purchaser
      hereby irrevocably waives all right to trial by jury in any action,
      proceeding or counterclaim (whether based on contract, tort or otherwise)
      arising out of or relating to this Agreement, the transactions contemplated
      hereby or the actions of such parties in the negotiation, administration,
      performance and enforcement hereof.



                                       47


IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement and Plan of Merger as of the date and year first above written.

INNERSPACE CORPORATION

            /s/ Robert D. Arkin

By:____________________________
            Robert D. Arkin,
            Chief Executive Officer




SURFNET NEW MEDIA, INC.


            /s/ Douglas Johnson

By:____________________________
            Douglas Johnson,
            President




SURFNET MEDIA GROUP, INC.


            /s/ Douglas Johnson

By:____________________________
            Douglas Johnson,
            President