EXODUS COMMUNICATIONS INC, S-4, 1999-05-28

EXODUS COMMUNICATIONS INC
S-4, 1999-05-28
BUSINESS SERVICES, NEC

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As filed with the Securities and Exchange Commission on May 28, 1999
Registration No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

EXODUS COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)

Delaware 4813 77-0403076
(State or other (Primary Standard (I.R.S. employer
jurisdiction of Industrial
incorporation or Classification Code identification no.)
organization) Number)
---------------
2831 Mission College Boulevard
Santa Clara, California 95054
(408) 346-2200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Richard S. Stoltz
Executive Vice President, Finance
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, California 95054
(408) 346-2200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
Horace L. Nash, Esq. Robert A. Schwed, Esq.
David W. Healy, Esq. Karen C. Wiedemann, Esq.
Robert A. Freedman, Esq. Christopher W. Rile, Esq.
Tram T. Phi, Esq. Reboul, MacMurray, Hewitt, Maynard
Andrew Y. Luh, Esq. & Kristol
Fenwick & West LLP 45 Rockefeller Plaza
Two Palo Alto Square New York, New York 10111
Palo Alto, California 94306 (212) 841-5700
(650) 494-0600 ---------------
Approximate date of commencement of proposed sale to the public: Upon
consummation of the merger described in the Registration Statement.
---------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
to be Registered Registered(1) Price Per Share(2) Offering Price(2) Registration Fee(3)
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<S> <C> <C> <C> <C>
common stock, $0.001 par
value(4)............... 1,000,000 $20.651 $20,651,000 $5,741
</TABLE>

(1) Represents the maximum number of shares of common stock of the Registrant
that may be issued pursuant to the merger described in this Registration
Statement.
(2) Inasmuch as there is no market for the securities of Cohesive Technology
Solutions, Inc. to be received by the Registrant or canceled in the
merger, the maximum offering price per share and the maximum aggregate
offering price are calculated, pursuant to Rule 457(f)(2), using the book
value of the securities computed as of the latest practicable date:
$20,651,000 which was the book value of Cohesive as of March 31, 1999.
(3) Calculated in accordance with Section 6(b) of the Securities Act and Rule
457(f)(2).
(4) Associated with Exodus common stock are preferred stock purchase rights
which will not be exercisable or evidenced separately from the common
stock prior to the occurrence of specified triggering events.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

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<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303

, 1999
Dear Stockholders:

You are cordially invited to attend a special meeting of stockholders of
Cohesive Technology Solutions, Inc. to be held on , 1999 at 10:00 a.m.,
local time, at Cohesive's corporate headquarters located at 2465 East Bayshore
Road, Suite 400, Palo Alto, California 94303. At the special meeting you will
be asked to vote on a proposal to adopt a merger agreement between Cohesive,
Exodus and a subsidiary of Exodus under which Cohesive will be merged with the
Exodus subsidiary. If the merger is completed, Cohesive stockholders, other
than those who are entitled to and have perfected appraisal rights, will
receive cash or a combination of cash and shares of Exodus common stock.
Holders of Cohesive Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock will receive cash. Holders of Series D Preferred Stock
and common stock will receive cash and shares of Exodus common stock. The
number of shares of Exodus common stock and the amount of cash received will be
determined by formulas which are fully described in the section of the enclosed
document entitled "Terms of the Merger -- Merger Consideration." The exact
number of shares of Exodus common stock and the exact amount of cash to which
the Cohesive stockholders will be entitled is dependent on many factors and
cannot be determined until the date the merger is completed. The Exodus shares
issued to Cohesive stockholders would represent up to approximately 2.5% of the
outstanding shares of Exodus after the merger. Exodus common stock trades on
the Nasdaq National Market under the symbol "EXDS." On , 1999, the closing
price of Exodus common stock was $ per share.

If the merger is completed, $10.0 million of cash merger consideration will
be placed into an escrow account to secure the indemnification obligations of
the Cohesive common stockholders under the merger agreement. See "Terms of the
Merger -- Indemnification."

In addition, each outstanding option to purchase Cohesive common stock will
be converted into the right to acquire shares of Exodus common stock.

The Cohesive Board of Directors believes that the terms of the merger
agreement and the merger are fair to and in the best interests of Cohesive
stockholders and recommends that the stockholders adopt the merger agreement.

Adoption of the merger agreement at the special meeting will require the
affirmative votes of:

. a majority of the issued and outstanding shares of Cohesive common
stock, Cohesive Series C Preferred Stock and Cohesive Series D Preferred
Stock, voting together as a single class on an as-converted to common
stock basis, and

. two-thirds of the issued and outstanding Series A Preferred Stock and
Series B Preferred Stock, voting together as a single class.

Welsh, Carson, Anderson & Stowe VI, L.P. ("WCAS VI"), Cohesive's principal
stockholder, owns approximately 67% of the issued and outstanding shares of
Cohesive common stock and approximately 94% of the issued and outstanding
shares of Cohesive Series A Preferred Stock and Series B Preferred Stock.
WCAS VI has entered into a voting agreement with Exodus. Pursuant to the voting
agreement, WCAS VI has agreed to vote its shares of Cohesive Series A Preferred
Stock, Series B Preferred Stock and common stock in favor of the merger
agreement. The vote of WCAS VI is sufficient under Delaware law and Cohesive's
certificate of incorporation and bylaws to adopt the merger agreement.

DENNIS M. ROHAN
President and Chief Executive Officer

The merger involves risks. See "Risk Factors" beginning on page 20.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this document is truthful or complete. Any representation to the contrary is a
criminal offense.

This document is dated , 1999 and is first being mailed to stockholders on
or about , 1999.

The information in this document is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This document is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303

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

Notice of Special Meeting of Stockholders

To Be Held On , 1999

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

A special meeting of the stockholders of Cohesive Technology Solutions, Inc.,
a Delaware corporation, will be held on , 1999 at 10:00 a.m., local time,
at Cohesive's corporate headquarters located at 2465 East Bayshore Road, Suite
400, Palo Alto, California 94303, for the following purposes:

1. To consider and vote upon a proposal to adopt the merger agreement among
Exodus Communications, Inc., a Delaware corporation, Cohesive and Marley
Acquisition Corp., a Delaware corporation that is a wholly-owned
subsidiary of Exodus. Under the merger agreement, Cohesive will be
merged into Marley Acquisition Corp. and all of the shares of capital
stock of Cohesive which are issued and outstanding at the time of the
merger, other than shares which are held by stockholders who are
entitled to and have perfected appraisal rights, will be converted into
the right to receive cash or a combination of cash and Exodus common
stock. The number of shares of Exodus common stock and the amount of
cash received will be determined by formulas which are fully described
in the section of the enclosed document entitled "Terms of the Merger --
Merger Consideration." The exact number of shares of Exodus common
stock and the exact amount of cash to which Cohesive stockholders will
be entitled are dependent on many factors and cannot be determined until
the date the merger is completed. If the merger is completed, $10.0
million of cash merger consideration will be placed into an escrow
account to secure the indemnification obligations of the Cohesive common
stockholders under the merger agreement. See "Terms of the Merger --
Indemnification."

2. To transact other business as may properly come before the special
meeting or any adjournments or postponements of the special meeting.

Only stockholders of record at the close of business on , 1999, the
record date for the special meeting, are entitled to notice of, and to vote at,
the special meeting.

The merger and other important matters are explained in this document which
you are urged to read carefully. A copy of the merger agreement is attached as
Appendix A.

Whether or not you plan to attend the special meeting, please complete, sign
and date the enclosed proxy card and promptly return it in the enclosed
postage-paid envelope. Please do not send any stock certificates at this time.
Your proxy may be revoked at any time before it is voted by signing and
returning a later dated proxy with respect to the same shares, by filing with
the Secretary of Cohesive a written revocation bearing a later date or by
attending and voting at the special meeting.

By Order of the Board of Directors

Stephen R. Bennion
Secretary

Palo Alto, California
, 1999
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
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<S> <C>
Questions and Answers about the Merger................................... 1
Summary.................................................................. 5
What the Companies Do................................................... 5
The Cohesive Special Meeting............................................ 5
Required Vote........................................................... 5
Comparative Per Share Market Prices..................................... 6
Appraisal Rights........................................................ 7
Cohesive's Reasons for the Merger....................................... 7
Exodus' Reasons for the Merger.......................................... 7
Material Federal Income Tax Treatment................................... 7
Regulatory Approvals Required Before the Merger Can Be Completed........ 7
Accounting Treatment of the Merger...................................... 8
Interests of Certain Persons in the Merger.............................. 8
Terms of the Merger..................................................... 8
Selected Historical and Pro Forma Financial Data......................... 12
Exodus Selected Historical Financial Information......................... 13
Cohesive Selected Historical Financial Information....................... 15
Exodus Selected Unaudited Pro Forma Combined Condensed Financial
Information............................................................. 16
Comparative Per Share Data............................................... 17
Comparative Per Share Market Prices...................................... 18
Market Price of Exodus and Cohesive Common Stock and Dividend Policies... 19
Risk Factors............................................................. 20
Risks Related to the Merger............................................. 20
Risks Related to Exodus................................................. 22
Risks Related to Cohesive............................................... 32
Forward-Looking Statements............................................... 35
Where You Can Find More Information...................................... 35
The Cohesive Special Meeting............................................. 36
Date, Time and Place of Meeting......................................... 36
Purpose of the Special Meeting.......................................... 36
Record Date............................................................. 36
Voting Rights........................................................... 36
Quorum ................................................................. 37
Required Vote........................................................... 37
Solicitation of Proxies ................................................ 38
Approval of the Merger and Related Transactions.......................... 38
Background of the Merger................................................ 38
Cohesive's Reasons for the Merger....................................... 40
Exodus' Reasons for the Merger ......................................... 42
Material Federal Income Tax Considerations ............................. 44
Regulatory Matters...................................................... 46
Accounting Treatment.................................................... 46
Appraisal Rights........................................................ 46
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
Page
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<S> <C>
Terms of the Merger....................................................... 49
General.................................................................. 49
Effective Time; Closing Date............................................. 49
Merger Consideration..................................................... 49
Exchange of Certificates and Cash........................................ 51
Representations and Warranties........................................... 51
Covenants................................................................ 52
Conditions to the Merger................................................. 54
Termination.............................................................. 55
Indemnification.......................................................... 56
Additional Possible Distributions to Cohesive Stockholders............... 57
Related Agreements....................................................... 57
Benefits of the Merger to Cohesive Directors and Executive Officers....... 59
Employment Agreements.................................................... 59
Assumption of Outstanding Stock Options.................................. 59
Acceleration of Stock Options............................................ 59
Redemption of Cohesive Preferred Stock................................... 60
Indemnification of Directors and Executive Officers...................... 60
Exodus Communications, Inc. Unaudited Pro Forma Combined Condensed
Financial Statements..................................................... 61
Unaudited Pro Forma Combined Condensed Balance Sheet...................... 62
Unaudited Pro Forma Combined Condensed Statement of Operations............ 63
Notes to Unaudited Pro Forma Combined Condensed Financial Statements...... 64
Business of Cohesive...................................................... 66
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Cohesive................................................... 69
Comparison of Rights of Holders of Exodus Common Stock and Holders of
Cohesive Common Stock.................................................... 77
Comparison of Preferences and Rights of Exodus Common Stock and Cohesive
Common Stock and Series D Preferred Stock............................... 77
Undesignated Preferred Stock............................................. 78
Election and Number of Directors; Filling Vacancies; Removal............. 78
Director Compensation.................................................... 78
Stockholder Meetings and Written Consents................................ 78
Power to Call Special Meeting of Stockholders............................ 78
Percentage of Voting Stock; Influence Over Affairs....................... 78
Directors' Committees.................................................... 79
Stockholder Rights Plan.................................................. 79
Principal Stockholders of Cohesive and the Stock Ownership of Cohesive's
Management............................................................... 81
Experts................................................................... 83
Legal Matters............................................................. 83
Financial Statements and Schedules of Cohesive............................ F-1
Appendices
A -- Agreement and Plan of Reorganization, as amended.................... A-1
B -- Section 262 of the Delaware General Corporation Law................. B-1
</TABLE>

ii
<PAGE>

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: Why is Cohesive proposing the merger?

A: The board of directors of Cohesive believes that it is in the best interests
of Cohesive stockholders because the merger will provide increased
investment liquidity and the board believes that the combined company will
be more competitive in the market and enhance the future value of the shares
held by Cohesive stockholders.

Q: I am a holder of Cohesive Series A Preferred Stock. What will I receive in
the merger?

A: If the merger is completed, you will receive $100 cash plus all accrued and
unpaid dividends in exchange for each share of Cohesive Series A Preferred
Stock you own. On , 1999, accrued and unpaid dividends payable for each
share of Series A Preferred Stock were $ .

Q: I am a holder of Cohesive Series B Preferred Stock. What will I receive in
the merger?

A: If the merger is completed, you will receive $100 cash plus all accrued and
unpaid dividends in exchange for each share of Cohesive Series B Preferred
Stock you own. On , 1999, accrued and unpaid dividends payable for each
share of Series B Preferred Stock were $ .

Q: I am a holder of Cohesive Series C Preferred Stock. What will I receive in
the merger?

A: If the merger is completed, you will receive $5 cash in exchange for each
share of Cohesive Series C Preferred Stock you own.

Q: I am a holder of Cohesive Series D Preferred Stock. What will I receive in
the merger?

A: If the merger is completed, your stock will have automatically converted
into Cohesive common stock immediately prior to the merger. You will then
receive the consideration payable to Cohesive common stockholders in the
merger described below. In addition, you will be entitled to receive cash
per share equal to the difference between $10 and the fair market value of
the Exodus common stock and cash received for each share of your Cohesive
common stock as a result of the merger.

Q: I am a holder of Cohesive common stock. What will I receive in the merger?

A: If the merger is completed, you will receive a combination of Exodus common
stock and cash in exchange for each share of your Cohesive common stock. The
amount of Exodus common stock and cash to be received is variable and will
be determined by the application of several formulas, which are summarized
as follows:

Number of shares of Exodus common stock you will receive:

Each share of Cohesive common stock will be converted into the right to
receive a fraction of one share of Exodus common stock. The fraction will
equal the total number of Exodus shares to be issued in the merger divided
by the number of shares of fully-diluted Cohesive common stock. Generally,
the total number of Exodus shares will be $50.0 million divided by the
average closing price per share of Exodus common stock for the five trading
days before the closing date. The number of shares of fully-diluted
Cohesive common stock will be the number of shares of Cohesive common stock
outstanding plus the number of shares of Cohesive common stock issuable
upon exercise of all outstanding vested Cohesive stock options and upon
conversion of all outstanding Cohesive Series D Preferred Stock.

As of , 1999, there were shares of Cohesive common stock
outstanding, shares of Cohesive common stock issuable upon exercise of
vested Cohesive options and 900,000 shares of Cohesive common stock
issuable upon conversion of 900,000 shares of Cohesive Series D Preferred
Stock. Accordingly, the number of shares of fully-diluted Cohesive common
stock equaled . Each of the following examples assumes this is the
number of shares of fully-diluted Cohesive common stock.

Example 1:

Assume the average closing price per share of Exodus common stock is $80.
Exodus would issue a total of 625,000 shares in the merger. Each share of
Cohesive common stock would receive 0.0404 shares of Exodus common stock.
As a result, if you own 1,000 shares of Cohesive common stock, after the
merger you will receive 40 shares of Exodus common stock.

1
<PAGE>

The maximum number of Exodus shares to be issued in the merger is limited
by a "collar" mechanism. Under the collar mechanism, if the average closing
price per share of Exodus common stock is below $50, Exodus may elect not
to proceed with the merger unless Cohesive agrees to fix the total number
of Exodus shares at 1,000,000.

Note that because of the collar mechanism, the maximum number of Exodus
shares that may be issued in the merger will be 1,000,000, as long as the
Exodus stock price is less than $50, no matter what the price may actually
be. However, the number of Exodus shares to be issued in the merger will be
increased, and the total cash consideration to be paid to Cohesive common
stockholders in the merger will be proportionately decreased, if necessary,
so that the total fair market value of the Exodus shares is equal to at
least 50% of the total fair market value of all consideration paid to
Cohesive stockholders in the merger. If the number of Exodus shares and
total cash consideration are adjusted, the adjustment will not affect the
total value of the merger consideration paid to Cohesive stockholders.

Example 2:

Assume that the average closing price per share of Exodus common stock is
$40. Exodus may elect not to proceed with the merger unless Cohesive agrees
to fix the number of Total Exodus Shares at 1,000,000. If Cohesive agrees
to this, each share of Cohesive common stock would receive 0.0646 shares of
Exodus common stock. As a result, if you own 1,000 shares of Cohesive
common stock, after the merger you will receive 64 shares of Exodus common
stock.

Under the collar mechanism, if the average closing price per share of
Exodus common stock is between and including $95 and $102.50, then Exodus
will issue 526,316 shares in the merger.

Example 3

Assume that the average closing price per share of Exodus common stock is
$100. The number of Exodus shares is 526,316. Accordingly, each share of
Cohesive common stock would receive 0.0340 shares of Exodus common stock.
As a result, if you own 1,000 shares of Cohesive common stock, after the
merger you will receive 34 shares of Exodus common stock.

Under the collar mechanism, if the average closing price per share of
Exodus common stock is more than $102.50, then the number of Exodus shares
will equal $53,947,390 divided by the average close price per share.

Example 4

Assume that the average closing price per share of Exodus common stock is
$110. The number of Exodus shares would be $53,947,390 divided by $110 or
490,430. Accordingly, each share of Cohesive common stock would receive
0.317 shares of Exodus common stock. As a result, if you own 1,000 shares
of Cohesive common stock, after the merger you will receive 31 shares of
Exodus common stock. If the collar mechanism did not apply, you would have
received only 29 shares of Exodus common stock after the merger.

Amount of Cash You will Receive:

In addition, each share of Cohesive common stock will be converted into the
right to receive cash consideration in an amount per share equal to the
total cash consideration divided by the number of shares of fully-diluted
Cohesive common stock. The total cash consideration will be $50.0 million,
plus the total amount of the exercise price of vested Cohesive options
outstanding at the effective time of the merger, less:

. all indebtedness of Cohesive for money borrowed and all severance
obligations agreed to by Cohesive after April 7, 1999,

. all liabilities of Cohesive for earnout payments to third parties,

. all cash payable to Cohesive preferred stockholders in the merger,
and

. all cash paid in the merger for fractional shares.

2
<PAGE>

Assume that:

. all indebtedness of Cohesive for money borrowed and all severance
payments agreed to by Cohesive after April 7, 1999 equals $ ,

. all liabilities of Cohesive for earnout payments to third parties
equals $5.5 million,

. all cash payable to Cohesive preferred stockholders in the merger
equals $20.0 million, and

. all cash paid in the merger for fractional shares equals $15,000.

Based on these assumptions, the total cash consideration would be $ .
$10.0 million will be withheld from the cash consideration payable to
Cohesive common stockholders, other than holders of shares issued upon
conversion of Cohesive Series D Preferred Stock, on a pro rata basis, and
deposited into escrow as collateral for indemnification obligations of
those Cohesive common stockholders. The balance of the amount, net of
indemnification claims of Exodus, will be released from escrow in two
stages. The first portion will be released on the later of the six month
anniversary of the merger and February 28, 2000 and the remainder on the
one year anniversary of the merger.

Example 5

The per share cash consideration equals $ divided by ,
or $ . As a result, if you own 1,000 shares of Cohesive common stock
issued upon conversion of Cohesive Series D Preferred Stock, after the
merger you will receive $ in cash. Otherwise, if you own 1,000
shares of Cohesive common stock, after the merger you will still be
entitled to $ in cash. However, you will receive $
immediately after the closing and $ will be deposited in escrow. If
Exodus had no indemnification claims, then you would receive $ on the
first distribution date and the remainder one year after the merger.

There are additional cash payments to which Cohesive common stockholders
may or may not be entitled. See "Terms of the Merger -- Additional Possible
Distributions to Cohesive Stockholders."

Q: What do I need to do now?

A: Please mail your signed proxy card in the enclosed return envelope as soon
as possible so that your shares will be counted at the special meeting of
Cohesive stockholders. Alternatively, you may attend the special meeting in
person rather than signing and mailing in your proxy card.

Q: What do I do if I want to change my vote?

A: If you want to change your vote, send the Secretary of Cohesive a later-
dated signed proxy card before the meeting or attend the meeting in person.
You also may revoke your proxy by sending written notice to the Secretary of
Cohesive before the meeting.

Q: When do you expect the merger to be completed?

A: We are working towards completing the merger as quickly as possible. In
addition to Cohesive stockholder approval, Exodus and Cohesive must obtain
regulatory approvals. We hope to complete the merger by , 1999.

Q: Should I send in my stock certificates now?

A: No. If the merger is completed, Exodus' exchange agent will send you written
instructions for exchanging your share certificates.

Additional questions and answers about the merger for Cohesive employees

Q: What will happen to stock options held by Cohesive employees?

A: The outstanding options will be assumed by Exodus and converted into options
for Exodus common stock. The number of shares subject to the option and the
exercise price under the option will be adjusted accordingly. The number of
shares of Cohesive common stock subject to the option will be multiplied by
the sum of (a) the number of Exodus shares to be exchanged for each share of
Cohesive common stock and (b) the quotient obtained by dividing

3
<PAGE>

the per share cash consideration by the average closing price per share of
Exodus common stock. The exercise price of Cohesive common stock under the
option will be divided by the sum of (a) the number of Exodus shares to be
exchanged for each share at Cohesive common stock and (b) the quotient
obtained by dividing the per share cash consideration by the average closing
price per share of Exodus common stock.

Example 6

Assume that all assumptions from Examples 1 and 5 apply. An option to
purchase 1,000 shares of Cohesive common stock at an exercise price of
$1.00 per share will be converted into an option to purchase Exodus common
stock as follows. The per share cash consideration ($ ) divided by the
average closing price per share of Exodus common stock ($80) equals .
The sum of the quotient ( ) plus the number of Exodus shares to be
exchanged for each share of Cohesive common stock ( ) equals .
Accordingly, the number of shares of Exodus common stock subject to the
option will be 1,000 multiplied by , or , and the exercise price per
share under the option will be $1.00 divided by , or $ .

Q: What will happen to Cohesive's Stock Option and Restricted Stock Purchase
Plan?

A: The Stock Option and Restricted Stock Purchase Plan will be terminated upon
completion of the merger.

Who Can Help Answer Your Questions

If you have additional questions about the merger or would like additional
copies of this document, you should contact:

Cohesive Technology Solutions, Inc.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303
Attention: Corporate Secretary
(650) 855-1700
4
<PAGE>

SUMMARY

Following is a summary of the information contained elsewhere in this
document. You should read all of this document and the appendices because the
summary does not contain a complete description of the merger agreement or the
merger.

What the Companies Do

Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, California 95054
(408) 346-2200
Nasdaq stock symbol: EXDS

Exodus is a leading provider of Internet system and network management
solutions for enterprises with mission-critical Internet operations. Its
solutions include Internet Data Centers, network services and managed services,
which together provide the high performance, scalability and expertise that
enterprises need to optimize their Web operations. Exodus manages Internet Web
sites and its network infrastructure from eight Internet Data Centers in the
San Francisco, Los Angeles, New York, Boston, Washington, D.C. and Seattle
metropolitan areas and a server hosting facility in London.

Cohesive Technology Solutions, Inc.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303
(650) 855-1700

Cohesive is a leading professional services company with an advanced
technology focus and in-depth expertise in computer network design,
implementation and support, web and application development, e-mail and
messaging, e-commerce, Internet and intranet development, information
technology security and strategy, system integration, and project management.
Cohesive's mission is to assist its clients in solving their business
challenges by employing advanced information technologies. Cohesive offers a
variety of services including network design and development, web and
application development and information technology strategy and project
management.

The Cohesive Special Meeting (page 36)

A special meeting of the stockholders of Cohesive will be held on , ,
1999, at 10:00 a.m., local time, at Cohesive's corporate headquarters located
at 2465 East Bayshore Road, Suite 400, Palo Alto, California 94303 to consider
and vote upon a proposal to adopt the merger agreement. If you held shares of
Cohesive capital stock at the close of business on , 1999, you are entitled
to vote at the special meeting.

Required Vote (page 37)

The affirmative votes of:

. two-thirds of the issued and outstanding Series A Preferred Stock and
Series B Preferred Stock, voting together as a single class

are required to approve and adopt the merger agreement and to approve the
merger.

5
<PAGE>

Cohesive officers and directors and their affiliates held approximately
% of the outstanding Cohesive common stock on , 1999, the record date
for the special meeting.

Welsh, Carson, Anderson & Stowe VI, L.P. ("WCAS VI"), Cohesive's principal
stockholder, owns approximately 67% of Cohesive common stock and approximately
94% of the issued and outstanding shares of Cohesive Series A Preferred Stock
and Series B Preferred Stock. WCAS VI has entered into a voting agreement with
Exodus. Pursuant to the voting agreement, WCAS VI has agreed to vote its shares
of Cohesive Series A Preferred Stock, Series B Preferred Stock and common stock
in favor of the merger agreement. The vote of WCAS VI is sufficient under
Delaware law and the Cohesive certificate of incorporation and bylaws to adopt
the merger agreement.

Comparative Per Share Market Prices (page 18)

To help you in your analysis of the proposed merger we have included the
following table which sets forth the closing prices per share of Exodus common
stock on the Nasdaq National Market on April 21, 1999, which was the last
trading day before the announcement of the proposed merger, and on ,
1999, the last practicable date before the mailing of this document. Also set
forth is the equivalent per share price for Cohesive common stock, based on the
following assumptions:

. the number of shares of fully-diluted Cohesive common stock equals
;

. the average closing price per share of Exodus common stock equals the
closing prices per share listed on April 21, 1999 and , 1999;

. the number of Exodus shares to be issued in the merger equals 594,813
($50.0 million divided by an average closing price per share of $84.06),
and ($50.0 million divided by an average closing price per
share of $ );

. the number of Exodus shares to be exchanged for each share of Cohesive
common stock equals . (the total Exodus shares of 594,813 divided by
the fully-diluted Cohesive common stock of ) and (the total
Exodus shares of divided by the fully-diluted Cohesive common
stock of );

. the total cash consideration equals $ ; and

. the per share cash consideration equals $ .

<TABLE>
<CAPTION>
Equivalent
Cohesive
Exodus Per Share
Common Stock Price
------------ ----------
<S> <C> <C>
April 21, 1999..................................... $84.06 $
, 1999......................................
</TABLE>

The total cash consideration and the per share cash consideration to be
received by the stockholders of Cohesive if the merger is completed depends on
a number of variables. The total cash consideration will equal $50.0 million,
plus the total amount of the exercise price of vested Cohesive options
outstanding at the effective time of the merger, less:

. all indebtedness of Cohesive for money borrowed and severance
obligations agreed to by Cohesive after April 7, 1999,

. all liabilities of Cohesive for earnout payments to third parties,

. all cash payable to Cohesive's preferred stockholders in the merger, and

. all cash paid in the merger for fractional shares.

Our assumption that the total cash consideration would be $ was based on
our current best estimate as to the amount of these variable payments. If the
total of the variable payments turns out to be higher than our estimate, you
will receive less cash in the merger.

6
<PAGE>

Appraisal Rights (page 46)

Under Delaware law, holders of shares of Cohesive common stock and preferred
stock who do not vote to approve the merger and strictly comply with applicable
requirements of Delaware law may dissent from the merger and demand payment in
cash from Cohesive of the fair value of their shares.

Cohesive's Reasons for the Merger (page 40)

In reaching its determination to approve the merger agreement, the Cohesive
board of directors considered a variety of factors, including:

. the increased investment liquidity that the merger provides to Cohesive
stockholders,

. historical information regarding Exodus' and Cohesive's operating
results and financial condition,

. Cohesive's management's and its advisors' view of Exodus' operating
results and financial condition after giving effect to the merger and
its strategic benefits, and

. current market conditions and historical trading patterns of Exodus
common stock.

Exodus' Reasons for the Merger (page 42)

The following are among the reasons why the Exodus board of directors
believes that the merger will benefit Exodus:

. The merger is expected to enhance customer retention and improve Exodus'
ability to obtain new customers.

Material Federal Income Tax Treatment (page 44)

Holders of Cohesive common stock and Series D Preferred Stock will receive
shares of Exodus common stock and cash in the merger and holders of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock will
receive cash in the merger. As the merger is expected to be a tax-free
reorganization for federal income tax purposes, no gain or loss should be
recognized by Cohesive stockholders on the conversion of Cohesive common stock,
including Cohesive common stock issued upon the automatic conversion of
Cohesive Series D Preferred Stock, into Exodus common stock. However, receipt
by Cohesive stockholders of cash consideration and cash in lieu of fractional
shares or upon exercise of dissenters' or appraisal rights will be a taxable
transaction for federal income tax purposes. The receipt of cash for shares of
Cohesive Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock will be a taxable transaction for federal income tax purposes.
Cohesive stockholders are urged to consult their own tax advisors regarding the
tax consequences relating to the merger.

Regulatory Approvals Required Before the Merger Can Be Completed (page 46)

We are prohibited by U.S. antitrust laws from completing the merger until
after we have furnished information to the Antitrust Division of the Department
of Justice and the Federal Trade Commission and a required waiting period has
ended. Both Exodus and Cohesive have filed the required notification and report

7
<PAGE>

forms. The waiting period ended on , 1999. However, the Department of
Justice, the Federal Trade Commission and various other parties continue to
have the authority to challenge the merger on antitrust grounds before or after
the merger is completed. The merger must also satisfy the requirements of
federal and state securities laws.

Accounting Treatment of the Merger (page 46)

Exodus intends to account for the merger as a purchase transaction. This
means that for financial accounting purposes, Exodus will allocate the value of
the shares, including stock options, and cash it is issuing to the fair value
of the net tangible assets of Cohesive, with the excess being allocated to
goodwill and identifiable intangible assets.

Interests of Certain Persons in the Merger (page 59)

In considering the merger and the recommendation of Cohesive's board of
directors regarding the merger, you should be aware of interests which certain
Cohesive executive officers and directors have in the merger which differ from
your interests as stockholders. These interests include the acceleration of
stock options for:

. Dennis M. Rohan, the President and Chief Executive Officer and a
director of Cohesive,

. Stephen R. Bennion, Chief Financial Officer of Cohesive, and

. Paul J. Brady, an Executive Vice President of Cohesive.

Messrs. Bennion and Brady, and Mr. James G. DuBos, Cohesive's Regional Vice
President, have also entered into new employment agreements with Exodus. In
addition, Messrs. Rohan, Brady and Bennion and Peter Cunningham and George
Covert, directors of Cohesive, hold Cohesive stock options which will be
assumed by Exodus in the merger. Furthermore, Thomas E. McInerney and Anthony
J. de Nicola, directors of Cohesive, serve as general partners of the sole
general partner of an investment fund which will receive approximately
$10.0 million in cash in the merger in exchange for its Cohesive preferred
stock holdings.

Terms of the Merger (page 49)

What will happen (page 49)

Cohesive will merge with and into Marley Acquisition, which will be the
surviving corporation and remain a wholly-owned subsidiary of Exodus. Holders
of Cohesive common stock and Cohesive Series D Preferred Stock will receive
cash and Exodus common stock. Holders of Cohesive Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock will receive cash.

When the merger will become effective (page 49)

The merger will become effective upon the filing of a certificate of merger
with the Delaware Secretary of State. We currently anticipate that the merger
will become effective on or about , 1999.

Conversion of Cohesive Series A Preferred Stock (page 50)

Each share of Cohesive Series A Preferred Stock outstanding prior to the
effective time of the merger will be canceled and converted into the right to
receive $100 cash plus any accrued and unpaid dividends on each share. On ,
1999, accrued and unpaid dividends payable for each share of Series A Preferred
Stock were $ .

Conversion of Cohesive Series B Preferred Stock (page 50)

Each share of Cohesive Series B Preferred Stock outstanding prior to the
effective time of the merger will be canceled and converted into the right to
receive $100 cash plus any accrued and unpaid dividends on each share. On ,
1999, accrued and unpaid dividends payable for each share of Series B Preferred
Stock were $ .

8
<PAGE>

Conversion of Cohesive Series C Preferred Stock (page 50)

Each share of Cohesive Series C Preferred Stock outstanding prior to the
effective time of the merger will be canceled and converted into the right to
receive $5 cash.

Conversion of Cohesive Series D Preferred Stock (page 50)

Each share of Cohesive Series D Preferred Stock outstanding prior to the
effective time of the merger will automatically be converted into common stock.
You will then receive the same consideration in the merger as other holders of
Cohesive common stock. In addition, you will receive cash per share equal to
the difference between $10 and the fair market value of the Exodus common stock
and cash received for each share of your Cohesive common stock.

Conversion of Cohesive common stock (page 49)

Each share of Cohesive common stock outstanding prior to the effective time
of the merger will be converted into a fraction of one share of Exodus common
stock and the right to receive the per share cash consideration.

The number of Exodus shares to be exchanged for each share of Cohesive common
stock will equal (a) the total number of Exodus shares to be issued in the
merger divided by (b) the number of shares of fully-diluted Cohesive common
stock. The fully-diluted Cohesive common stock will be the number of shares of
Cohesive common stock outstanding, plus the number of shares of Cohesive common
stock issuable upon exercise of all vested Cohesive options outstanding and
upon conversion of all Cohesive Series D Preferred Stock outstanding.

The total number of Exodus shares to be issued in the merger will be $50.0
million divided by the average closing price per share of Exodus common stock
for the five trading days before and including the trading day preceding the
closing date. However:

. if the average closing price per share of Exodus common stock is below
$50, then Exodus may unilaterally terminate the merger agreement without
liability unless Cohesive agrees to fix the total number of Exodus
shares at 1,000,000;

. if the average closing price per share of Exodus common stock is between
and including $95 and $102.50, then the total number of Exodus shares
will be 526,316; and

. if the average closing price per share of Exodus common stock is more
than $102.50, then the total number of Exodus shares will equal
$53,947,390 divided by the average closing price.

The per share cash consideration equals the total cash consideration divided
by the number of shares of fully-diluted Cohesive common stock. The total cash
consideration will be $50.0 million, plus the total amount of the exercise
price of vested Cohesive options outstanding at the effective time of the
merger, less:

. all indebtedness of Cohesive for money borrowed and severance
obligations agreed to by Cohesive after April 7, 1999,

. all liabilities of Cohesive for earnout payments to third parties,

. all cash payable to Cohesive's preferred stockholders in of the merger,
and

. all cash paid in the merger for fractional shares.

However, the number of Exodus shares to be issued in the merger will be
increased, and the total cash consideration to be paid to Cohesive common
stockholders in the merger will be proportionately decreased, if

9
<PAGE>

necessary, so that the total fair market value of the Exodus shares is equal to
at least 50% of the total fair market value of all consideration paid to
Cohesive stockholders in the merger. If the number of Exodus shares and the
total cash consideration are adjusted, the adjustment will not affect the total
value of the merger consideration paid to Cohesive stockholders.

Escrow Cash (page 51)

Exodus will withhold $10.0 million from the cash consideration which would
otherwise be delivered to holders of Cohesive common stock, other than holders
of shares issued upon conversion of Cohesive Series D Preferred Stock, as a
result of the merger. Exodus will deposit the funds in escrow. The cash will be
held as collateral for the indemnification obligations of Cohesive stockholders
and will be released from escrow according to the terms of an escrow agreement.

Assumption of Options (page 50)

At the effective time of the merger, Exodus will assume all outstanding
options to purchase Cohesive common stock. Each assumed Cohesive option will be
converted into an option to purchase shares of Exodus common stock as follows:

. the number of shares of Exodus common stock subject to each assumed
option will equal the number of shares of Cohesive common stock subject
to the option multiplied by the sum of (a) the number of Exodus shares
to be exchanged for each share of Cohesive common stock and (b) the
quotient obtained by dividing the per share cash consideration by the
average closing price per share of Exodus common stock at the effective
time; and

. the exercise price per share of Exodus common stock under each assumed
option will equal the exercise price per share of Cohesive common stock
under the option divided by the sum of (a) the number of Exodus shares
to be exchanged for each share of cohesive common stock and (b) the
quotient obtained by dividing the per share cash consideration by the
average closing price per share of Exodus common stock at the effective
time.

How to exchange your stock certificates (page 51)

Soon after the effective time of the merger, you will be directed to
surrender your Cohesive stock certificates to Exodus or its exchange agent so
that they may be canceled and exchanged for Exodus common stock certificates
and/or cash, as applicable. Please do not surrender your Cohesive stock
certificates until you receive instructions from Exodus or its exchange agent.

Cohesive cannot solicit another possible acquirer (page 53)

Cohesive has agreed that it will not solicit any offer, inquiry or proposal
from a third party regarding an acquisition of Cohesive or negotiate with any
third party regarding any offer, inquiry or proposal. Cohesive has agreed that
its officers, directors, employees, affiliates and agents will be similarly
bound.

Conditions to the merger (page 54)

The completion of the merger depends on a number of conditions being
satisfied, including the following:

. Cohesive stockholders shall have approved the terms of the merger
agreement;

. Exodus and Cohesive shall have obtained all governmental authorizations
required for the merger; and

. at the closing, the representations and warranties of Exodus and
Cohesive shall be true and Exodus and Cohesive shall have performed
their respective covenants in the merger agreement.

10
<PAGE>

Each of the conditions to the merger may be waived by the company entitled to
assert the condition.

Termination of the merger agreement (page 55)

Exodus and Cohesive can mutually agree to terminate the merger agreement
without completing the merger. Either Exodus or Cohesive can terminate the
merger agreement if any of the following events occur:

. all conditions to closing have not been satisfied before November 30,
1999, other than as a result of a breach by the terminating party;

. if the other party has materially breached any of its representations,
warranties or covenants and has not cured the breach within thirty days;
or

. if there is a final injunction or other court order which would make the
merger illegal or otherwise prohibit the completion of the merger.

In addition, Exodus may terminate the merger agreement if the average closing
price per share of Exodus common stock is below $50, unless Cohesive agrees to
fix the total number of Exodus shares at 1,000,000.

Indemnification (page 56)

As discussed above under "Escrow Cash," Exodus will withhold $10.0 million
from the cash that would otherwise be delivered to Cohesive common
stockholders, other than holders of shares issued upon conversion of Cohesive
Series D Preferred Stock, as a result of the merger and deposit this sum in
escrow as collateral for the indemnification obligations of Cohesive common
stockholders. Generally, Cohesive common stockholders are obligated to
indemnify Exodus and its related parties against all claims and losses arising
out of Cohesive's breach of any of its representations, warranties or covenants
and other matters. The sole remedy for indemnity claims is recovery against the
$10.0 million of escrowed cash.

Related Agreements (page 57)

There are additional agreements related to the merger agreement, including:

. an escrow agreement which governs the distribution of the $10.0 million
of escrowed cash to either Cohesive common stockholders, Exodus
indemnified parties or both;

. a voting agreement where WCAS VI, the party holding a majority of the
voting power of Cohesive stock, agreed to vote in favor of the merger;
and

. employment agreements and noncompetition agreements between Exodus and
various Cohesive employees.

11
<PAGE>

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The following selected historical financial information of Exodus and
Cohesive has been derived from their respective historical financial statements
and should be read in conjunction with those consolidated financial statements
and the related notes, which are incorporated by reference into this document
or included elsewhere in this document. The unaudited historical financial
statement data for Exodus and Cohesive as of March 31, 1999, and for the three
months ended March 31, 1998 and 1999, have been prepared on the same basis as
the historical information in the audited financial statements and, in the
opinion of management of each company, contain all adjustments, consisting only
of normal recurring adjustments, necessary for the fair presentation of the
financial position and results of operations for those periods. Operating
results for the three months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1999 or any future period.

The unaudited pro forma financial data gives effect to the merger using the
purchase method of accounting and is based on the historical audited and
unaudited consolidated financial statements and related notes of Exodus and
Cohesive, which are incorporated by reference into this document or included
elsewhere in this document. The pro forma adjustments are preliminary and based
on available information and assumptions made by management. In the opinion of
management, all adjustments have been made that are necessary to present fairly
the pro forma data.

The unaudited pro forma combined condensed balance sheet assumes that the
merger took place on March 31, 1999, and combines Exodus' unaudited March 31,
1999 consolidated balance sheet with Cohesive's unaudited March 31, 1999
consolidated balance sheet. The pro forma combined condensed statements of
operations assume the merger took place as of January 1, 1998 and combine
Exodus' audited consolidated statement of operations for the year ended
December 31, 1998 and unaudited consolidated statement of operations for the
three months ended March 31, 1999, with Cohesive's audited statement of
operations for the year ended December 31, 1998 and unaudited statement of
operations for the three months ended March 31, 1999, respectively.

The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred had the merger been consummated in the earlier period, nor
is it necessarily indicative of future operating results or financial position.

12
<PAGE>

EXODUS SELECTED HISTORICAL FINANCIAL INFORMATION

We are the successor to a Maryland corporation that was formed in August 1992
to provide computer consulting services. We began to offer Internet
connectivity services to enterprises in October 1994 and server hosting
services in late 1995. In August 1996, we opened our first dedicated Internet
Data Center and refocused our business strategy on providing Internet system
and network management solutions for enterprises with mission-critical Internet
operations.

In the following tables and in this document, "EBITDA" represents loss before
net interest expense, income taxes, depreciation, amortization (including
amortization of deferred stock compensation) and other noncash charges.
Although EBITDA should not be used as an alternative to operating loss or net
cash provided by (used for) operating activities, investing activities or
financing activities, each as measured under generally accepted accounting
principles and, although EBITDA may not be comparable to other similarly titled
information from other companies, our management believes that EBITDA is an
additional meaningful measure of performance and liquidity. With respect to the
captions entitled "Deficiency of earnings available to cover fixed charges" and
"Ratio of earnings to fixed charges," earnings consist of income (loss) before
provision for income taxes plus fixed charges. Fixed charges consist of
interest charges and amortization of debt expense and discount or premium
related to indebtedness, whether expensed or capitalized, and that portion of
rental expense we believe to be representative of interest.

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
------------------------------------ -------------------
1995 1996 1997 1998 1998 1999
------- ------- -------- -------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Total revenues.......... $ 1,408 $ 3,130 $ 12,408 $ 52,738 $ 7,105 $ 30,087
------- ------- -------- -------- -------- ---------
Costs and expenses:
Cost of revenues...... 1,128 2,990 16,868 61,559 9,881 28,110
Marketing and sales... 1,056 2,734 12,702 28,778 6,417 10,264
General and
administrative....... 427 1,056 5,983 15,865 2,657 7,055
Product development... 70 444 1,647 3,221 645 1,285
------- ------- -------- -------- -------- ---------
Total costs and
expenses........... 2,681 7,224 37,200 109,423 19,600 46,714
------- ------- -------- -------- -------- ---------
Operating loss...... (1,273) (4,094) (24,792) (56,685) (12,495) (16,627)
Interest income......... -- 68 193 7,137 155 2,804
Interest expense........ (38) (107) (699) (16,894) (981) (8,341)
------- ------- -------- -------- -------- ---------
Net loss............ (1,311) (4,133) (25,298) (66,442) (13,321) (22,164)
Cumulative dividends and
accretion on redeemable
convertible preferred
stock.................. -- -- (1,413) (2,014) (2,014) --
------- ------- -------- -------- -------- ---------
Net loss
attributable to
common
stockholders....... $(1,311) $(4,133) $(26,711) $(68,456) $ 15,335 $ (22,164)
======= ======= ======== ======== ======== =========
Basic and diluted net
loss per share......... $ (0.50) $ (1.08) $ (6.93) $ (2.19) $ (2.23) $ (0.55)
======= ======= ======== ======== ======== =========
Shares used in computing
basic and diluted net
loss per share......... 2,630 3,828 3,856 31,286 6,872 40,526
======= ======= ======== ======== ======== =========
Consolidated Statement
of Cash Flows Data:
Net cash used for
operating activities... $ (453) $(3,116) $(15,518) $(46,498) $ (7,760) $ (15,507)
Net cash used for
investing activities... (77) (3,877) (23,864) (92,746) (7,331) (44,430)
Net cash provided by
financing activities... 692 10,545 45,937 279,865 78,974 232,688
Other Data:
EBITDA.................. $(1,208) $(3,633) $(20,274) $(41,125) $ (9,617) $ (10,905)
Depreciation and
amortization........... 65 461 3,429 12,997 1,975 5,533
Capital expenditures.... 69 3,499 22,489 44,564 7,146 34,850
Deficiency of earnings
available to cover
fixed charges.......... (1,311) (4,133) (25,298) (66,442) (13,321) (22,164)
</TABLE>

13
<PAGE>

<TABLE>
<CAPTION>
Year Ended December 31, 1994
----------------------------
(in thousands, except ratio
and per share data)
<S> <C>
Consolidated Statement of Operations Data:
Revenues......................................... $ 977
Operating income................................. $ 143
Net income....................................... $ 144
Basic and diluted net income per share........... $ 0.07
Shares used in computing basic and diluted net
income per share................................ 2,000
Ratio of earnings to fixed charges............... 26x
</TABLE>

<TABLE>
<CAPTION>
December 31,
-------------------------------------- March 31,
1994 1995 1996 1997 1998 1999
---- ------ ------ ------- -------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Cash and cash equivalents..... $ 1 $ 163 $3,715 $10,270 $150,891 $323,642
Restricted cash equivalents
and investments.............. -- -- 378 1,753 45,614 36,292
Working capital (deficiency).. 93 (1,170) 1,892 (3,707) 119,693 294,816
Total assets.................. 320 840 8,289 40,973 293,286 526,292
Equipment loans, line of
credit facilities and capital
lease obligations, less
current portion.............. -- 141 1,449 15,135 27,096 24,975
Convertible subordinated
notes........................ -- -- -- -- -- 250,000
Senior notes.................. -- -- -- -- 200,000 200,000
Total stockholders' equity
(deficit)..................... 169 (1,140) (5,234) (30,600) 19,141 (513)
</TABLE>

14
<PAGE>

COHESIVE SELECTED HISTORICAL FINANCIAL INFORMATION

The selected consolidated financial data set forth below with respect to
Cohesive's consolidated statements of operations for each of the three years in
the period ended December 31, 1998, and with respect to the balance sheets as
of December 31, 1997 and 1998, are derived from the consolidated financial
statements that have been audited by Deloitte & Touche LLP, independent
auditors, which are included elsewhere in this document. The selected balance
sheet data as of December 31, 1996 are derived from audited consolidated
financial statements not included in this document. The selected statement of
operations data for the years ended December 31, 1994 and 1995 and for the
three months ended March 31, 1998 and 1999, and the selected balance sheet data
as of December 31, 1994 and 1995 and March 31, 1999 have been derived from
unaudited financial statements that have been prepared on the same basis as the
audited financial statements and which, in the opinion of management, include
all adjustments, consisting of only normal recurring adjustments, necessary for
a fair presentation of Cohesive's financial position and results of operations.
Operating results for the three months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1999 or any future period. The data set forth below should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Cohesive" and the consolidated financial
statements and related notes included in this document.

For Cohesive, "EBITDA from continuing operations" represents income (loss)
from continuing operations before net interest expense, income taxes,
depreciation and amortization, including amortization of stock compensation.
Although EBITDA from continuing operations should not be used as an alternative
to operating income (loss) or net cash provided by (used for) operating
activities, investing activities or financing activities each as measured under
generally accepted accounting principles and, although EBITDA from continuing
operations may not be comparable to other similarly titled information from
other companies, Cohesive's management believes that EBITDA from continuing
operations is an additional meaningful measure of performance and liquidity.

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
------------------------------------------ ---------------------
1994 1995 1996 1997 1998 1998 1999
------ ------- ------- ------- ------- ----------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues................ $ -- $ 3,085 $12,792 $20,420 $41,708 $ 8,615 $ 11,715
Operating loss.......... (1,461) (1,547) (5,106) (11,082) (13,704) (3,751) (1,995)
Gain on divestiture..... -- -- -- 37,966 -- -- --
Income (loss) from
continuing operations.. (1,417) (1,465) (5,035) 16,013 (10,797) (3,092) (2,236)
Loss from discontinued
operations............. (81) (87) (135) (136) -- -- --
Gain on divestiture of
discontinued
operations............. -- -- -- 2,523 562 -- --
Net income (loss)....... (1,498) (1,552) (5,170) 18,400 (10,235) (3,092) (2,236)
Dividends and accretion
on redeemable preferred
stock.................. 93 306 639 827 800 156 312
Net income (loss)
applicable to common
stockholders........... (1,591) (1,858) (5,809) 17,753 11,035 (3,248) (2,548)
Consolidated Statement
of Cash Flows Data:
Net cash used for
operating activities... (1,544) (2,256) (3,402) (18,753) (9,608) (4,013) (808)
Net cash provided by
(used for) investing
activities............. (410) (549) (2,516) 17,744 4,028 2,285 (1,466)
Net cash provided by
financing activities... 2,363 5,468 5,055 1,973 5,943 224 539
Other Data:
EBITDA from continuing
operations............. (1,402) (1,476) (6,082) 29,058 (4,073) (2,377) 451
Depreciation and
amortization........... 15 71 1,033 1,893 7,034 1,457 2,433
Capital expenditures.... 106 466 860 745 1,338 291 267
<CAPTION>
December 31,
------------------------------------------ March 31,
1994 1995 1996 1997 1998 1999
------ ------- ------- ------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash and cash
equivalents............ $ 347 $ 3,115 $ 2,253 $ 3,217 $ 3,580 $ 1,845
Restricted cash and
short-term
investments............ -- -- -- 20,914 -- --
Working capital
(deficiency)........... 342 2,734 2,054 18,162 (5,891) (6,051)
Total assets............ 962 7,258 8,290 36,130 43,567 42,501
Long term obligations,
less current portion... -- 136 -- -- 349 246
Redeemable preferred
stock.................. 1,661 7,467 13,039 9,743 18,274 18,586
Total stockholders'
equity (deficiency).... (718) (2,970) (8,368) 15,584 4,748 2,262
</TABLE>

15
<PAGE>

EXODUS SELECTED UNAUDITED PRO FORMA

COMBINED CONDENSED FINANCIAL INFORMATION

The following unaudited pro forma financial information gives effect to the
merger using the purchase method of accounting and is based on the historical
audited and unaudited consolidated financial statements and related notes of
Exodus and Cohesive, which are incorporated by reference into this document or
included elsewhere in this document. The pro forma adjustments are preliminary
and based on available information and assumptions made by management. In the
opinion of management, all adjustments have been made that are necessary to
present fairly the pro forma data.

<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, March 31,
1998 1999
Consolidated Statement of Operations Data: ------------ ------------
<S> <C> <C>
Total revenues....................................... $ 94,446 $ 41,802
Cost and expenses:
Cost of revenues................................... 89,883 36,378
Marketing and sales................................ 34,450 11,593
General and administrative......................... 25,942 8,364
Product development................................ 3,221 1,285
Amortization of goodwill and other intangible
assets............................................ 10,955 3,316
Acquisition-related charges........................ 4,463 --
-------- --------
Total cost and expenses.......................... 168,914 60,936
-------- --------
Operating loss................................... (74,486) (19,134)
Interest expense, net................................ (12,205) (6,478)
-------- --------
Loss from continuing operations before taxes..... (86,673) (25,612)
Income tax benefit................................... 2,555 --
-------- --------
Loss from continuing operations.................. (84,118) (25,612)
Cumulative dividends and accretion on redeemable
convertible preferred stock......................... (2,014) --
-------- --------
Loss from continuing operations attributable to
common stockholders............................. $(86,132) $(25,612)
======== ========
Basic and diluted loss per share from continuing
operations.......................................... $ (2.69) $ (0.62)
======== ========
Shares used in computing basic and diluted net loss
per share from continuing operations................ 32,029 41,269
======== ========
</TABLE>

<TABLE>
<CAPTION>
March 31,
1999
Consolidated Balance Sheet Data: ---------
<S> <C>
Cash and cash equivalents........................................... $269,487
Restricted cash equivalents and investments......................... 36,292
Working capital (deficiency)........................................ 244,055
Total assets........................................................ 594,658
Equipment loans, line of credit facilities and capital lease
obligations, less current portion.................................. 25,221
Convertible subordinated notes...................................... 250,000
Senior notes........................................................ 200,000
Total stockholders' equity.......................................... 59,487
</TABLE>

16
<PAGE>

COMPARATIVE PER SHARE DATA

The following table sets forth selected historical per share data of Exodus
and combined per share data on an unaudited pro forma basis after giving effect
to the merger using the purchase method of accounting. The information
presented in this table is derived from the financial information of Exodus and
Cohesive. The information set forth below is only a summary. This data should
be read in conjunction with the Selected Historical Financial Information and
separate historical consolidated financial statements of Exodus and Cohesive
included elsewhere in this document or incorporated by reference into this
document. This table is not necessarily indicative of the results of future
operations of Exodus or actual results that would have occurred if the merger
had taken place prior to the period indicated. See "Where You Can Find More
Information" on page 35.

<TABLE>
<CAPTION>
Pro Forma
Historical Exodus Combined
----------------- ---------
<S> <C> <C>
Book value per share:
March 31, 1999............................... $(0.01) $ 1.53
Basic and diluted net loss per share from
continuing operations:
Year ended December 31, 1998................. $(2.19) $(2.69)
Three months ended March 31, 1999............ $(0.55) $(0.62)
</TABLE>

To assist you in understanding the table above, we used the following
methods:

. We computed historical book value per share by dividing Exodus' total
stockholders' deficit as of March 31, 1999 by the number of common
shares outstanding as of that date.

. We computed the pro forma combined book value per share amounts by
dividing pro forma stockholders' equity, including pro forma
adjustments, by the pro forma number of shares of Exodus common stock
which would have been outstanding had the merger been completed as of
March 31, 1999 without including outstanding options. For more detailed
information, refer to the Exodus Selected Unaudited Pro Forma Combined
Condensed Financial Information on page 16.

. We computed the Pro Forma Combined basic and diluted net loss per share
from continuing operations using the weighted average number of shares
of common stock outstanding after the issuance of Exodus common stock in
exchange for the outstanding shares of Cohesive common stock.

. We excluded dilutive options from the computation during these loss
periods as their effect is anti-dilutive.

17
<PAGE>

COMPARATIVE PER SHARE MARKET PRICES

Exodus common stock is traded on the Nasdaq National Market under the symbol
"EXDS." There is no established public trading market for the Cohesive common
stock. To help you in your analysis of the proposed merger, we have included
the following table, which sets forth the closing prices per share of Exodus
common stock on the Nasdaq National Market on April 21, 1999, which was the
last trading day before the announcement of the proposed merger, and on
, 1999, the last practicable date preceding the mailing of this
document. Also set forth is the equivalent per share price for Cohesive common
stock, based on the following assumptions:

. the number of shares of fully-diluted Cohesive common stock equals ;

. the average closing price per share of Exodus common stock equals the
closing prices per share listed on April 21, 1999 and , 1999;

. the total Exodus shares equal ($50.0 million divided by an
average closing price per share of $84.06), and ($50.0
million divided by an average closing price per share of $ );

. the number of Exodus shares to be exchanged for each share of Cohesive
common stock equals (the total Exodus shares of divided by
the fully-diluted Cohesive common stock of ) and (the
total Exodus shares of divided by the fully-diluted Cohesive
common stock of );

. the total cash consideration equals $ ; and

. the per share cash consideration equals $ .
<TABLE>
<CAPTION>
Equivalent
Cohesive
Exodus Per Share
Common Stock Price
------------ ----------
<S> <C> <C>
April 21, 1999..................................... $84.06 $
, 1999......................................
</TABLE>

Please remember, however, that Exodus' stock price can fluctuate
significantly and that we cannot predict what the stock prices will be at or
after the effective time of the merger and the total cash consideration may
change.

Because the market price of Exodus common stock is subject to fluctuation,
the market value of the shares of Exodus common stock that the holders of
shares of Cohesive common stock will receive in the merger may increase or
decrease prior to the merger. We urge you to obtain current market quotations
for Exodus common stock before making any decision with respect to the merger.
The current market information for shares of Exodus can be obtained on the
World Wide Web at http://www.nasdaq-amex.com.

The total cash consideration and the per share cash consideration to be
received by the Cohesive common stockholders if the merger is completed depends
on a number of variables. The total cash consideration equals $50.0 million,
plus the total amount of the exercise price of vested Cohesive options
outstanding at the effective time of the merger, less:

. all indebtedness of Cohesive for money borrowed and severance
obligations agreed to by Cohesive after April 7, 1999,

. all liabilities of Cohesive for earnout payments to third parties,

. all cash payable to Cohesive preferred stockholders in the merger, and

. all cash paid in the merger for fractional shares.

Our assumption that the total cash consideration would be $ was
based on our current best estimate as to the amount of these variable payments.
If the total of the variable payments turns out to be higher than our estimate,
you will receive less cash in the merger.

18
<PAGE>

MARKET PRICE OF EXODUS AND COHESIVE COMMON STOCK AND DIVIDEND POLICIES

The following table sets forth the high and low prices per share of Exodus
common stock for the periods indicated, as reported on the Nasdaq National
Market.

<TABLE>
<CAPTION>
High Low
------- ------
<S> <C> <C>
Year Ending December 31, 1999
1999 Second Quarter (through May 27, 1999)................. $109.13 $60.00
1999 First Quarter......................................... 77.81 27.50
Year Ended December 31, 1998
1998 Fourth Quarter........................................ $ 34.88 $ 7.75
1998 Third Quarter......................................... 25.00 8.25
1998 Second Quarter........................................ 23.50 13.88
1998 First Quarter (commencing March 19, 1998)............. 14.88 12.53
</TABLE>

On May , 1999, there were shares of Exodus common stock outstanding
which were held of record by stockholders. On May , 1999, there were
13,973,820 shares of Cohesive common stock outstanding which were held of
record by 115 stockholders.

Exodus has never declared or paid any cash dividends on its common stock.
Exodus currently intends to retain any earnings for use in its business and
does not anticipate paying any cash dividends in the foreseeable future.
Cohesive has never paid cash dividends on its common stock and does not
anticipate that any cash dividends will be paid on its common stock in the
foreseeable future. Furthermore, Cohesive's revolving credit facility with
Credit Suisse First Boston and the terms of its preferred stock contain
provisions which materially restrict the payment by Cohesive of cash dividends
or distributions on its common stock. In addition, Cohesive agreed in the
merger agreement not to declare, set aside or pay any dividends on its capital
stock prior to the effective time of the merger. See "Terms of the Merger --
Covenants."

19
<PAGE>

RISK FACTORS

In addition to the other material in this document, you should carefully
consider the following risk factors in evaluating whether or not to approve the
merger.

Risks Related to the Merger

If Exodus and Cohesive cannot effectively integrate their operations, then
potential benefits of the merger will not be realized

An important reason for the merger is that it is expected to allow Exodus to
utilize Cohesive employees to provide an enhanced level of services in
connection with Exodus' managed and professional services operations. To do so,
Exodus and Cohesive will have to integrate their management teams as well as
their managed and professional services operations. If this integration effort
is not successful, then results of operations could be adversely affected,
employee morale could decline, key employees could leave, and customers could
cancel existing orders or choose not to place new ones. In addition, until
Cohesive's existing customers have had the opportunity to determine how well
the combined companies will operate, they may cancel existing orders or delay
placing new ones. If Exodus' operations after the merger do not meet the
expectations of Cohesive's or Exodus' existing customers, then these customers
may reduce their future orders or cease doing business with the company
altogether.

The market price of Exodus common stock could decline as a result of the
merger

The market price of Exodus common stock may decline significantly as a result
of the merger if:

. Exodus does not experience the benefits of the merger as quickly as
anticipated or the costs of or operational difficulties arising from the
merger are greater than anticipated;

. the impact of the merger on Exodus' financial results is not in line
with the expectations of financial analysts; or

. margins on professional services decline because of competitive or other
factors or because the anticipated shift of the total mix of business
towards managed and professional services does not materialize.

Businesses of Cohesive and Exodus could suffer due to announcement of the
merger

The announcement of the merger may increase the likelihood of a number of
changes to Cohesive's business, any of which could have a material adverse
effect. The changes include but are not limited to:

. loss of key management, development or other personnel of Cohesive. In
particular, the loss of key employees at any particular Cohesive
regional office could adversely impact Cohesive's overall financial
results;

. cancellation or decline in the rate of orders for Cohesive's or Exodus'
products or services or deterioration of Cohesive's or Exodus' customer
relationships. The continuance of these Cohesive relationships is
generally based on continued customer goodwill and satisfaction rather
than long term orders or other contractual commitments. Cancellations or
declines could arise due to customer's postponing or canceling
consulting projects in 1999 that are unrelated to Year 2000 compliance
or canceling orders due to an increased customer perception that Exodus'
increased post-merger emphasis on consulting services is more
competitive to the customers' own consulting business, if any; or

. delays in product development or development of new service
capabilities.

Even if the merger is not completed, Cohesive could be harmed by the
expectation of these changes and restoring Cohesive's business to its pre-
announcement value could take a long time and be costly. As a result

20
<PAGE>

of the factors described above, the failure to consummate the merger could
have a material adverse effect on Cohesive's business, operating results and
financial condition.

Exodus common stock is subject to price volatility

A portion of the merger consideration is payable in shares of Exodus common
stock. Exodus common stock has experienced substantial price volatility. This
volatility may occur in the future, particularly as a result of quarter-to-
quarter variations in the actual or anticipated financial results of Exodus or
its customers or competitors and announcements by Exodus or its competitors
regarding new product and service introductions. In addition, Exodus' stock
price can fluctuate due to price and volume fluctuations in the stock market,
especially those that have affected the market price of technology stocks in
general and Internet stocks in particular.

Withholding of Maximum Earnout Liability amount

The merger agreement provides that Exodus will withhold from the cash
portion of the purchase price a reserve of $5.5 million (subject to
adjustment) to defray amounts that Cohesive may be obligated to pay under
earnout obligations related to prior acquisitions of Cohesive as well as
related legal fees. There is a dispute regarding one of the earnout
provisions, which makes the amount and timing of payment thereof uncertain.
Once these amounts are settled, they will be paid to the respective contract
parties and any balance will be paid pro rata to the former holders of
Cohesive common stock and Series D Preferred Stock.

Indemnity claims may reduce distribution from escrow to Cohesive common
stockholders

Indemnity claims by Exodus may significantly reduce the $10.0 million
initially deducted from the cash portion of the purchase price and deposited
into escrow. This would reduce the amount available for ultimate distribution
to holders of Cohesive common stock upon termination of the escrow. In
addition to potential recovery for breaches of Cohesive representations,
warranties and covenants, Exodus may make indemnity claims for matters outside
of Cohesive's control, such as claims relating to lack of Year 2000 conformity
or earnout disputes.

The costs associated with the merger are difficult to estimate, may be
higher than expected and may harm the financial results of the combined
companies

Exodus and Cohesive estimate that they will incur combined direct
transaction costs of approximately $5.0 million associated with the merger,
and additional costs associated with consolidation and integration of
operations, which cannot be estimated accurately at this time. If the total
costs of the merger exceed estimates or the benefits of the merger do not
exceed the total costs of the merger, the financial results of the combined
companies could be adversely affected.

21
<PAGE>

Risks Related to Exodus

In deciding whether to approve the merger and exchange of Cohesive common
stock for Exodus common stock, Cohesive stockholders should consider the
following risks associated with Exodus' business and operations, which also
impact the value of Exodus common stock.

Our short operating history and heavy losses make our business difficult to
evaluate

Our limited operating history makes evaluating our business operations and
our prospects difficult. We began offering server hosting and Internet
connectivity services in 1995 and opened our first dedicated Internet Data
Center in August 1996. Due to our short operating history, our business model
is still in an emerging state. We have incurred operating losses and negative
cash flows each quarter and year since 1995. Our accumulated deficit was
approximately $119.1 million at March 31, 1999. We anticipate making
significant investments in new Internet Data Centers and network
infrastructure, product development, sales and marketing programs and
personnel. We believe that we will continue to experience net losses on a
quarterly and annual basis for the foreseeable future. We may also use
significant amounts of cash to acquire complementary businesses, products,
services or technologies. Although we have experienced significant growth in
revenues in recent periods, we do not believe that this growth rate is
necessarily indicative of future operating results. It is possible that we may
never achieve profitability on a quarterly or an annual basis.

Our operating results have fluctuated widely and we expect this to continue

We have experienced significant fluctuations in our results of operations on
a quarterly and an annual basis. We expect to continue to experience
significant fluctuations due to a variety of factors, many of which are outside
of our control, including:

. demand for and market acceptance of our services;

. reliable continuity of service and network availability;

. the ability to increase bandwidth as necessary, both on our network and
at our interconnection points with other networks;

. costs related to the acquisition of network capacity and arrangements
for interconnections with third-party networks;

. customer retention and satisfaction;

. capacity utilization of our Internet Data Centers;

. the timing, magnitude and integration of acquisitions of complementary
businesses and assets;

. the timing of customer installations;

. the provision of customer discounts and credits;

. the mix of services sold by us;

. the timing and success of marketing efforts and service introductions by
us and our competitors;

. the timing and magnitude of capital expenditures, including construction
costs relating to the expansion of operations;

. the timely expansion of existing Internet Data Centers and completion of
new Internet Data Centers;

. the introduction by third parties of new Internet and networking
technologies;

. changes in our pricing policies and those of our competitors; and

. fluctuations in bandwidth used by customers.

In addition, a relatively large portion of our expenses are fixed in the
short-term, particularly with respect to telecommunications, depreciation,
substantial interest expenses, real estate and personnel. Therefore, our

22
<PAGE>

results of operations are particularly sensitive to fluctuations in revenues.
Furthermore, if we were to become unable to continue leveraging third party
products in our services offerings, our product development costs could
increase significantly. Finally, many of our customers are in an emerging
stage, and there is the possibility that we will not be able to collect
receivables on a timely basis.

Rapid expansion produces a significant strain on our business

The expansion of our network through the opening of additional Internet Data
Centers in geographically diverse locations is one of our key strategies. We
currently have eight Internet Data Centers located in six metropolitan areas:
Boston, San Francisco, New York, Los Angeles, Seattle and Washington, D.C., and
we have a server hosting facility in the London metropolitan area. We expect to
open additional Internet Data Centers in the Chicago, Seattle, Washington D.C.
and London metropolitan areas in the second quarter of 1999. We also expect to
open other data centers in the United States and server hosting facilities in
Europe and Japan in 1999. To successfully expand, we must be able to assess
markets, locate and secure new Internet Data Center sites, install facilities
and establish additional peering interconnections with Internet service
providers in a timely manner and at a reasonable cost. To manage this expansion
effectively, we must continue to improve our operational and financial systems
and expand, train and manage our employee base. Our inability to establish
additional Internet Data Centers or effectively manage our expansion would have
a material adverse effect upon our business.

We expect to expend substantial resources for leases of real estate,
significant improvements of facilities, purchase of complementary businesses,
assets and equipment, implementation of multiple telecommunications connections
and hiring of network, administrative, customer support and sales and marketing
personnel with the establishment of each new Internet Data Center. Moreover, we
expect to make significant investments in sales and marketing and the
development of new services as part of our expansion strategy. The failure to
generate sufficient cash flows or to raise sufficient funds may require us to
delay or abandon some or all of our development and expansion plans or
otherwise forego market opportunities, making it difficult for us to respond to
competitive pressures.

It usually takes us at least six months to select the appropriate location
for a new Internet Data Center, construct the necessary facilities, install
equipment and telecommunications infrastructure, and hire operations and sales
personnel. Expenditures commence well before the Internet Data Center opens,
and it takes an extended period for us to approach break-even capacity
utilization. As a result, we expect that individual Internet Data Centers will
experience losses for in excess of one year from the time they are opened. We
experience further losses from sales personnel hired to test market our
services in markets where there is no Internet Data Center. Growth in the
number of our Internet Data Centers is likely to increase the amount and
duration of losses. In addition, if we do not attract customers to new Internet
Data Centers in a timely manner, or at all, our business would be materially
adversely affected.

We must manage growth effectively

We are experiencing, and expect to continue experiencing, rapid growth with
respect to the building of our Internet Data Centers and network
infrastructure, expansion of our customer base and increase in the number of
employees. This growth has placed, and if it continues, will place, a
significant strain on our financial, management, operational and other
resources, including our ability to ensure customer satisfaction. This
expansion also requires significant time commitment from our senior management
and places a significant strain on their ability to manage the existing
business. In addition, we may be required to manage multiple relationships with
a growing number of third parties as we seek to complement our service
offerings. Our ability to manage our growth effectively will require us to
continue to expand operating and financial procedures and controls, to replace
or upgrade our operational, financial and management information systems and to
attract, train, motivate and retain key employees. We have recently hired many
key employees and officers, and as a result, our entire management team has
worked together for only a brief time. If our executives are unable to manage
growth effectively, our business could be materially adversely affected.

23
<PAGE>

Risks associated with acquisitions

In October 1998 we acquired the assets of Arca Systems, Inc. and in February
1999 we acquired American Information Systems, Inc. We continue to expend
resources integrating these new businesses and the personnel hired in
connection with acquisitions. In April 1999, we announced that we had entered
into a definitive agreement to acquire Cohesive. We believe that our future
growth depends, in part, upon the acquisition of complementary businesses,
products, services or technologies. If we buy a company, we could have
difficulty in assimilating that company's technology, personnel and operations.
In addition, the key personnel of the acquired company may decide not to work
for us. These difficulties could disrupt our ongoing business, distract our
management and employees and increase our expenses. In addition, future
acquisitions by us may result in the incurrence of additional debt, large one-
time write-offs and the creation of goodwill or other intangible assets that
could result in amortization expenses.

Our substantial leverage and debt service obligations adversely affect our
cash flow

We have substantial amounts of outstanding indebtedness, primarily from our
senior notes and convertible notes. There is the possibility that we may be
unable to generate cash sufficient to pay the principal of, interest on and
other amounts due in respect of our indebtedness when due. As of March 31,
1999, we had indebtedness of approximately $487.7 million and available
borrowings of up to an additional $4.6 million. We also expect to add
additional equipment loans and lease lines to finance capital expenditures for
our Internet Data Centers and may obtain additional long term debt, working
capital lines of credit and lease lines. There can be no assurance that any
financing arrangements will be available.

Our substantial leverage could have significant negative consequences,
including:

. increasing our vulnerability to general adverse economic and industry
conditions;

. limiting our ability to obtain additional financing;

. requiring the dedication of a substantial portion of our expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow available for other purposes, including
capital expenditures;

. limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and

. placing us at a possible competitive disadvantage vis-a-vis less
leveraged competitors and competitors that have better access to capital
resources.

We are subject to restrictive covenants that limit our flexibility

Our senior notes and convertible notes contain various restrictions on our
ability to incur indebtedness, pay dividends or make other restricted payments,
sell assets, enter into affiliate transactions and take other actions.
Furthermore, our existing financing arrangements are, and future financing
arrangements are likely to be, secured by substantially all of our assets. The
existing financing arrangements require, and future financing arrangements are
likely to require, that we maintain specific financial ratios and comply with
covenants restricting our ability to incur indebtedness, pay dividends or make
other restricted payments, sell assets, enter into affiliate transactions or
take other actions.

In addition, the convertible notes proceeds may be used only for limited
purposes. Proceeds in the amount of $48.5 million may be used for general
corporate purposes. The remaining $194.5 million may be used only to finance
the purchase of assets or other businesses to be used in our business.

We compete with much larger companies and there are few barriers to entry

Our market is intensely competitive. There are few substantial barriers to
entry, and we expect to face additional competition from existing competitors
and new market entrants in the future. The principal

24
<PAGE>

competitive factors in this market include:

. Internet system engineering and other expertise;

. customer service;

. network capability, reliability, quality of service and scalability;

. the variety of services offered;

. access to network resources, including circuits, equipment and
interconnection capacity to other networks;

. broad geographic presence;

. price;

. the ability to maintain and expand distribution channels;

. brand name;

. the timing of introductions of new services;

. network security; and

. financial resources.

There can be no assurance that we will have the resources or expertise to
compete successfully in the future. Our current and potential competitors in
the market include:

. providers of server hosting services;

. national and regional ISPs;

. global, regional and local telecommunications companies and Regional
Bell Operating Companies; and

. large IT outsourcing firms.

Many of our competitors have substantially greater resources, more customers,
longer operating histories, greater name recognition and more established
relationships in the industry. As a result, these competitors may be able to
develop and expand their network infrastructures and service offerings more
quickly, devote greater resources to the marketing and sale of their products
and adopt more aggressive pricing policies. In addition, these competitors have
entered and will likely continue to enter into business relationships to
provide additional services competitive with those we provide.

Some of our competitors may be able to provide customers with additional
benefits in connection with their Internet system and network management
solutions, including reduced communications costs, which could reduce the
overall costs of their services relative to ours. We may not be able to offset
the effects of any price reductions. In addition, we believe our market is
likely to encounter consolidation in the near future, which could result in
increased price and other competition.

Our market is new and our services may not be generally accepted

The market for Internet system and network management solutions has only
recently begun to develop, is evolving rapidly and is characterized by an
increasing number of market entrants. This market may not prove to be viable
or, if it becomes viable, may not continue to grow. Our future growth depends
on the willingness of enterprises to outsource the system and network
management of their mission-critical Internet operations and our ability to
market our services in a cost-effective manner to a sufficiently large number
of customers. If this market fails to develop, or develops more slowly than
expected, or if our services do not achieve market acceptance, our business
would be materially and adversely affected. In addition, in order to be
successful we must be able to differentiate ourselves from our competition
through our service offerings.

System failures could lead to significant costs

We must protect our network infrastructure and customers' equipment against
damage from human error, physical or electronic security breaches, power loss
and other facility failures, fire, earthquake, flood,

25
<PAGE>

telecommunications failure, sabotage, vandalism and similar events. Despite
precautions we have taken, a natural disaster or other unanticipated problems
at one or more of our Internet Data Centers could result in interruptions in
our services or significant damage to customer equipment. In addition, failure
of any of our telecommunications providers, such as MCI WorldCom or Qwest
Communications Corporation, to provide consistent data communications capacity
could result in interruptions in our services. Any damage to or failure of our
systems or service providers could result in reductions in, or terminations of,
services supplied to our customers, which could have a material adverse effect
on our business. In the past, we have experienced interruptions in specific
circuits within our network resulting from events outside our control, which
led to short-term degradation in the level of performance of our network.

Customer satisfaction is critical to our success

Our customers demand a very high level of service. Our customer contracts
generally provide a limited service level warranty related to the continuous
availability of service on a 24 hours per day, seven days per week basis. This
warranty is generally limited to a credit consisting of free service for a
short period of time for disruptions in Internet transmission services. To
date, only a limited number of customers have been entitled to this warranty.
If we incur significant warranty obligations in connection with system
downtime, our liability insurance may not be adequate to cover these expenses.
As customers outsource more mission-critical operations to us, we may be
subject to increased liability claims and customer dissatisfaction should our
systems fail or our customers otherwise become unsatisfied.

Our ability to expand our network is unproven

To satisfy customer requirements, we must continue to expand and adapt our
network infrastructure. We are dependent on MCI WorldCom and Qwest and other
telecommunications providers for our backbone capacity, including our dedicated
clear channel network. The expansion and adaptation of our telecommunications
infrastructure will require substantial financial, operational and management
resources as we negotiate telecommunications capacity with network
infrastructure suppliers. Due to the limited deployment of our services to
date, our ability to connect and manage a substantially larger number of
customers at high transmission speeds is unknown. We have yet to prove our
network's ability to be scaled up to higher customer levels while maintaining
superior performance. Furthermore, it may be difficult for us to quickly
increase our network capacity in light of current necessary lead times within
the industry to purchase circuits and other critical items. If we fail to
achieve or maintain high capacity data transmission circuits, consumer demand
could shrink because of possible degradation of service. In addition, as we
upgrade our telecommunications infrastructure to increase bandwidth available
to our customers, we expect to encounter equipment or software incompatibility
which may cause delays in implementation.

We depend on network interconnections

We rely on a number of public and private network interconnections, commonly
referred to as peering relationships, to allow our customers to connect to
other networks. If our peering partners were to discontinue their support for
the peering relationships, our ability to exchange traffic would be
significantly constrained. Furthermore, our business will be adversely affected
if these peering partners do not add more bandwidth to accommodate increased
traffic. Many of the companies with which we maintain private peering
interconnections are our competitors. There is nothing to prevent any peering
partners, many of which are significantly larger than we are, from charging
high usage fees or denying access. In the future, private peering partners
could refuse to continue to interconnect directly with us, might impose
significant costs on us or limit our customers access to their networks. If we
were unable on a cost-effective basis to access alternative networks to
exchange our customers' traffic or if we were unable to pass through to our
customers any additional costs of utilizing these networks, our business could
be materially adversely affected.

Risks associated with international operations

A component of our strategy is to expand into international markets,
including Europe and Japan, and we currently have a server hosting site in the
London metropolitan area. We expect to open an Internet Data Center

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<PAGE>

in the London metropolitan area by the end of the second quarter of 1999 and
server hosting facilities in Europe and Japan by the end of 1999. In order to
expand international operations, we may enter into joint ventures or
outsourcing agreements with third parties, acquire rights to high-bandwidth
transmission capability, acquire complementary businesses or operations, or
establish and maintain new operations outside of the United States. Thus, we
will depend on third parties to be successful in our international operations.
In addition, the rate of development and adoption of the Internet has been
slower outside of the United States, and the cost of bandwidth has been higher,
which may adversely affect our ability to expand operations and may increase
our cost of operations internationally. The risks inherent in conducting
business internationally include:

. unexpected changes in regulatory requirements, export restrictions,
tariffs and other trade barriers;

. challenges in staffing and managing foreign operations;

. differences in technology standards;

. employment laws and practices in foreign countries;

. longer payment cycles and problems in collecting accounts receivable;

. political instability;

. fluctuations in currency exchange rates and imposition of currency
exchange controls; and

. potentially adverse tax consequences.

Rapid technological change and evolving industry standards

Our future success will depend on our ability to offer services that
incorporate leading technology and address the increasingly sophisticated and
varied needs of our current and prospective customers. Our market is
characterized by rapidly changing and unproven technology, evolving industry
standards, changes in customer needs, emerging competition and frequent new
service introductions. Future advances in technology may not be beneficial to,
or compatible with, our business, and we may not be able to incorporate
advances on a cost-effective and timely basis. Moreover, technological advances
may have the effect of encouraging our current or future customers to rely on
in-house personnel and equipment to furnish the services we currently provide.
In addition, keeping pace with technological advances may require substantial
expenditures and lead time.

We believe that our ability to compete successfully is also dependent upon
the continued compatibility and interoperability of our services with products,
services and architectures offered by various vendors. Although we work with
various vendors in testing newly developed products, these products may not be
compatible with our infrastructure or adequate to address changing customer
needs. For instance, existing networking hardware may not be immediately
compatible with leading edge telecommunications infrastructure services, and
therefore may require us to make significant investments to achieve
compatibility. Although we intend to support emerging standards, industry
standards may not be established or we may not be able to timely conform to new
standards. Our failure to conform to a prevailing standard, or the failure of a
common standard to emerge, could have a material adverse effect on our
business.

System security risks could disrupt our services

The ability to provide secure transmissions of confidential information over
networks accessible to the public is a significant barrier to electronic
commerce and communications. A portion of our services rely on encryption and
authentication technology licensed from third parties. Despite a variety of
network security measures taken by us, we cannot assure that unauthorized
access, computer viruses, accidental or intentional actions and other
disruptions will not occur. Our Internet Data Centers have experienced and may
in the future experience delays or interruptions in service as a result of the
accidental or intentional actions of Internet users, current and former
employees or others. Furthermore, inappropriate use of the network by third
parties could also jeopardize the security of confidential information, such as
customer and Exodus passwords as well as

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credit card and bank account numbers, stored in our computer systems or those
of our customers. This could result in liability to others and the loss of
existing customers or the deterrence of potential customers. The costs required
to eliminate computer viruses and alleviate other security problems could be
prohibitively expensive and the efforts to address these problems could result
in interruptions, delays or cessation of service to our customers.

We depend on third-party equipment and software suppliers

We depend on vendors to supply key components of our telecommunications
infrastructure and system and network management solutions. Some of the
telecommunications services and networking equipment is available only from
sole or limited sources. For instance, the routers, switches and modems we use
are currently supplied primarily by Cisco Systems, Inc. We typically purchase
or lease all of our components under purchase orders placed from time to time.
We do not carry significant inventories of components and have no guaranteed
supply arrangements with vendors. Our failure to obtain required products or
services on a timely basis and at an acceptable cost would have a material
adverse effect on our business. In addition, the failure of our sole or limited
source suppliers to provide products or components that comply with evolving
Internet and telecommunications standards or that interoperate with other
products or components we use could have a material adverse effect on our
business. For example, we have experienced performance problems, including
previously unknown software and firmware bugs, with routers and switches that
have caused temporary disruptions in and impairment of network performance. In
addition, we expect to depend for a time on third parties to deliver our
services from and manage our international operations, including our site in
London.

Government regulation and legal uncertainties may adversely affect our
business

Laws and regulations directly applicable to communications and commerce over
the Internet are becoming more prevalent. The United States Congress has
recently considered Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The European Union
also recently enacted its own privacy regulations. The law of the Internet,
however, remains largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing
laws such as those governing intellectual property, privacy, libel and taxation
apply to the Internet. In addition, the growth and development of the market
for online commerce may prompt calls for more stringent consumer protection
laws, both in the United States and abroad, that may impose additional burdens
on companies conducting business online. The adoption or modification of laws
or regulations relating to the Internet could adversely affect our business. We
provide services over the Internet in all states in the United States and in
many foreign countries, and we facilitate the activities of our customers in
these jurisdictions. As a result we may be required to qualify to do business,
or be subject to taxation, or be subject to other laws and regulations, in
these jurisdictions even if we do not have a physical presence or employees or
property in these jurisdictions. The application of these multiple sets of laws
and regulations is uncertain, but we could find that Exodus is subject to
regulation, taxation, enforcement or other liability in unexpected ways, which
could materially adversely affect our business.

There are risks involved with the information disseminated through our
network

The law relating to the liability of online services companies and Internet
access providers for information carried on or disseminated through their
networks is currently unsettled. The Child Online Protection Act of 1998
imposes criminal penalties and civil liability on anyone engaged in the
business of selling or transferring material that is harmful to minors, by
means of the World Wide Web, without restricting access to this type of
material by underage persons. Numerous states have adopted or are currently
considering similar types of legislation. The imposition upon us and other
Internet network providers of potential liability for information carried on or
disseminated through systems could require us to implement measures to reduce
exposure to liability, which may require the expenditure of substantial
resources, or to discontinue various service or product offerings. Further, the
costs of defending against any claims and potential adverse outcomes of these

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claims could have a material adverse effect on our business. While we carry
professional liability insurance, it may not be adequate to compensate or may
not cover us in the event we become liable for information carried on or
disseminated through our networks.

Some businesses, organizations and individuals have in the past sent
unsolicited commercial e-mails advertising sites hosted at our facilities to
massive numbers of people. This practice, known as "spamming," has led to some
complaints against us. In addition, some ISPs and other online services
companies could deny network access to us if we allow undesired content or
spamming to be transmitted through our networks. Although we prohibit customers
by contract from spamming, there can be no assurance that customers will not
engage in this practice, which could have a material adverse effect on our
business.

We depend on our key personnel

Our success depends in significant part upon the continued services of our
key technical, sales and senior management personnel. Although some of our
executive officers participate in our executive employment policy, none of our
officers is a party to an employment agreement. Any officer or employee can
terminate his or her relationship at any time. The loss of the services of one
or more of our key employees or our failure to attract additional qualified
personnel could have a material adverse effect on our business. We do not carry
key-person life insurance for any of our employees.

We depend on the Internet and Internet infrastructure development

Our success will depend in large part on continued growth in the use of the
Internet. Critical issues concerning the commercial use of the Internet,
including security, reliability, cost, ease of access, quality of service and
necessary increases in bandwidth availability, remain unresolved and are likely
to affect the development of the market for our services. In addition, the rate
of development and adoption of the Internet has been slower outside of the
United States and the cost of bandwidth has been higher. The recent growth in
the use of the Internet has caused frequent periods of performance degradation,
requiring the upgrade of routers and switches, telecommunications links and
other components forming the infrastructure of the Internet by ISPs and other
organizations with links to the Internet. Any perceived degradation in the
performance of the Internet as a whole could undermine the benefits of our
services. Consequently, the emergence and growth of the market for our services
is dependent on improvements being made to the entire Internet infrastructure
to alleviate overloading and congestion.

Risks associated with protection and enforcement of intellectual property
rights

We rely on a combination of copyright, trademark, service mark and trade
secret laws and contractual restrictions to establish and protect proprietary
rights in our products and services. We have no patented technology that would
preclude or inhibit competitors from entering our market. Although we have
entered into confidentiality agreements with our employees, contractors,
suppliers, distributors and appropriate customers to limit access to and
disclosure of our proprietary information, these may prove insufficient to
prevent misappropriation of our technology or to deter independent third-party
development of similar technologies. In addition, the laws of various foreign
countries may not protect our products, services or intellectual property
rights to the same extent as do the laws of the United States.

In addition to licensing technologies from third parties, we are developing
and acquiring additional proprietary intellectual property. Third parties may
try to claim that our products or services infringe their intellectual
property. We expect that participants in our markets will be increasingly
subject to infringement claims. Any claim, whether meritorious or not, could be
time consuming, result in costly litigation, cause product installation delays
or require us to enter into royalty or licensing agreements. These royalty or
licensing agreements might not be available on terms acceptable to us or at
all.

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Volatility of our stock price

The market price of our common stock has fluctuated in the past and is likely
to continue to fluctuate. In addition, the securities markets, particularly
with respect to Internet stocks, have experienced significant price and volume
fluctuations.

Risk related to the Year 2000 problem

The Year 2000 problem stems from the use of a two digit date to represent the
year (e.g., 85 = 1985) in computer software and firmware. As a result, many
currently installed computer systems are not capable of distinguishing dates
beginning with the year 2000 from dates prior to the year 2000. As a result,
computer systems or applications used by many companies in a wide variety of
industries may experience operating difficulties unless the systems or
applications are modified to process adequately information related to the date
change. Significant uncertainty exists in the software and other industries
concerning the scope and magnitude of problems associated with the century
change. To the extent Year 2000 issues cause significant delay in, or
cancellation of decisions to purchase products or product support, due to the
reallocation of resources to address Year 2000 issues or otherwise, our
business could be materially adversely affected.

We recognize the need to ensure our operations will not be adversely impacted
by Year 2000 issues. We have put into place a comprehensive Year 2000 Risk
Management initiative that is adequately funded, staffed and managed. This
initiative's scope covers both our information technology (IT) systems and non-
IT systems and addresses all areas of the Year 2000 issues as defined by the
Information Technology Association of America (ITAA). Our internal inventory
audit was completed January 1999. We plan to have an independent review of our
Year 2000 assessment completed in the second quarter of 1999, with final Year
2000 compliance expected in the third quarter of 1999.

We have determined that our Internet Data Center equipment is either
currently Year 2000 compliant or that a funded replacement/upgrade plan is in
place to resolve known issues. Likewise, based on the on-going assessment
relative to our current software service offerings, we believe that the current
versions of these products are either Year 2000 compliant or will not require
substantial effort or cost to make them Year 2000 compliant by the end of the
third quarter of 1999. We have reviewed, and continue to review, internal
management information and other systems in order to identify and modify those
products, services or systems that may not be Year 2000 compliant. Based on our
assessment to date, we believe that internal management information and other
systems are either Year 2000 compliant or will not require substantial effort
or cost to make them Year 2000 compliant. We do not foresee any issues with
internal IT and internal non-IT systems being Year 2000 compliant by the end of
the third quarter of 1999.

Our Year 2000 initiative also addresses vendor relationships (both IT and
non-IT) and their readiness/preparedness relating to Year 2000 issues. IT
vendors include software providers, hardware providers, service providers, off
the shelf software publishers and IT consultants. Non-IT providers include
electric power suppliers, vendors of uninterruptable power supplies and
generators, telecommunications service providers, business partners, facilities
maintainers and other non-IT service contractors. In the event that third
parties cannot provide us with products, services or systems that are Year 2000
compliant on a timely basis, our business could be materially adversely
affected. To date, we have not discovered nor do we anticipate any material
issues with vendors and service providers. Evaluation of vendor Year 2000
preparedness is an on-going process. As our Year 2000 evaluation does not
evaluate our vendors' vendors nor our vendors' customer base viability issues,
we will be developing contingency plans to address specific vendor/service
provider concerns. Our contingency plan shall be completed by September 30,
1999.

Many of our customers maintain their Internet operations on servers which may
be impacted by Year 2000 complications. The failure of our customers to ensure
that their servers are Year 2000 compliant could have a material adverse effect
on our customers, which in turn could have a material adverse effect on our
business, if our customers are forced to cease or interrupt Internet operations
or experience malfunctions related to their equipment.

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We have established procedures for evaluating and managing the risks and
costs associated with this problem. Funding and execution for this initiative
is within our existing business units and operating budgets and is not viewed
as material. Based on our current assessment, we believe the costs, excluding
employee personnel time and effort, to resolve Year 2000 issues, other than
unanticipated liabilities, should not exceed $500,000. We further estimate that
the time and effort required of our personnel to resolve Year 2000 issues will
not be material.

While we believe our Year 2000 initiative to be prudent, properly funded and
staffed and well-managed, there can be no assurance that we will identify and
remedy all Year 2000 problems in a timely fashion, that any remedial efforts in
this regard will not involve significant time and expense, or that these
problems will not have a material adverse effect on our business.

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Risks Related to Cohesive

There is no trading market for Cohesive's capital stock and none is expected
to develop

Cohesive is a private company. There is no trading market for any class or
series of its capital stock and none is expected to develop. In addition,
Cohesive has no obligation to redeem its common stock or its Series C Preferred
Stock and, consequently, if the merger or an alternative sale transaction does
not occur, the holders of common stock and Series C Preferred Stock are
unlikely to realize investment liquidity in the foreseeable future.

Cohesive is obligated to make significant payments in the near future under
the terms of its existing credit facility and its certificate of
incorporation. Cohesive does not believe that it will have the funds
necessary to satisfy these obligations without additional financing from
its principal stockholder and this stockholder's agreement to extend the
mandatory redemption date for its preferred stock.

If requested by the holders of its Series D Preferred Stock, Cohesive will be
required to redeem up to 300,000 shares of Series D Preferred Stock in
September 1999 for an aggregate redemption price of approximately $3.0 million.
Cohesive is required to redeem shares of its Series A Preferred Stock and
Series B Preferred Stock in January 2000 for an aggregate redemption price of
approximately $11.0 million. In addition, its revolving credit facility matures
in December 1999. Upon maturity, Cohesive is required to repay all outstanding
indebtedness under this credit facility. As of May 20, 1999, $8.4 million was
outstanding under the credit facility. Cohesive does not believe that it has
the ability to make these payments from its existing resources and anticipated
cash flows. While Cohesive's principal stockholder has agreed to provide it the
necessary funds to repay its existing credit line at maturity and to extend the
redemption date of the Series A Preferred Stock and Series B Preferred Stock
for several months, Cohesive will face significant future payment obligations
with respect to its debt and equity securities. Cohesive cannot assure you that
its principal stockholder will agree to provide similar funding in the future
or to again extend the redemption dates of the Series A Preferred Stock and
Series B Preferred Stock. In addition, the financing extended by Cohesive's
principal stockholder may result in the issuance of securities having a
liquidation preference senior to Cohesive's existing preferred stock or which
dilute Cohesive's existing common stockholders or both.

Cohesive faces significant risks related to its growth strategy

In the past, Cohesive has expanded its operations primarily through the
acquisition of additional businesses. Currently, Cohesive does not have the
financial resources to pursue further expansion of its business through
acquisitions. If Cohesive cannot obtain acquisition financing in the future, it
will be forced to abandon its growth-oriented business strategy. Even if
Cohesive is successful in obtaining the funds needed to pursue future
acquisitions, it cannot assure you that it will be able to identify, acquire or
profitably manage additional businesses or successfully integrate any acquired
businesses without substantial expenses, delays or other operational or
financial problems. In addition, Cohesive cannot assure you that acquired
businesses will achieve anticipated revenues and earnings. Cohesive's inability
to pursue or failure to properly manage its acquisition strategy successfully
could have a material adverse effect on its business and operating results.

Cohesive's success depends upon its ability to attract and retain employees

Cohesive's business involves the delivery of professional services and is
labor intensive. Cohesive's success depends upon its ability to identify,
attract, train, motivate and retain highly skilled managers and technical
employees. There is a shortage of qualified personnel in the information
services market. In particular, qualified technical employees are in great
demand and are likely to remain a limited resource for the foreseeable future.
As a result, Cohesive and its competitors are in constant competition for the
same persons. Cohesive cannot assure you that it will be able to attract and
retain sufficient numbers of qualified employees in the future. If a
significant number of Cohesive's technical employees, senior managers or key
project managers were to leave Cohesive, the turnover could have a material
adverse effect on Cohesive's business, operating results and financial
condition, including its ability to secure and complete projects for its
customers.

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Furthermore, even if Cohesive is able to retain its current employees, it
cannot assure you that it will be able to recruit the talented professionals
needed for future growth. In addition, Cohesive may be required to increase its
current level of recourses or compensation expense or both in order to attract
and retain employees. Any increase in the level of recourses or compensation
could have an adverse effect on Cohesive's operating margins.

Cohesive is currently engaged in a search for a Chief Operating Officer.
Cohesive has so far been unable to attract a qualified executive to fill this
position. If Cohesive is unable to do so, its failure to hire a Chief Operating
Officer could have a material adverse effect on its results of operations and
its ability to raise capital in the future. Cohesive cannot assure you that its
search will be successful.

Cohesive relies on its key executives

As an independent company, Cohesive is highly dependent upon the efforts and
abilities of its key executives, particularly Dennis M. Rohan, its founder,
President and Chief Executive Officer. Although many Cohesive executives have
entered into employment agreements containing noncompetition, nondisclosure and
nonsolicitation covenants, these contracts do not guarantee that these key
executives will continue their employment with Cohesive. If Cohesive were to
lose the services of any of these individuals, it could have a material adverse
effect upon its business and operating results.

Cohesive's lack of long-term contracts with its customers reduces the
predictability of its revenues

Cohesive's customers generally retain it on a project-by-project basis,
rather than under long-term contracts. As a result, its revenues may be
difficult to predict. Because Cohesive incurs costs based on its expectations
of future engagements, its failure to predict its revenues accurately may
seriously harm its financial condition and results of operations. Although
Cohesive has historically generated significant repeat business from continuing
client relationships, it cannot assure you that its current customers will
engage it in the future. A decline in business could result from factors
unrelated to Cohesive's work product and outside of its control such as the
general business or financial condition of the clients. If a client defers,
modifies or cancels an engagement or chooses not to retain Cohesive for future
work, Cohesive must be able to rapidly redeploy its employees to other projects
in order to minimize underutilization of employees and the resulting harm to
its results of operations.

Cohesive's industry is highly competitive

The information technology services market includes a large number of
competitors and is subject to rapid change. Cohesive's primary competitors
include participants from a variety of market segments, including:

. ""Big Five" accounting firms,

. systems consulting and implementation firms,

. application software firms,

. service groups of computer equipment companies,

. facilities management companies,

. general management consulting firms, and

. programming companies.

Many of these competitors have longer operating histories, larger client
bases and greater financial, technical and marketing resources than Cohesive.
Cohesive cannot assure you that it will compete successfully with these
existing competitors or with any new competitors.

Cohesive's success is dependent on its ability to keep pace with the latest
technological changes

Cohesive's future success will depend on its ability to keep pace with
continuing changes in information technology, evolving industry standards and
changing client preferences. Cohesive cannot assure you that it will be
successful in adequately addressing these developments on a timely, cost-
effective basis or that, if these

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developments are addressed, that Cohesive will be successful in the
marketplace. In addition, there can be no assurance that products or
technologies developed by others will not render Cohesive's services
uncompetitive or obsolete. If Cohesive fails to keep pace with these
developments, it could have a material adverse effect on its business and
operating results.

Cohesive's principal stockholder has significant influence over the company

As of , 1999, Welsh, Carson, Anderson & Stowe VI, L.P., a private
equity investment partnership ("WCAS VI") beneficially owned approximately 67%
of Cohesive common stock and approximately 94% of the issued and outstanding
shares of Cohesive Series A Preferred Stock and Series B Preferred Stock. As a
result, WCAS VI has a significant influence over the outcome of matters
requiring a stockholder vote, including the election of the members of the
Cohesive board of directors and the approval of a significant corporation
transaction like the merger.

The Year 2000 problem may adversely affect Cohesive

Many existing computer systems and software products use only two character
fields to identify dates. These programs were designed and developed without
consideration for the upcoming Year 2000 date change. Significant uncertainty
exists in the computer industry concerning the potential consequences of these
computer systems and software products being unable to recognize dates upon the
turn of the century. If not corrected, these systems and software are likely to
fail in whole or part as a result of the Year 2000 date change. Cohesive
believes that the majority of its computer-controlled systems and software will
function properly in the Year 2000 and thereafter, but it cannot assure you
that they will until these systems are operational in the Year 2000. Cohesive
has not undertaken a formal assessment of its internal Year 2000 conformity nor
has it adopted a Year 2000 contingency plan. Furthermore, any Year 2000
problems faced by Cohesive's vendors and clients could have a material adverse
effect on Cohesive's business as its vendors and clients could face significant
business interruptions and financial problems as a result of the Year 2000
issue. Cohesive has not undertaken to conduct a survey of its vendors and
clients with respect to their Year 2000 preparedness. In addition, there is a
risk that Cohesive's clients will attempt to hold Cohesive liable under
statements, representations, warranties and indemnities made by Cohesive to
these customers or otherwise with respect to systems serviced by Cohesive.
Recently Cohesive has increasingly been requested to provide Year 2000
compliance representations and indemnity to its clients, which could harm
financial results in the future.

Cohesive's recent acquisitions have created financial and other challenges
which, if not addressed or resolved, could have an adverse effect on its
business

Cohesive acquired seven businesses during 1997 and 1998. As a result of these
acquisitions, Cohesive is experiencing financial, operational and managerial
challenges in integrating these acquired companies. Cohesive's management must
devote significant time and attention to the integration of technology,
accounting and information systems, operations and personnel as a result of
these acquisitions, and accordingly, Cohesive's ability to maintain accurate
accounting and information systems, service current clients and win new clients
may suffer as a result of these challenges. Cohesive could also experience
financial or other setbacks if any of the acquired businesses experienced
problems in the past of which Cohesive is not yet aware. For example, if an
acquired business had dissatisfied customers or had any performance problems,
Cohesive's reputation could suffer as a result of its association with that
business. In addition, while Cohesive is unaware of any material legal
liabilities of the acquired companies, any legal liabilities could have a
material adverse effect on Cohesive's business, financial condition and results
of operations.

Cohesive performs some work on a fixed-bid basis. If the costs of these
projects exceed Cohesive's expectations, Cohesive may lose money in the
performance of these engagements.

Cohesive generally undertakes projects on a "time and materials" basis;
however, it does perform some work under capped-fee arrangements. If Cohesive
fails to complete these projects within or below budget, it could lose money.
Cost overruns and unprofitable engagements could have a material adverse effect
on Cohesive's future business and operating results.

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FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," variations of these words and similar expressions are intended to
identify these forward-looking statements. In particular, statements regarding
expected strategic benefits, advantages and other effects of the merger
described in "Approval of the Merger and Related Transactions -- Cohesive's
Reasons for the Merger," and "-- Exodus' Reasons for the Merger" and elsewhere
in this document are forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result
of many factors, including those described under "Risk Factors."

We make no representation as to whether any projected or estimated financial
information referenced in this document will be attained. Projections or
estimates of future performance are necessarily subject to a high degree of
uncertainty and may vary materially from actual results. Neither Exodus nor
Cohesive undertakes any obligation to release publicly the results of any
revision to these forward-looking statements which may be made to reflect
events or circumstances arising after the date of this document.

WHERE YOU CAN FIND MORE INFORMATION

Exodus files reports, proxy statements and other information with the
Securities and Exchange Commission. You may inspect the documents Exodus files
with the SEC and copy them, at prescribed rates, at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
public reference facilities by calling the SEC at 1-800-SEC-0330. You may also
read Exodus' filings at the SEC's Web site at http://www.sec.gov.

The SEC allows Exodus to incorporate by reference into this document
information that it files with the SEC. This means that Exodus can disclose
important information to you by referring you to those documents. The
information Exodus incorporates by reference is considered as part of this
document, and later information it files with the SEC will automatically update
and supersede this information.

The following documents that Exodus has filed with the SEC are incorporated
by reference into this document:

. annual report on Form 10-K for the year ended December 31, 1998;

. quarterly report on Form 10-Q for the quarter ended March 31, 1999;

. current reports on Form 8-K filed on January 29, 1999, February 22, 1999
and March 2, 1999;

. the description of Exodus common stock on Form 8-A filed on February 13,
1998 and the description of Exodus' preferred stock purchase rights on
Form 8-A filed on January 29, 1999; and

. all other information that Exodus files with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this document and prior to the termination of this offering.

Exodus will provide upon written or oral request, without charge, copies of
all documents incorporated by reference, not including exhibits to the
documents incorporated by reference unless the exhibits are specifically
incorporated into the documents incorporated by reference, to each person to
whom a copy of this document is delivered. You should direct requests for
copies to:

Adam W. Wegner
Secretary
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, California 95054
(408) 346-2200

In order to ensure timely delivery of the documents, you should make your
request by , 1999.

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You can find more information about the common stock that is offered by this
document if you read Exodus' registration statement on Form S-4 which has been
filed with the SEC under the Securities Act of 1933. We will refer to it and
any amendments to it as the "registration statement." This document is a part
of that registration statement and does not contain all of the information
contained in the registration statement and its exhibits and schedules.

You should rely only on the information contained or specifically
incorporated by reference in this document to vote on the merger. We have not
authorized anyone to give you any information that is different from what is
contained or incorporated by reference in this document.

This document is dated , 1999. You should not assume that the
information contained in this document is accurate as of any date other than
, 1999 and neither the delivery of this document to you nor the
issuance of the Exodus common stock to you should create an implication that
there has been no change in the information.

THE COHESIVE SPECIAL MEETING

Date, Time and Place of Meeting

Purpose of the Special Meeting

At the Cohesive special meeting, the stockholders of Cohesive will be asked
to consider and vote upon a proposal to adopt the merger agreement, to approve
the merger and to transact other business as may properly come before the
special meeting. The Cohesive board of directors recommends that Cohesive's
stockholders vote for the adoption of the merger agreement.

Record Date

Only holders of record of Cohesive stock on , 1999, the record date
for the special meeting, are entitled to notice of and to vote at, the special
meeting and any adjournment or adjournments thereof. On the record date, there
were issued and outstanding:

. 13,973,719 shares of Cohesive common stock,

. 60,570 shares of Cohesive Series A Preferred Stock,

. 28,800 shares of Cohesive Series B Preferred Stock,

. 800,000 shares of Cohesive Series C Preferred Stock, and

. 900,000 shares of Cohesive Series D Preferred Stock.

Voting Rights

Each holder of Cohesive common stock will be entitled to one vote, in person
or by proxy, for each share of Cohesive common stock held in his, her or its
name on the books of Cohesive on the record date with respect to any matter
submitted to a vote of the Cohesive voting stockholders.

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Each holder of Cohesive Series A Preferred Stock will be entitled to one
vote, in person or by proxy, for each share of Cohesive Series A Preferred
Stock held in his, her or its name on the books of Cohesive on the record date
with respect to any matter submitted to a vote of the holders of Cohesive
Series A Preferred Stock.

Each holder of Cohesive Series B Preferred Stock will be entitled to one
vote, in person or by proxy, for each share of Cohesive Series B Preferred
Stock held in his, her or its name on the books of Cohesive on the record date
with respect to any matter submitted to a vote of the holders of Cohesive
Series B Preferred Stock.

Each holder of Cohesive Series C Preferred Stock and Series D Preferred Stock
will be entitled to that number of votes, in person or by proxy, which is equal
to the number of shares of Cohesive common stock into which a holder's shares
of Cohesive Series C Preferred Stock or Series D Preferred Stock could have
been converted on the record date for the special meeting with respect to any
matter submitted to a vote of the Cohesive voting stockholders.

Quorum

The presence, in person or by proxy, of holders of record of:

. a majority of the issued and outstanding shares of Cohesive common
stock, Cohesive Series C Preferred Stock and Cohesive Series D Preferred
Stock, counted together on an as-converted to common stock basis, which
are entitled to vote at the special meeting, and

. a majority of the issued and outstanding shares of Cohesive Series A
Preferred Stock and Series B Preferred Stock, counted together, which
are entitled to vote at the special meeting

together constitutes a quorum for action at the special meeting. Abstentions
are counted for purposes of determining the presence or absence of a quorum for
transaction of business. Abstentions are not counted as votes for or against
this proposal.

Required Vote

The affirmative votes of holders of:

. two-thirds of the issued and outstanding Series A Preferred Stock and
Series B Preferred Stock, voting together as a single class

are required to approve and adopt the merger agreement and to approve the
merger.

Cohesive officers and directors and their affiliates held approximately
% of the outstanding Cohesive common stock on , 1999, the record
date for the special meeting.

Welsh, Carson, Anderson & Stowe VI, L.P. ("WCAS VI"), Cohesive's principal
stockholder, owns approximately 67% of the issued and outstanding shares of
Cohesive common stock and approximately 94% of the issued and outstanding
shares of Cohesive Series A Preferred Stock and Series B Preferred Stock. WCAS
VI has entered into a voting agreement with Exodus. Pursuant to the voting
agreement, WCAS VI has agreed to vote its shares of Cohesive Series A Preferred
Stock, Series B Preferred Stock and common stock in favor of the merger
agreement. The vote of WCAS VI is sufficient under Delaware law and the
Cohesive certificate of incorporation and bylaws to adopt the merger agreement.

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Solicitation of Proxies

If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting at the pleasure of the stockholder
signing it, either by:

. filing a written notice of revocation received by the person or persons
named in the proxy;

. the stockholder attending the special meeting and voting the shares in
person, or

. delivering another duly executed proxy dated subsequent to the date
thereof to the addressee named in the enclosed proxy.

Please note, however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote at the meeting, you must bring to
the meeting a letter from the broker, bank or other nominee confirming your
beneficial ownership of the shares.

Shares represented by duly executed proxies in the accompanying form will be
voted in accordance with the instructions indicated on the proxies, and, if no
instructions are indicated, will be voted in favor of the merger agreement and
at the discretion of the proxy holder on all other business as may properly
come before the special meeting.

The expense of preparing, printing, and mailing this document and the
material used in this solicitation of proxies from Cohesive stockholders will
be paid by .

APPROVAL OF THE MERGER AND RELATED TRANSACTIONS

This section contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words and similar expressions are intended to
identify these forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result
of many factors, including those described under "Risk Factors." You should not
place undue reliance on forward-looking statements in this document, which
reflect the analysis of the management of either Exodus or Cohesive only as of
the date of this document.

Background of the Merger

In October 1998, representatives of Exodus initiated discussions with Stephen
R. Bennion, the Chief Financial Officer of Cohesive, and other representatives
of Cohesive concerning a possible sales partnership between Exodus and
Cohesive. Officers of Cohesive and Exodus held a meeting to discuss a possible
sales partnership at Exodus' offices on January 20, 1999. These sales
partnership discussions continued through the month of February 1999, when
several additional meetings between Exodus and Cohesive took place. Neither an
investment by Exodus in Cohesive nor a business combination transaction
involving the companies was discussed at any meeting.

On January 27, 1999, representatives of Welsh, Carson, Anderson & Stowe V,
L.P. ("WCAS VI"), Cohesive's largest stockholder, traveled to Cohesive's Palo
Alto headquarters and met with Dennis M. Rohan, the President and Chief
Executive Officer of Cohesive. At this meeting representatives of WCAS VI and
Mr. Rohan discussed the possibility of a proposed business combination between
Cohesive and a strategic buyer proposed by the WCAS VI representatives.

At the January 28, 1999 meeting of the Cohesive board, the Cohesive directors
discussed the feasibility of a sale of Cohesive to the strategic buyer proposed
by WCAS VI. At this meeting, the board concluded that an exploratory meeting
between representatives of Cohesive and this third party should be held. In
addition, the board directed Mr. Rohan actively to seek additional capital for
Cohesive to facilitate future acquisitions.

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On February 2, 1999, representatives of Cohesive traveled to WCAS VI's New
York offices and participated in meetings with representatives of the proposed
strategic buyer and WCAS VI.

On February 11, 1999, Mr. Rohan and representatives of WCAS VI held a meeting
with representatives of the strategic buyer proposed by WCAS VI to assess the
feasibility of a business combination between the companies. After the meeting
it was determined that a sale of Cohesive to the proposed buyer was not likely
to be in the best interests of either company and no further discussions were
held.

In accordance with the direction of the Cohesive board, in February and March
1999 Mr. Rohan met with various other strategic and financial groups with a
view toward raising the additional capital necessary to allow Cohesive to
continue its acquisition strategy in accordance with its existing business
plan.

On March 4, 1999, Mr. Rohan and Mr. Bennion attended a dinner meeting with
representatives of Exodus. At this meeting Mr. Rohan proposed that Exodus make
a minority equity investment in Cohesive. Representatives of Exodus then
initiated discussions concerning Exodus' acquisition of Cohesive.

On March 10, 1999 representatives of Cohesive and Exodus held a meeting at
Exodus' Santa Clara, California offices. At this meeting Cohesive and Exodus
each conducted preliminary business due diligence and negotiations concerning a
possible transaction.

On March 11, 1999 Exodus entered into an engagement letter with Donaldson,
Lufkin and Jenrette Securities Corporation ("DLJ") pursuant to which DLJ agreed
to act as Exodus' exclusive financial advisor in connection with the proposed
transaction with Cohesive.

On March 19, 1999, Cohesive entered into an engagement letter with Credit
Suisse First Boston Corporation ("CSFB") pursuant to which Cohesive engaged
CSFB as its exclusive financial advisor in connection with the transaction.

On March 23, 1999, representatives of Cohesive, Exodus, DLJ and CSFB attended
a meeting at WCAS VI's New York offices. At this meeting, Exodus proposed to
WCAS VI a sale of Cohesive to Exodus in exchange for cash and Exodus common
stock. The proposal by Exodus included a total transaction price in the range
of $85.0 to $110.0 million.

On March 25, 1999 a meeting between Exodus and Cohesive and their respective
financial advisors was held at Cohesive's Palo Alto, California headquarters.
At this meeting Exodus representatives including representatives from DLJ
participated in a detailed financial and operational review of Cohesive and its
business. At this meeting, Cohesive delivered its 1999 business plan to Exodus.
Terms of a possible transaction were not discussed at this meeting.

From March 29 through April 7, the parties, with the assistance of their
respective financial advisors, held various telephonic meetings during which
negotiations on key deal terms took place. Key issues resolved during these
discussions included the transaction price, the inclusion of a collar mechanism
to protect Cohesive stockholders from fluctuations in Exodus' stock price, the
duration of the proposed indemnification escrow and the right of Cohesive
stockholders to receive a post-merger distribution of an anticipated tax
refund. Thereafter, the parties commenced drafting, review and negotiation of
definitive documents, which negotiations, along with due diligence
investigations, continued through to April 21, 1999, as described below.

During the week of April 12, representatives of DLJ and Exodus made various
due diligence inspections of various Cohesive facilities.

On April 17, 1999, Exodus and its counsel conducted an extensive due
diligence interview with representatives of Cohesive and its counsel and the
parties continued to negotiate key price and other terms such as the right of
Cohesive common stockholders to receive post-merger distributions related to
receivables under contracts with three Louisiana school districts.

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On April 19, 1999 the board of directors of Exodus held a meeting to review
and approve the merger agreement.

On April 21, 1999, the Cohesive board held a telephonic meeting. Each of the
directors of Cohesive, other than George Covert, who was unable to attend,
participated in this meeting. At this meeting Mr. Rohan gave the board a
summary of the proposed transaction and after considerable discussion, the
board members in attendance voted unanimously to approve the merger agreement.

On April 21, 1999, the parties signed the merger agreement and publicly
announced the proposed merger. Subsequently, the parties signed an amendment to
the merger agreement on May 28, 1999.

Cohesive's Reasons for the Merger

The board of directors of Cohesive has determined that the terms of the
merger are fair to, and in the best interests of, Cohesive and its
stockholders. Accordingly, the Cohesive board recommends that you vote for
approval of the merger agreement and the merger.

Cohesive's board consulted with Cohesive's senior management as well as its
legal counsel and financial advisors in reaching its decision to approve the
merger. Among the factors considered by Cohesive's board in its deliberations
were the following:

. historical information concerning Exodus' and Cohesive's respective
financial performance, results of operations, assets, liabilities,
operations, technology, management and competitive position, including
Exodus' public reports filed with the SEC;

. Cohesive's management's and Cohesive's financial advisors' view of the
financial condition, results of operations, assets, liabilities,
businesses and prospects of Exodus and its industry after giving effect
to the merger;

. current market conditions and historical trading information with
respect to Exodus common stock;

. comparable merger transactions; and

. the terms and conditions of the merger agreement taken as a whole.

In reaching its decision, the Cohesive board identified several potential
benefits of the merger including the following:

. the strategic benefits of the merger, including Cohesive's customer base
and the information technology market has been increasingly in need of
professional services with Internet-based or Internet-related solution
capabilities. Cohesive has actively adapted to these changing needs of
our customers and the marketplace. The combination with Exodus' direct
focus on the quickly emerging Internet market continues this evolution.
Since Exodus is a leading provider of Internet system and network
management solutions, it helps ensure that Cohesive's customers and
employees stay on the leading edge of the information technology market;

. the liquidity that the merger provides to the stockholders of Cohesive,
a privately-held company, through the receipt of a combination of cash
and fully-registered, publicly-traded Exodus common stock. Exodus common
stock is listed on the Nasdaq National Market. Based on the closing
price of Exodus common stock on April 21, 1999, the last trading day
prior to the public announcement of the merger, Exodus had a market
capitalization of approximately $3.0 billion. Accordingly, by receiving
cash and/or Exodus common stock for their shares of Cohesive stock,
Cohesive's stockholders will be afforded liquidity for their existing
illiquid investment in Cohesive, a private company;

. the opportunity to participate in the potential growth of the combined
company following the merger;

. a comparison of price multiples from recent transactions similar to the
merger and involving companies in the same industry as Cohesive
suggested that the proposed merger consideration was fair and
represented a favorable valuation of Cohesive;

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<PAGE>

. solving the liquidity issues that Cohesive would face if it continued as
an independent company, including its redemption obligations with
respect to its outstanding preferred stock, the repayment obligations
with respect to its existing senior debt and the difficulty it would
face in pursuing its acquisition-oriented business plan; and

. the expected tax-free treatment to Cohesive and its stockholders with
respect to Exodus common stock to be received in the merger.

The Cohesive board also identified and considered a variety of potential
negative factors in its deliberations concerning the merger, including, but not
limited to:

. the risk to Cohesive's stockholders that the value to be received in the
merger could decline significantly due to the following variables:

. the collar placed on the exchange formula which determines the
number of shares of Exodus common stock to be received by holders of
Cohesive common stock,

. the various deductions from the cash portion of the merger
consideration paid to holders of Cohesive common stock; and

. the indemnity given by the holders of Cohesive common stock to
Exodus and the possibility that the $10.0 million of merger
consideration placed in escrow would not be returned to the
stockholders;

. the loss of control over the future operations of Cohesive following the
merger;

. the impact of the loss of Cohesive's status as an independent company on
Cohesive's stockholders, optionholders, employees and customers;

. the risk that the potential strategic benefits sought in the merger
might not be realized;

. the possibility that the merger might not be consummated and the
potential adverse effects of the public announcement of the merger on
Cohesive's:

. sales and operating results;

. ability to attract and retain key employees; and

. overall competitive position;

. the risk that, despite the efforts of Exodus and Cohesive, key technical
and management personnel might not remain employees of Exodus following
the closing of the merger; and

. the transaction costs expected to be incurred in connection with the
merger, including the fee payable to Credit Suisse First Boston for its
services in connection with the merger, and the other risks described
under "Risk Factors" beginning on page 20.

After due consideration, the Cohesive board concluded that the risks
associated with the proposed merger were outweighed by the potential benefits
of the merger.

During the process of evaluating the Exodus offer, the Cohesive's board also
considered the provisions of the merger agreement that prohibited solicitation
of third-party bids and the acceptance, approval or recommendation of any
unsolicited third-party bids. After fully discussing these matters during its
deliberations, the Cohesive board determined that the benefits of the Exodus
offer justified these conditions and proceeded to approve the merger.

The foregoing discussion of the information and factors considered by the
Cohesive board is not intended to be exhaustive but is believed to include all
material factors considered by Cohesive's board. In view of the complexity and
wide variety of information and factors, both positive and negative, considered
by the Cohesive board, it did not find it practical to quantify, rank or
otherwise assign relative or specific weights to the factors

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<PAGE>

considered. In addition, the Cohesive board did not reach any specific
conclusion with respect to each of the factors considered, or any aspect of any
particular factor, but, rather, conducted an overall analysis of the factors
described above, including thorough discussions with Cohesive's management and
legal, financial and accounting advisors. In considering the factors described
above, individual members of the Cohesive board may have given different weight
to different factors. The Cohesive board of directors considered all these
factors as a whole and believed the factors supported its determination to
approve the merger. After taking into consideration all of the factors set
forth above, Cohesive's board concluded that the merger was fair to, and in the
best interests of, Cohesive and its stockholders and that Cohesive should
proceed with the merger.

During the time period in which Cohesive was engaged in discussions with
Exodus, it did not receive any unsolicited offers regarding a possible business
combination with any third parties.

Exodus' Reasons for the Merger

The Exodus board has determined that the terms of the merger agreement and
the transactions contemplated by the merger agreement provide an opportunity
that serves the best interests of Exodus, and that Exodus should proceed with
the merger at this time. In making this determination, the Exodus board
consulted extensively with Exodus' management and reviewed the results of
management's due diligence investigation and analysis of Cohesive.

The following are among the reasons why the Exodus board believes that the
merger will benefit Exodus:

. The acquisition of Cohesive is expected to broaden, deepen and improve
the ability to deliver Exodus' managed and professional services
offerings, thereby allowing Exodus to better extend the capabilities and
optimize the performance of its customers' mission critical Internet
sites. Exodus is a leading provider of Internet system and network
management solutions for enterprises with Internet operations. Cohesive
is a leading technology professional services organization with
expertise in business information technology consulting, network systems
services, and Internet-based applications development and
implementation. Specific areas of Cohesive's expertise include network
design, integration, electronic commerce, information technology
strategy project management, information technology security, e-mail and
messaging, database design and integration, and Internet and intranet
application development. Cohesive's expertise in these areas, along with
its offices in the San Francisco Bay Area, Chicago, New York, Boston,
Gulf Coast and London, are expected to give Exodus a platform and an
ability to expand and improve its managed and professional services
offerings, particularly those increasingly demanded by enterprise
customers.

. The merger is expected to enhance customer retention and improve Exodus'
ability to obtain new customers. Enterprise customers' needs are growing
more complex as they migrate mission critical operations to the
Internet, so enhanced services, such as those Cohesive will help Exodus
to provide, are required for a successful, on going relationship.
Specifically, enterprises are increasingly using the Internet for
business critical functions, moving commerce transactions to the
Internet, connecting these operations to legacy systems and placing
Internet operations in multiple locations. Customers involved in such
complex activities, and who insist on high levels of support and
expertise to ensure continuous, smooth operation of their Internet
related operations, are increasingly looking to hosting suppliers such
as Exodus to provide both managed Internet data center and networking
operations and also professional and managed services. In fact, more
customers are demanding professional and managed services as a
prerequisite to hiring any web hosting supplier. The merger is expected
to address these evolving customer requirements and thus improve Exodus'
ability to retain and attract customers.

. The addition of Cohesive's strong professional services capabilities is
expected to give Exodus a competitive advantage by having a high degree
of expertise in three complementary areas: server hosting, Internet
connectivity and managed and professional services. Customers seeking to
outsource these web hosting needs are increasingly seeking companies
with expertise in these three areas. Further,

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value-added services offerings will increase the frequency of customer
contacts, thereby improving relations with customers and perhaps
improving customer loyalty. Thus Exodus expects the merger will enable
Exodus to both better retain existing customers and better compete for
new customers and to become a leader not only in the Internet Data
Center market but also in the market for complex web hosting services.

. Exodus expects that there will be significant cross-selling
opportunities resulting from the merger which may result in accelerating
Exodus' revenue growth. Specifically, there may be opportunities to sell
Exodus' web hosting services to Cohesive's customers and to sell
Cohesive's managed and professional services to Exodus' customers.
Further, there may be an ability to sell specific Cohesive services on a
flat fee basis rather than on a per-hour basis. Additional revenue
opportunities may arise from Cohesive's strategic alliances with key
networking and Internet hardware and software providers.

. The merger may improve gross margin by increasing the percentage of
managed services revenue.

In the course of its deliberations, the Exodus board, with Exodus management,
reviewed and considered a number of other factors relevant to the merger. In
particular, the Exodus board considered, among other things:

. information concerning the parties' respective businesses, prospects,
financial performance and condition, operations and present and planned
service offerings;

. the stock price of Exodus at various points in time prior to execution
of the merger agreement;

. the costs expected to be incurred in connection with the merger, in
future quarters, including merger-related costs and potential costs or
charges to combine operations and costs related to various Cohesive
contractual obligations;

. prospects for growing revenues after the merger;

. the belief that the terms of the agreements relating to the merger,
including the parties' representations, warranties and covenants, are
reasonable;

. reports from management as to the results of the due diligence
investigation of Cohesive and as to the merits, risks and strategic
importance of the merger;

. the terms of the proposed merger and voting agreement regarding
restrictions on Cohesive's rights to consider and negotiate other
acquisition proposals;

. the potential benefits expected to be realized after the merger from
utilization of managed and professional services capacity.

The Exodus board also considered a variety of potentially negative factors in
deliberating the merits of the proposed merger, including but not limited to:

. the uncertainty of Cohesive's future revenues;

. potential costs related to various Cohesive indemnity obligations;

. the potential dilutive effect of the issuance of Exodus stock in the
merger;

. the risk that relationships with customers would be disrupted in
implementing the merger and the potential detrimental impact on
revenues;

. the difficulty of managing separate operations at different geographic
locations;

. the risk that key technical personnel of Cohesive might not be retained
after the merger;

. the possibility that some of the benefits sought to be obtained through
the merger may not be realized; and

. the other risks described under "Risk Factors" above.

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The Exodus board believed that these risks were outweighed by the potential
benefits of the merger.

The foregoing discussion of the information and factors considered by the
Exodus board is not intended to be exhaustive but is believed to include all
material factors considered by Exodus' board. In view of the complexity and
wide variety of information and factors, both positive and negative, considered
by the Exodus board, it did not find it practical to quantify, rank or
otherwise assign relative or specific weights to the factors considered. In
addition, the Exodus board did not reach any specific conclusion with respect
to each of the factors considered, or any aspect of any particular factor, but,
rather, conducted an overall analysis of the factors described above, including
thorough discussions with Exodus' management and legal, financial and
accounting advisors. In considering the factors described above, individual
members of the Exodus board may have given different weight to different
factors. The Exodus board of directors considered all these factors as a whole
and believed the factors supported its determination to approve the merger.
After taking into consideration all of the factors set forth above, the Exodus
board concluded that the merger was in the best interests of Exodus and that
Exodus should proceed with the merger.

Material Federal Income Tax Considerations

The following discussion summarizes the material federal income tax
consequences of the merger to holders of Cohesive capital stock under the
Internal Revenue Code of 1986, as amended, existing IRS regulations (including
final, temporary or proposed), and current administrative rulings and court
decisions, any and all of which are subject to change, possibly with
retroactive effect. The discussion does not deal with all income tax
considerations that may be relevant to particular stockholders, such as dealers
in securities, foreign persons, stockholders who acquired their shares in
connection with previous mergers involving Cohesive or an affiliate of
Cohesive, or stockholders who acquired their shares in connection with stock
options or stock purchase plans or in other compensatory transactions. In
addition, the following discussion does not address the tax consequences of
transactions effectuated prior to or after the merger (whether or not such
transactions are in connection with the merger), including, without limitation,
transactions in which shares of Cohesive common stock or preferred stock were
or are acquired. Furthermore, no foreign, state, local or estate or gift tax
considerations are addressed.

Accordingly, Cohesive stockholders are urged to consult their own tax
advisors as to the specific tax consequences, including the applicable federal,
state, local and foreign tax consequences, to them of the merger.

Cohesive Common Stock and Series D Preferred Stock

For holders of Cohesive common stock, including holders of Cohesive Series D
Preferred Stock which will automatically convert into Cohesive common stock
prior to the merger, the merger is expected to constitute a "reorganization"
within the meaning of Section 368(a) of the Code, with each of Exodus, Marley,
and Cohesive qualifying as a "party to a reorganization" under Section 368(b)
of the Code, in which case the following federal income tax consequences should
apply, subject to the limitations and qualifications referred to above:

. neither Exodus, Marley, nor Cohesive will recognize gain or loss as a
result of the merger;

. no gain or loss will be recognized by holders of Cohesive common stock
solely upon their receipt of Exodus common stock in the merger;

. the aggregate tax basis of the Exodus common stock received in the
merger by a holder of Cohesive common stock will be the same as the
aggregate tax basis of the Cohesive common stock surrendered in exchange
therefor, decreased by the sum of any cash received and the fair market
value of any other non-stock consideration received, then increased by
the sum of the amount treated as a dividend, if any, and the amount of
gain to the holder which was recognized on such exchange, not including
any portion of such gain which was treated as a dividend;

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. the holding period for the Exodus common stock received in the merger by
a holder of Cohesive common stock will include the period during which
the holder held the Cohesive common stock surrendered in exchange
therefor, provided that the Cohesive common stock is held as a capital
asset at the time of the merger;

. a holder of Cohesive common stock, including a holder of Cohesive Series
D Preferred Stock which will automatically convert into Cohesive common
stock prior to the merger, receiving cash or other non-stock
consideration in the merger generally will recognize gain, upon such
payment, but in an amount not in excess of the sum of the cash and the
fair market value of the other non-stock consideration; and

. a fractional share of Exodus common stock for which cash is received in
lieu of will be treated as if a fractional share of Exodus common stock
had been issued in the merger and then redeemed by Exodus. A Cohesive
stockholder receiving cash for a fractional share will generally
recognize gain or loss upon the payment equal to the difference between
the stockholder's tax basis in the fractional share and the amount of
cash received. The gain or loss will be a capital gain or loss if, at
the time of the merger, the Cohesive common stock is held as a capital
asset.

The parties are not requesting a ruling from the Internal Revenue Service
("IRS") in connection with the merger. A successful IRS challenge to the
"reorganization" status of the merger would result in a Cohesive stockholder
recognizing gain or loss with respect to his shares of Cohesive common stock
surrendered equal to the difference between the stockholder's basis in the
shares and the fair market value, as of the effective time of the merger, of
the Exodus common stock and all non-stock consideration received in exchange
for the Cohesive common stock. In such event, a stockholder's aggregate basis
in the Exodus common stock so received would equal its fair market value and
such stockholder's holding period would begin the day after the merger.

A successful IRS challenge to the "reorganization" status of the merger would
result in the merger of Cohesive into Marley being treated as a taxable sale of
assets by Cohesive to Marley. Cohesive would recognize taxable gain or loss
equal to the difference between Cohesive's adjusted basis in its assets and the
fair market value of the assets. As the surviving corporation, Marley would
assume the tax liability of Cohesive resulting from the asset sale by operation
of law.

Cohesive Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock

The receipt of cash for shares of Cohesive Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock pursuant to the merger agreement
will be a taxable transaction for federal income tax purposes. In general, a
holder of Cohesive Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in
exchange for their shares of Cohesive Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock and the stockholder's adjusted tax
basis in the shares. If the shares constitute capital assets in the hands of
the stockholder, the gain or loss will constitute capital gain or loss. The
gain or loss will be long-term capital gain or loss, provided that the shares
so exchanged were held by the stockholder for more than twelve months. Under
current law, long-term capital gains of individuals are taxed at a maximum rate
of 20%. Capital gains that are not long-term capital gains are taxed at
ordinary income rates. To the extent the cash received by the stockholder is
attributable to accrued and unpaid dividends, that amount will be treated as
ordinary income to the extent of Cohesive's current and accumulated earnings
and profits as determined for U.S. federal income tax purposes.

A stockholder who exchanges shares of Cohesive Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock may be subject to a 31%
backup withholding tax unless the stockholder provides its taxpayer
identification number, or unless an exemption applies. If backup withholding
applies to a stockholder, the exchange agent is required to withhold 31% from
payments to the stockholder. Backup withholding is not

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an additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained
by the stockholder upon filing an income tax return.

Regulatory Matters

The merger may be reviewed by the Department of Justice and the Federal Trade
Commission to determine whether it complies with applicable antitrust laws.
Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, the merger may not be consummated until Exodus and Cohesive furnish
information to the Department of Justice and the FTC and the specified waiting
period requirements of the HSR Act have been satisfied. The notification and
waiting period imposed upon Exodus and Cohesive under the HSR Act expired on
, 1999.

At any time, the Department of Justice, the FTC, state attorneys general,
foreign regulatory agencies or a private person or entity could challenge the
merger under the antitrust laws and seek, among other things, to enjoin the
merger, to cause Exodus to divest itself of significant assets of Exodus and
Cohesive, or to impose conditions on Exodus with respect to the business
operations of the combined companies. Based on information available to them,
Exodus and Cohesive believe that the merger will not violate federal or state
antitrust laws.

Exodus and Cohesive each conduct operations in foreign countries where
regulatory filings may be required as a result of the merger. Exodus and
Cohesive will make filings as they determine are necessary or appropriate.

Exodus and Cohesive are aware of no other material governmental or regulatory
approvals required for consummation of the merger, other than compliance with
the federal and state securities laws.

Accounting Treatment

The merger will be accounted for as a purchase transaction for financial
accounting purposes in accordance with generally accepted accounting
principles. Under this method of accounting, Exodus will allocate the value of
the stock, including stock options, and cash it is issuing in the merger to the
fair value of the net tangible assets it acquires, with the excess being
allocated to goodwill and identifiable intangible assets. The purchase price
allocation is subject to revision when Exodus obtains additional information
concerning asset valuation. Exodus anticipates that the value it will allocate
to goodwill and other intangible assets will be approximately $108.1 million.
This amount will be amortized over the next seven to ten years, depending on
the particular asset. This amortization will reduce Exodus' earnings during
those years.

Appraisal Rights

You are entitled to appraisal rights under Section 262 of Delaware law
("Section 262") as to shares owned by you. Set forth below is a summary
description of Section 262, which is reprinted in its entirety as Appendix B to
this document. All references in Section 262 and in this summary to a
"stockholder" are to the record holder of the shares. A person having a
beneficial interest in shares that are held of record in the name of another
person, such as a broker or nominee, must act promptly to cause the record
holder to follow the steps summarized below properly and in a timely manner to
perfect whatever appraisal rights the beneficial owner may have.

This summary and Appendix B should be reviewed carefully by any holder who
wishes to exercise statutory appraisal rights or who wishes to preserve the
right to do so because failure to comply strictly with the procedures set forth
in this document and in Appendix B will result in the loss of appraisal rights.

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In accordance with Section 262, any stockholder may, before the vote at the
special meeting upon the proposal to approve and adopt the merger agreement,
demand in writing from Cohesive the appraisal of the fair value of the
stockholder's shares. The demand must reasonably inform Cohesive of the
identity of the stockholder and that the stockholder intends to demand the
appraisal of the stockholder's shares. In order to be entitled to appraisal
rights with respect to any shares, a stockholder must:

. be the record holder of the shares on the date of the demand;

. continuously hold the shares through the effective time of the merger;

. properly demand an appraisal as described in this section; and

. not vote in favor of the proposal to approve and adopt the merger
agreement.

A stockholder who elects to exercise appraisal rights must mail or deliver a
written demand to:

Cohesive Technology Solutions, Inc.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303.
Attention: Corporate Secretary

A vote against the merger or a failure to vote for the merger would not by
itself constitute sufficient notice of a stockholder's election to exercise
appraisal rights.

Any stockholder, other than a record owner who is acting as a nominee holder
for different beneficial owners, seeking to exercise appraisal rights for a
portion, but not all, of the stockholder's shares should consult with legal
counsel before taking action. Cohesive believes that Delaware law has not
clearly addressed the ability of a stockholder to exercise appraisal rights
with respect to a portion, but not all, of a stockholder's shares. Should a
stockholder, other than a record owner who is acting as a nominee holder for
different beneficial owners, seek to exercise appraisal rights with respect to
a portion, but not all, of the stockholder's shares, Cohesive presently intends
to assert that by doing so the stockholder has waived appraisal rights.
Stockholders should be aware that a Delaware court may find that the
stockholder has so waived the stockholder's appraisal rights.

A demand for appraisal must be executed by or for the stockholder of record
as the stockholder's name appears on the certificate or certificates
representing his or her shares. If the shares are owned of record in a
fiduciary capacity, such as by a trustee, guardian, or custodian, the demand
must be executed by the fiduciary. If the shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the demand must be
executed by all joint owners. An authorized agent, including an agent for two
or more joint owners, may execute the demand for appraisal for a stockholder of
record; however, the agent must identify the record owner and expressly
disclose the fact that, in exercising the demand, he or she is acting as agent
for the record owner. A record owner, such as a broker, who holds shares as a
nominee for others, may exercise appraisal rights with respect to the shares
held for all or less than all beneficial owners of shares as to which the
person is the record owner. In this case, the written demand must set forth the
number of shares covered by the demand. Where the number of shares is not
expressly stated, the demand will be presumed to cover all shares outstanding
in the name of the record owner. Beneficial owners who are not record owners
and who intend to exercise appraisal rights should instruct the record owner to
comply strictly with the statutory requirements with respect to the exercise of
appraisal rights.

From and after the effective time of the merger, no stockholder who has duly
demanded appraisal in compliance with Section 262 will be entitled to vote for
any purpose the shares subject to the demand or to receive payment of dividends
or other distributions on the shares, except for dividends or distributions
payable to stockholders of record at a date prior to the effective time.

At any time within 60 days after the effective time of the merger, any
stockholder shall have the right to withdraw the stockholder's demand for
appraisal and to accept the terms offered in the merger agreement; after

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this period, a stockholder may withdraw the stockholder's demand for appraisal
only with the consent of Marley Acquisition, as the surviving corporation.

Within 120 days after the effective time of the merger, either Marley, as the
surviving corporation, or any stockholder who has complied with the required
conditions of Section 262 may file a petition in the Delaware Court of Chancery
demanding a determination of the fair value of the shares of the dissenting
stockholders. If a petition for an appraisal is timely filed, after a hearing
on the petition, the Court of Chancery will determine which stockholders are
entitled to appraisal rights and will appraise the shares formerly owned by
these stockholders, determining the fair value of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. In determining the fair value, the
Court of Chancery is to take into account all relevant factors.

The cost of the appraisal proceeding may be determined by the Court of
Chancery and taxed against the parties as the Court of Chancery deems equitable
in the circumstances. Upon application of a dissenting stockholder, the Court
of Chancery may order that all or a portion of the expenses incurred by any
dissenting stockholder in connection with the appraisal proceeding, including
without limitation, reasonable attorneys' fees and the fees and expenses of
experts, be charged pro rata against the value of all shares entitled to
appraisal.

If no petition for appraisal is filed with the Court of Chancery within 120
days after the effective time of the merger, stockholders' rights to appraisal
shall cease, and all stockholders who had previously demanded appraisal shall
thereafter be entitled to receive shares of Exodus common stock and/or cash
pursuant to the merger agreement upon valid surrender of the certificates that
formerly represented their shares. Since Cohesive has no obligation to file a
petition, and has no present intention to do so, any stockholder who desires a
petition to be filed is advised to file it on a timely basis.

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TERMS OF THE MERGER

The following discussion summarizes the material provisions of the merger
agreement and the other related agreements and transactions. The following is
not, however, a complete statement of all the provisions of the merger
agreement and related agreements. Detailed terms and conditions are contained
in the merger agreement, a copy of which is attached to this document as
Appendix A and is incorporated into this document by reference. For a complete
presentation of this information, you are urged to read the more detailed
information set forth in the Appendices.

General

The merger agreement provides for the merger of Cohesive with and into Marley
Acquisition. As a result of the merger, the separate existence of Cohesive
shall cease to exist. Marley Acquisition will be the surviving corporation of
the merger and remain a wholly-owned subsidiary of Exodus. The former holders
of common stock of Cohesive will receive cash and become stockholders of
Exodus. The former holders of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock of Cohesive will receive cash for their
Cohesive shares. Finally, the former holders of Series D Preferred Stock of
Cohesive will automatically convert into Cohesive common stock immediately
prior to the merger and will receive cash and become stockholders of Exodus.

Effective Time; Closing Date

The merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware, or on another date as the
parties to the merger agreement may agree upon. The closing will occur at a
date and time agreed upon by Exodus and Cohesive promptly after all conditions
to closing have been satisfied or waived. Assuming all conditions to closing
are satisfied or waived, it is currently anticipated that the effective time of
the merger and the closing will be on or about , 1999.

Merger Consideration

Conversion of Common Stock

At the effective time of the merger, each share of Cohesive common stock
issued and outstanding immediately prior to the effective time, other than
dissenting shares, will be converted into the following:

. a fraction of one share of Exodus common stock; and

. the right to receive the per share cash consideration.

The fraction will equal (a) the total number of Exodus shares to be issued in
the merger divided by (b) the number of shares of fully-diluted Cohesive common
stock.

The fully-diluted Cohesive common stock equals the number of shares of
Cohesive common stock outstanding, plus the number of shares of Cohesive common
stock issuable upon exercise of all vested Cohesive options outstanding, plus
the number of shares of Cohesive common stock issuable upon conversion of all
Cohesive Series D Preferred Stock outstanding.

The total number of Exodus shares will be $50.0 million divided by the
average closing price per share of Exodus common stock for the five trading
days before and including the trading day preceding the closing date. However:

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. if the average closing price per share of Exodus common stock is between
and including $95 and $102.50, then the total number of Exodus shares
will be 526,316; and

. if the average closing price per share of Exodus common stock exceeds
$102.50, then the total number of Exodus shares will equal $53,947,390
divided by the average closing price.

The per share cash consideration equals the total cash consideration divided
by the number of shares of fully-diluted Cohesive common stock. The total cash
consideration equals $50.0 million, plus the total amount of the exercise price
of vested Cohesive options outstanding at the effective time of the merger,
less:

. all indebtedness of Cohesive for money borrowed and all severance
payments agreed to by Cohesive after April 7, 1999, which is estimated
to be $ ;

. all liabilities of Cohesive for earnout payments to third parties, which
are estimated to be $5.5 million;

. all cash payable to Cohesive's preferred stockholders in the merger, as
shown below, which are estimated to be $20.0 million; and

. all cash paid in the merger for fractional shares.

However, the number of Exodus shares to be issued in the merger will be
increased, and the total cash consideration to be paid to Cohesive common
stockholders will be proportionately decreased, if necessary, so that the total
fair market value of the Exodus shares is equal to at least 50% of the total
fair market value of all consideration paid to Cohesive stockholders in the
merger. If the number of Exodus shares and the total cash consideration are
adjusted, the adjustment will not affect the total value of merger
consideration paid to Cohesive stockholders.

The amounts listed for each of the foregoing variable payments is based on
our current best estimate. If the total of each variable payments turns out to
be higher than our estimate, you will receive less cash in the merger.

Conversion of Preferred Stock

At the effective time of the merger, Cohesive Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock issued and outstanding
immediately prior to the effective time will be canceled and converted into the
right to receive the following consideration:

. for each share of Cohesive Series A Preferred Stock and Series B
Preferred Stock, $100 cash plus any accrued and unpaid dividends on each
share. On , 1999, accrued and unpaid dividends payable for each share
of Series A Preferred Stock were $ , and accrued and unpaid
dividends payable for each share of Series B Preferred Stock were
$ ; and

. for each share of Cohesive Series C Preferred Stock, $5 cash.

Cohesive Series D Preferred Stock will automatically be converted into
Cohesive common stock immediately prior to the merger. At the effective time of
the merger, the former holders of Cohesive Series D Preferred Stock will be
entitled to receive cash per share equal to the difference between $10 and the
total fair market value of Exodus common stock and cash received for each share
of their Cohesive common stock as a result of the merger, as calculated
pursuant to the merger agreement.

Assumption of Options

. the number of shares of Exodus common stock subject to each assumed
option will equal the number of shares of Cohesive common stock subject
to the option multiplied by the sum of (a) the number of

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Exodus shares to be exchanged for each share of Cohesive common stock
and (b) the quotient obtained by dividing the per share cash
consideration by the average closing price per share of Exodus common
stock at the effective time;

. the exercise price per share of Exodus common stock under each assumed
option will equal the exercise price per share of Cohesive common stock
under the option divided by the sum of (a) the number of Exodus shares
to be exchanged for each share of Cohesive common stock and (b) the
quotient obtained by dividing the per share cash consideration by the
average closing price per share of Exodus common stock at the effective
time; and

. all of the other terms and conditions of each assumed option will remain
unchanged in all material respects.

Fractional Shares

No fractional shares of Exodus common stock will be issued in the merger.
Instead, cash will be paid in the merger for fractional shares. The amount of
cash will equal the fraction of a share of Exodus common stock multiplied by
the average closing price per share of Exodus common stock.

Escrow Cash

Exodus will withhold $10.0 million from the cash consideration which would
otherwise be delivered to holders of Cohesive common stock, other than holders
of shares issued upon conversion of Cohesive Series D Preferred Stock, as a
result of the merger and deposit the sum in escrow. The cash will be held as
collateral for the indemnification obligations of Cohesive stockholders under
the merger agreement and will be released from escrow according to the terms of
the escrow agreement. See "Related Agreements -- Escrow Agreement."

Dissenting Shares

Holders of shares of Cohesive common stock and preferred stock who have
complied with all requirements for perfecting appraisal rights under Delaware
law will be entitled to receive the fair value of their stock as appraised by
the Delaware Court of Chancery instead of the merger consideration described
above.

Exchange of Certificates and Cash

As a result of the merger, all shares of Cohesive capital stock outstanding
immediately prior to the merger will be converted into the right to receive
Exodus common stock and/or cash as set forth above. Consequently, after the
effective time of the merger, no further transfers of Cohesive capital stock
will be recorded in the stock transfer books of Cohesive. Soon after the
effective time, you will be directed to surrender your Cohesive stock
certificate to Exodus for cancellation. In the event that your stock
certificate has been lost or destroyed, you will have to execute an affidavit
of lost certificate and post a bond satisfactory to Exodus as indemnity against
any claim that may be made against Exodus with respect to that stock
certificate. Promptly after receipt of your Cohesive stock certificate or an
affidavit of lost certificate accompanied by a bond, Exodus or its exchange
agent will provide a certificate for Exodus common stock to you and/or
distribute cash to you, as applicable.

Representations and Warranties

The merger agreement contains various representations and warranties of
Cohesive, including representations and warranties as to:

. Cohesive's due organization, valid existence and good standing and its
corporate power and authority to own and operate its properties and
carry on its business;

. Cohesive's power and authority to enter into and perform under the
merger agreement and ancillary agreements;

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. Cohesive's capitalization and the ownership of Cohesive capital stock;

. the third party consents required for the merger and the absence of
conflict between (a) the merger agreement and ancillary agreements and
(b) Cohesive's corporate documents and applicable law;

. the absence of pending litigation or threatened against Cohesive;

. the accuracy of Cohesive's financial statements;

. Cohesive's timely filing of tax returns and Cohesive's liabilities for
taxes;

. the absence of certain changes with respect to Cohesive since December
31, 1998, the date of Cohesive's audited balance sheet;

. Cohesive's material contracts and Cohesive's compliance with the terms
of these contracts;

. Cohesive's ownership of intellectual property and the absence of
infringement of third party intellectual property rights by Cohesive;

. Cohesive's compliance with all applicable laws, including employment,
health and safety, environmental, export and immigration laws and
regulations;

. Cohesive's complete and accurate disclosure made to Exodus and
Cohesive's books and records;

. the Year 2000 compliance of Cohesive's software, hardware and systems
and representations, warranties and indemnities given to customers by
Cohesive concerning Year 2000 compliance or other matters;

. Cohesive's relationships with its customers;

. the conformance of the products and services of Cohesive with applicable
contractual commitments, warranties, specifications and quality
standards; and

. the maximum liability of Cohesive under earnout provisions;

The merger agreement contains representations and warranties of Exodus as to:

. Exodus' due organization, valid existence and good standing and Exodus'
corporate power and authority to own and operate its properties and
carry on its business;

. Exodus' corporate power and authority to enter into and perform under
the merger agreement and ancillary agreements;

. the absence of conflict between (a) the merger agreement and ancillary
agreements and (b) the corporate documents of Exodus and agreements and
laws applicable to Exodus;

. the completeness and accuracy of the disclosure package provided by
Exodus to Cohesive and compliance of the package with federal securities
laws; and

. Exodus' capitalization.

Covenants

Cohesive Covenants

A complete list of the covenants of Cohesive is set forth in Section 4 of the
merger agreement, which is included as Appendix A.

General Affirmative Covenants

In the merger agreement, Cohesive has agreed that until the earlier of the
effective time of the merger or the termination of the merger agreement, it
will:

. promptly advise Exodus of any material adverse change to its business,
financial condition or assets or any litigation pending or threatened
against it;

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. obtain the government approvals and third party consents necessary for
the merger;

. promptly notify Exodus of any acquisition inquiry, offer or proposal
regarding it;

. provide Exodus with access to its files, books, records and offices; and

. terminate all of its employee benefit plans at or prior to the closing,
unless Exodus agrees otherwise, and take actions required to ensure that
these plans comply with applicable law.

Conduct of Business

Cohesive has agreed to conduct its business in the ordinary course during the
pre-closing period and will not take a variety of actions that could affect its
business without the prior consent of Exodus. For instance, Cohesive will not:

. borrow any money, except under existing lines of credit;

. make any capital expenditure in excess of $50,000 outside the ordinary
course or not contemplated in Cohesive's capital expenditure budget or
in excess of $100,000 in the ordinary course;

. encumber or dispose of any assets except in the ordinary course;

. purchase or sell any property, except in the ordinary course or as
contemplated by Cohesive's capital expenditure budget, or enter into any
material contract;

. implement any new employee benefit plan or increase compensation to, or
accelerate or modify options granted to, any officer, employee or
consultant except in the ordinary course;

. change accounting methods;

. enter into any noncompetition or exclusivity agreement or amend or
terminate any contract to which it is a party, except in the ordinary
course;

. lend money to any person, other than advances for travel and business
expenses incurred in the ordinary course;

. waive or release any material right or claims, except in the ordinary
course;

. merge or consolidate with any other entity or acquire any other entity;

. agree to any tax audit or file any federal or state income or franchise
tax return;

. license any of its technology or intellectual property, except in the
ordinary course;

. terminate any key employee; or

. defer payment of accounts payable or accelerate collection of accounts
receivable outside the ordinary course.

No Other Negotiations

During the pre-closing period, Cohesive will not:

. solicit, facilitate, discuss or encourage any offer, inquiry or proposal
from a third party concerning the acquisition of all or a substantial
part of Cohesive's business, assets or capital stock; or

. provide any confidential information to or negotiate with any third
party regarding any acquisition offer, inquiry or proposal.

Cohesive also will not authorize or permit any of its officers, directors,
employees, affiliates or agents to undertake any of the prohibited actions
listed immediately above.

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Exodus Covenants

During the pre-closing period, Exodus will:

. allow Cohesive access to Exodus management and officers and Exodus
business and financial information;

. exercise all reasonable efforts to cause the conditions to closing the
merger to be satisfied; and

. obtain government approvals and third party consents necessary for the
merger.

In addition, Exodus makes the following covenants that apply at or after the
effective time of the merger:

. Exodus will continue to employ all then-active employees of Cohesive,
who will be entitled to participate in Exodus employee benefit plans
with credit for prior periods of employment with Cohesive; and

. subject to specified conditions, Exodus will generally indemnify the
current and former directors and officers of Cohesive for claims arising
prior to the effective time which are asserted after the effective time
to the fullest extent that would have permitted under Cohesive's
certificate of incorporation and bylaws in effect on April 21, 1999.

Conditions to the Merger

Conditions to Obligations of Cohesive

Cohesive's obligation to consummate the merger is subject to the satisfaction
of various conditions, any of which may be waived by Cohesive, including:

. the representations and warranties of Exodus shall be true and correct
in all material respects on and as of the closing date and Cohesive
shall have received a certificate to that effect from Exodus;

. Exodus shall have performed and complied in all material respects with
all of its covenants on or before the closing and Cohesive shall have
received a certificate to that effect from Exodus;

. the absence of any actual or threatened order, decree or ruling by any
court or government agency, or any other fact or circumstance, which
would prohibit the merger or make the merger illegal;

. all permits or authorizations from regulatory authorities required to
consummate the merger shall have been obtained at or prior to the
closing date;

. the absence of any litigation or proceeding initiated by a party other
than Cohesive or its stockholders which would likely enjoin or prevent
the consummation of the merger;

. Cohesive shall have received a legal opinion from Fenwick & West LLP,
counsel to Exodus;

. Cohesive shall have received an officers' certificate from Exodus
regarding certain tax matters;

. the expiration or early termination of all applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act;

. the approval of the principal terms of the merger agreement by the
Cohesive stockholders; and

. all indebtedness of Cohesive for money borrowed and all severance
payments agreed to by Cohesive since April 7, 1999 shall be paid in full
in cash at the closing by Exodus.

Conditions to Obligations of Exodus

Exodus' obligation to consummate the merger is subject to the satisfaction of
various conditions, any of which may be waived by Exodus, including:

. the representations and warranties of Cohesive shall be true and correct
in all material respects on and as of the closing date and Exodus shall
have received a certificate to that effect from Cohesive;

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. Cohesive shall have performed and complied in all material respects with
all of its covenants on or before the closing and Exodus shall have
received a certificate to that effect from Cohesive;

. the absence of any material adverse change in Cohesive's financial
condition, properties, assets, liabilities, business, results of
operations or prospects;

. the absence of any order, decree or ruling by any court or government
agency which would prohibit the merger or make the merger illegal;

. all permits or authorizations from regulatory authorities required to
consummate the merger shall have been obtained at or prior to the
closing date;

. Exodus shall have received all consents necessary to continue in full
force all material contracts of Cohesive;

. Exodus shall have received a legal opinion from Reboul, MacMurray,
Hewitt, Maynard & Kristol, special counsel to Cohesive;

. the approval of the principal terms of the merger agreement by the
Cohesive stockholders;

. the absence of any pending or threatened litigation or proceeding which
would likely enjoin or prevent the consummation of the merger or could
be expected to have a material adverse effect on Cohesive;

. Exodus shall have received an officers' certificate from Cohesive
regarding certain tax matters;

. the expiration or early termination of all applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act; and

. all indebtedness of Cohesive for money borrowed and all severance
payments agreed to by Cohesive after April 7, 1999, and the cash
payments to holders of preferred stock under the merger agreement, shall
be paid in full in cash at the closing by Exodus, and each payee shall
acknowledge payment in full.

Termination

The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after approval of the merger by the
Cohesive stockholders:

. by the mutual written consent of Exodus and Cohesive;

. by either Exodus or Cohesive, if all of the conditions to closing have
not been satisfied or waived on or before November 30, 1999, other than
as a result of a breach of the merger agreement by the terminating party
or any of its affiliates;

. by either Exodus or Cohesive, if the other party has breached any
representation, warranty, covenant or agreement in the merger agreement
or if any representation of the other party has failed to remain true,
if the breach or failure could be expected to have a material adverse
effect on the other party and is not cured by the other party within
thirty days;

. by either Exodus or Cohesive, if there is a final, non-appealable
permanent injunction or other court order which would make the merger
illegal or otherwise prohibit the consummation of the merger; or

. by Exodus, if the average closing price per share of Exodus common stock
is below $50, unless Cohesive agrees to fix the total number of Exodus
shares at 1,000,000.

Termination of the merger agreement will generally terminate the obligations
of the parties to perform their covenants in the merger agreement, except that
the parties shall continue to comply with various miscellaneous provisions,
including the following:

. disputes under the merger agreement are to be resolved by binding
arbitration;

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. each of the parties will refrain from divulging or using the
confidential information of the other party, except as required by the
merger agreement; and

. each party will bear its own expenses in connection with the merger
agreement, provided that upon the closing of the merger, Exodus will pay
up to $2.0 million of Cohesive's expenses incurred in connection with
the merger and Cohesive stockholders will pay any portion of Cohesive's
expenses in excess of $2.0 million.

Indemnification

Survival of Representations, Warranties and Covenants

All representations, warranties and covenants of Cohesive in the merger
agreement will remain in full force and effect after the closing. However, no
claim for a violation of the Cohesive representations, warranties and covenants
may be made by Exodus unless Exodus gives notice of the claim to the Cohesive
stockholders' representative on or prior to the first anniversary of the
closing date. Generally, all representations, warranties and covenants of
Exodus in the merger agreement will expire at the closing.

Indemnification by Cohesive Stockholders

As described above, Exodus will withhold $10.0 million from the cash
consideration which would otherwise be delivered to holders of Cohesive common
stock as a result of the merger and deposit this sum in escrow to be held as
collateral for the indemnification obligations of Cohesive stockholders.
Generally, the Cohesive stockholders are obligated to indemnify and hold
harmless Exodus and its directors, officers, employees and agents as well as
any person who may control Exodus from and against all claims, actions, losses
and expenses:

. arising out of any misrepresentation, breach or default of Cohesive with
respect to its representations, warranties or covenants;

. resulting from any failure of any Cohesive stockholder to have good,
valid and marketable title to the Cohesive capital stock held by the
stockholder, free and clear of any encumbrance or to have full right,
capacity and authority to vote the Cohesive capital stock in favor of
the merger;

. relating to Cohesive's contractual obligations to make earnout payments
to third parties or disputes concerning these obligations, to the extent
that these claims or losses exceed the estimated amount of earnout
obligations already deducted from the $50.0 million total cash
consideration in the merger;

. relating to the failure of Cohesive's systems to be Year 2000 compliant
or any liability of Cohesive to customers for representations,
warranties or indemnities concerning Year 2000 compliance, except with
respect to customer contracts entered into after April 21, 1999 which
will not have been fully performed as of the effective time and contain
representations, warranties or indemnities concerning Year 2000
compliance approved by Exodus;

. relating to any liability to Cohesive stockholders or option holders due
to the grant, offer or sale of Cohesive stock options to these persons
in violation of applicable law; and

. relating to any claim of a beneficiary of a non-competition agreement
made by Cohesive that Exodus would breach that agreement by continuing
its current business after the closing or that Cohesive's business or
activities pre-closing constituted a breach of that agreement.

The sole and exclusive remedy of Exodus indemnified parties for the indemnity
claims listed above is recovery against the $10.0 million of escrowed cash.
Cohesive stockholders shall not be personally liable to the Exodus indemnified
parties, other than to the extent of their proportionate interests in the
escrowed cash. In addition, the Exodus indemnified parties will not be entitled
to recover from the escrowed cash until their total indemnity claims exceed
$250,000, at which point they will be entitled to recover the full amount of
these claims.

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<PAGE>

Additional Possible Distributions to Cohesive Stockholders

Tax Refund

Cohesive anticipates a federal tax refund of approximately $2,085,000 due to
the application of Cohesive net operating losses against income realized in
connection with Cohesive's sale of assets to Cisco Systems. Generally, so long
as this refund has not been included as an asset on Cohesive's December 31,
1998 balance sheet, Exodus has agreed to pay to Cohesive stockholders an amount
equal to any tax refund, which amount will be delivered to the Cohesive
stockholders' representative for distribution to the stockholders on a pro rata
basis if received. If Exodus receives the refund, it remains entitled to deduct
its actual costs incurred as a result of transferring the refund to the
Cohesive stockholders.

Earnout Liability Balance

At closing, Exodus will withhold from the $50.0 million total cash
consideration the estimated maximum amount of earnout liabilities of Cohesive
to third parties, which is expected to be approximately $5.5 million. After
Exodus determines that all the earnout liabilities and related expenses have
been fully paid from escrow, then any remaining balance of the amount
originally held in escrow will be delivered to the Cohesive stockholders'
representative for distribution to the Cohesive stockholders on a pro rata
basis.

Government Contracts Proceeds

A subsidiary of Cohesive is a party to contracts with various Louisiana
parishes under which the subsidiary is to supply equipment to the parishes.
Cohesive estimates that it will have to pay vendors of the equipment
approximately $1,876,058. In the event that Cohesive draws on its bank line to
pay the vendors prior to closing, Cohesive will in effect increase the amount
of indebtedness of Cohesive which will be deducted from the $50.0 million
aggregate cash consideration in the merger. In this event, Exodus will, upon
collection of all payments from the Louisiana parishes, deliver the payments to
the Cohesive stockholders' representative for distribution to the Cohesive
stockholders on a pro rata basis. However, Exodus is not obligated to deliver
an amount in excess of the amount of the increase in indebtedness incurred by
Cohesive to pay its equipment vendors.

Related Agreements

Escrow Agreement

Exodus, Cohesive, the Cohesive stockholders' representative and an escrow
agent will enter into an escrow agreement which will become effective as of the
effective time of the merger. The escrow agreement will set forth the terms and
conditions under which the $10.0 million of escrowed cash will be disbursed to
satisfy the indemnification obligations of the Cohesive stockholders. The
following is a summary of the material terms of the escrow agreement:

. On the later of the six month anniversary of the effective time of the
merger or February 28, 2000, the escrow agent shall release $5.0 million
of escrowed cash, less any escrowed cash which is the subject of
resolved or pending indemnification claims, to the Cohesive stockholders
on a pro rata basis.

. On the one year anniversary of the effective time of the merger, the
escrow agent shall release the remaining escrowed cash, less any
escrowed cash which is the subject of resolved or pending
indemnification claims, to the Cohesive stockholders on a pro rata
basis.

. An Exodus indemnified party shall deliver notice of any claim for
indemnification to both the Cohesive stockholders' representative and
the escrow agent. If a claim is brought against the indemnified party by
a third party, the representative shall be entitled to assume the
defense of the claim. If the representative fails to do so, then the
indemnified party may assume the defense of the claim. Neither the
indemnified party nor the representative may settle the claim without
the consent of the other.

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<PAGE>

. Claims for indemnification which are not contested by the Cohesive
stockholders' representative shall be paid out of the escrowed cash to
the indemnified party. Claims for indemnification which are contested by
the representative shall be resolved as follows:

. contested indemnification claims related to an action brought by
third parties will await a final adjudication or settlement of the
action; and

. other contested indemnification claims shall be submitted to binding
arbitration.

. Disputes under the escrow agreement shall be resolved by
negotiation, followed by binding arbitration if negotiation is
unsuccessful.

. Ordinary fees and expenses of the escrow agent shall be borne by Exodus.
Extraordinary fees and expenses of the escrow agent, including those
incurred in connection with disputes over the distribution of the
escrowed cash or the validity of a notice of claim, shall be shared
equally by Exodus and the Cohesive stockholders.

Voting Agreement

Exodus has entered into a voting agreement with Welsh, Carson, Anderson &
Stowe VI, L.P. ("WCAS VI"), which controls a majority of the voting power of
Cohesive capital stock. Under the terms of the voting agreement, WCAS VI has
agreed to a number of restrictions with respect to the Cohesive capital stock
it holds during the pre-closing period, including the following:

. it will generally not transfer any of its Cohesive capital stock or
otherwise reduce its risk of ownership of capital stock;

. it will not deposit any of its Cohesive capital stock in a voting trust
or grant a proxy with respect to the capital stock, other than the proxy
delivered to Exodus described below; and

. it will vote its Cohesive capital stock as follows:

. in favor of the merger and the approval of the terms of the merger
agreement;

. against any action that would result in a breach of any of
Cohesive's representations, warranties or covenants or prevent
fulfillment of a condition to closing; and

. against a variety of corporate actions involving Cohesive, including
a merger with or sale of assets to a third party, a registered
public offering, a change in the majority of Cohesive's board of
directors and a material change in Cohesive's capitalization or
corporate structure.

WCAS VI has delivered an irrevocable proxy to Exodus authorizing Exodus and
Adam W. Wegner and Joseph Stockwell, who are officers of Exodus, to vote WCAS
VI's Cohesive capital stock in the manner described above.

WCAS VI has made additional agreements, including that it:

. will not exercise any appraisal or dissenters' rights it may have in
connection with the merger;

. will waive a variety of stockholder rights such as notice rights and
preemptive rights with respect to its Cohesive capital stock which may
apply to the merger agreement or the merger; and

. will not solicit, consider, negotiate or approve any merger of Cohesive
with a third party, any sale of Cohesive's assets to a third party or
any registered public offering of Cohesive stock.

WCAS VI has made representations and warranties to Exodus in the voting
agreement, including as to its authority to enter into the voting agreement,
the absence of conflicts between the voting agreement and other agreements to
which it is a party, and its ownership of Cohesive capital stock.

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<PAGE>

Employment Agreements and Noncompetition Agreements

Exodus entered into employment agreements and noncompetition agreements with
various individuals employed by Cohesive. For more information, see "Benefits
of the Merger to Cohesive Directors and Executive Officers -- Employment
Agreements."

BENEFITS OF THE MERGER TO COHESIVE DIRECTORS AND EXECUTIVE OFFICERS

When you consider the Cohesive board of directors' recommendation to vote for
the merger, you should be aware of interests which some of the Cohesive
directors and executive officers have in the merger that are different from
your and their interests as Cohesive stockholders. The Cohesive board of
directors was aware of these and other interests and considered them before
approving and adopting the merger agreement.

Employment Agreements

Stephen R. Bennion and Paul J. Brady, executive officers of Cohesive, have
entered into employment agreements with Exodus. These agreements will take
effect on the day the merger is completed. Upon consummation of the merger,
under these new employment agreements, Messrs. Bennion and Brady would:

. serve as Exodus regional general managers for two-year periods with
guaranteed base salaries and the potential for performance based
bonuses,

. receive options to purchase shares of Exodus common stock, and

. be permitted to accelerate vesting of their unvested Cohesive stock
options assumed by Exodus upon the twelve-month anniversary of
consummation of the merger.

James G. Dubos, an executive officer of Cohesive, has entered into a letter
agreement with Exodus. Upon consummation of the merger, under the letter
agreement, Mr. Dubos would receive a guaranteed base salary and options to
purchase shares of Exodus common stock.

In May 1999 Cohesive entered into a severance agreement with Alan Reed under
which Cohesive will pay Mr. Reed $220,000 and accelerate the vesting of Mr.
Reed's options to purchase shares of Cohesive common stock. In addition,
Cohesive will continue to pay Mr. Reed his current salary, bonus and benefits
until the earlier of August 15, 1999 or the date the merger is completed. Mr.
Reed previously served Cohesive as one of its regional managers.

Assumption of Outstanding Stock Options

The directors and executive officers of Cohesive hold options to purchase an
aggregate of 440,250 shares of Cohesive common stock. At the effective time of
the merger, Exodus will assume all of the outstanding vested and unvested
options to purchase Cohesive common stock. Each of these new Exodus options
will contain the same material terms and conditions as the existing Cohesive
options except that the number of Exodus shares issuable upon exercise of a new
option and the exercise price of a new option will be adjusted to reflect:

. the exchange ratio used to determine the number of shares of Exodus
common stock to be issued to holders of Cohesive common stock in the
merger; and

. the amount of cash to be paid to holders of Cohesive common stock in the
merger.

Acceleration of Stock Options

If executive officers or directors of Cohesive elect to exercise any of their
vested options prior to the effective time of the merger, those executive
officers and directors will receive the merger consideration payable to holders
of Cohesive common stock in exchange for the shares issued upon exercise.
Pursuant to an existing agreement with Stephen R. Bennion, Cohesive's Chief
Financial Officer, the completion of the merger will cause the immediate
vesting of 75,000 options to purchase shares of Cohesive common stock. In
addition, at the same

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<PAGE>

time that it approved the merger, the Cohesive board of directors accelerated
the vesting of options to purchase 50,000 shares of Cohesive common stock held
by Dennis M. Rohan, a Cohesive director and its President and Chief Executive
Officer.

Redemption of Cohesive Preferred Stock

Cohesive Series A Preferred Stock

Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Information Partners, L.P. and
nine individuals, including Thomas E. McInerney, a director of Cohesive, who
serve as general partners of the sole general partner of one or both of these
Delaware limited partnerships, own all of the issued and outstanding shares of
Cohesive Series A Preferred Stock. Mr. McInerney and Anthony J. de Nicola,
another director of Cohesive, serve as general partners of WCAS VI Partners,
L.P., a Delaware limited partnership. WCAS VI Partners, L.P. is the sole
general partner of Welsh, Carson, Anderson & Stowe VI, L.P. Mr. McInerney
serves as a general partner of WCAS IP Partners, a Delaware limited
partnership. WCAS IP Partners is the sole general partner of WCAS Information
Partners, L.P. In the merger, all issued and outstanding shares of Cohesive
Series A Preferred Stock will be converted into the right to receive a cash
payment of $100 per share plus accrued and unpaid dividends. Currently, there
are 60,570 shares of Series A Preferred Stock outstanding.

Cohesive Series B Preferred Stock

Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Information Partners, L.P. and
ten individuals, including Messrs. McInerney and de Nicola, who serve as
general partners of the sole general partner of one or both of these Delaware
limited partnerships, own all of the issued and outstanding shares of Cohesive
Series B Preferred Stock. In the merger, all issued and outstanding shares of
Cohesive Series B Preferred Stock will be converted into the right to receive a
cash payment of $100 per share plus accrued and unpaid dividends. Currently,
there are 28,800 shares of Series B Preferred Stock outstanding.

Cohesive Series C Preferred Stock

Cisco Systems, Inc. owns all of the issued and outstanding shares of Cohesive
Series C Preferred Stock. Christine Hemrick, a director of Cohesive, is an
officer of Cisco Systems, Inc. In the merger, all issued and outstanding shares
of Cohesive Series C Preferred Stock will be converted into the right to
receive a cash payment of $5 per share plus declared and unpaid dividends.
Currently, there are 800,000 shares of Series C Preferred Stock outstanding.

Cohesive Series D Preferred Stock

Paul J. Brady, a director of Cohesive, owns 300,000 shares of Cohesive Series
D Preferred Stock. In the merger, all issued and outstanding shares of Cohesive
Series D Preferred Stock will be converted into the right to receive cash and
shares of Exodus common stock with an aggregate value of $10 per share.
Currently, there are 900,000 shares of Series D Preferred Stock outstanding.

Indemnification of Directors and Executive Officers

With some exceptions, Exodus has agreed to indemnify and hold harmless each
current and former director and officer of Cohesive against liability arising
out of matters existing or occurring after April 21, 1999 and prior to the
merger and asserted or claimed after the merger to the fullest extent that
Cohesive would have been permitted to indemnify and hold these persons harmless
under its certificate of incorporation and bylaws in effect as of April 21,
1999.

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<PAGE>

EXODUS COMMUNICATIONS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the combined financial position or results of operations for future periods or
the results of operations or financial position that actually would have been
realized had Exodus and Cohesive been a combined company during the specified
periods. The unaudited pro forma combined condensed financial statements,
including the related notes, are qualified in their entirety by reference to,
and should be read in conjunction with, the historical consolidated financial
statements of Exodus and Cohesive, including the related notes, incorporated by
reference into this document or included elsewhere in this document.

The following unaudited pro forma combined condensed financial statements
give effect to the proposed merger between Exodus and Cohesive using the
purchase method of accounting. The pro forma combined condensed financial
statements are based on the respective historical audited and unaudited
consolidated financial statements and related notes of Exodus and Cohesive,
which are incorporated by reference into this document or included elsewhere in
this document. The pro forma adjustments are preliminary and based on
management's estimates of the value of the tangible and intangible assets
acquired. In addition, management is in the process of assessing and
formulating its integration plans, which may include employee separations,
employee relocations, and other restructuring actions and has not yet
determined the costs, if any, of these plans.

Based on the timing of the closing of the transaction, the finalization of
the integration plans and other factors, the pro forma adjustments may differ
materially from those presented in these pro forma financial statements. A
change in the pro forma adjustments would result in a reallocation of the
purchase price affecting the value assigned to the long-term tangible and
intangible assets or, in some circumstances, result in a charge to the
statement of operations. The effect of these changes on the statement of
operations will depend on the nature and amounts of the assets and liabilities
adjusted. See note 1(c) to the pro forma combined condensed financial
statements.

The unaudited pro forma combined condensed balance sheet assumes that the
merger took place on March 31, 1999, and combined Exodus' unaudited March 31,
1999 consolidated balance sheet with Cohesive's unaudited March 31, 1999
consolidated balance sheet. The pro forma combined condensed statements of
operations assume the merger took place as of January 1, 1998 and combines
Exodus' audited consolidated statement of operations for the year ended
December 31, 1998 and unaudited consolidated statement of operations for the
three months ended March 31, 1999, with Cohesive's audited statement of
operations for the year ended December 31, 1998 and unaudited statement of
operations for the three months ended March 31, 1999, respectively.

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<PAGE>

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
March 31, 1999
(In thousands)

<TABLE>
<CAPTION>
Historical Pro forma
------------------- ------------------------
Exodus Cohesive Adjustments Combined
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..... $ 323,642 $ 1,845 $(13,287)(a)
(42,713)(c) 269,487
Accounts receivable........... 16,277 10,633 26,910
Income taxes receivable....... -- 1,997 (1,997)(b) --
Prepaid expenses and other
current assets............... 6,727 881 7,608
--------- -------- -------- ---------
Total current assets......... 346,646 15,356 (57,997) 304,005
Property and equipment, net.... 101,793 2,773 104,566
Restricted cash equivalents and
investments................... 36,292 -- 36,292
Goodwill and other intangible
assets, net................... 23,223 24,263 (24,263)(c) --
108,125 (c) 131,348
Other assets................... 18,338 109 18,447
--------- -------- -------- ---------
$ 526,292 $ 42,501 $ 25,865 $ 594,658
========= ======== ======== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of equipment
loans and line of credit
facilities................... $ 6,804 $ 8,030 $ (7,590)(a) $ 7,244
Current portion of capital
lease obligations............ 5,950 -- 5,950
Accounts payable.............. 24,504 3,437 27,941
Accrued expenses.............. 7,623 4,243 11,866
Accrued interest payable...... 6,949 -- 6,949
Amounts due under acquisition
agreements................... -- 5,697 (5,697)(a) --
--------- -------- -------- ---------
Total current liabilities.... 51,830 21,407 (13,287) 59,950
--------- -------- -------- ---------
Equipment loans and line of
credit facilities, less
current portion............... 12,864 246 13,110
Capital lease obligations, less
current portion............... 12,111 -- 12,111
Convertible subordinated
notes......................... 250,000 -- 250,000
Senior notes................... 200,000 -- 200,000
--------- -------- -------- ---------
Total liabilities............ 526,805 21,653 (13,287) 535,171
--------- -------- -------- ---------
Redeemable preferred stock..... -- 18,586 (18,586)(c) --
Stockholders' equity (deficit):
Preferred stock............... -- 4,000 (4,000)(c) --
Common stock.................. 20 140 (139)(c) 21
Additional paid-in capital.... 119,541 3,425 56,574 (c) 179,540
Deferred stock compensation... (891) -- (891)
Accumulated deficit........... (119,183) (5,303) (1,997)(b) --
7,300 (c) (119,183)
--------- -------- -------- ---------
Total stockholders' equity
(deficit)................... (513) 2,262 57,738 59,487
--------- -------- -------- ---------
$ 526,292 $ 42,501 $ 25,865 $ 594,658
========= ======== ======== =========
</TABLE>

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<PAGE>

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Year ended December 31, 1998
------------------------------------------
Historical Pro forma
------------------ ----------------------
Exodus Cohesive Adjustments Combined
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenues........................... $ 52,738 $ 41,708 $ $ 94,446
-------- -------- --------
Costs and expenses:
Cost of revenues.................. 61,559 28,324 89,883
Marketing and sales............... 28,778 5,672 34,450
General and administrative........ 15,723 10,219 25,942
Product development............... 3,221 -- 3,221
Amortization of goodwill and other
intangible assets................ 142 6,734 (6,734)(d)
10,813 (d) 10,955
Acquisition-related charges....... -- 4,463 4,463
-------- -------- ------- --------
Total costs and expenses......... 109,423 55,412 4,079 168,914
-------- -------- ------- --------
Operating loss................... (56,685) (13,704) (4,079) (74,468)
Interest income (expense), net..... (9,757) 352 (2,800)(e) (12,205)
-------- -------- ------- --------
Loss from continuing operations
before taxes.................... (66,442) (13,352) (6,879) (86,673)
Income tax benefit................. -- 2,555 2,555
-------- -------- ------- --------
Loss from continuing operations.. (66,442) (10,797) (6,879) (84,118)
Cumulative dividends and accretion
on redeemable preferred stock..... (2,014) (800) 800 (f) (2,014)
-------- -------- ------- --------
Loss from continuing operations
attributable to common
stockholders.................... $(68,456) $(11,597) $(6,079) $(86,132)
======== ======== ======= ========
Basic and diluted loss per share
from continuing operations........ $ (2.19) $ (2.69)
======== ========
Shares used to compute basic and
diluted loss per share from
continuing operations............. 31,286 743 (g) 32,029
======== ======= ========
<CAPTION>
Three months ended March 31, 1999
------------------------------------------
Historical Pro forma
------------------ ----------------------
Exodus Cohesive Adjustments Combined
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenues........................... $ 30,087 $ 11,715 $ 41,802
Costs and expenses:................
Cost of revenues.................. 28,110 8,268 36,378
Marketing and sales............... 10,264 1,329 11,593
General and administrative........ 6,442 1,922 8,364
Product development............... 1,285 -- 1,285
Amortization of goodwill and other
intangible assets................ 613 2,191 $(2,191)(d)
2,703 (d) 3,316
-------- -------- ------- --------
Total costs and expenses......... 46,714 13,710 512 60,936
-------- -------- ------- --------
Operating loss................... (16,627) (1,995) (512) (19,134)
Interest expense, net.............. (5,537) (241) (700)(e) (6,478)
-------- -------- ------- --------
Loss from continuing operations.. (22,164) (2,236) (1,212) (25,612)
Cumulative dividends and accretion
on redeemable preferred stock..... -- (312) 312 (f) --
-------- -------- ------- --------
Loss from continuing operations
attributable to common
stockholders.................... $(22,164) $ (2,548) $ (900) $(25,612)
======== ======== ======= ========
Basic and diluted net loss per
share from continuing operations.. $ (0.55) $ (0.62)
======== ========
Shares used to compute basic and
diluted net loss per share from
continuing operations............. 40,526 743 (g) 41,269
======== ======= ========
</TABLE>

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<PAGE>

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

(1) Unaudited Pro Forma Combined Condensed Balance Sheet

On April 21, 1999, Exodus entered into a merger agreement under which all of
the outstanding capital stock of Cohesive is to be exchanged for approximately
$100.0 million in cash and common stock of Exodus. In addition, Exodus will
assume all outstanding options to purchase common stock of Cohesive. The
actual number of Exodus shares to be issued will depend upon the average
closing price per share of Exodus common stock for the five trading days
before and including the trading day before the closing date.

The pro forma combined condensed balance sheet as of March 31, 1999, gives
effect to the merger as if it had occurred on March 31, 1999.

The following adjustments have been reflected in the unaudited pro forma
combined condensed balance sheet:

(a) To allocate a portion of the cash consideration to the payment of
indebtedness and amounts due under acquisition agreements of Cohesive
pursuant to the merger agreement.

(b) To exclude income tax receivable by Cohesive from the net assets acquired
pursuant to the merger agreement.

(c) To record cash paid and common stock and options issued to common and
preferred stockholders of Cohesive, and record applicable purchase
accounting entries.

Under purchase accounting, the total purchase price will be allocated to
Cohesive's assets and liabilities based on their relative fair values.
Allocations are subject to valuations as of the date of the consummation of
the merger. The amounts and components of the estimated purchase price
along with the preliminary allocation of the estimated purchase price to
assets purchased are as follows (in thousands):

<TABLE>
<S> <C>
Cash.............................................................. $ 51,000
Common stock...................................................... 50,000
Fair value of Cohesive stock options assumed...................... 10,000
Estimated transaction costs....................................... 5,000
--------
Total purchase price............................................. $116,000
========
Book value of net tangible assets of Cohesive after adjustment (a)
and (b) above.................................................... $ 7,875
Goodwill and other intangible assets.............................. 108,125
--------
Net assets acquired.............................................. $116,000
========
</TABLE>

The actual allocation of the purchase price will depend upon the composition
of Cohesive's net assets on the closing date and Exodus' evaluation of the
fair value of the net assets as of the date indicated. Consequently, the
actual allocation of the purchase price could differ from that presented
above.

(2) Unaudited Pro Forma Combined Condensed Statements of Operations

The pro forma combined condensed statements of operations give effect to the
merger as if it had occurred at the beginning of the period presented.

The following adjustments have been reflected in the unaudited pro forma
combined condensed statements of operations:

(d) Adjustment to remove the amortization of historical goodwill and other
intangible assets previously recorded by Cohesive and to record the
amortization of goodwill and intangible assets resulting from the
allocation of the Cohesive purchase price. The pro forma adjustment
assumes goodwill and other

64
<PAGE>

intangible assets will be amortized on a straight-line basis over an
estimated life of 10 years. The ultimate lives assigned will be determined
at the date of acquisition based on the facts and circumstances existing at
that date.

(e) To eliminate interest income earned by Exodus on cash paid at the date of
the merger.

(f) To remove Cohesive's historical cumulative dividends and accretion on
redeemable preferred stock which are settled in cash at the date of the
merger.

(g) To reflect the estimated shares to be issued as consideration for the
merger based on the closing price of Exodus common stock of $67.25 per
share.

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<PAGE>

BUSINESS OF COHESIVE

Overview

While Cohesive typically provides services on a project basis, it endeavors
to build long-term partnerships with its clients. Cohesive believes that the
continuing nature of its customer relationships adds significant value to the
businesses it services. Cohesive has major customers across the United States,
as well as numerous small and mid-size clients. Some of these client
relationships have existed for five years or more. Cohesive has offices in
Boston, New York, Chicago, the San Francisco Bay Area, the Gulf Coast region
(Louisiana) and London. As of April 30, 1999, Cohesive employs approximately
348 people including approximately 257 technical professionals or managers.

Cohesive's Services and Core Competencies

The market for Cohesive's services is driven by the growing reliance on
Internet and intranet applications by both business and government users,
coupled with the growth of e-commerce. Specific application areas include e-
mail and messaging, e-commerce for business sales and client support, e-
commerce for retail and wholesale applications, and complex integration of
legacy systems with intranets.

Cohesive services its clients' needs through a coordinated and consistent set
of service offerings composed of:
. business consulting,

. networking, and

. web and application development.

Business Consulting

Cohesive's business consulting practice works closely with its clients to
understand their particular business needs and to develop appropriate
technology plans to meet those needs. Cohesive employs methodologies which
subdivide projects into distinct but interrelated phases. These phases follow
the lifecycle of the technical project from initial concept to final support of
a working system. The business consulting group generally provides overall
project management and may serve as Cohesive's client liaison.

Networking

Cohesive has substantial expertise in infrastructure network development and
support. Approximately 60% of its technical professionals specialize in this
area and have core competencies in network design, implementation, operations,
security and optimization. Cohesive has substantial expertise in wide area
networking with special competencies in the intranet, ATM, frame relay,
routing, network security, transport protocols (TCP/IP, SNA and IPX,) and
network operating systems (Cisco, IOS). Cohesive's networking competencies
include implementing and supporting local area networks, data bases (Microsoft
SQL, Sybase, Oracle, DB2) and computer operating systems (including, Unix,
MicroSoft NT, Novell, OS/2, MicroSoft MS-DOS).

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Web Application and Development

Cohesive's application and web systems group designs and develops complex web
sites, databases and application software for its clients. This group includes
approximately 30% of Cohesive's professional staff. In designing and developing
systems for its clients Cohesive employs a proven methodology consisting of:

. assessing requirements and planning,

. design,

. solution prototyping,

. implementation, and

. turnover, service and support.

Cohesive's specific technical skills include knowledge of programming
languages such as Java, Java Script, HTML, C, C++, and the design and
development of relational databases.

Sales and Marketing

Sales

Cohesive is organized on a regional basis with major offices in Boston, New
York, Chicago, the San Francisco Bay Area, and the Gulf Coast. In each region
Cohesive has a direct sales force focused on regional customers. Large sales to
clients with multi-regional offices are coordinated by Cohesive's national
corporate management. In addition to its direct sales force, its professional
technical staff participates actively in overall sales activities.

Marketing

Cohesive develops and performs its marketing communication, service product
marketing and customer relation functions at both the regional and national
level. Public relations and website development and management are national
corporate activities. Cohesive delivers focused seminars, selected trade shows
and advertisements at the regional level. Cohesive works actively with product
and service companies such as Cisco, Microsoft, Lucent Technologies and others
in providing services and solutions to its clients. From time to time, Cohesive
offers joint seminars with product and service companies.

Customers

Cohesive targets large and mid-size companies and selected vertical markets.
The following is a representative sample of industries in which Cohesive has
had customers over the last five years:

. financial services,

. electronic commerce,

. high technology,

. education and government,

. publishing, and

. real estate

Cohesive's client projects vary in scope and depth of technical knowledge
required. Typically Cohesive contracts with its clients on a "time and
materials" basis. No one client contributed more than 10% of Cohesive's total
revenues in fiscal 1998.

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Employees

As of April 30, 1999, Cohesive employed 348 people, including 257 technical
professionals and managers.

Competition

Cohesive is progressively moving into larger projects and larger accounts,
with the vertical market being the fastest growing segment of its business. The
four primary types of competitors in Cohesive's markets are:

. large information technology consultants, such as the consulting
divisions of the "Big 5" accounting firms, Cambridge Technologies,
Sapient and Whitman-Hart,

. systems integrators, such as EDS, IBM Global Services and CSC,

. Internet-related consultants, such as US WEB, Proxicom, and

. networking specialists, such as INS and Sprint Paranet.

Cohesive also competes with local value added resellers and consultants.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THEFINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF COHESIVE

The following is a discussion by Cohesive's management of its financial
condition and results of operations. This discussion should be read in
conjunction with Cohesive's consolidated financial statements and related notes
which are included in this document. This discussion contains forward-looking
statements that involve risks and uncertainties. Cohesive's actual results may
be significantly different than those suggested by these forward-looking
statements. The factors that may cause differences include those described
under "Risk Factors--Risks Related to Cohesive" beginning on page 32.

Overview

We are a leading professional services company with an advanced technology
focus and in-depth expertise in computer network design, implementation and
support, web and application development, e-mail and messaging, e-commerce,
Internet and intranet development, information technology security and
strategy, system integration, and project management. Our mission is to assist
our clients in solving their business challenges by employing advanced
information technologies. We offer a variety of services including network
design and development, web and application development and information
technology strategy and project management.

We derive our revenues primarily from fees paid for professional services
provided to our customers and amounts paid by customers to purchase products we
procured from third party suppliers. Professional service revenues are
recognized as our services are performed. Product revenues are recognized when
the products are delivered to the customers.

Since inception, a significant portion of our growth has resulted from our
acquisition of professional service companies. During the three-year period
ended December 31, 1998, we made a total of eight acquisitions. Each of the
acquisitions has been accounted for under the purchase method of accounting.
The excess of the purchase price over net identifiable tangible assets for each
acquisition has been allocated to identifiable and unidentifiable intangibles
and amortized over the estimated periods of benefit, ranging from two to
seven years. Our financial results reflect the results of operations of the
acquired companies from their respective dates of acquisition.

In connection with our acquisitions, we have recognized acquisition-related
charges in 1998, 1997 and 1996. Acquisition-related charges consist of signing
and retention bonuses, cash earnouts contingent upon continued employment and
reorganization expenses. Our reorganization expenses consist primarily of
severance and relocation costs.

We also divested two significant entities during 1997. In July 1997, we sold
a portion of our software development group to an unrelated third party for
$40.0 million, and recorded a $38.0 million gain related to this sale. In
November 1997, we sold our Internet services division to an unrelated third
party for $6.0 million. We recorded gains of $0.9 million and $3.9 million
during 1998 and 1997, respectively, related to this sale. The operating results
of the Internet services division have been segregated from continuing
operations and reported as discontinued operations in our consolidated
statement of operations.

If requested by the holders of our Series D Preferred Stock, we will be
required to redeem up to 300,000 shares of Series D Preferred Stock in
September 1999 for an aggregate redemption price of approximately $3.0 million.
We are also required to redeem shares of our Series A Preferred Stock and
Series B Preferred Stock in January 2000. In addition, our revolving credit
facility matures in December 1999. Upon maturity, we are required to repay all
outstanding indebtedness under this line of credit. We do not believe that we
have the ability to make these payments from our existing resources and
anticipated cash flows. Our principal stockholder has agreed to provide us the
necessary funds to repay our existing credit line at maturity and to extend the
redemption date of the Series A Preferred Stock and Series B Preferred Stock.

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Results of Operations

The following table presents selected consolidated statement of operations
data as a percentage of revenues for the years ended December 31, 1996, 1997
and 1998 and the three-month periods ended March 31, 1998 and 1999. This
information has been taken from, and should be read together with, our
consolidated financial statements and related notes which are included
elsewhere in this document.

<TABLE>
<CAPTION>
Percentage of revenues
----------------------------
Three
Months
Year Ended Ended
December 31, March 31,
---------------- ----------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Service revenues............................... 27% 41% 63% 59% 76%
Product revenues............................... 73% 59% 37% 41% 24%
---- ---- ---- ---- ----
Total revenues................................ 100% 100% 100% 100% 100%
---- ---- ---- ---- ----
Costs of Revenues:..............................
Costs of service revenues...................... 18% 27% 37% 30% 51%
Costs of product revenues...................... 52% 47% 31% 37% 20%
---- ---- ---- ---- ----
Total cost of revenues........................ 70% 74% 68% 67% 71%
---- ---- ---- ---- ----
Gross profit.................................... 30% 26% 32% 33% 29%
---- ---- ---- ---- ----
Operating Expenses:.............................
Sales and marketing............................ 18% 25% 14% 16% 11%
General and administrative..................... 33% 32% 24% 25% 16%
Research and development....................... 4% 6% -- -- --
Amortization of intangibles.................... 7% 8% 16% 15% 19%
Acquisition-related charges.................... 8% 9% 11% 21% --
---- ---- ---- ---- ----
Total operating expenses...................... 70% 80% 65% 77% 46%
---- ---- ---- ---- ----
Operating loss.................................. (40%) (54%) (33%) (44%) (17%)
---- ---- ---- ---- ----
Other income (expense):.........................
Gain on divestiture............................ -- 186% -- -- --
Interest income (expense), net................. 1% 2% 1% 3% (2%)
---- ---- ---- ---- ----
Total other income............................ 1% 188% 1% 3% (2%)
Income (loss) from continuing operations before
income taxes................................... (39%) 134% (32%) (41%) (19%)
Provision for (benefit from) income taxes....... -- 56% (6%) (5%) --
---- ---- ---- ---- ----
Income (loss) from continuing operations........ (39%) 78% (26%) (36%) (19%)
==== ==== ==== ==== ====
</TABLE>

Comparison of the Three Months ended March 31, 1998 and 1999

Revenues

Our revenues consist of fees paid for professional information technology
("IT") consulting services and amounts paid by customers to purchase products
manufactured by third party vendors. Service revenues increased 76% from $5.1
million in the first quarter of 1998 to $8.9 million in the first quarter of
1999. The increase is primarily attributable to additional revenues provided by
companies acquired during 1998, and to additional customers and increased
billing rates. Service revenues are recognized as the related services are
rendered.

We sell hardware and software products to customers in conjunction with
professional services. Product revenues have not increased as rapidly as
service revenues due to the fact that the IT services companies that we
acquired in 1998 do not resell products in conjunction with their service
offerings. Product revenues

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decreased 21% from $3.5 million in the first quarter of 1998 to $2.8 million in
the first quarter of 1999. The decrease in product revenues is associated with
a change in our business strategy during the second half of 1998 to emphasize
services rather than product sales. Product revenues are recognized when the
products are delivered to the customers.

Cost of Revenues

Cost of revenues is comprised of the costs of service revenues and product
revenues. Cost of service revenues includes professional staff wages and
benefits, training programs, recruiting charges and other costs related to
professional staff. Cost of product revenues consists of the cost to purchase
third party products.

Cost of service revenues increased 124% from $2.6 million in the first
quarter of 1998 to $5.9 million in the first quarter of 1999. As a percentage
of service revenues, costs of service revenues increased from 52% in the first
quarter of 1998 to 66% in the first quarter of 1999. Cost of service revenues
increased in absolute dollars primarily as a result of increased headcount.
Cost of service revenues increased as a percentage of service revenues due to
the acquisition of practices that have a slightly lower ratio of billing rates
compared to professional staff wages.

Cost of product revenues decreased 25% from $3.2 million in the first quarter
of 1998 to $2.4 million in the first quarter of 1999. As a percentage of
product revenues, costs of product revenues decreased from 90% in the first
quarter of 1998 to 86% in the first quarter of 1999. Cost of product revenues
decreased in absolute dollars due to the decrease in product revenues. Cost of
product revenues decreased as a percentage of product revenues due to our
achieving maximum gross margins for any product sales. Subsequent to the
divestiture of our software development group in July 1997, our product sales
are primarily resales of third party products with a higher cost as a
percentage of revenues. We resell products to accommodate customers and
facilitate the sale of consulting services by providing turnkey solutions.

Sales and Marketing

Sales and marketing expenses primarily include salaries, commissions and
benefits for marketing and sales personnel and public-relations related
expenses. Sales and marketing expenses decreased 2% from $1.4 million in the
first quarter of 1998 to $1.3 million in the first quarter of 1999. As a
percentage of total revenues, sales and marketing expenses decreased from 16%
in the first quarter of 1998 to 11% in the first quarter of 1999. The decrease
in absolute dollars and as a percentage of revenue is due to one-time costs in
the first quarter of 1998 associated with the change of our corporate name.

General and Administrative

General and administrative expenses primarily consist of salaries and
benefits for our finance, administrative and executive personnel, plus fees
paid for outside professional services. General and administrative expenses
decreased 7% from $2.1 million in the first quarter of 1998 to $1.9 million in
the first quarter of 1999. General and administrative expenses as a percentage
of total revenues decreased from 25% in the first quarter of 1998 to 16% in the
first quarter of 1999. General and administrative expenses fell as a percentage
of total revenues due to economies of scale achieved with our growth.

Amortization of Intangibles

Amortization of intangibles represents amortization of identifiable
intangible assets and goodwill resulting from various acquisitions of IT
services companies. Amortization of intangibles increased 68% from $1.3 million
in the first quarter of 1998 to $2.2 million in the first quarter of 1999. The
increase is related to significant acquisitions made during 1998.

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Acquisition-related Charges

Acquisition-related charges consist of signing and retention bonuses, cash
earnouts contingent upon continued employment and reorganization expenses,
consisting primarily of severance and relocation costs. Acquisition-related
charges were $1.8 million in the first quarter of 1998 and were related to cash
earnouts that were contingent upon continued employment. All earnout programs
were concluded during 1998 and there were no new acquisitions in the first
quarter of 1999.

Interest Income (Expense), Net

Interest income (expense), net decreased $0.5 million from income of $0.3
million in the first quarter of 1998 to expense of $0.2 million in the first
quarter of 1999. The decrease relates to the decrease in our cash balances from
the first quarter of 1998 to the first quarter of 1999. During the first
quarter of 1998, we had interest income on cash received from the business
divestitures. During the first quarter of 1999, we incurred interest expense
due to borrowings against our line of credit.

Income Taxes

Our provision for income taxes decreased from a benefit of $0.4 million in
the first quarter of 1998 to zero in the first quarter of 1999. The decreased
benefit is associated with a lower expected taxable loss in 1999 compared to
1998.

Income (Loss) From Continuing Operations

Our loss from continuing operations decreased $0.9 million from $3.1 million
in the first quarter of 1998 to $2.2 million in the first quarter of 1999. The
improvement in our loss is attributable to the factors discussed above.

Comparison of Years ended December 31, 1997 and 1998

Revenues

In 1997, revenue also included revenue from the sale of network security
software developed by our software development group. This product line was
sold to Cisco Systems in July 1997.

Service revenues increased 211% from $8.5 million in 1997 to $26.3 million in
1998. This increase is attributable primarily to incremental revenues provided
by IT services companies acquired during the second half of 1997 and 1998,
combined with internal growth from new customers and increased billing rates.

Product revenues increased 29% from $12.0 million in 1997 to $15.4 million in
1998. This increase is associated with the increase in related service
revenues. Entities acquired in 1997 that resell products have a full year of
product revenues in 1998 as compared to 1997 where product revenues of the
acquired entities are included only from the date of acquisition.

Cost of Revenues

Cost of service revenues increased 179% from $5.5 million in 1997 to $15.3
million in 1998. As a percentage of service revenues, costs of service revenues
decreased from 65% in 1997 to 58% in 1998. Cost of service revenues increased
in absolute dollars primarily as a result of increased headcount from both
acquisitions of companies and internal growth. Cost of service revenues
decreased as a percentage of service revenues due to Cohesive's emphasis on
providing higher value services to its customers.

Cost of product revenues increased 36% from $9.6 million in 1997 to $13.0
million in 1998 due to increased product revenues. As a percentage of product
revenues, costs of product revenues increased from 80% in 1997 to 85% in 1998.
Cost of product revenues increased as a percentage of product revenues due
primarily to the mix of products sold.

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Sales and Marketing

Sales and marketing expenses increased 11% from $5.1 million in 1997 to $5.7
million in 1998. As a percentage of total revenues, sales and marketing
expenses decreased from 25% in 1997 to 14% in 1998. The increase in absolute
dollars is primarily attributable to increased sales commissions associated
with increased revenues. The decrease as a percentage of total revenues is
associated with the elimination of marketing costs associated with the software
development group, which had relatively lower revenues, that was sold during
July 1997.

General and Administrative

General and administrative expenses increased 57% from $6.5 million in 1997
to $10.2 million in 1998. This increase is attributable to additional finance
and administrative personnel that were part of practices acquired in late 1997
and 1998. As a percentage of revenues, general and administrative expenses
decreased from 32% in 1997 to 24% in 1998. The decrease as a percentage of
revenue is due to the economies of scale achieved through acquisitions and
revenues growing faster than general and administrative expenses.

Research and Development

Research and development expenses relate to salaries and benefits of internal
research and development personnel. Research and development expenses decreased
in absolute dollars from $1.3 million in 1997 to zero in 1998. Research and
development expense in 1997 was comprised primarily of salaries and benefits of
our software development group personnel exploring remote monitoring
technologies. As previously stated, the software development group was sold in
1997.

Amortization of Intangibles

Amortization of intangibles increased 325% from $1.6 million in 1997 to $6.7
million in 1998. The increase is related to significant acquisitions in 1997
and 1998.

Acquisition-Related Charges

Acquisition-related charges increased 133% from $1.9 million in 1997 to $4.5
million in 1998. Expenses associated with signing and retention bonuses
increased by $1.3 million from $.5 million in 1997 to $1.8 million in 1998.
Cash earnouts contingent upon continued employment increased by $0.3 million
from $1.4 million in 1997 to $1.7 million in 1998. Reorganization expenses were
zero in 1997 and $0.9 million in 1998. The increase in acquisition-related
charges in 1998 over 1997 relates to the specific terms of Cohesive's 1998
acquisitions.

Gain on Divestiture

On July 25, 1997, Cohesive's network security software product line was sold
to Cisco Systems for $40 million. The $38.0 million gain on divestiture
recognized in 1997 relates entirely to this sale.

Interest Income (Expense), Net

Interest income (expense), net decreased $0.2 million from $0.6 million in
1997 to $0.4 million in 1998. This decrease resulted primarily from less
interest income in 1998 as less cash and short-term investments were available
as compared to 1997.

Income Taxes

Income taxes decreased $14.1 million from a $11.5 million expense in 1997 to
a $2.6 million benefit in 1998. The 1997 tax expense relates primarily to the
gain on divestiture of the network security product line in 1997. The tax
benefit in 1998 relates to the carry back of 1998 losses against the income tax
paid in 1997.

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Income (Loss) from Continuing Operations

Our income (loss) from continuing operations decreased from an income of
$16.0 million in 1997 to a loss of $10.8 million in 1998. The 1997 income is
attributable primarily to the $38.0 million gain on the divestiture of a
portion of our network security software product line. Excluding the
divestiture, our loss from continuing operations is due to the amortization of
intangibles and acquisition-related charges during those periods.

Comparison of Years ended December 31, 1996 and 1997

Revenues

Service revenues increased 142% from $3.5 million in 1996 to $8.5 million in
1997. This increase is primarily attributable to additional revenues provided
by companies acquired during 1996 and 1997 and to additional customers and
increased billing rates.

Product revenues increased 29% from $9.3 million in 1996 to $12.0 million in
1997. The increase in product revenues is associated with our increased service
revenues as we resell products to provide a turnkey solution for our customers.

Cost of Revenues

Cost of service revenues increased 139% from $2.3 million in 1996 to $5.7
million in 1997. As a percentage of service revenues, costs of service revenues
decreased slightly from 66% in 1996 to 65% in 1997. Cost of service revenues
increased in absolute dollars primarily as a result of increased headcount.

Cost of product revenues increased 43% from $6.7 million in 1996 to $9.6
million in 1997. As a percentage of product revenues, costs of product revenues
increased from 72% in 1996 to 80% in 1997. Cost of product revenues increased
in absolute dollars due to increases in product revenues. Cost of product
revenues increased as a percentage of product revenues due to the mix of
products sold and increased competition in product resales.

Sales and Marketing

Sales and marketing expenses increased 123% from $2.3 million in 1996 to $5.1
million in 1997. As a percentage of total revenues, sales and marketing
expenses increased from 18% in 1996 to 25% in 1997. The increase in absolute
dollars is primarily attributable to increased sales commissions associated
with increased revenues. The increase as a percentage of total revenues relates
to a general increase in marketing programs.

General and Administrative

General and administrative expenses increased 54% from $4.2 million in 1996
to $6.5 million in 1997. As a percentage of total revenues, general and
administrative expenses decreased from 33% in 1996 to 32% in 1997. The increase
in absolute dollars is attributable to increased travel and corporate spending
associated with the acquisition of entities and our overall growth.

Research and Development

Research and development expenses increased 131% from $0.6 million in 1996 to
$1.3 million in 1997. As a percentage of total revenues, research and
development expenses increased from 4% in 1996 to 6% in 1997. The increase in
absolute dollars and as a percentage of revenues is attributable to our
expanded development efforts.

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Amortization of Intangibles

Amortization of intangibles increased 82% from $0.9 million in 1996 to $1.6
million in 1997. The increase is related to acquisitions during 1996 and 1997.

Acquisition-Related Charges

Acquisition-related charges increased 99% from $1.0 million in 1996 to $1.9
million in 1997. The increase in acquisition-related charges in 1997 over 1996
relates to additional cash earnouts associated with our 1997 acquisitions.

Interest Income (Expense), Net

Interest income (expense) increased $0.5 million from $0.1 million in 1996 to
$0.6 million in 1997. The increase relates to the increase in our cash and
short term investment balances during 1997.

Income Taxes

Income taxes increased $11.5 million from zero in 1996 to an $11.5 million
expense in 1997. The 1997 tax expense relates primarily to the gain on
divestiture of the software development group in 1997 while no provision was
provided in 1996 due to Cohesive's history of operating losses.

Income (Loss) From Continuing Operations

Our income (loss) from continuing operations increased $21.0 million from a
loss of $5.0 million in 1996 to an income of $16.0 million in 1997. The 1997
gain is attributable primarily to the $38 million gain on the divestiture of
our software development group.

Liquidity and Capital Resources

From inception through March 31, 1999, Cohesive has financed its operations
primarily through private sales of preferred stock, the divestiture of its
software development product line in July 1997 and proceeds from working
capital lines of credit. At March 31, 1999, Cohesive's principal sources of
liquidity were $1.8 million in cash and cash equivalents, and $7.5 million in
funds available under its working capital line of credit.

During September 1999, Cohesive entered into a revolving line of credit from
a bank that provides for borrowings up to $15 million through December 31,
1999. Borrowings under the line are secured by substantially all of our assets
and bear interest at varying rates based upon the bank's prime or LIBOR rate on
the date of borrowing. As of March 31, 1999, we had borrowed $7.5 million under
this line of credit and had $7.5 million available.

Net cash used for operating activities was $4.0 million and $0.8 million for
the quarters ended March 31, 1998 and 1999, respectively and $18.8 million and
$9.6 million for the years ended December 31, 1997 and 1998, respectively. Net
cash used for operating activities primarily results from Cohesive's net
losses, adjusted for the gain in divestiture in 1997 and depreciation and
amortization.

Net cash provided by (used for) investing activities was $2.3 million and
($1.5) million for the quarters ended March 31, 1998 and 1999, respectively.
Net cash provided by investing activities was $17.7 million in fiscal year 1997
and $4.0 million in fiscal 1998. Net cash provided by investing activities
primarily relates to cash received in connection with the divestiture of the
software development group and Internet services division in 1997, offset by
cash paid in connection with acquisitions.

Net cash provided by financing activities was $0.2 million and $0.5 million
for the quarters ended March 31, 1998 and 1999, respectively. Net cash provided
by financing activities was $2.0 million in fiscal

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year 1997 and $6.0 million in fiscal 1998. Net cash provided by financing
activities in 1997 related to $8.9 million raised in the sale of common and
preferred stock, offset by the redemption of $7.0 million in preferred stock.
Net cash provided by financing activities in 1998 related primarily to $6.5
million drawn down from available lines of credit.

Quantitative and Qualitative Disclosure About Market Risk

As of March 31, 1999 Cohesive has $7.5 million outstanding on a variable
interest-bearing revolving line of credit. A hypothetical 10% increase or
decrease in interest rates would not have a material impact on the fair value
of the line of credit. Cohesive does not hedge any interest rate exposures.

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COMPARISON OF RIGHTS OF HOLDERS OF EXODUS COMMON STOCK AND
HOLDERS OF COHESIVE COMMON STOCK

After consummation of the merger, the holders of Cohesive common stock who
receive Exodus common stock under the terms of the merger agreement, including
holders of Series D Preferred Stock whose shares are automatically converted
into Cohesive common stock immediately prior to the merger, will become
stockholders of Exodus. Because Cohesive and Exodus are both Delaware
corporations, Cohesive stockholders' rights will continue to be governed by
Delaware law. Additionally, as stockholders of Cohesive, their rights are
presently governed by the Cohesive certificate of incorporation and the
Cohesive bylaws. As stockholders of Exodus, their rights following the
consummation of the merger will instead be governed by the Exodus certificate
of incorporation and the Exodus bylaws. The following discussion summarizes
only the material differences between the rights of holders of Exodus common
stock and holders of Cohesive common stock under the certificates of
incorporation and bylaws of Exodus and Cohesive. This summary does not purport
to be complete and is qualified in its entirety by reference to the Exodus
certificate of incorporation and bylaws, the Cohesive certificate of
incorporation and bylaws and the relevant provisions of Delaware law.

Comparison of Preferences and Rights of Exodus Common Stock and Cohesive Common
Stock and Series D Preferred Stock

Under the Exodus certificate of incorporation, the holders of outstanding
Exodus common stock are entitled to receive dividends out of assets legally
available at such times and in such amounts as the Exodus board may from time
to time determine, subject to preferences that may apply to shares of preferred
stock outstanding at the time. Each Exodus stockholder is entitled to one vote
for each share of common stock held on all matters submitted to a vote of
stockholders. Cumulative voting for the election of directors is not provided
for in the Exodus certificate of incorporation, which means that the holders of
a majority of the shares voted can elect all of the directors then standing for
election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Upon the liquidation, dissolution or
winding-up of Exodus, the assets legally available for distribution to
stockholders are distributable ratably among the holders of the common stock
and any participating preferred stock outstanding at that time after payment of
liquidation preferences, if any, on any outstanding preferred stock and payment
of other claims of creditors.

The Cohesive certificate of incorporation provides that the holders of
outstanding Cohesive common stock and Series D Preferred Stock are entitled to
receive dividends out of assets legally available at such times and in such
amounts as the Cohesive board may from time to time determine, subject to
preferences of Cohesive Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock. Except as otherwise provided by Delaware law, only
holders of Cohesive common stock, Series C Preferred Stock and Series D
Preferred Stock are entitled to one vote for each share of common stock held,
determined on an as-converted to common stock basis, on all matters submitted
to a vote of stockholders. Cumulative voting for the election of directors is
not provided for in the Cohesive certificate of incorporation. The common stock
and the Series D Preferred Stock are not entitled to preemptive rights and are
not subject to redemption. The Series D Preferred Stock may be converted into
Cohesive common stock at any time at the election of the holder of the shares,
and automatically convert into Cohesive common stock on the closing of a
qualifying public offering, immediately prior to the closing of a sale or
acquisition of Cohesive, or on September 19, 2002. Upon the liquidation,
dissolution or winding-up of Cohesive, the assets legally available for
distribution to stockholders are distributable first ratably among the holders
of Series A Preferred Stock and Series B Preferred Stock until each holder
receives $100 per share plus any unpaid accrued dividends; second ratably among
holders of Series C Preferred Stock until each holder receives $5 per share
plus any declared and unpaid dividends; and third ratably among the holders of
Series D Preferred Stock until each holder receives $10 per share plus any
declared and unpaid dividends. Any assets legally available for distribution to
stockholders following the distributions to the holders of preferred stock are
distributable ratably among the holders of common stock.

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Undesignated Preferred Stock

Under the Exodus certificate of incorporation, the Exodus board of directors,
subject to limitations prescribed by law and the Exodus certificate of
incorporation, is authorized to provide for the issuance of Exodus undesignated
preferred stock in one or more series. The authorized undesignated preferred
stock is available for issuance without further action by Exodus stockholders,
unless this action is required by applicable law or the rules of any stock
exchange or automated quotation system on which Exodus securities may be listed
or traded.

The Cohesive certificate of incorporation does not authorize the Cohesive
board of directors to provide for the issuance of undesignated preferred stock.

Election and Number of Directors; Filling Vacancies; Removal

The Exodus bylaws provide that the number of directors is to be one or more.
Currently, the Exodus bylaws provide for a board of directors consisting of six
members, but may be changed by resolution of the Exodus board of directors. The
Cohesive bylaws provide that the size of its board, within the stated range of
six to ten directors, may be changed by resolution of the board of directors.
Currently, the Cohesive bylaws provide for a board of directors consisting of
six members.

The Exodus bylaws provide that any director may be removed by the holders of
a majority of the shares then entitled to vote at an election of directors, and
any vacancies, including newly created directorships, may be filled by the
stockholders, a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. The Cohesive bylaws contain comparable
provisions, except that vacancies, including newly created directorships, may
be filled only by the stockholders holding a majority of the issued and
outstanding voting stock of Cohesive.

Director Compensation

The Exodus bylaws provide that directors may receive fees and other
compensation for their services as directors pursuant to a resolution of the
board of directors. The Cohesive bylaws provide that directors may not receive
a stated salary for their services; however, the board of directors may by
resolution fix a specific sum plus expenses for attendance at each meeting of
the board of directors.

Stockholder Meetings and Written Consents

Under the Exodus certificate of incorporation and bylaws, actions must be
taken by Exodus' stockholders only at annual or special meetings, and not by
written consent. The Cohesive bylaws provide that any action required to be
taken at any annual or special meeting may be taken by written consent.

Power To Call Special Meeting of Stockholders

The Exodus bylaws provide that a special meeting of stockholders may be
called at any time by the board of directors, the chairman of the board or the
Chief Executive Officer. The Cohesive bylaws provide that a special meeting of
stockholders may be called at any time by the board of directors, the chairman
of the board, the Chief Executive Officer or by one or more stockholders
holding not less than 50% of the outstanding shares entitled to vote at the
meeting.

Percentage of Voting Stock; Influence Over Affairs

Upon completion of the merger, the percentage ownership of Exodus by each
former Cohesive stockholder will be substantially less than the stockholder's
current percentage ownership of Cohesive. Accordingly, former Cohesive
stockholders will have a significantly smaller voting influence over the
affairs of Exodus than they currently enjoy over the affairs of Cohesive.

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<PAGE>

Directors' Committees

Under the Exodus bylaws, Exodus' board may, by resolution passed by a
majority of the whole board, delegate limited powers normally held only by the
board in its entirety to a committee comprised of one or more members of the
board. These committees may exercise any power normally held by the entire
board, but may not:

. amend the Exodus certificate of incorporation, except that a committee
may, to the extent authorized in the resolution or resolutions providing
for the issuance of stock adopted by the board as provided by Delaware
law, fix the designations, preferences or rights of the shares relating
to dividends, redemption, dissolution, any distribution of assets of
Exodus, or the conversion into, or the exchange of the shares for,
shares of any other class or series of the same or any other class of
stock of Exodus or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series;

. adopt an agreement of merger or consolidation under Delaware law;

. recommend to the stockholders the sale, lease, or exchange of all or
substantially all of Exodus' property and assets;

. recommend to the stockholders a dissolution of Exodus or a revocation of
a dissolution; or

. amend the Exodus bylaws.

The Exodus bylaws further specify that unless the board resolution
establishing the committee expressly so provides, no committee shall have the
power or authority to:

. declare a dividend;

. authorize the issuance of stock; or

. adopt a certificate of ownership and merger under Delaware law.

Under the Cohesive bylaws, Cohesive's board may, by resolution passed by a
majority of the whole board, delegate limited powers normally held only by the
board in its entirety to a committee comprised of one or more members of the
board. These committees may exercise any power normally held by the entire
board, but may not:

. amend the Cohesive certificate of incorporation;

. adopt an agreement of merger or consolidation;

. recommend to the stockholders the sale, lease, or exchange of all or
substantially all of Cohesive' property and assets;

. recommend to the stockholders a dissolution of Cohesive or a revocation
of a dissolution;

. remove or indemnify directors; or

. amend the Cohesive bylaws.

The Cohesive bylaws further specify that unless the board resolution
establishing the committee expressly so provides, no committee shall have the
power or authority to declare a dividend or authorize the issuance of stock.

Stockholder Rights Plan

In January 1999, Exodus adopted a stockholder rights plan. The plan is
designed to protect the long-term value of Exodus for its stockholders during
any future unsolicited acquisition attempt. In connection with the

79
<PAGE>

plan, Exodus declared a dividend of one preferred share purchase right for each
share of Exodus common stock outstanding on February 11, 1999 and further
directed the issuance of one specified right with respect to each share of
Exodus common stock that is issued after February 11, 1999, except in specified
circumstances. The rights will expire on January 27, 2009. The rights are
initially attached to Exodus common stock and will not trade separately.

If a person or a group acquires 15% or more of Exodus common stock (an
"Acquiring Person"), or announces an intention to make a tender offer for
Exodus common stock the consummation of which would result in a person or group
becoming an Acquiring Person, then the rights will be distributed (the
"Distribution Date") and will thereafter trade separately from the common
stock. Upon the Distribution Date, each right may be exercised for 1/200th of a
share of a newly-designated Series A Junior Participating Preferred Stock at an
exercise price of $175. The Preferred Stock has been structured so that the
value of 1/100th of a share of the preferred stock will approximate the value
of one share of common stock.

Upon a person becoming an Acquiring Person, holders of the rights, other than
the Acquiring Person, will have the right to acquire Exodus common stock at a
substantially discounted price, in lieu of the preferred stock. Additionally,
if after the Distribution Date, Exodus is acquired in a merger or other
business combination, or 50% or more of its assets are sold in a transaction
with an Acquiring Person, the holders of rights, other than the Acquiring
Person, will have the right to receive common stock of the acquiring
corporation at a substantially discounted price.

After a person has become an Acquiring Person, the Exodus board of directors
may, at its option, require the exchange of outstanding rights, other than
those held by the Acquiring Person, for common stock at an exchange ratio of
one share of common stock per right. The board also has the right to redeem
outstanding rights at any time prior to the Distribution Date, or later in
specified circumstances, at a price of $0.001 per right. The terms of the
rights, including the period to redeem the rights, may be amended by the board
in specified circumstances.

Cohesive does not have a stockholder rights plan in place.

80
<PAGE>

PRINCIPAL STOCKHOLDERS OF COHESIVE AND
THE STOCK OWNERSHIP OF COHESIVE'S MANAGEMENT

The following chart presents information with respect to the beneficial
ownership of Cohesive common stock as of May , 1999 by:

. each executive officer of Cohesive,

. each director of Cohesive,

. each beneficial owner of more than 5% of the outstanding shares of
Cohesive common stock, and

. all executive officers and directors of Cohesive as a group.

Unless otherwise noted, each of the stockholders named below has sole voting
and investment power with respect to the shares shown as being owned
beneficially by him, her or it.

<TABLE>
<CAPTION>
Percentage
of Shares
Number of Shares of Common
of Common Stock Stock
Name of Stockholder Beneficially Owned Outstanding
- ------------------- ------------------ -----------
<S> <C> <C>
Thomas E. McInerney (1)(2)(3).................. 9,592,646 68.6
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue,
Suite 2500 New York, New York 10022
Anthony J. de Nicola (1)(4).................... 9,339,170 66.8
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue,
Suite 2500 New York, New York 10022
Welsh, Carson, Anderson & Stowe VI, L.P........ 9,336,270 66.8
320 Park Avenue, Suite 2500
New York, New York 10022
Dennis M. Rohan (5)............................ 1,990,000 14.1
c/o Cohesive Technology Solutions, Inc.
2465 East Bayshore Road, Suite 400
Palo Alto, California 94303
Mark R. Kriss (6).............................. 1,040,001 7.4
3810 Magnolia Drive
Palo Alto, California 94306
Cisco Systems, Inc. (7)........................ 800,000 5.4
170 West Tasman Drive
San Jose, California 95134-1706
Paul J. Brady (8).............................. 300,000 2.1
Stephen R. Bennion (9)......................... 125,000 *
Edward J. Kramer (10).......................... 71,250 *
Peter Cunningham (11).......................... 36,250 *
George Covert (12)............................. 30,000 *
James G. DuBos (13)............................ 29,750 *
Christine Hemrick (14)......................... -- --
All executive officers and directors (10
persons) (15)................................. 13,217,797 90.4
</TABLE>
- --------
* Less than 1%

81
<PAGE>

(1) Includes 9,336,270 shares of Cohesive common stock owned by Welsh, Carson,
Anderson & Stowe VI, L.P. Mr. McInerney and Mr. de Nicola serve as general
partners of WCAS VI Partners, L.P., the sole general partner of Welsh,
Carson, Anderson & Stowe VI, L.P. As general partners of WCAS VI Partners,
L.P., Messrs. McInerney and de Nicola may be deemed to beneficially own
the shares owned by Welsh, Carson, Anderson & Stowe VI, L.P. Messrs.
McInerney and de Nicola disclaim beneficial ownership of these shares.
(2) Includes 198,400 shares of Cohesive common stock owned by WCAS Information
Partners, L.P. Mr. McInerney serves as a general partner of WCAS IP
Partners, the sole general partner of WCAS Information Partners, L.P. As a
general partner of WCAS IP Partners, Mr. McInerney may be deemed to
beneficially own the shares owned by WCAS Information Partners, L.P. Mr.
McInerney disclaims beneficial ownership of these shares.
(3) Mr. McInerney is a director of Cohesive.
(4) Mr. de Nicola is a director of Cohesive.
(5) Includes 100,000 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999. Includes 1,750,000 shares
owned in the name of Dennis and Theres Rohan, husband and wife, as joint
tenants and 140,000 shares owned by Mr. Rohan's children. Mr. Rohan
disclaims beneficial ownership of the shares owned by his children. Mr.
Rohan is the President and Chief Executive Officer as well as a director
of Cohesive.
(6) Includes 80,000 shares owned by Mr. Kriss' children. Mr. Kriss disclaims
beneficial ownership of these shares.
(7) Represents 800,000 shares of Cohesive common stock issuable upon the
conversion of 800,000 shares of Cohesive Series C Preferred Stock. Cisco
holds 100% of the Cohesive Series C Preferred Stock outstanding.
(8) Includes 300,000 shares of Cohesive common stock issuable upon the
conversion of 300,000 shares of Cohesive Series D Preferred Stock. Mr.
Brady is a Regional Vice President of Cohesive. Mr. Brady holds 33.3% of
the Cohesive Series D Preferred Stock outstanding. The remaining shares of
Cohesive Series D Preferred Stock are held by John P. Tower and Karl J.
Peffinis, each of whom holds 300,000 shares, or 33.3%, of Cohesive Series
D Preferred Stock.
(9) Includes 50,000 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999 and 75,000 options which
will be accelerated in connection with the merger. Mr. Bennion is the
Executive Vice President and Chief Financial Officer of Cohesive.
(10) Includes 33,750 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999. Mr. Kramer is a Regional
Vice President of Cohesive.
(11) Includes 36,250 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999. Mr. Cunningham is a
director of Cohesive.
(12) Includes 30,000 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999. Mr. Covert is a director
of Cohesive.
(13) Includes 29,750 shares subject to options which are currently exercisable
or exercisable within 60 days of May , 1999. Mr. DuBos is a Regional
Vice President of Cohesive.
(14) Ms. Hemrick is a director of Cohesive.
(15) Includes 9,754,670 shares of Cohesive common stock as to which beneficial
ownership is disclaimed.

The 9,336,270 shares of Cohesive common stock owned by Welsh, Carson,
Anderson & Stowe VI, L.P. are the subject of an irrevocable proxy which was
granted by Welsh, Carson, Anderson & Stowe VI, L.P. to Exodus Communications,
Inc. and two of its officers, Adam W. Wegner and Joseph Stockwell, on April 21,
1999 pursuant to a voting agreement. See "The Cohesive Special Meeting --
Required Vote."

Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Information Partners, L.P. and
ten individuals, including Thomas E. McInerney and Anthony J. de Nicola, own
all of the outstanding shares of Cohesive Series A Preferred Stock and Series B
Preferred Stock. Each of these ten individuals is a current or former general
partner of WCAS VI Partners, L.P., the general partner of Welsh, Carson,
Anderson & Stowe VI, L.P., or WCAS IP Partners, the general partner of WCAS
Information Partners, L.P. Mr. McInerney, a director of Cohesive, is a general
partner of each of WCAS VI Partners, L.P. and WCAS IP Partners. Mr. de Nicola,
another director of Cohesive, is a general partner of WCAS VI Partners.The
Cohesive Series A Preferred stock and Series B Preferred Stock are non-voting
securities. However, the holders of the Cohesive Series A Preferred Stock and
Series B Preferred Stock have the right to vote together as a single class on
the merger. Each of these ten individuals disclaims beneficial ownership of all
shares not owned directly by them.

82
<PAGE>

EXPERTS

The consolidated financial statements and related schedule of Exodus as of
December 31, 1997 and 1998, and for each of the years in the three-year period
ended December 31, 1998, have been incorporated by reference in this document
and in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Cohesive as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
included in the registration statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report appearing in this document
and in the registration statement, and have been so included in reliance of
said firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

The validity of the Exodus common stock issuable in the merger and other
legal matters related to the merger will be passed on by Fenwick & West LLP,
Palo Alto, California. Reboul, MacMurray, Hewitt, Maynard & Kristol, New York,
New York, is acting as counsel for Cohesive in connection with legal matters
relating to the merger.

83
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Cohesive Technology Solutions, Inc. -- Consolidated Financial Statements

Independent Auditors' Report............................................ F-2

Consolidated Balance Sheets as of December 31, 1997 and 1998............ F-3

Consolidated Statements of Operations for the years ended December 31,
1996 and 1997 and 1998................................................. F-4

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1997 and 1998....................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998.................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7

Unaudited Condensed Consolidated Balance Sheets as of December 31, 1998
and March 31, 1999..................................................... F-16

Unaudited Condensed Consolidated Statement of Operations for the three
months ended March 31, 1998 and 1999................................... F-17

Unaudited Condensed Consolidated Statement of Cash Flows for the three
months ended March 31, 1998 and 1999................................... F-18

Notes to Unaudited Condensed Consolidated Financial Statements.......... F-19

</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors of
Cohesive Technology
Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of Cohesive
Technology Solutions, Inc. (formerly Cohesive Network Systems, Inc.) and
subsidiaries as of December 31, 1997 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Cohesive Technology Solutions,
Inc. and subsidiaries as of December 31, 1997 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP
April 8, 1999
(April 21, 1999 as to Note 10)

F-2
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 3,217,000 $ 3,580,000
Restricted cash...................................... 5,130,000 --
Short-term investments............................... 15,784,000 --
Accounts receivable, net of allowance for doubtful
accounts of $250,000 and $962,000 in 1997 and 1998,
respectively........................................ 4,038,000 7,561,000
Income tax receivable................................ -- 1,984,000
Other receivables.................................... 109,000 --
Inventory............................................ 393,000 422,000
Prepaid expenses..................................... 294,000 758,000
----------- -----------
Total current assets............................... 28,965,000 14,305,000
Property and equipment, net........................... 1,241,000 2,748,000
Other assets.......................................... 108,000 60,000
Intangibles, net...................................... 5,816,000 26,454,000
----------- -----------
Total................................................. $36,130,000 $43,567,000
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY

Current liabilities:
Revolving lines of credit............................ $ 515,000 $ 6,997,000
Accounts payable..................................... 1,058,000 2,316,000
Amounts due under acquisition agreements............. 3,815,000 6,896,000
Accrued payroll and related expenses................. 1,026,000 2,224,000
Other accrued liabilities............................ 495,000 1,047,000
Income taxes payable................................. 2,125,000 --
Deferred revenue..................................... 719,000 276,000
Deferred gain........................................ 1,050,000 --
Current portion of long-term obligations (Note 2).... -- 440,000
----------- -----------
Total current liabilities.......................... 10,803,000 20,196,000
Long-term obligations (Note 2)........................ -- 349,000
----------- -----------
Total liabilities.................................. 10,803,000 20,545,000
----------- -----------
Commitments and contingencies (Notes 3 and 9)......... -- --

Redeemable preferred stock:
Preferred stock, $1.00 par value; 196,800 shares
authorized: Series A, 120,000 shares designated;
shares outstanding: 60,570 in 1997 and 1998......... 6,743,000 7,166,000
Series B, 76,800 shares designated; shares
outstanding: 28,800 in 1997 and 1998................ 3,000,000 3,202,000
Convertible Series D preferred stock, $1.00 par
value, none in 1997, 900,000 shares authorized,
designated and outstanding in 1998 ................. -- 7,906,000
----------- -----------
Total redeemable preferred stock................... 9,743,000 18,274,000
----------- -----------

Stockholders' equity:
Convertible Series C preferred stock, $1.00 par
value, 800,000 shares authorized, designated and
outstanding in 1997 and 1998........................ 4,000,000 4,000,000
Common stock $0.01 par value per share; 21,000,000
shares authorized; shares outstanding: 13,519,919
in 1997 and 13,902,769 in 1998 ..................... 135,000 139,000
Additional paid-in capital........................... 3,169,000 3,364,000
Retained earnings (accumulated deficit).............. 8,280,000 (2,755,000)
----------- -----------
Total stockholders' equity......................... 15,584,000 4,748,000
----------- -----------
Total liabilities, redeemable preferred stock and
stockholders' equity................................. $36,130,000 $43,567,000
=========== ===========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Revenues:
Service revenues...................... $ 3,494,000 $ 8,463,000 $ 26,328,000
Product revenues...................... 9,298,000 11,957,000 15,380,000
----------- ----------- ------------
Total revenues..................... 12,792,000 20,420,000 41,708,000
Costs of revenues:
Costs of service revenues............. 2,292,000 5,489,000 15,291,000
Costs of product revenues............. 6,693,000 9,577,000 13,033,000
----------- ----------- ------------
Total cost of revenues............. 8,985,000 15,066,000 28,324,000
----------- ----------- ------------
Gross profit........................... 3,807,000 5,354,000 13,384,000
----------- ----------- ------------
Operating expenses:
Sales and marketing................... 2,285,000 5,100,000 5,672,000
General and administrative............ 4,229,000 6,528,000 10,219,000
Research and development.............. 566,000 1,308,000 --
Amortization of intangibles........... 869,000 1,583,000 6,734,000
Acquisition related charges........... 964,000 1,917,000 4,463,000
----------- ----------- ------------
Total operating expenses........... 8,913,000 16,436,000 27,088,000
----------- ----------- ------------
Operating loss (5,106,000) (11,082,000) (13,704,000)
----------- ----------- ------------
Other income (expense):
Gain on divestiture................... -- 37,966,000 --
Interest income, net.................. 71,000 579,000 354,000
Other expense, net.................... -- -- (2,000)
----------- ----------- ------------
Total other income................. 71,000 38,545,000 352,000
----------- ----------- ------------
Income (loss) from continuing
operations before income taxes........ (5,035,000) 27,463,000 (13,352,000)
Provision for (benefit from) income
taxes................................. -- 11,450,000 (2,555,000)
----------- ----------- ------------
Income (loss) from continuing
operations............................ (5,035,000) 16,013,000 (10,797,000)
Loss from discontinued operations...... (135,000) (136,000) --
Gain on divestiture of discontinued
operations (Less income taxes of
$1,412,000 in 1997 and $380,000 in
1998)................................. -- 2,523,000 562,000
----------- ----------- ------------
Net income (loss)...................... (5,170,000) 18,400,000 (10,235,000)
Preferred dividends.................... (639,000) (827,000) (625,000)
Accretion on preferred stock........... -- -- (175,000)
----------- ----------- ------------
Net income (loss) applicable to common
stockholders.......................... $(5,809,000) $17,573,000 $(11,035,000)
=========== =========== ============
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1997 and 1998

<TABLE>
<CAPTION>
Series C Convertible
Preferred Stock Common Stock Additional Retained
-------------------- -------------------- Paid In Earnings
Shares Amount Shares Amount Capital (Deficit) Total
-------------------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1,
1996................... -- $ -- 10,700,031 $107,000 $ 805,000 $(3,484,000) $(2,572,000)
Exercise of options..... 129,850 1,000 12,000 13,000
Preferred dividends..... (639,000) (639,000)
Net loss................ (5,170,000) (5,170,000)
-------- ----------- ---------- -------- ---------- ----------- -----------
Balances, December 31,
1996................... -- -- 10,829,881 108,000 817,000 (9,293,000) (8,368,000)
Exercise of options..... 770,038 8,000 135,000 143,000
Sale of common stock.... 1,920,000 19,000 1,901,000 1,920,000
Issuance of preferred
stock.................. 800,000 4,000,000 4,000,000
Compensatory stock
arrangements (Note 3).. 316,000 316,000
Preferred dividends..... (827,000) (827,000)
Net income.............. 18,400,000 18,400,000
-------- ----------- ---------- -------- ---------- ----------- -----------
Balances, December 31,
1997................... 800,000 4,000,000 13,519,919 135,000 3,169,000 8,280,000 15,584,000
Repurchase of common
stock.................. (250,000) (3,000) (747,000) (750,000)
Exercise of options..... 632,850 7,000 352,000 359,000
Compensatory stock
arrangements (Note 6).. 590,000 590,000
Accretion on preferred
stock.................. (175,000) (175,000)
Preferred dividends..... (625,000) (625,000)
Net loss................ (10,235,000) (10,235,000)
-------- ----------- ---------- -------- ---------- ----------- -----------
Balances, December 31,
1998................... 800,000 $ 4,000,000 13,902,769 $139,000 $3,364,000 $(2,755,000) $ 4,748,000
======== =========== ========== ======== ========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1996 1997 1998
Cash flows from operating activities: ----------- ----------- ------------
<S> <C> <C> <C>
Net income (loss)...................... $(5,170,000) $18,400,000 $(10,235,000)
Adjustments to reconcile net income
(loss) to net cash used by operating
activities:
Depreciation and amortization......... 1,033,000 1,893,000 7,034,000
Stock compensation expense............ -- 281,000 590,000
Loss on disposal of property and
equipment............................ -- 25,000 598,000
Interest income on restricted cash.... -- (80,000) (44,000)
Gain on divestiture................... -- (37,966,000) --
Results of discontinued operations
and gain on disposal................. 135,000 (2,387,000) (562,000)
Change in assets and liabilities, net
of effect of acquisitions and
divestitures:
Accounts receivable................. (692,000) (190,000) (1,317,000)
Other receivables................... (72,000) (64,000) 125,000
Inventory........................... (267,000) 311,000 (29,000)
Prepaid expenses.................... (166,000) (70,000) (449,000)
Other assets........................ (37,000) 17,000 105,000
Accounts payable.................... (43,000) (334,000) 942,000
Income taxes........................ 100,000 492,000 (4,341,000)
Amounts due under acquisition
agreements......................... 964,000 -- --
Accrued payroll and related
expenses........................... 467,000 424,000 586,000
Accrued liabilities................. 337,000 239,000 (2,159,000)
Other current liabilities........... 177,000 328,000 (452,000)
----------- ----------- ------------
Net cash used by continuing
operating activities............. (3,234,000) (18,681,000) (9,608,000)
Net cash used by discontinued
operations....................... (168,000) (72,000) --
----------- ----------- ------------
Net cash used by operating
activities....................... (3,402,000) (18,753,000) (9,608,000)
----------- ----------- ------------
Cash flows from investing activities:
Sale (purchase) of short-term
investments.......................... -- (15,784,000) 15,784,000
Acquisitions, net of cash acquired.... (1,312,000) (4,507,000) (11,928,000)
Repayment of acquisition obligations,
net.................................. -- -- (3,556,000)
Purchases of property and equipment... (860,000) (745,000) (1,338,000)
Proceeds from divestitures............ -- 34,210,000 4,124,000
Proceeds from sale of discontinued
operations........................... -- 4,830,000 942,000
Investing activities of discontinued
operations........................... (344,000) (260,000) --
----------- ----------- ------------
Net cash provided by (used by)
investing activities............. (2,516,000) 17,744,000 4,028,000
----------- ----------- ------------
Cash flows from financing activities:
Proceeds (repayments) on line of
credit, net.......................... 110,000 (193,000) 6,482,000
Proceeds from issuance of common
stock................................ 13,000 2,063,000 211,000
Proceeds from issuance of preferred
stock................................ 4,420,000 6,880,000 --
Repurchase of common stock............ -- -- (750,000)
Redemption of preferred stock......... -- (7,003,000) --
Financing activities of discontinued
operations........................... 512,000 226,000 --
----------- ----------- ------------
Net cash provided by financing
activities....................... 5,055,000 1,973,000 5,943,000
----------- ----------- ------------
Net increase (decrease) in cash and
cash equivalents...................... (863,000) 964,000 363,000
Cash and cash equivalents, beginning of
year.................................. 3,116,000 2,253,000 3,217,000
----------- ----------- ------------
Cash and cash equivalents, end of
year.................................. $ 2,253,000 $ 3,217,000 $ 3,580,000
=========== =========== ============
Non-cash investing and financing
activities:
Purchase of software under deferred
payment arrangement (Note 2)......... $ -- $ -- $ 769,000
Preferred stock issued in acquisition
(Note 3)............................. -- -- 7,731,000
Tax benefit on stock option
exercises............................ -- -- 148,000
Supplemental cash flow information:
Interest paid......................... $ -- $ 107,000 $ 96,000
Income taxes paid..................... -- 10,862,000 1,787,000
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1997 and 1998

1. Business and Significant Accounting Policies

Business--The Company was incorporated in California in 1993 under the name
Global Internet Access Services, Inc. and reincorporated in Delaware in 1994,
subsequently changing its name to Cohesive Network Systems, Inc. During
September 1998, the Company merged with Business Technologies, Inc. and changed
its name to Cohesive Technology Solutions, Inc. Cohesive Technology Solutions,
Inc. and its wholly-owned subsidiaries (collectively, the "Company") are
primarily in the business of providing information technology related
consulting services to mid-tier customers and divisions of large corporations.
The Company has core competencies in the areas of business consulting,
application development and network integration.

The Company has incurred a net loss of $10,235,000 for the year ended
December 31, 1998. In addition, the Company has a negative working capital of
$5,891,000 and an accumulated deficit of $2,755,000 as of December 31, 1998.
Approximately $3 million of the Company's preferred stock is redeemable in
September 1999 while another $10.4 million is redeemable in January 2000. The
Company believes, to the extent existing resources and anticipated revenues are
insufficient to fund the Company's planned activities, that additional debt or
equity financing will be available from its majority stockholder. This
stockholder has indicated that to the extent that the Company is otherwise
unable to meets it obligation to repay its existing credit line at maturity in
December 1999, it will make an investment in debt or equity securities of the
Company in an amount sufficient to permit the Company to meet such obligation
up to a maximum of $15 million. In addition, the stockholder has agreed, to the
extent that the Company may not have capital legally available for the payment
of redemption amounts otherwise due in January 2000 in respect to preferred
stock held by the stockholder, to extend the redemption date of such preferred
stock until at least May 2000.

Consolidation--The consolidated financial statements include the accounts of
Cohesive Technology Solutions, Inc. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk--Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash equivalents and
accounts receivable. The Company invests its excess cash in money market
accounts and highly liquid government securities. The Company's accounts
receivable are generally derived from sales to customers in the United States
which require information technology and networking services. The Company
maintains reserves for potential credit losses.

Fair Value of Financial Instruments--As of December 31, 1997 and 1998, the
carrying amounts of cash and cash equivalents, accounts receivable and
borrowings under the Company's credit agreements approximate their respective
fair values.

Cash and Cash Equivalents--Cash equivalents are short-term, highly liquid
cash investments with an original maturity of less than 90 days.

Restricted Cash--Restricted cash represents cash in escrow related to the
divestiture of the Company's software development group and Internet services
division.

F-7
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

Short-Term Investments--While the Company's practice is to hold securities to
maturity, the Company has classified all securities as available-for-sale
securities, as the sale of such securities may be required prior to maturity to
implement management strategies. The carrying value of securities is adjusted
to fair market value, with unrealized gains and losses, net of deferred taxes,
being excluded from earnings and reported as a separate component of
stockholders' equity. Cost is based on the specific identification method for
purposes of computing realized gains or losses. At December 31, 1997, the
difference between fair value and amortized cost was not significant.

Inventory--Inventory consists primarily of computer hardware held for resale
and spare parts, and is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.

Property and Equipment--Property and equipment are stated at cost.
Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the assets, which are generally two to five
years.

Intangibles--Intangibles resulting from the acquisition of technology service
businesses are estimated by management to be primarily associated with the
acquired workforce and technological know-how. As a result of the limited
operating history of the entities acquired, the rapid technological changes
occurring in the industry and the intense competition for qualified engineering
professionals, recorded intangibles are amortized on the straight-line basis
over the estimated periods of benefit, generally two to seven years. At
December 31, 1997 and 1998, accumulated amortization was $2,493,000 and
$9,227,000, respectively.

At each balance sheet date, the Company assesses the value of recorded
intangibles for possible impairment based upon a number of factors, including
turnover of the acquired workforce and the undiscounted value of expected
future operating cash flows in relation to its net investment in each
subsidiary. Since inception, the Company has not recorded any provisions for
possible impairment of intangible assets.

Revenue Recognition--Revenue from services is recognized upon performance.
Revenue from hardware and software sales is recognized upon shipment.

Stock-Based Compensation--The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."

Income Taxes--Deferred tax liabilities are recognized for future taxable
amounts and deferred tax assets are recognized for future deductions net of a
valuation allowance to reduce net deferred tax assets to amounts that are more
likely than not to be realized.

Reclassifications--Certain prior year amounts have been reclassified to
conform to the current year presentation. Other than the reclassification of
redeemable preferred stock, these reclassifications had no effect on total
stockholders' equity or net income (loss). Redeemable preferred stock has been
reclassified from stockholders' equity to mezzanine equity to comply with SEC
reporting requirements.

Recently Issued Accounting Standards--In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income," which requires an enterprise to report,
by major components and as a single total, the change in its net assets during
the period from nonowner sources. The Company adopted SFAS No. 130 in 1998. The
Company's comprehensive income is the same as its net income (loss).

In 1998, the AICPA issued a Statement of Position (SOP 98-1), which requires
companies to capitalize the costs incurred to develop and install software for
internal use. The Company adopted SOP 98-1 in 1998. Adoption of this statement
did not impact the Company's financial position, results of operations or cash
flows.

F-8
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

2. Property and Equipment

Property and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
Computer and office equipment...................... $1,595,000 $2,877,000
Software........................................... 135,000 968,000
Furniture and fixtures............................. 223,000 389,000
Vehicles........................................... 73,000 91,000
Leasehold improvements............................. 52,000 86,000
---------- ----------
2,078,000 4,411,000
Accumulated depreciation and amortization.......... (837,000) (1,663,000)
---------- ----------
Property and equipment, net........................ $1,241,000 $2,748,000
========== ==========
</TABLE>

During 1998, the Company spent approximately $789,000 to purchase, install
and implement new back office systems software. Of this amount, approximately
$440,000 and $349,000 is payable in 1999 and 2000, respectively.

3. Acquisitions and Divestitures

During the years ended December 31, 1996, 1997 and 1998, the Company made the
following acquisitions:

<TABLE>
<CAPTION>
Total
Acquisition Purchase
Company Date Price
------- ----------- -----------
<S> <C> <C>
Forte Computer Services, Inc...................... 4/2/96 $ 2,020,000
The Leftbank Operations, Inc...................... 4/10/97 1,300,000
R&D Networking, Inc............................... 8 /28/97 3,600,000
Computer Lanscapes, Inc........................... 12/19/ 97 4,770,000
Napier Corporation................................ 1/28/98 3,500,000
I. Consulting Corporation......................... 3/19/98 717,000
Integrated Office Solutions, Inc.................. 7/1/98 6,000,000
Business Technologies, Inc........................ 9/18/98 16,731,000
-----------
Total........................................... $38,638,000
===========
</TABLE>

The total purchase prices above consist of (i) nonrefundable cash payments
due on closing of the acquisition (approximately $18.1 million), (ii) 900,000
shares of Convertible Redeemable Series D preferred stock issued to the former
shareholders of Business Technologies, Inc. (valued at $7.7 million) and
(iii) probable amounts to be paid in cash to the former owners of the acquired
companies upon the attainment of certain performance criteria (the "Cash
Earnouts") (approximately $12.8 million). Of the Cash Earnouts, $9.3 million
were allocated to original purchase price as the performance criteria were
considered probable of occurring as of the acquisition date. The remaining of
Cash Earnouts were contingent upon continued employment and were recorded as
Acquisition Related Charges during the employment periods. As of December 31,
1998, no additional amounts are contingent upon continued employment.

F-9
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

During 1996, 1997 and 1998, the Company recognized Acquisition Related
Charges comprised of the following:

<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Signing and retention bonuses............. $ -- $ 500,000 $1,818,000
Cash earnouts contingent upon continued
employment............................... 964,000 1,417,000 1,696,000
Reorganization expenses (primarily
severance and relocation costs).......... -- -- 949,000
-------- ---------- ----------
$964,000 $1,917,000 $4,463,000
======== ========== ==========
</TABLE>

As of December 31, 1998, accrued liabilities included $283,000 of unpaid
Acquisition Related Charges that will be paid in 1999.

The acquisitions have been accounted for in accordance with the purchase
method of accounting and the accompanying consolidated financial statements
reflect the purchase price allocated to assets acquired and liabilities assumed
based upon their fair values as of the acquisition date. The $34.5 million
excess of the cash purchase price over the fair value of the net identifiable
assets has been allocated to intangibles. The Company's results of operations
include those of the acquired companies from their respective dates of
acquisition.

On July 25, 1997, the Company sold a portion of its software development
group to an unrelated third party for $40 million. As of December 31, 1997, all
of the proceeds except $4 million were available for operations. The remaining
amount was placed in escrow. During 1998, this entire amount and the related
accrued interest of $124,000 were released from escrow. In connection with this
sale, the vesting of options held by employees of the software development
division were accelerated by one year. This resulted in the Company recognizing
$281,000 in stock compensation expense during fiscal 1997. The Company recorded
a gain of $38 million during 1997 related to this sale.

On November 26, 1997, the Company sold its Internet services division to an
unrelated third party for $6 million. As of December 31, 1997, all of the
proceeds except $1,050,000 were available for operations. The $1,050,000 amount
was placed in escrow at the time of the sale and was recorded as a deferred
gain at December 31, 1997. Of this amount, $942,000 was released to the Company
and recognized as a gain on divestiture during 1998. The remaining $108,000 was
released to the third party purchaser. In connection with this sale, the
vesting of options held by employees of the Internet services division were
accelerated by one year. This resulted in the Company recognizing $35,000 in
stock compensation expense during fiscal 1997. The Company recorded gains of
$3.9 million and $0.9 million during 1997 and 1998, respectively, related to
this sale.

The operating results of the Internet services division have been segregated
from continuing operations and reported as discontinued operations in the
accompanying statement of operations. Revenues for the discontinued operations
were $3,721,000 and $3,805,000 for 1996 and 1997, respectively.

4. Lines of Credit

The Company has a revolving line of credit from a bank that provides for
borrowings up to $15 million through December 31, 1999. Borrowings under the
line are secured by substantially all of the Company's assets and bear interest
at varying rates based upon the bank's prime or LIBOR rate on the date of
borrowing. In

F-10
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

addition, the line of credit restricts the payment by the Company of cash
dividends or distributions on its common stock. The agreements require, among
other things, that the Company satisfy certain financial covenants. As of
December 31, 1998, the Company was in compliance with such covenants.

As of December 31, 1997, the Company had two revolving lines of credit from
banks, which provided for borrowings up to $1,000,000 each through June 2,
1998, and July 1, 1998. All outstanding amounts were fully paid during 1998 and
the lines of credit were not renewed.

5. Redeemable Preferred Stock

Preferred Stock

Holders of Series A and B preferred stock are entitled to annual dividends at
the rate of $7 per share when and if declared by the Board of Directors. Such
dividends for Series A and B preferred stock shall be cumulative and shall
accrue on each share of preferred stock from the date of original issuance of
such share. Dividends for Series A and B are payable in preference and priority
to convertible Series C and D preferred stock.

In the event of a liquidation, dissolution or winding up of the Company, the
Series A and B preferred stockholders are entitled to a liquidation preference
of $100 per share plus all accrued but unpaid dividends. Upon payment of the
liquidation preference (aggregating $10,368,000 at December 31, 1998), the
remaining proceeds will be allocated to the convertible Series C and Series D
preferred stockholders.

The Company may redeem Series A and B preferred stock at any time. Redemption
is mandatory (1) on January 31, 2000 or (2) in the event of the closing of a
firm underwritten offering meeting certain criteria, if earlier. The redemption
price shall be equal to $100 per share plus all accrued but unpaid dividends.

The holders of Series A and B preferred stock are not entitled to vote on any
matter to be voted on by the stockholders of the Company, except liquidation,
dissolution, winding up, consolidation or merger of the Company, or sale of all
or substantially all of the Company's assets, requires approval of two-thirds
of the Series A and B preferred stock voting as a single class. Series A and B
preferred stock is not convertible into common stock.

Convertible Series D Preferred Stock

Holders of redeemable convertible Series D preferred stock have the right to
require redemption of the Series D shares at a price of $10 per share plus all
declared but unpaid dividends. As of September 18, 1999, 2000 and 2001, the
redemption rights will apply to 300,000, 600,000 and 900,000 Series D shares,
respectively. The redemption rights expire as to all shares that have not been
redeemed as of September 19, 2002. The carrying value of the Series D preferred
stock is being accreted to its redemption price over the redemption period.

In the event of a liquidation, dissolution or winding up of the Company,
Series D preferred stockholders are entitled to a liquidation preference of $10
per share plus any declared and unpaid dividends. Upon payment of the Series D
liquidation preference (aggregating $9 million at December 31, 1998), the
remaining proceeds will be allocated to the preferred Series C, preferred
Series D and common stockholders on an as converted basis.

Each share of Series D preferred stock is convertible into one share of
common stock at the option of the holder, subject to adjustment for certain
dilutive issuances. Conversion of the Series D preferred stock is mandatory in
the event of the closing of a firm underwritten public offering under the
Securities Act of 1993.

The holders of Series D preferred stock are entitled to one vote for each
share of common stock into which the preferred stock is convertible.

F-11
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

6. Stockholders' Equity

Convertible Series C Preferred Stock

Holders of convertible Series C preferred stock are entitled to noncumulative
annual dividends of $0.50 per share, when and if declared, and are payable in
preference to any dividends on Series D preferred stock or common stock.

In the event of a liquidation, dissolution or winding up of the Company,
Series C preferred stockholders are entitled to a liquidation preference of $5
per share plus any declared and unpaid dividends. Upon payment of the
liquidation preference (aggregating $4,000,000 at December 31, 1998), the
remaining proceeds will be allocated to the Series D preferred stockholders.

Each share of Series C preferred stock is convertible into one share of
common stock at the option of the holder, subject to adjustment for certain
dilutive issuances. Conversion of the Series C preferred stock is mandatory in
the event of the closing of a firm underwritten public offering under the
Securities Act of 1933, at a price of at least $5 per share and at an aggregate
gross offering price of not less than $10,000,000, or upon the consent of the
stockholders holding a majority of the outstanding Series C preferred stock.

The holders of Series C preferred stock are entitled to one vote for each
share of common stock into which the preferred stock is convertible.

Stock Option Plans

The Company has stock option plans (the "Plans") under which officers,
employees, directors and consultants may be granted options to purchase shares
of the Company's common stock. At December 31, 1998, 5,560,000 shares of the
Company's common stock have been reserved for issuance under the Plans. The
Plans permit incentive and nonqualified stock options to be granted at an
exercise price not less than the fair market value on the date of grant with
terms of up to ten years. Options generally vest over a four-year period.

A summary of option activity under the Plans is as follows:

<TABLE>
<CAPTION>
Weighted
Number of Average
Shares Exercise Price
--------- --------------
<S> <C> <C>
Balances, January 1, 1996 (192,675 shares
exercisable at a weighted average price of
$0.10)....................................... 1,523,100 $0.12
Granted..................................... 933,500 0.32
Exercised................................... (129,850) 0.13
Canceled.................................... (328,925) 0.17
---------
Outstanding, December 31, 1996 (405,750 shares
exercisable at a weighted average price of
$0.10)....................................... 1,997,825 0.21
Granted..................................... 1,409,850 1.14
Exercised................................... (770,038) 0.18
Canceled.................................... (567,637) 0.49
---------
Outstanding, December 31, 1997 (294,625 shares
exercisable at a weighted average price of
$0.20)....................................... 2,070,000 0.77
Granted..................................... 2,769,333 2.58
Exercised................................... (632,850) 0.34
Canceled.................................... (668,595) 1.82
---------
Outstanding, December 31, 1998................ 3,537,888 $2.07
=========
</TABLE>

F-12
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

Additional information regarding options outstanding as of December 31, 1998
is as follows:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life (Years) Price Exercisable Prices
--------------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.10-$0.11 237,500 6.6 $0.10 181,250 $0.10
0.35- 1.00 502,950 7.8 0.55 205,550 0.48
1.75- 2.00 1,242,923 9.0 1.90 136,125 1.77
3.00 1,554,515 9.6 3.00 -- --
--------- -------
$0.10-$3.00 3,537,888 8.9 $2.07 522,925 $0.69
========= =======
</TABLE>

At December 31, 1998, 714,443 shares were available for future grants under
the Plans.

During 1998, in connection with the resignation of certain officers and
employees, the Company accelerated the vesting of options to purchase 244,000
shares of the Company's common stock. The Company recorded an associated
$590,000 charge to compensation expense.

Additional Stock Plan Information

As discussed in Note 1, the Company accounts for its stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees," and its related interpretations.

SFAS No. 123, "Accounting for Stock-Based Compensation," requires the
disclosure of pro forma net income (loss) had the Company adopted the fair
value method since the Company's inception. Under SFAS No. 123, the fair value
of stock-based awards to employees is calculated through the use of option
pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the Company's stock option
awards. These models also require subjective assumptions, including future
stock price volatility and expected time to exercise, which greatly affect the
calculated values.

The Company's calculations were made using the minimum value method with the
following weighted average assumptions: expected life, one year following
vesting; risk free interest rate of 6%; and no dividends during the expected
term. The Company's calculations are based on a multiple award valuation
approach, and forfeitures are recognized as they occur. If the computed minimum
values of the Company's stock-based awards to employees had been amortized to
expense over the vesting period of the awards as specified under SFAS No. 123,
net income (loss) available to common stockholders would have been
$(5,226,000), $18,065,000 and $(10,562,000) in 1996, 1997 and 1998,
respectively. The estimated weighted-average minimum value per option as of the
grant date for the awards granted for the years ended December 31, 1996, 1997
and 1998 were $0.06, $0.24 and $0.47, respectively.

F-13
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

7. Income Taxes

The provision for (benefit from) income taxes on continuing operations
consists of:

<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal......................... $ -- $ 9,124,000 $(2,513,000)
State........................... -- 2,326,000 (42,000)
----------- ----------- -----------
Total current income taxes........ -- 11,450,000 (2,555,000)
----------- ----------- -----------
Deferred:
Federal......................... 1,322,000 746,000 786,000
State........................... 125,000 48,000 291,000
----------- ----------- -----------
Total deferred income taxes....... 1,447,000 794,000 1,077,000
Valuation allowance............... (1,447,000) (794,000) (1,077,000)
----------- ----------- -----------
Provision for (benefit from)
income taxes..................... $ -- $11,450,000 $(2,555,000)
=========== =========== ===========
</TABLE>

Deferred income tax assets are comprised of:
<TABLE>
<CAPTION>
December 31,
------------------------
1997 1998
----------- -----------
<S> <C> <C>
Deductible intangibles........................... $ 833,000 $ 1,968,000
Net operating losses............................. -- 139,000
Deferred gain.................................... 461,000 113,000
Other............................................ 150,000 301,000
----------- -----------
Total............................................ 1,444,000 2,521,000
Valuation allowance.............................. (1,444,000) (2,521,000)
----------- -----------
Total net deferred income tax assets............. $ -- $ --
=========== ===========
</TABLE>

The Company has net operating loss carryforwards of approximately $2.3
million for state income tax purposes, which will expire in 2003. The Company
has deferred tax assets of approximately $1,444,000 and $2,521,000 as of
December 31, 1997 and 1998, respectively, resulting primarily from basis
differences in intangibles and other items. However, because realization of
these benefits depends on the generation of future taxable income, which is
subject to uncertainty, the Company has placed a full valuation allowance
against the deferred tax assets.

The Tax Reform Act of 1986 and California Conformity Act of 1987 impose
substantial restrictions on the utilization of net operating losses in the
event of an "ownership change" as defined in the Internal Revenue Code. Any
such ownership change could significantly limit the Company's ability to
utilize its tax carryforwards.

8. Employee Benefit Plan

The Company has a qualified employee salary savings plan (401(k) plan). The
401(k) plan allows the Company to make discretionary contributions of a certain
percentage of employees' contributions to the 401(k) plan. The Company made no
contributions during 1996 and 1997 and the Company made a $12,000 contribution
during 1998.

F-14
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Years Ended December 1, 1996, 1997 and 1998

9. Commitments and Contingencies

The Company leases its facilities under various operating leases that extend
through February 2003. Rental expense for the Company's facilities was
$356,000, $530,000 and $987,000, for 1996, 1997 and 1998, respectively.

Future minimum operating lease payments at December 31, 1998 are
approximately as follows:

<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
1999.......................................................... $ 802,000
2000.......................................................... 595,000
2001.......................................................... 428,000
2002.......................................................... 67,000
2003.......................................................... 10,000
----------
Total minimum lease payments................................... $1,902,000
==========
</TABLE>

The Company is party to various litigation arising in the normal course of
its operations. In the opinion of management, the ultimate liability for these
matters, if any, will not have a material adverse effect on the Company's
financial position or results of operations.

10. Subsequent Events

On April 21, 1999, the Company entered into a definitive agreement to be
acquired by Exodus Communications, Inc. (Exodus) for cash and common stock
valued at approximately $100 million. The acquisition is expected to close in
mid-1999, subject to regulatory review and approval. Upon closing of the
acquisition, the Company will exchange all outstanding preferred and common
stock for cash and shares of Exodus common stock at that date.

F-15
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December March 31,
31, 1998* 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 3,580,000 $ 1,845,000
Accounts receivable, net of allowance for doubtful
accounts of $962,000 and $972,000, respectively... 7,561,000 10,633,000
Income tax receivable.............................. 1,984,000 1,997,000
Inventory.......................................... 422,000 198,000
Prepaid expenses................................... 758,000 683,000
----------- -----------
Total current assets............................. 14,305,000 15,356,000

Property and equipment, net.......................... 2,748,000 2,773,000

Other assets......................................... 60,000 109,000

Intangibles, net..................................... 26,454,000 24,263,000
----------- -----------

Total assets......................................... $43,567,000 $42,501,000
=========== ===========

LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit and current portion of
long-term obligations............................. $ 7,437,000 $ 8,030,000
Accounts payable................................... 2,316,000 3,437,000
Amounts due under acquisition agreements........... 6,896,000 5,697,000
Accruals and other current liabilities............. 3,547,000 4,243,000
----------- -----------
Total current liabilities........................ 20,196,000 21,407,000

Long-term obligations................................ 349,000 246,000
----------- -----------
Total liabilities................................ 20,545,000 21,653,000
----------- -----------

Commitments and contingencies........................ -- --

Redeemable preferred stock........................... 18,274,000 18,586,000
----------- -----------

Stockholders' equity:
Convertible preferred stock........................ 4,000,000 4,000,000
Common stock....................................... 139,000 140,000
Additional paid-in capital......................... 3,364,000 3,425,000
Accumulated deficit................................ (2,755,000) (5,303,000)
----------- -----------
Total stockholders' equity....................... 4,748,000 2,262,000
----------- -----------

Total liabilities, redeemable preferred stock and
stockholders' equity................................ $43,567,000 $42,501,000
=========== ===========
</TABLE>
- --------
*Derived from audited consolidated financial statements.

See notes to consolidated condensed financial statements.

F-16
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1999
-------------- --------------
(Unaudited)
<S> <C> <C>
Revenues:
Service revenues............................ $ 5,070,000 $ 8,930,000
Product revenues............................ 3,545,000 2,785,000
-------------- --------------
Total revenues............................ 8,615,000 11,715,000

Cost of Revenues:
Costs of service revenues................... 2,625,000 5,884,000
Costs of product revenues................... 3,182,000 2,384,000
-------------- --------------
Total cost of revenues.................... 5,807,000 8,268,000
-------------- --------------

Gross profit.................................. 2,808,000 3,447,000
-------------- --------------

Operating expenses:
Sales and marketing......................... 1,351,000 1,329,000
General and administrative.................. 2,063,000 1,922,000
Amortization of intangibles................. 1,571,000 2,191,000
Acquisition related charges................. 1,574,000 --
-------------- --------------
Total operating expenses.................. 6,559,000 5,442,000
-------------- --------------

Operating loss................................ (3,751,000) (1,995,000)
-------------- --------------

Interest income (expense), net................ 246,000 (241,000)
-------------- --------------

Loss before income taxes...................... (3,505,000) (2,236,000)

Benefit from income taxes..................... 413,000 --
-------------- --------------

Net loss...................................... (3,092,000) (2,236,000)

Dividends and accretion on redeemable
preferred stock.............................. (156,000) (312,000)
-------------- --------------

Net loss applicable to common stockholders.... $ (3,248,000) $ (2,548,000)
============== ==============
</TABLE>

See notes to consolidated condensed financial statements.

F-17
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1999
----------- -----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(3,092,000) $(2,236,000)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 1,374,000 2,433,000
Stock compensation expense....................... -- 13,000
Interest income on restricted cash............... (1,000) --
Changes in assets and liabilities, net of effect
of acquisitions:
Accounts receivable............................ (1,379,000) (3,072,000)
Income taxes receivable........................ (2,419,000) (13,000)
Inventory...................................... 40,000 224,000
Prepaid expenses............................... 131,000 75,000
Other assets................................... (10,000) (49,000)
Accounts payables.............................. 139,000 1,121,000
Amounts due under acquisition agreements....... 642,000 --
Accruals and other current liabilities......... 562,000 696,000
----------- -----------
Net cash used by operating activities........ (4,013,000) (808,000)
----------- -----------

Cash flows from investing activities:
Purchase of short-term investments................. 2,815,000 --
Acquisitions, net of cash acquired................. (1,539,000) --
Repayment of acquisition obligations............... (700,000) (1,199,000)
Purchase of property and equipment................. (291,000) (267,000)
Proceeds from divestitures......................... 2,000,000 --
----------- -----------
Net cash provided by (used for) investing
activities.................................. 2,285,000 (1,466,000)
----------- -----------

Cash flows from financing activities:
Proceeds on line of credit......................... 154,000 502,000
Repayments of long-term obligations................ -- (12,000)
Issuance of common stock........................... 70,000 49,000
----------- -----------
Net cash provided by financing activities.... 224,000 539,000
----------- -----------

Net decrease in cash................................. (1,504,000) (1,735,000)

Cash and cash equivalents--beginning of period....... 3,217,000 3,580,000
----------- -----------

Cash and cash equivalents--end of period............. $ 1,713,000 $ 1,845,000
=========== ===========
</TABLE>

See notes to consolidated condensed financial statements.

F-18
<PAGE>

COHESIVE TECHNOLOGY SOLUTIONS, INC. AND SUBSIDIARIES
(Formerly Cohesive Network Systems, Inc.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared by the Company, and, do not include all of the disclosures normally
required by generally accepted accounting principles. The unaudited financial
information has been prepared in accordance with the Company's customary
accounting policies and practices. In the opinion of management, all
adjustments, consisting of normal recurring adjustments considered necessary
for a fair presentation of results of operations for the periods, have been
included. Results of operations for the interim periods are not necessarily
indicative of results for the full year.

2. Inventory

Inventory consists primarily of computer hardware held for sale and spare
parts, and is stated at the lower of cost or market. Cost is determined using
the first-in, first-out method.

3. Line of Credit

At March 31, 1999, the Company was not in compliance with its line of credit
covenants. The Company has obtained a waiver from the bank with respect to the
covenant violations.

4. Litigation

5. Subsequent Events

On April 21, 1999, the Company entered into a definitive agreement to be
acquired by Exodus Communications, Inc. (Exodus) for cash and common stock
valued at approximately $100.0 million at that date. The acquisition is
expected to close in mid-1999, subject to regulatory review and approval. Upon
closing of the acquisition, the Company will exchange all outstanding preferred
and common stock for cash and shares of Exodus common stock.

******

F-19
<PAGE>

Appendix A

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

EXODUS COMMUNICATIONS, INC.,

COHESIVE TECHNOLOGY SOLUTIONS, INC.,

AND

MARLEY ACQUISITION CORP.

April 21, 1999
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. PLAN OF REORGANIZATION................................................. A-1
1.1 The Merger.......................................................... A-1
1.2 Fractional Shares................................................... A-3
1.3 Escrow Agreement.................................................... A-3
1.4 Effects of the Merger............................................... A-4
1.5 Further Assurances.................................................. A-4
1.6 Registration on Form S-4............................................ A-4
1.7 Hart-Scott-Rodino Filings........................................... A-4
1.8 Tax-Free Reorganization............................................. A-4
1.9 Purchase Accounting................................................. A-4
1.10 Dissenting Shares................................................... A-5
1.11 Employment/Noncompetition Agreements................................ A-5

2. REPRESENTATIONS AND WARRANTIES OF CTSI................................. A-5
2.1 Organization and Good Standing...................................... A-5
2.2 Power, Authorization and Validity................................... A-5
2.3 Capitalization...................................................... A-5
2.4 Subsidiaries and Guaranties......................................... A-6
2.5 No Violation of Existing Agreements or Laws......................... A-6
2.6 Litigation.......................................................... A-7
2.7 CTSI Financial Statements........................................... A-7
2.8 Taxes............................................................... A-7
2.9 Title to Properties................................................. A-8
2.10 Absence of Certain Changes.......................................... A-9
2.11 Agreements and Commitments.......................................... A-10
2.12 Intellectual Property............................................... A-11
2.13 Compliance with Laws................................................ A-11
2.14 Certain Transactions and Agreements................................. A-12
2.15 Employees........................................................... A-12
2.16 Corporate Documents................................................. A-13
2.17 No Brokers.......................................................... A-14
2.18 Disclosure.......................................................... A-14
2.19 Books and Records................................................... A-14
2.20 Insurance........................................................... A-14
2.21 Environmental Matters............................................... A-14
2.22 Government Contracts................................................ A-15
2.23 Year 2000 Conformity................................................ A-15
2.24 Warranties, Guarantees and Indemnities.............................. A-15
2.25 No Stockholder Claims............................................... A-16
2.26 Customer Relationships.............................................. A-16
2.27 Product and Service Quality......................................... A-16
2.28 Information Supplied................................................ A-16
2.29 Inventory........................................................... A-16
2.30 Debt; Earn Out Provisions........................................... A-16

3. REPRESENTATIONS AND WARRANTIES OF EXODUS AND NEWCO..................... A-16
3.1 Organization and Good Standing...................................... A-16
3.2 Power, Authorization and Validity................................... A-17
3.3 No Violations....................................................... A-17
3.4 Disclosure.......................................................... A-17
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
3.5 Newco............................................................... A-17
3.6 Information Supplied................................................ A-18
3.7 Authorized/Outstanding Capital Stock................................ A-18

4. CTSI PRECLOSING COVENANTS.............................................. A-18
4.1 Advice of Changes................................................... A-18
4.2 Maintenance of Business............................................. A-18
4.3 Conduct of Business................................................. A-18
4.4 Certain Agreements.................................................. A-20
4.5 Stockholder Approval................................................ A-20
4.6 Regulatory Approvals................................................ A-20
4.7 Necessary Consents.................................................. A-20
4.8 Litigation.......................................................... A-20
4.9 No Other Negotiations............................................... A-20
4.10 Access to Information............................................... A-21
4.11 Satisfaction of Conditions Precedent................................ A-21
4.12 Blue Sky Laws....................................................... A-21
4.13 Notification of Employee Problems................................... A-21
4.14 Termination of Benefit Plans........................................ A-21
4.15 Stockholder Approval; Voting Agreement.............................. A-21
4.16 Prospectus/Proxy Statement.......................................... A-21
4.17 Rescission Offer.................................................... A-21
4.18 Insurance........................................................... A-21

5. EXODUS PRECLOSING COVENANTS............................................ A-22
5.1 Access to Information............................................... A-22
5.2 Satisfaction of Conditions Precedent................................ A-22
5.3 Regulatory Approvals................................................ A-22
5.4 Employee Matters.................................................... A-22
5.5 Indemnification..................................................... A-22
5.6 Cooperation in Obtaining Necessary Consents......................... A-23

6. CLOSING MATTERS........................................................ A-23
6.1 The Closing......................................................... A-23
6.2 Exchange of Certificates and Cash................................... A-23
6.3 Assumption of Options and Warrants.................................. A-24

7. CONDITIONS TO OBLIGATIONS OF CTSI...................................... A-24
7.1 Accuracy of Representations and Warranties.......................... A-24
7.2 Covenants........................................................... A-24
7.3 Compliance with Law................................................. A-24
7.4 Government Consents................................................. A-24
7.5 No Litigation....................................................... A-24
7.6 Opinion of Exodus' Counsel.......................................... A-24
7.7 Tax Representations................................................. A-24
7.8 Hart-Scott-Rodino Compliance........................................ A-24
7.9 Stockholder Approval................................................ A-25
7.10 Form S-4............................................................ A-25
7.11 Discharge of Debt................................................... A-25

8. CONDITIONS TO OBLIGATIONS OF EXODUS.................................... A-25
8.1 Accuracy of Representations and Warranties.......................... A-25
8.2 Covenants........................................................... A-25
8.3 Absence of Material Adverse Change.................................. A-25
</TABLE>

ii
<PAGE>

<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
8.4 Compliance with Law................................................ A-25
8.5 Government Consents................................................ A-25
8.6 Consents........................................................... A-25
8.7 Opinion of CTSI's Counsel.......................................... A-25
8.8 Requisite Approvals................................................ A-25
8.9 No Litigation...................................................... A-25
8.10 Escrow............................................................. A-25
8.11 Warrants Exercised................................................. A-26
8.12 Tax Representations................................................ A-26
8.13 Hart-Scott-Rodino Compliance....................................... A-26
8.14 Form S-4........................................................... A-26
8.15 Discharge of Debt and Obligations to Preferred Holders............. A-26
8.16 Resignations Tendered.............................................. A-26
8.17 Comfort Letter..................................................... A-26

9. TERMINATION OF AGREEMENT............................................... A-26
9.1 Termination........................................................ A-26
9.2 Certain Continuing Obligations..................................... A-27

10. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS................................................... A-27
10.1 Survival of Representations........................................ A-27
10.2 CTSI Stockholders Agreement to Indemnify........................... A-27
10.3 Tax Refund......................................................... A-28
10.4 Distribution of Maximum Earn Out Liability Balance................. A-29
10.5 Distribution of E-Rate Receivable Proceeds......................... A-29

11. MISCELLANEOUS......................................................... A-29
11.1 Governing Law; Dispute Resolution.................................. A-29
11.2 Assignment; Binding Upon Successors and Assigns.................... A-30
11.3 Severability....................................................... A-30
11.4 Counterparts....................................................... A-30
11.5 Other Remedies..................................................... A-30
11.6 Amendment and Waivers.............................................. A-31
11.7 No Waiver.......................................................... A-31
11.8 Expenses........................................................... A-31
11.9 Notices............................................................ A-31
11.10 Construction of Agreement.......................................... A-32
11.11 No Joint Venture................................................... A-32
11.12 Further Assurances................................................. A-32
11.13 Absence of Third Party Beneficiary Rights.......................... A-32
11.14 Public Announcement................................................ A-32
11.15 Confidentiality.................................................... A-32
11.16 Time is of the Essence............................................. A-33
11.17 Entire Agreement................................................... A-33
</TABLE>

Exhibits:

Exhibit AForm of Escrow Agreement
Exhibit BVoting Agreement

iii
<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered into
as of April 21, 1999, by and among Exodus Communications, Inc., a Delaware
corporation ("Exodus"), Cohesive Technology Solutions, Inc., a Delaware
corporation ("CTSI"), and Marley Acquisition Corp., a Delaware corporation that
is a wholly-owned subsidiary of Exodus ("Newco).

RECITALS

A. The parties intend that, subject to the terms and conditions hereinafter
set forth, CTSI will merge with and into Newco in a forward triangular merger
(the "Merger"), with Newco to be the surviving corporation of the Merger, all
pursuant to the terms and conditions of this Agreement and the applicable
provisions of the General Corporation Law of the State of Delaware ("Delaware
Law"). Upon the effectiveness of the Merger, (i) all the outstanding Common
Stock and to the extent herein provided, Preferred Stock of CTSI will be
converted into the right to receive shares of Common Stock of Exodus and cash
in the amounts specified herein (collectively, the "Merger Consideration") ,
and (ii) Exodus will assume outstanding options and warrants to purchase the
Common Stock and Preferred Stock of CTSI, all in the manner and on the basis
determined herein.

B. The Merger is intended to be treated in accordance with the purchase
method of accounting and as a tax-free reorganization pursuant to the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), by virtue of the provisions of Section 368(a)(2)(D) of
the Code.

NOW, THEREFORE, the parties hereto agree as follows:

1. PLAN OF REORGANIZATION

1.1 The Merger. A Certificate of Merger containing only the information
required by Section 251(d) of the Delaware Law (the "Certificate of Merger")
will be filed with the Secretary of State of the State of Delaware as soon as
practicable after the Closing (as defined in Section 6.1 below). The effective
time of the Merger (the "Effective Time") will occur upon the filing of the
Certificate of Merger with the Delaware Secretary of State, or on such other
date as the parties hereto may mutually agree upon. Subject to the terms and
conditions of this Agreement, CTSI will be merged with and into Newco in a
statutory merger pursuant to this Agreement and in accordance with applicable
provisions of Delaware law as follows:

1.1.1 Conversion of CTSI Preferred Stock. At the Effective Time each
share of Preferred Stock of CTSI issued and outstanding immediately prior
thereto (other than Dissenting Shares (as defined below)) (and other than
shares of Series D Preferred Stock which will be automatically converted to
CTSI Common Stock immediately prior to the Merger pursuant to the Certificate
of Incorporation of CTSI) shall be canceled and converted into the right to
receive a portion of the Merger Consideration as follows:

(a) in the case of CTSI's Series A and Series B 7% Cumulative
Redeemable Preferred Stock, an amount in cash equal to $100 per
share, the redemption value of a share of Series A and Series B
Preferred Stock, plus any accrued and unpaid dividends thereon
through the Effective Time;

(b) in the case of CTSI's Series C Preferred Stock, an amount
equal to $5 per share, the liquidation value of a share of Series C
Preferred Stock, plus any declared and unpaid dividends thereon
through the Effective Time; and

(c) in the case of the holders of CTSI's Series D Preferred Stock,
CTSI shall pay an amount in cash equal to the difference between (x)
$10 per share and (y) the aggregate fair market value of the shares
of Exodus Common Stock and cash received for each share of CTSI
issued upon conversion of the Series D Preferred Stock as of the
Effective Time all as required

A-1
<PAGE>

under Section 4.1 of that certain Shareholder Agreement dated
September 18, 1998 by and among CTSI, Paul J. Brady, John T. Towner
and Karl J. Pessinis ("Shareholder Agreement"), with the amount due
under this clause ( c) to be as set forth in the spread sheet
included in Item 2.3 of the CTSI Disclosure Letter (as defined
below)):.

1.1.2 Conversion of CTSI Shares. Each share of CTSI Common Stock,
$0.01 par value (the "CTSI Common Stock") that is issued and outstanding
immediately prior to the Effective Time (including CTSI Common Stock issued
upon the automatic conversion of the Series D Preferred Stock), will, by virtue
of the Merger and at the Effective Time (other than Dissenting Shares), and
without further action on the part of any holder thereof, be converted into the
Applicable Number (determined in accordance with Section 1.1.4 hereof) of fully
paid and nonassessable shares of Exodus Common Stock, $0.001 par value ("Exodus
Common Stock"), and the right to receive, subject to Section 1.3, the Per Share
Cash Consideration (determined in accordance with Section 1.1.4 hereof).

1.1.3 Assumptions of Options. Effective at the Effective Time, Exodus
will assume all the outstanding options (whether vested or unvested) (but not
warrants) to purchase CTSI Common Stock listed on Item 2.3 (as described in
Section 2.3(b) below) (the "CTSI Options"). Each CTSI Option shall be converted
into an option (an "Exodus Option"), to purchase that number of shares of
Exodus Common Stock that is equal to the number of shares of CTSI Common Stock,
that could be purchased pursuant to the CTSI Option immediately prior to the
Effective Time multiplied by the sum of (a) the Applicable Number (determined
in accordance with Section 1.1.4 hereof) plus (b) the number determined by
dividing the Per Share Cash Consideration (determined in accordance with
Section 1.1.4 hereof) by the Closing Price Per Share, such number of shares
being rounded down to the nearest whole share. The exercise price per share of
Exodus Common Stock purchasable under each such Exodus Option shall be equal to
the exercise price per share of CTSI Common Stock under the corresponding CTSI
Option divided by the sum of (a) the Applicable Number plus (b) the number
determined by dividing the Per Share Cash Consideration by the Closing Price
Per Share, such exercise price being rounded up to the nearest whole cent. All
of the other terms and conditions of each Exodus Option will be the same in all
material respects to the corresponding CTSI Option. No cash will be paid in
lieu of fractional shares which are rounded down pursuant to this Section.

1.1.4 Definitions; Consideration; Collar.

(a) Unless there is an adjustment to the shares to be issued in
the Merger pursuant to Section 1.1.5 below, the "Applicable Number"
shall be determined by dividing (i) the "Total Exodus Shares" (as
defined below) by (ii) the number of shares CTSI Common Stock
outstanding at the Effective Time plus (x) the total number of
shares of CTSI Common Stock issuable upon exercise of all vested
CTSI Options outstanding at the Effective Time ("Vested CTSI
Options") and (y) the number of shares of CTSI Common Stock issuable
upon conversion of CTSI's outstanding Series D Preferred Stock (the
"Fully-Diluted CTSI Common Stock"). Subject to Section 1.3, the
"Aggregate Cash Consideration" to be given in consideration for the
conversion of the CTSI Common Stock shall equal $50,000,000 less the
sum of (w) the Debt, (x) the Maximum Earn Out Liability, (y) the
cash allocated to CTSI's Preferred Stock pursuant to Section 1.1.1,
and (z) any and all cash paid for fractional shares pursuant to
Section 1.2 hereof. Subject to Section 1.3, the "Per Share Cash
Consideration" to be given in consideration for the conversion of
each share of CTSI Common Stock (including the shares of CTSI Common
Stock issued upon conversion of CTSI's Series D Preferred Stock)
shall be determined by dividing (i) the Aggregate Cash Consideration
by (ii) the Fully Diluted CTSI Common Stock.

(b) The "Total Exodus Shares" shall mean the total number of
shares of Exodus Common Stock to be issued in the Merger to the
holders of CTSI capital stock ("CTSI Stockholders") (which shall
equal (A) $50,000,000 divided by (B) the average closing price (the
"Closing Price Per Share") as quoted on the Nasdaq National Market
of one share of Exodus Common Stock for the five trading days prior
to and including the trading day ending one day prior to the

A-2
<PAGE>

Closing Date (as defined in Section 6.1 hereof) as reported in The
Wall Street Journal)); provided, however, that notwithstanding the
foregoing:

(2) in the event that Closing Price Per Share is between
[ninety five dollars ($95.00) and one hundred two dollars fifty
cents ($102.50)] inclusive, the Total Exodus Shares shall equal
five hundred twenty six thousand three hundred sixteen
(526,316); and

(3) in the event that the Closing Price Per Share exceeds one
hundred two dollars fifty cents ($102.50), the Total Exodus
Shares shall equal (A) $53,947,390 divided by (B) the Closing
Price Per Share.

(d) The "Debt" shall mean all of CTSI's indebtedness, as of
Closing, for money borrowed, including bank debt, any other interest
bearing debt, and any severance payments or "golden parachute"
payments or arrangements agreed to by the Company since April 7,
1999, as set out in Item 1.1.4(d), which schedule will be updated
through and to the time of Closing on a monthly basis by CTSI, with
each such update to be certified to be correct by CTSI's Chief
Financial Officer and delivered to Exodus with associated back up
documentation demonstrating its accuracy.

(e) "Maximum Earn Out Liability" means $5,500,000 as adjusted so
that the representation in Section 2.30 is true at Closing.

(f) "Earn Out Provisions" means each and all of the earn out
provisions in any agreements to which CTSI is a party pursuant to
which CTSI acquired other companies, as disclosed on Item 1.1.4(d).

1.1.5 Adjustments for Capital Changes. If prior to the Merger, Exodus
or CTSI recapitalizes either through a split-up of its outstanding shares into
a greater number, or through a combination of its outstanding shares into a
lesser number, or reorganizes, reclassifies or otherwise changes its
outstanding shares into the same or a different number of shares of other
classes (other than through a split-up or combination of shares provided for in
the previous clause), or declares a dividend on its outstanding shares payable
in shares or securities convertible into shares, the calculation of the
Applicable Number and the Per Share Cash Consideration governing the conversion
of CTSI Common Stock will be adjusted appropriately.

1.2 Fractional Shares. No fractional shares of Exodus Common Stock will
be issued in connection with the Merger, but in lieu thereof, the holder of any
shares of CTSI Company Stock who would otherwise be entitled to receive a
fraction of a share of Exodus Common Stock will receive from Exodus, promptly
after the Effective Time, an amount of cash equal to the Closing Price Per
Share multiplied by the fraction of a share of Exodus Common Stock to which
such holder would otherwise be entitled.

1.3 Escrow Agreement. Pursuant to an Escrow Agreement to be entered into
on or before the Closing Date in substantially the form of Exhibit A (the
"Escrow Agreement"), among Exodus, CTSI, the Representative (as defined in
Section of the Escrow Agreement hereof) of the CTSI Stockholders and State
Street Bank and Trust Company (the "Escrow Agent"), Exodus will withhold, pro
rata, from the total cash consideration that would otherwise be delivered to
each of the holders of CTSI Common Stock (other than the holders of shares
issued upon conversion of the Series D Preferred Stock), an aggregate of Ten
Million Dollars ($10,000,000) (the "Escrow Cash"). Promptly after the Closing
Date, Exodus will deposit or cause to be deposited in escrow pursuant to the
Escrow Agreement, the Escrow Cash. The Escrow Cash will be held in

A-3
<PAGE>

escrow as collateral for the indemnification obligations of the CTSI
Stockholders under Section 10.2 below and pursuant to the Escrow Agreement
pending release from escrow pursuant to the Escrow Agreement.

1.4 Effects of the Merger. At the Effective Time: (a) the separate
existence of CTSI will cease and CTSI will be merged with and into Newco and
Newco will be the surviving corporation pursuant to the terms of this
Agreement; (b) the Certificate of Incorporation and Bylaws of Newco will
continue unchanged as the Certificate of Incorporation and Bylaws of the
surviving corporation; (c) each share of CTSI Capital Stock and each CTSI
Option outstanding immediately prior to the Effective Time will be converted as
provided in this Section 1; (d) the directors and executive officers of Exodus
and Newco will remain unchanged; and (e) the Merger will, at and after the
Effective Time, have all of the effects provided by applicable law.

1.5 Further Assurances. CTSI and the CTSI Stockholders agree that if, at
any time after the Effective Time, Exodus considers or is advised that any
further deeds, assignments or assurances are reasonably necessary or desirable
to vest, perfect or confirm in Exodus or Newco title to any property or rights
of CTSI as provided herein, Exodus and any of its officers are hereby
authorized by CTSI to execute and deliver all such proper deeds, assignments
and assurances and do all other things necessary or desirable to vest, perfect
or confirm title to such property or rights in Exodus or Newco and otherwise to
carry out the purposes of this Agreement, in the name of CTSI, the CTSI
Stockholders or otherwise.

1.6 Registration on Form S-4. The Exodus Common Stock to be issued in
the Merger shall be registered under the Securities Act of 1933, as amended
(the "Securities Act") on Form S-4. As promptly as practicable after the date
of this Agreement, Exodus and CTSI shall prepare and file with the SEC a Form
S-4 registration statement (the "Form S-4") together with the prospectus/proxy
statement included therein (the "Prospectus/Proxy Statement") and any other
documents required by the Securities Act, or the Securities Exchange Act of
1934, as amended (the "Exchange Act") in connection with the Merger. Each of
Exodus and CTSI shall use commercially reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Exodus shall also take any action required to be taken under any
applicable state securities or "blue sky" laws in connection with the issuance
of the Exodus Common Stock in the Merger. CTSI shall furnish to Exodus all
information concerning CTSI and the CTSI Stockholders as may be reasonably
requested in connection with any action contemplated by this Section 1.6.

1.7 Hart-Scott-Rodino Filings. Each of Exodus and CTSI will promptly
prepare and file the applicable notices (if any) required to be filed by it
under the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act"), and
comply promptly with any requests to it from the Federal Trade Commission or
United States Department of Justice for additional information.

1.8 Tax-Free Reorganization. The parties intend to adopt this Agreement
as a tax-free plan of reorganization and to consummate the Merger in accordance
with the provisions of Section 368(a)(1)(A) of the Code, by virtue of the
provisions of Section 368(a)(2)(D) of the Code. For purposes of this Section
1.8, Exodus and CTSI agree to report the transactions contemplated in this
Agreement in a manner consistent with the reorganization treatment they intend
and will not take any position inconsistent therewith in any tax return, refund
claim, litigation or otherwise unless required to do so by any governmental
authority. The shares of Exodus Common Stock issued in the Merger will be
issued solely in exchange for the issued and outstanding shares of CTSI Common
Stock pursuant to this Agreement, and no other transaction other than the
Merger represents, provides for or is intended to be an adjustment to the
consideration paid for the CTSI Common Stock. Except for the Aggregate Cash
Consideration paid for the CTSI Common Stock and cash paid in lieu of
fractional shares, no consideration that could constitute "other property"
within the meaning of Section 356 of the Code will be paid by Exodus for shares
of CTSI Common Stock in the Merger. At the Closing (as defined in Section 6.1
hereof), officers of CTSI and officers of Exodus will execute and deliver
officers' certificates in mutually agreed to and approved by the Parties'
respective Counsel.

1.9 Purchase Accounting. The parties intend that the Merger be treated
as a purchase for accounting purposes.

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1.10 Dissenting Shares. Holders of shares of CTSI capital stock who have
complied with all requirements for perfecting stockholders' rights of
appraisal, as set forth in Section 262 of the Delaware Law, shall be entitled
to their rights under the Delaware Law with respect to such shares ("Dissenting
Shares").

1.11 Employment/Noncompetition Agreements. Simultaneously with execution
of this Agreement, Exodus has entered into employment agreements and/or
noncompletion/nonsolicitation agreements in mutually agreed form with each of
Steve Bennion, Paul Brady and Dennis Rohan, which agreements will become
effective upon the Effective Time of the Merger.

2. REPRESENTATIONS AND WARRANTIES OF CTSI

CTSI hereby represents and warrants that, except as disclosed in the
CTSI disclosure letter (the "CTSI Disclosure Letter") delivered by CTSI to
Exodus herewith, including items in the CTSI Disclosure Letter referred to as
"Items" below:

2.1 Organization and Good Standing. Except as disclosed in Item 2.1,
CTSI and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation,
has the corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted and as proposed to be conducted
and is qualified as a foreign corporation in each jurisdiction where the nature
of its business or location of its properties requires such qualification and
where the failure to qualify would have a Material Adverse Effect.

2.2 Power, Authorization and Validity.

2.2.1 CTSI has the right, power, legal capacity and authority to
enter into and perform its obligations under this Agreement and all agreements
to which CTSI is or will be a party that are required to be executed pursuant
to this Agreement (the "CTSI Ancillary Agreements"). This Agreement and the
CTSI Ancillary Agreements have been or will be duly executed and delivered. The
execution, delivery and performance of this Agreement and the CTSI Ancillary
Agreements have been duly and validly approved and authorized by all necessary
corporate action on the part of CTSI (other than the approval and adoption of
this Agreement by the stockholders of CTSI as required under Delaware law).

2.2.2 No filing, authorization or approval with or of any
governmental entity is necessary or required to be made or obtained to enable
CTSI to enter into, and to perform its obligations under, this Agreement and
the CTSI Ancillary Agreements, except for (a) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, the filing of such
officers' certificates and other documents as are required to effectuate the
Merger under Delaware law and the filing of appropriate documents with the
relevant authorities of the states other than Delaware in which CTSI is
qualified to do business, if any, (b) such filings as may be required to comply
with federal and state securities laws, (c) the approval of the CTSI
Stockholders of the transactions contemplated hereby, and (d) the filings
required by the HSR Act. Welsh, Carson, Anderson & Stowe VI, L.P. owns a
sufficient number of shares of each class and series of capital stock of CTSI
so as to be able to alone approve this Agreement and the transactions hereby
contemplated.

2.2.3 This Agreement and the CTSI Ancillary Agreements are, or when
executed and delivered by CTSI and the other parties thereto will be, valid and
binding obligations of CTSI enforceable against CTSI and against the Escrow
Cash deposited pursuant to the Escrow Agreement in accordance with their
respective terms, subject to approval of CTSI's stockholders, 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; provided, however, that the Merger
Agreement will not be effective until filed with the Delaware Secretary of
State.

2.3 Capitalization.

(a) Authorized/Outstanding Capital Stock. The authorized capital
stock of CTSI consists of 21,000,000 shares of CTSI Common Stock, $.01
par value, and 120,000 shares of Series A 7%

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Cumulative Redeemable Preferred Stock, 76,800 shares of Series B 7%
Cumulative Redeemable Preferred Stock, 800,000 shares of Series C
Preferred Stock, and 900,000 shares of Series D Preferred Stock, $1.00
par value. 13,973,820 shares of CTSI Common Stock and 60,570 shares of
Series A 7% Cumulative Redeemable Preferred Stock, 28,800 shares of
Series B 7% Cumulative Redeemable Preferred Stock, 800,000 shares of
Series C Preferred Stock, and 900,000 shares of Series D Preferred
Stock are issued and outstanding as of this date and as of immediately
prior to Closing, all of which are held of record and owned by the CTSI
Stockholders, provided, however, that (i) such shares of Series D
Preferred Stock shall automatically convert into 900,000 shares of CTSI
Common Stock per the CTSI Certificate of Incorporation immediately
prior to the Closing; and (ii) 5,500,000 shares of CTSI Common Stock
are reserved for issuance under the Cohesive Technology Solutions, Inc.
Stock Option and Restricted Stock Purchase Plan (the "Stock Plan") and
no shares have been reserved for issuance outside the Stock Plan; of
the CTSI Options, as of the date of this Agreement 633,379 are vested,
2,403,159 are unvested; of these unvested options an aggregate of
499,576 will vest between the date of this Agreement and November 30,
1999 (assuming no changes in the vesting provisions thereof). No CTSI
Options are subject to acceleration of vesting as a result of the
Merger or otherwise, except as disclosed on Item 2.3. All shares of
CTSI capital stock issued and outstanding as of the date hereof are
listed by holder on Item 2.3. All issued and outstanding shares of CTSI
Capital Stock, other than as disclosed on Item 2.3, have been duly
authorized and validly issued, are fully paid and nonassessable, are
not subject to any right of rescission and, other than as disclosed on
Item 2.3, have been offered, issued, sold and delivered by CTSI in
compliance with all registration or qualification requirements (or
applicable exemptions therefrom) of applicable federal and state
securities laws.

(b) Options/Rights. Except as disclosed on Item 2.3, CTSI has not
granted, issued and is not a party to or aware of any stock
appreciation rights, options, warrants, calls, commitments, conversion
privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any of CTSI's capital stock; there are no
options, warrants, calls, commitments, conversion privileges or
preemptive or other rights or agreements to which CTSI is a party
involving the purchase or other acquisition of any shares of CTSI
capital stock; there is no liability for dividends accrued but unpaid;
CTSI is not a party to and has no knowledge of any voting agreements,
registration rights, rights of first refusal or other restrictions
(other than normal restrictions on transfer under applicable federal
and state securities laws) applicable to any of CTSI's outstanding
securities.

2.4 Subsidiaries and Guaranties. Except for the subsidiaries of CTSI
disclosed on Item 2.4 (collectively, the "Subsidiaries" and each a
"Subsidiary"), each of which is wholly-owned by CTSI, CTSI does not have any
subsidiaries or any interest, direct or indirect, in any corporation,
partnership, joint venture or other business entity. CTSI is not a guarantor of
any obligation of a third party, whether or not such third party is related to
or affiliated with CTSI.

2.5 No Violation of Existing Agreements or Laws. Except as disclosed in
Item 2.5, neither the execution and delivery of this Agreement or any CTSI
Ancillary Agreement, nor the consummation of the transactions provided for
herein or therein, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of (a)
any provision of the Certificate of Incorporation or Bylaws of CTSI, as
currently in effect, (b) any instrument or contract to which CTSI is a party or
by which CTSI is bound or (c) any federal, state, local or foreign judgment,
writ, decree, order, statute, rule or regulation applicable to CTSI or any
Subsidiary or their respective assets or properties, other than, with respect
to (a), (b) and ( c ), any such conflict, termination, breach, impairment, or
violation that would not have a material adverse effect on the properties,
assets, material intellectual property rights, financial condition, operating
results, business or prospects of CTSI and its Subsidiaries taken as a whole (a
"Material Adverse Effect"). The consummation of the Merger and succession by
Newco to all rights, licenses, franchises, leases and agreements of CTSI and
each Subsidiary in and of themselves will not require the consent of any third
party where the failure to obtain such consent would have a Material Adverse
Effect, except as disclosed in Item 2.5; and CTSI has obtained the consent of
Credit Suisse First Boston to CTSI's entry into this Agreement.

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2.6 Litigation. There is no action, proceeding, claim or investigation
pending or, to the best of CTSI's knowledge, threatened against CTSI or any
Subsidiary before any court or administrative agency that, if determined
adversely to CTSI or any Subsidiary, may reasonably be expected to have a
Material Adverse Effect, nor to CTSI's knowledge is there any basis therefor.
Except as disclosed in Item 2.6, there is no basis for any stockholder or
former stockholder of CTSI, or any other person, firm, corporation or entity to
assert a claim against CTSI, Exodus or Newco as successor in interest to CTSI
based upon: (a) ownership or rights to ownership of any shares of CTSI Capital
Stock or other securities, (b) any rights as a CTSI securities holder,
including, without limitation, any option or other right to acquire any CTSI
securities, any preemptive rights or any rights to notice or to vote or (c) any
rights under any agreement between CTSI and any CTSI securities holder or
former CTSI securities holder in such holder's capacity as such. There is no
action, suit, proceeding, claim, arbitration or investigation pending or as to
which CTSI has received any notice of assertion against CTSI, which in any
manner challenges or seeks to prevent, enjoin, materially alter or materially
delay any of the transactions contemplated by this Agreement.

2.7 CTSI Financial Statements. CTSI has delivered to Exodus in Item 2.7
CTSI's audited balance sheet as of December 31, 1998 (respectively, the "CTSI
Balance Sheet" and the "Balance Sheet Date") and CTSI's unaudited balance sheet
as of March 31, 1999 (respectively, the "CTSI Latest Balance Sheet" and the
"Latest Balance Sheet Date") and CTSI's audited income statements for the years
ended December 31, 1996, 1997 and 1998 and unaudited income statement for the
three months ended March 31, 1999 (collectively, the "CTSI Financial
Statements"). The CTSI Financial Statements (a) are in accordance with the
books and records of CTSI, (b) fairly and accurately represent the financial
condition of CTSI at the respective dates specified therein and the results of
operations for the respective periods specified therein and (c) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis. Except as disclosed in Item 2.7, CTSI has no debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that would be required under
generally accepted accounting principles ("GAAP") to be reflected on a balance
sheet, or the notes thereto, prepared as of the date hereof in accordance with
GAAP and is not reflected, reserved against or disclosed in the CTSI Financial
Statements, except for those that may have been incurred after the Balance
Sheet Date in the Ordinary Course.

2.8 Taxes.

(a) For purposes of this Agreement, the following terms have the
following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means any and all taxes, including without limitation (i)
any income, profits, alternative of add-on minimum tax, gross receipts,
sales, use, value-added, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, net worth, premium, property, environmental or windfall
profit tax, custom, duty or other tax governmental fee or assessment or
charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental entity responsible for the imposition of any such tax
(domestic or foreign) (a "Taxing Authority"), (ii) any liability for
the payment of any amounts of the type described in clause (i) above as
a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period or as the result of being a
transferee or successor thereof and (iii) any liability for the payment
of any amounts of the type described in clause (i) or (ii) above as a
result of any express or implied obligation to indemnify any other
person.

(b) All Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and reports)
required to be filed with any Taxing Authority with respect to any
Taxable period ending on or before the Effective Time, by or on behalf
of CTSI and each of its Subsidiaries (collectively, the "CTSI
Returns"), have been or will be filed when due (including any
extensions of such due date), and all amounts shown to be due thereon
on or before the Effective Time have been or will be paid on or before
such date. The CTSI Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through
the dates thereof. The CTSI Balance Sheet (i) fully accrues consistent
with past practices and in accordance with GAAP all

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actual and contingent liabilities for Taxes with respect to all periods
through the Latest Balance Sheet Date, and (ii) properly accrues
consistent with past practices all liabilities for Taxes payable after
the Latest Balance Sheet Date with respect to all transactions and
events occurring on or prior to such date. All information set forth in
the notes to the CTSI Financial Statements relating to Tax matters is
true, complete and accurate in all material respects.

(c) No Tax liability since January 1, 1999 has been incurred other
than in the ordinary course of business, and adequate provision has
been made for all Taxes since that date in accordance with past
practices on at least a quarterly or, with respect to employment taxes,
monthly basis. CTSI has withheld and paid to the applicable financial
institution or Taxing Authority all amounts required to be withheld.
Copies of audit reports, if any, previously have been provided to
Exodus or are CTSI Returns with respect to which the applicable period
for assessment under applicable law, after giving effect to extensions
or waivers, has expired. CTSI has not granted any extension or waiver
of the limitation period applicable to any CTSI Returns.

(d) There is no claim, audit, action, suit, proceeding, or
investigation now pending or, to the best knowledge of CTSI, threatened
against or with respect to CTSI or any Subsidiary in respect of any Tax
or assessment, nor to the best knowledge of CTSI is there any basis
therefor. There are no liabilities for Taxes with respect to any notice
of deficiency or similar document of any Tax Authority received by CTSI
or any Subsidiary which have not been satisfied in full (including
liabilities for interest, additions to tax and penalties thereon and
related expenses). Neither CTSI or any Subsidiary nor any person on
behalf of CTSI has entered into or will enter into any agreement or
consent pursuant to Section 341(f) of the Code. There are no liens for
taxes upon the assets of CTSI or any Subsidiary except liens for
current Taxes not yet due. Except as may be required as a result of the
Merger or as disclosed in Item 2.8, CTSI has not been and will not be
required to include any adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the
Closing.

(e) There is no contract, agreement, plan or arrangement, including
without limitation the provisions of this Agreement, covering any
employee or independent contractor or former employee or independent
contractor of CTSI or any Subsidiary that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible pursuant to Section 280G or Section 162 of the Code
(as determined without regard to Section 280G(b)(4)). Other than
pursuant to this Agreement, CTSI or any Subsidiary is not a party to or
bound by (or will prior to the Effective Date become a party to or
bound by) any tax indemnity, tax sharing or tax allocation agreement.
CTSI has previously provided or made available to Exodus true and
correct copies of all CTSI Returns filed during the preceding 5
calendar years, and, as reasonably requested by Exodus, prior to or
following the date hereof, presently existing information statements,
reports, work papers, Tax opinions and memoranda and other Tax data and
documents.

CTSI has not been at any time within the past five years, and will not
be prior to the Effective Time, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.

2.9 Title to Properties. Except as disclosed in Item 2.9, CTSI has good
and marketable title to all of its material assets and properties (including
but not limited to those shown on the balance sheet as of the Latest Balance
Sheet Date included in the CTSI Financial Statements), free and clear of all
liens, charges or encumbrances (other than ( i ) liens for taxes not yet due
and payable; (ii) liens reflected on the Latest Balance Sheet as of the Latest
Balance Sheet Date and (iii) liens which are not material in character, amount
or extent, and which do not materially detract from the value or materially
interfere with the use of the property subject thereto or affected thereby (the
foregoing ( i ), (ii) and (iii), "Permitted Liens"). The machinery and
equipment included in such assets are in good condition and repair, normal wear
and tear excepted, and all leases of real or personal property to which CTSI or
any Subsidiary is a party are fully effective and afford CTSI or the Subsidiary
peaceful and undisturbed possession of the subject matter of the lease. Neither
CTSI nor any

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Subsidiary is in violation of any zoning, building, safety or environmental
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties which would have a Material Adverse
Effect on CTSI, and neither CTSI nor any Subsidiary has received any notice of
such violation with which it has not complied or had waived.

2.10 Absence of Certain Changes. Since the Balance Sheet Date, CTSI has
carried on its business in the ordinary course substantially in accordance with
the procedures and practices in effect on the Balance Sheet Date, and except as
disclosed in Item 2.10 or in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements, since the Balance Sheet Date there
has not been with respect to CTSI or any Subsidiary:

(a) any change in the financial condition, properties, assets,
liabilities, business, results of operations or prospects, which change
by itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, have had or is reasonably
likely to have a Material Adverse Effect;

(b) any contingent liability incurred thereby as guarantor or surety
with respect to the obligations of others;

(d) any obligation or liability incurred thereby other than in the
ordinary course of business, which obligations or liabilities do not
exceed in the aggregate $150,000;

(e) any purchase, license, sale or other disposition, or any
agreement or other arrangement for the purchase, license, sale or other
disposition, of any of the properties, assets or goodwill thereof other
than in the ordinary course of business;

(f) any damage, destruction or loss, whether or not covered by
insurance, that would have or is reasonably likely to have a Material
Adverse Effect;

(g) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock
thereof, any split, stock dividend, combination or recapitalization of
the capital stock thereof, any direct or indirect redemption, purchase
or other acquisition of the capital stock thereof;

(h) any labor dispute or claim of unfair labor practices, any change
in the compensation payable or to become payable to any of its
officers, employees or agents (other than pursuant to existing
agreements set out on Item 2.10(h) or, in the case of non-officers, in
the ordinary course of business consistent with past practice
("Ordinary Course")), or any bonus payment or arrangement made to or
with any of such officers, employees or agents other than amounts paid
pursuant to Employee Plans disclosed in Item 2.15.3 or bonuses in an
aggregate amount not to exceed $100,000 for all persons to whom bonuses
are paid;

(i) any loss of key executive, management or development personnel
thereof that has had or would have a Material Adverse Effect on CTSI;

(j) any payment or discharge of a lien or liability thereof, which
lien or liability was not either (i) shown on the balance sheet as of
the Balance Sheet Date included in the CTSI Financial Statements or
(ii) incurred in the Ordinary Course after the Balance Sheet Date as
disclosed under Section 2.10(d) above;

(k) any obligation or liability incurred thereby to any of its
officers, directors, stockholders or affiliates, or any loans or
advances made thereby to any of its officers, directors, stockholders
or affiliates, except normal compensation and expense allowances
payable to officers;

(l) any loss on or prior to the date of this Agreement of one or more
Material Customers or such number of customers which together represent
a material amount of business or any indication that

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such a loss is, or losses are, reasonably likely, other than in
connection with completion of projects and normal customer turnover in
the Ordinary Course;

(m) any amendment or change in the Certificate of Incorporation or
Bylaws of CTSI;

(n) any issuance or sale of any debt or equity securities (including
but not limited to stock) thereby or of any options or other rights to
acquire from CTSI or any Subsidiary, directly or indirectly, any debt
or equity securities (including but not limited to stock) thereof other
than shares of CTSI Common Stock issued upon exercise of CTSI Options
issued pursuant to the Stock Plan;

(o) any execution, amendment, relinquishment, termination or non-
renewal thereby of, any contract, lease, transaction, commitment or
other right or obligation or, to CTSI's knowledge, any written
indication or assertion by the other party thereto of problems with
CTSI's products or services or performance under such contract, lease,
transaction, commitment or other right or obligation or its desire to
so amend, relinquish, terminate or not renew any such contract, lease,
transaction, commitment or other right or obligation other than, in
each such case, any such action that would not have a Material Adverse
Effect;

(p) any agreement or arrangement made thereby to take any action
which, if taken prior to the date hereof, would have made any
representation or warranty of CTSI set forth in this Agreement untrue
or incorrect as of the date when made; or

(q) any deferral of the payment of any accounts payable outside the
Ordinary Course or in an amount which is material or any discount,
accommodation or other concession made outside the Ordinary Course in
order to accelerate or induce the collection of any receivable.

2.11 Agreements and Commitments. Except as disclosed in Item 2.11
delivered by CTSI to Exodus herewith, or as disclosed in Item 2.12, Item 2.15.3
or Item 2.15.6 as required by Section 2.12, Section 2.15.3 or Section 2.15.6,
as the case may be, neither CTSI nor any Subsidiary is on the date of this
Agreement a party or subject to any oral or written executory agreement,
obligation or commitment that is material to CTSI, its financial condition,
business or prospects, including but not limited to the following:

(a) Any contract, commitment, letter agreement, quotation or purchase
order providing for payments by or to CTSI or any Subsidiary in an
aggregate amount of (i) $150,000 or more in the Ordinary Course or (ii)
$50,000 or more not in the Ordinary Course;

(b) Any material license agreement under which CTSI or any Subsidiary
is licensor (except for any nonexclusive software license granted by
CTSI or any Subsidiary to customers in the Ordinary Course); or under
which CTSI or any Subsidiary is licensee (except for standard "shrink
wrap" licenses for off-the-shelf software products);

(c) Any material agreement by CTSI or any Subsidiary to encumber,
transfer or sell rights in or with respect to any material item of CTSI
Intellectual Property (as defined in Section 2.12 hereof);

(d) Any agreement for the sale or lease of real or personal property
involving more than $50,000 per year;

(e) Any dealer, distributor, sales representative, original equipment
manufacturer, value added remarketer or other agreement for the
distribution of CTSI's products;

(f) Any franchise agreement;

(g) Any stock redemption or purchase agreement;

(h) Any joint venture contract or arrangement or any other agreement
that involves a sharing of profits with other persons or the payment of
royalties to any other person;

(i) Any instrument evidencing indebtedness for borrowed money by way
of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade

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indebtedness or any advance to any employee of CTSI or any Subsidiary
incurred or made in the Ordinary Course, and except as disclosed in the
CTSI Financial Statements;

(j) Any contract containing covenants purporting to limit CTSI's
freedom to compete in any line of business, market or industry and/or
in any geographic area; or

(k) Any contract or commitment for the employment of any officer,
employee or consultant of CTSI or any Subsidiary or any other type of
contract or understanding with any officer, employee or consultant of
CTSI or any Subsidiary that is not immediately terminable by CTSI or
any Subsidiary without cost or other liability.

Except as noted in Item 2.5, all agreements, obligations and commitments
disclosed in Item 2.11, Item 2.12, Item 2.15.3 or Item 2.15.6 as required by
Section 2.11, Section 2.12, Section 2.15.3 or Section 2.15.6, as the case may
be, are valid and in full force and effect. Except as noted on Item 2.11,
neither CTSI or any Subsidiary nor, to CTSI's knowledge, any other party is in
breach of or default under any material term of any such agreement, obligation
or commitment nor has such other party threatened such a breach or default.
Neither CTSI nor any Subsidiary is a party to any contract or arrangement that
it reasonably expects will have a Material Adverse Effect on its business or
prospects. Neither CTSI nor any Subsidiary has liability for renegotiation of
government contracts or subcontracts which are material to CTSI, its financial
condition, business or prospects.

2.12 Intellectual Property. CTSI and each of the Subsidiaries owns all
right, title and interest in, or has the right to use, all patent applications,
patents, trademark applications, trademarks, service marks, trade names, mask
works, copyright applications, copyrights, trade secrets, know-how, technology
and other intellectual property and proprietary rights that are material to or
reasonably necessary to the conduct of its business as presently conducted or
proposed to be conducted ("CTSI Intellectual Property"). CTSI has taken
reasonable measures to protect all material CTSI Intellectual Property, and,
except as disclosed on Item 2.12, CTSI is not aware of any infringement of any
CTSI Intellectual Property by any third party. Disclosed on Item 2.12 delivered
to Exodus herewith is a true and complete list of all copyright, mask work and
trademark registrations, applications and claimed rights which are not
registered and all patents and patent applications for CTSI Intellectual
Property owned by CTSI and the Subsidiaries. CTSI is not aware of any material
loss, cancellation, termination or expiration of any such registration or
patent. CTSI has delivered to Exodus a copy of the form of agreement it
currently enters into with its employees and consultants with respect to
assignments of copyright and other intellectual property rights. Copies of all
forms of nondisclosure or confidentiality agreements currently utilized to
protect the CTSI Intellectual Property have been provided to Exodus. The
business of CTSI and the Subsidiaries as conducted as of the date hereof does
not and the business of the development, production, marketing, licensing and
sale of commercial products and services using such intellectual property and
proprietary rights after the Effective Time, will not cause CTSI any Subsidiary
or any successor entity to, infringe or violate any of the patents, trademarks,
service marks, trade names, mask works, copyrights, trade secrets, proprietary
rights or other intellectual property of any other person, and neither CTSI nor
any Subsidiary has received any written or oral claim or notice of infringement
or potential infringement of the intellectual property of any other person. To
the knowledge of CTSI, neither CTSI nor any of its Subsidiaries is using any
confidential information or trade secrets of any former employer of any past or
present employees. Except as set out in Item 2.12, none of CTSI and its
Subsidiaries has granted any reseller, distributor, sales representative,
original equipment manufacturer, value added reseller or other third party any
right to reproduce, manufacture, sell, license or distribute any of its
products or services in any market segment or geographic location, except for
grants thereof in the Ordinary Course to customers and pursuant to "turnkey"
arrangements.

2.13 Compliance with Laws. Each of CTSI and its Subsidiaries has
complied, or prior to the Closing Date (as defined in Section 6.1 hereof) will
have complied, and is or will be at the Closing Date (as defined in Section 6.1
hereof) in full compliance, in all material respects, with all applicable laws,
ordinances, regulations and rules, and all orders, writs, injunctions, awards,
judgments and decrees, applicable to CTSI or

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to the assets, properties and business thereof, including, without limitation:
(a) all applicable federal and state securities laws and regulations except as
disclosed in Item 2.3, (b) all applicable federal, state and local laws,
ordinances and regulations, and all orders, writs, injunctions, awards,
judgments and decrees, pertaining to (i) the sale, licensing, leasing,
ownership or management of owned, leased or licensed real or personal property,
products or technical data, (ii) employment or employment practices, terms and
conditions of employment, or wages and hours and (iii) safety, health, fire
prevention, environmental protection (including toxic waste disposal and
related matters described in Section 2.21 hereof), building standards, zoning
or other similar matters, (c) the Export Administration Act and regulations
promulgated thereunder and other laws, regulations, rules, orders, writs,
injunctions, judgments or decrees applicable to the export or re-export of
controlled commodities or technical data, (d) the Immigration Reform and
Control Act and (e) all governmental and nongovernmental regulations related to
the operation and use of the Internet. Except as disclosed in Item 2.5, CTSI
and each Subsidiary has received all permits and approvals from, and has made
all filings with, third parties, including government agencies and authorities,
that are necessary to the conduct of its business as presently conducted except
where the failure to receive such permit or approval or make such filing would
not have a Material Adverse Effect.

2.14 Certain Transactions and Agreements. No person who is an officer of
CTSI or any Subsidiary nor any member of their immediate families, has any
direct or indirect ownership interest in or any employment or consulting
agreement with any firm or corporation that competes with CTSI or Exodus
(except with respect to any interest in less than 2% of the outstanding voting
shares of any corporation whose stock is publicly traded). Except as disclosed
in Item 2.14, none of said officers or any directors of CTSI or any member of
their immediate families, is directly or indirectly interested in any contract
or informal arrangement with CTSI or any Subsidiary, including, but not limited
to, any loan arrangements, except for normal compensation for services as an
officer (disclosed in Item 2.15.3), director or employee of CTSI and except for
the normal rights of a stockholder, warrantholder or optionholder. Except as
disclosed in Item 2.14, none of such officers or directors or family members
has, except for the normal rights of a stockholder or an option holder, any
interest in any (a) CTSI Intellectual Property or (b) any interest in any
property (other than CTSI Intellectual Property) used in the business of CTSI,
whether such property is real or personal, tangible or intangible.

2.15 Employees.

2.15.1 Except as disclosed in Item 2.15.1, neither CTSI nor any
Subsidiary has an employment contract or consulting agreement currently in
effect that is not terminable at will without penalty or payment of
compensation by CTSI or any Subsidiary (other than agreements with the sole
purpose of providing for the confidentiality of proprietary information or
assignment of inventions).

2.15.2 Neither CTSI nor any Subsidiary (a) has ever been or is now
subject to a union organizing effort, (b) is subject to any collective
bargaining agreement with respect to any of its employees, (c) is subject to
any other material contract, written or oral, with any trade or labor union,
employees' association or similar organization or (d) has any current labor
dispute. Each of CTSI and each Subsidiary has good labor relations, and has no
knowledge of any facts indicating that the consummation of the transactions
provided for herein (other than any contemplated reductions in force associated
therewith) will have a material adverse effect on its labor relations, and has
no knowledge that any of its key development or other employees intends to
leave its employ where such departure would reasonably be expected to have a
Material Adverse Effect on CTSI.

2.15.3 Item 2.15.3 delivered by CTSI to Exodus herewith contains a
list of all employment and consulting agreements, all severance agreements,
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefit plans maintained by CTSI or any Subsidiary or any trade or business
which is treated as a single employer with CTSI within the meaning of Code
Section 414(b), (c), (m) or (o) (each an

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"ERISA Affiliate") (the "Employee Plans"), including without limitation all
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Except as disclosed in Item
2.15.3, each of the Employee Plans, and its operation and administration, is in
compliance in all material respects with each of the respective Employee Plans'
terms and with all applicable, federal, state, local and other governmental
laws and ordinances, orders, rules and regulations, including the requirements
of ERISA and the Code. Except as disclosed in Item 2.15.3, all such Employee
Plans that are "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) which are intended to qualify under Section 401(a) of the Code have
received favorable determination opinion, notification or advisory letters with
respect to such plans that such plans comply with the Tax Reform Act of 1986 or
have remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified states of
each such Employee Plan. In addition, neither CTSI nor any Subsidiary has ever
been a participant in any "prohibited transaction," within the meaning of
Section 406 of ERISA with respect to any employee pension benefit plan (as
defined in Section 3(2) of ERISA) which CTSI or any Subsidiary sponsors as
employer or in which CTSI or any Subsidiary participates as an employer, which
would impose a material penalty on CTSI or which was not otherwise exempt
pursuant to Section 408 of ERISA (including, but not limited to, any individual
exemption granted under Section 408(a) of ERISA), or which could result in an
excise tax under the Code. The group health plans, as defined in Section
4980B(g) of the Code, that benefit employees of CTSI or any Subsidiary are in
compliance in all material respects with the continuation coverage requirements
of subsection 4980B of the Code. There are no outstanding violations of Section
4980B of the Code with respect to any Employee Plan, covered employees or
qualified beneficiaries. Except as disclosed in Item 2.15.3, no employee of
CTSI or any Subsidiary and no person subject to any CTSI or any Subsidiary
health plan has made medical claims through such health plan during the twelve
months preceding the date hereof for more than $30,000 in the aggregate.

2.15.4 To the best knowledge of CTSI, no employee of CTSI or any
Subsidiary is in violation of any term of any employment contract, patent or
trade secret disclosure agreement or noncompetition agreement or any other
contract or agreement, or any restrictive covenant, relating to the right of
any such employee to be employed by CTSI or any Subsidiary or to use trade
secrets or proprietary information of others, and the employment of any
employee of CTSI or any Subsidiary does not subject CTSI or any Subsidiary to
any material liability to any third party.

2.15.5 Except as disclosed in Item 2.15.5, neither CTSI nor any
Subsidiary is a party to any (a) agreement with any employee of CTSI or any
Subsidiary (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving CTSI in the
nature of any of the transactions contemplated by this Agreement (ii) providing
any term of employment or compensation guarantee or (iii) providing severance
benefits or other benefits after the termination of employment of such employee
regardless of the reason for such termination of employment other than as
required by law, or (b) agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any
of the benefits of which will be materially increased, or the vesting of
benefits of which will be materially accelerated, by the occurrence of any of
the transactions contemplated by this Agreement. Neither CTSI nor any
Subsidiary is obligated to make any parachute payment, as defined in Section
280G(b)(2) of the Code, nor will any parachute payment be deemed to have
occurred, as a result of the transactions contemplated by this Agreement.

2.15.6 A list of all employees, officers and consultants of CTSI and
the Subsidiaries and their current base compensation and benefits as of the
date of this Agreement is disclosed on Item 2.15.6.

2.15.7 All contributions due from CTSI or any Subsidiary with respect
to any of the Employee Plans have been made or accrued on CTSI's financial
statements.

2.16 Corporate Documents. CTSI has made available to Exodus for
examination all documents and information disclosed in Items 2.1 through 2.25
or other exhibits called for by this Agreement which have been reasonably
requested by Exodus' legal counsel, including, without limitation, the
following: (a) copies of CTSI's Certificate of Incorporation and Bylaws as
currently in effect; (b) CTSI's minute book containing all

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records of all proceedings, consents, actions and meetings of CTSI's directors
and stockholders; (c) CTSI's stock ledger, journal and other records reflecting
all stock issuances and transfers; and (d) all permits, orders and consents
issued by any regulatory agency with respect to CTSI, or any securities of
CTSI, and all applications for such permits, orders and consents.

2.17 No Brokers. Except as disclosed in Item 2.17, neither] CTSI nor any
Subsidiary is obligated for the payment of fees or expenses of any investment
banker, broker or finder in connection with the origin, negotiation or
execution of this Agreement or in connection with any transaction provided for
herein or therein.

2.18 Disclosure. This Agreement, its exhibits and schedules, any of the
certificates or documents to be delivered by CTSI to Exodus under this
Agreement and the financial projections of CTSI for fiscal year 1999 dated
January 20, 1999 and delivered to Exodus on or about March 25, 1999 (the
"Projections"), taken together, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading; except that, with respect to
the Projections, CTSI represents and warrants only that the Projections were
prepared in good faith based on reasonable assumptions and all information
reasonably available to management as of January 20, 1999.

2.19 Books and Records. The books, records and accounts of CTSI and the
Subsidiaries (a) are in all material respects true and complete, (b) have been
maintained in accordance with reasonable business practices on a basis
consistent with prior years, (c) are stated in reasonable detail and accurately
and fairly reflect the transactions and dispositions of the assets of CTSI and
any Subsidiary and (d) accurately and fairly reflect the basis for the CTSI
Financial Statements.

2.20 Insurance. CTSI and its Subsidiaries maintain the insurance
coverage disclosed on Item 2.20 which it believes to be reasonably prudent for
similarly sized and similarly situated business. Item 2.20 sets forth all
claims made under such insurance policies since January 1, 1998 and the
premiums that apply with respect to such insurance policies as of the date of
this Agreement. Except for changes in carriers for newly acquired Subsidiaries
following CTSI's acquisition of such Subsidiaries, CTSI has not changed
insurance carriers since January 1, 1998.

2.21 Environmental Matters.

2.21.1 During the period that each of CTSI and the Subsidiaries has
leased or owned its properties or leased, owned or operated any facilities,
there have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under any such properties or
facilities that would expose CTSI to any material legal liability or otherwise
have a Material Adverse Effect. CTSI has no knowledge of any presence,
disposals, releases or threatened releases of Hazardous Materials on, from or
under any of such properties or facilities, which may have occurred prior to
CTSI or any Subsidiary having taken possession of any of such properties or
facilities which might reasonably be expected to have a Material Adverse
Effect. For purposes of this Agreement, the terms "disposal," "release," and
"threatened release" have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. (S)
9601 et seq., as amended ("CERCLA"). For the purposes of this Section 2.21,
"Hazardous Materials" mean any hazardous or toxic substance, material or waste
which is or becomes prior to the Closing Date, regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical," "hazardous
material," "toxic substance" or "hazardous chemical" under (i) CERCLA; (ii) the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; (iii) the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
(v) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.; (vi) regulations promulgated under any of the above statutes; or (vii)
any other applicable federal, state or local statute, ordinance, rule or
regulation that has a scope or purpose similar to those identified above.

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2.21.2 None of the properties or facilities currently leased or owned
by CTSI or any Subsidiary or any properties or facilities previously leased or
owned by CTSI or any Subsidiary is in violation in any material respect of any
federal, state or local law, ordinance, regulation or order relating to
industrial hygiene or to the environmental conditions on, under or about such
properties or facilities, including, but not limited to, soil and ground water
condition.

2.21.3 During CTSI's or any Subsidiary's occupancy of any properties
or facilities owned or leased at any time by CTSI or any Subsidiary, neither
CTSI or any Subsidiary, nor to CTSI's knowledge, any third party, has used,
generated, manufactured, released or stored on, under or about such properties
and facilities or transported to or from such properties and facilities any
Hazardous Materials that would expose CTSI to any material legal liability or
otherwise have a Material Adverse Effect.

2.21.4 During the time that CTSI or any Subsidiary has owned or
leased the properties and facilities currently occupied by it or any properties
and facilities previously occupied by CTSI or any Subsidiary, there has been no
material litigation, proceeding or administrative action brought or threatened
against CTSI or any Subsidiary, or any material settlement reached by CTSI or
any Subsidiary with, any party or parties alleging the presence, disposal,
release or threatened release of any Hazardous Materials on, from or under any
of such properties or facilities.

2.21.5 During CTSI's or any Subsidiary's occupancy of any properties
or facilities owned or leased at any time by CTSI or any Subsidiary, to the
best knowledge of CTSI, no Hazardous Materials have been transported from such
premises to any site or facility now listed or proposed for listing on the
National Priorities List, at 40 C.F.R. Part 300, or any list with a similar
scope or purpose published by any state authority.

2.22 Government Contracts. All representations, certifications and
disclosures made by CTSI or any Subsidiary to any Government Contract Party (as
defined below) have been in all material respects current, complete and
accurate at the times they were made. There have been no acts, omissions or
noncompliance with regard to any applicable public contracting statute,
regulation or contract requirement (whether express or incorporated by
reference) relating to any of CTSI's or any Subsidiary's contracts with any
Government Contract Party (as defined below) in either case that have led to or
is reasonably likely to lead to, either before or after the Closing Date, (a)
any material claim or dispute involving CTSI, any Subsidiary and/or Exodus as
successor in interest to CTSI and any Government Contract Party or (b) any
suspension, debarment or contract termination, or proceeding related thereto.
There has been no act or omission that relates to the marketing, licensing or
selling to any Government Contract Party (as defined below) of any of CTSI
technical data, computer software, products and services and that has led to or
is reasonably likely to lead to, either before or after the Closing Date, any
cloud on any of CTSI's or any Subsidiary's rights in and to its technical data,
computer software, products and services. There is currently no dispute between
CTSI or any Subsidiary and any Government Contract Party. For purposes of this
Section 2.22, the term "Government Contract Party" means any independent or
executive agency, division, subdivision, audit group or procuring office of the
federal, state, county, local or municipal government, including any prime
contractor of the federal government and any higher level subcontractor of a
prime contractor of the federal government, and including any employees or
agents thereof, in each case acting in such capacity.

2.23 Year 2000 Conformity. All operating codes, programs, utilities,
development tools and other software, as well as all hardware and systems,
utilized by CTSI or any Subsidiary internally or to develop products or to
provide services to customers, as well as all CTSI or Subsidiary products sold
to customers (collectively, "Systems") are, in all material respects, in "Year
2000 Conformity" which term shall have the meaning set out in British Standards
Institution DISC PD2000-1 A definition of Year 2000 Conformity Requirements.
Neither CTSI nor any Subsidiary has given to customers any written
representations or warranties or indemnities with respect to Year 2000
Conformity, except as disclosed in Item 2.23 (it being agreed that CTSI may
update Item 2.23 of the CTSI Disclosure Schedule for up to ten (10) business
days following the date of this Agreement).

2.24 Warranties, Guarantees and Indemnities. Except as disclosed in Item
2.24 or in the agreements or contract listed herein, neither CTSI nor any
Subsidiary has provided to its customers (i) any

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warranties, guarantees or indemnities regarding the services and products it
provides to such customers; or (ii) rights to obtain refunds with respect to
such services except for rights that are customary in the industry and do not
expose CTSI or any Subsidiary to any material risk of liability.

2.25 No Stockholder Claims. No CTSI Stockholder has claimed any interest
in any additional shares of CTSI Stock, or any options, warrants or other
securities of CTSI, except for the number of shares of CTSI Capital Stock which
such person is shown to be the owner of on Item 2.3, and (b) no third party who
is not disclosed on Item 2.3 has made, or has, any claim of entitlement to
receive any shares of the capital stock of CTSI, any warrants or other rights
to acquire any capital stock of CTSI or any other securities of CTSI.

2.26 Customer Relationships. Each of CTSI and its Subsidiaries has good
commercial working relationships with its customers. Except as disclosed in
Item 2.26, no customer accounting for $500,000 or more of CTSI's or any
Subsidiary's revenues in fiscal 1998 (a "Material Customer") has, from January
1, 1998 to the date of this Agreement, canceled or otherwise terminated its
relationship with CTSI or any Subsidiary, decreased or limited materially the
amount of product or services ordered from CTSI or any Subsidiary, or
threatened to take any such action other than in the Ordinary Course upon
completion of customer projects.

2.27. Product and Service Quality. All products manufactured, sold,
licensed, leased or delivered by CTSI and the Subsidiaries and all services
provided by CTSI and the Subsidiaries, to customers on or prior to the Closing
Date conform to applicable contractual commitments, express and implied
warranties, product specifications and quality standards in all material
respects, and none of CTSI or any Subsidiary has any material liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against CTSI giving rise to
any liability) for replacement or repair thereof or other damages in connection
therewith. All material complaints received since the end of 1997 from
customers regarding CTSI's or any Subsidiary's services are summarized in Item
2.27.

2.28 Information Supplied. None of the information supplied or to be
supplied by CTSI for inclusion in the Form S-4 and the Prospectus/Proxy
Statement (collectively "Notice Materials"), at the date such information is
supplied and at the time of the meeting of the CTSI Stockholders to be held to
approve the Merger, contains or will contain any untrue statement of a material
fact or omits 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 misleading or will, in the case of
the Form S-4, at the time the Form S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.

2.29 Inventory. No inventory of CTSI or any Subsidiary is obsolete other
than inventory in the aggregate whose book value is less than $50,000 and other
than as adequately reserved for on the Company's most recent balance sheet
provided to Exodus.

2.30 Debt; Earn Out Provisions. Item 1.1.4(d) accurately lists all Debt.
An aggregate of $5,500,000 is a reasonable estimate of the Maximum Earn Out
Liability, based on all information currently and reasonably known to CTSI, of
the maximum amount payable pursuant to the Earn Out Provisions, including
reasonable estimate for legal fees and costs to resolve impending disputes or
litigation regarding amounts payable under the Earn Out Provisions.

3. REPRESENTATIONS AND WARRANTIES OF EXODUS AND NEWCO

Each of Exodus and Newco, where applicable, hereby represents and
warrants, that, except as disclosed on the Exodus disclosure letter delivered
to CTSI herewith as amended from time to time prior to Closing:

3.1 Organization and Good Standing. Each of Exodus and Newco is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and

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authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted.

3.2 Power, Authorization and Validity.

3.2.1 Each of Exodus and Newco has the corporate right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement, and all agreements to which Exodus and Newco is or will be a party
that are required to be executed pursuant to this Agreement (the "Exodus
Ancillary Agreements"). The execution, delivery and performance of this
Agreement and the Exodus Ancillary Agreements have been duly and validly
approved and authorized by Exodus's Board of Directors and Newco's Board of
Directors, as applicable and no other corporate approvals or proceedings on the
part of Exodus are necessary to authorize this Agreement and the transactions
contemplated hereby.

3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable Exodus to enter into, and to perform its
obligations under, this Agreement and the Exodus Ancillary Agreements, except
for (a) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, the filing of such officers' certificates and other
documents as are required to effectuate the Merger under Delaware law and the
filing of appropriate documents with the relevant authorities of other states
in which Exodus and Newco are qualified to do business, if any, (b) such
filings as may be required to comply with federal and state securities laws and
(c) the filings required by the HSR Act.

3.2.3 This Agreement and the Exodus Ancillary Agreements are, or when
executed and delivered by Exodus and Newco (as applicable) and the other
parties thereto will be, valid and binding obligations of Exodus and Newco,
enforceable against Exodus and Newco in accordance with their respective 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 provision requiring indemnification in connection with
the offering, issuance or sale of securities provided, however, that the
Certificate of Merger will not be effective until filed with the Delaware
Secretary of State.

3.3 No Violations. Neither the execution nor delivery of this Agreement
or any Exodus Ancillary Agreement, nor the consummation of the transactions
contemplated hereby or thereby, will conflict with, or (with or without notice
or lapse of time, or both) result in a termination, breach, impairment or
violation of (a) any provision of the Certificate of Incorporation or Bylaws of
Exodus or Newco, as currently in effect or (b) any mortgage, indenture, lease,
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Exodus or its properties, other than any such violation, conflict, default,
loss, termination or acceleration that would not materially adversely affect
the ability of Exodus to consummate the transactions contemplated hereby.

3.4 Disclosure. Exodus has furnished CTSI with its most recent annual
report on Form 10-K (the "Form 10-K") and all other reports or documents
required to be filed by Exodus pursuant to Section 13(a) or 15(d) of the 1934
Act since the filing of the Form 10-K, in each case as amended (the "Exodus
Disclosure Package"). The items in the Exodus Disclosure Package, (including,
without limitation, any financial statement or schedules included therein) (i)
were prepared in compliance with the requirements of the Securities Act, or the
Exchange Act, and the rules and regulations thereunder, as the case may be, and
(ii) did not at the time of filing (or if amended, supplemented or superseded
by a filing prior to the date hereof, on the date of that filing) 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 were made, not misleading.
Exodus has timely filed all forms, reports and documents required to be filed
with the SEC in the last 12 months under the Securities Act, or the Exchange
Act, and the rules and regulations thereunder.

3.5 Newco. Newco has been formed for the sole purpose of effecting the
Merger and, except as contemplated by this Agreement, Newco has not conducted
any business activities and does not have any material liabilities or
obligations.

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3.6 Information Supplied. None of the information supplied or to be
supplied by Exodus for inclusion in the Form S-4 and the Prospectus/Proxy
Statement (collectively "Notice Materials"), at the date such information is
supplied and at the time of the meeting of the CTSI Stockholders to be held to
approve the Merger, contains or will contain any untrue statement of a material
fact or omits 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 misleading or will, in the case of
the Form S-4, at the time the Form S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.

3.7 Authorized/Outstanding Capital Stock. The authorized capital stock
of Exodus consists of 105,000,000 shares, consisting of two classes:
100,000,000 shares of Common Stock, $0.001 par value per share, and 5,000,000
shares of Preferred Stock, $0.001 par value per share. According to a
certificate from Exodus' transfer agent dated April 19, 1999, a copy of which
has been supplied to CTSI, an aggregate of 40,772,605 shares of Exodus Common
Stock were issued and outstanding as of the date of such transfer agent
certificate. No shares of Exodus Preferred Stock are outstanding.

4. CTSI PRECLOSING COVENANTS

During the period from the date of this Agreement until the Effective
Time, CTSI covenants to and agrees with Exodus as follows:

4.1 Advice of Changes. CTSI will promptly advise Exodus in writing (a)
of any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of CTSI contained in this Agreement, if
made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect and (b) the occurrence of any material
adverse change in CTSI's financial condition, properties, assets, liabilities,
business, results of operations or prospects. To ensure compliance with this
Section 4.1, CTSI shall deliver to Exodus within fifteen (15) days after the
end of each monthly accounting period ending after the date of this Agreement
and before the Closing Date, an unaudited balance sheet and statement of
operations, which financial statements shall be prepared in the ordinary course
of business, in accordance with CTSI's books and records and generally accepted
accounting principles and shall fairly present the financial position of CTSI
as of their respective dates and the results of CTSI's operations for the
periods then ending.

4.2 Maintenance of Business. The parties hereto understand and
acknowledge that it is their intent to work closely together during the period
from the date hereof until the Closing Date. CTSI will use its best efforts to
carry on and preserve its business and its relationships with customers,
suppliers, employees and others in substantially the same manner as it has
prior to the date hereof. If CTSI becomes aware of a material deterioration in
the relationship with any material customer, material prospective customer,
supplier or key employee, it will promptly bring such information to the
attention of Exodus in writing and, if requested by Exodus, will exert its best
efforts to restore the relationship.

4.3 Conduct of Business. CTSI will continue to conduct its business and
maintain its business relationships in the ordinary and usual course and will
not, without the prior written consent of the Chief Executive Officer or Chief
Financial Officer of Exodus, not to be unreasonably withheld:

(a) borrow any money other than pursuant to existing lines of credit;

(b) enter into any transaction or make any commitment involving an
expense of CTSI or capital expenditure by CTSI in excess of $50,000 (in
the case of transactions or commitments outside Ordinary Course or that
are not contemplated by CTSI's current capital expenditure budget) or
$100,000 (in the case of transactions or commitments in the Ordinary
Course ) or any amount which differs materially, in the case of items
expressly and specifically listed by item in CTSI's current

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capital expenditure budget, from the amount shown on such budget (a
copy of which budget is attached as Item 4.3(b) to the CTSI Disclosure
Letter);

(c) encumber or permit to be encumbered any of its assets except in
the Ordinary Course and to an extent which is not material;

(d) dispose of any of its assets except in the Ordinary Course;

(e) enter into any lease or contract for the purchase or sale of any
property, real or personal, tangible or intangible, except in the
Ordinary Course or CTSI's current capital expenditure budget or enter
into any agreement of the types described in Section 2.11;

(f) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained to
the date of this Agreement, subject only to ordinary wear and tear;

(g) pay any bonus, royalty, increased salary (except for annual
increases in the Ordinary Course and disclosed to Exodus in writing and
approved by Exodus, such approval not to unreasonably be withheld) or
special remuneration, or grant, accelerate or otherwise modify any
stock options (other than to new hires in the Ordinary Course), to any
officer, employee or consultant (except pursuant to existing
arrangements heretofore disclosed in writing to Exodus) or enter into
any new employment or consulting or severance agreement with any such
person, or enter into any new agreement or plan of the type described
in Section 2.15.3;

(h) change accounting methods;

(i) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital stock, or, except as contemplated in
this Agreement, redeem or otherwise acquire any of its capital stock;

(j) amend or terminate or settle any disputes under any contract,
agreement or license to which it is a party (including by paying,
liquidating, discharging or settling any amounts due or allegedly due
with respect to any of the Earn Out Provisions), except those non Earn
Out Provisions related agreements that are amended or terminated in the
Ordinary Course and which are not material in amount or effect, or
enter into any noncompetition or exclusivity arrangements or
agreements;

(k) lend any amount to any person or entity, other than advances for
travel and expenses which are incurred in the Ordinary Course and which
are not material in amount, which travel and expenses shall be
reasonably documented by receipts for the claimed amounts;

(l) guarantee or act as a surety for any obligation except for the
endorsement of checks and other negotiable instruments in the Ordinary
Course and which are not material in amount;

(m) waive or release any material right or claim except in the
Ordinary Course;

(n) issue or sell any shares of its capital stock of any class or any
other of its securities (other than the issuance of CTSI Common Stock
upon the exercise of CTSI Options), or issue or create any warrants,
obligations, subscriptions, options, convertible securities, stock
appreciation rights or other commitments to issue shares of capital
stock, or except as disclosed in Item 4.3(n) to the CTSI Disclosure
Letter, accelerate the vesting of any outstanding option or other
security;

(o) split or combine the outstanding shares of its capital stock of
any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any
other of its securities;

(p) except for the Merger, merge, consolidate or reorganize with, or
acquire any entity;

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(q) amend its Certificate of Incorporation or Bylaws;

(r) agree to any audit assessment by any tax authority or file any
federal or state income or franchise tax return unless copies of such
returns have been delivered to Exodus for its review prior to filing;

(s) license any of its technology or any CTSI Intellectual Property,
except in the Ordinary Course;

(t) change or terminate any insurance coverage;

(u) terminate the employment of any key employee disclosed in Item
2.10(i);

(v) defer the payment of any accounts payable outside the Ordinary
Course or in an amount which is material or grant any discount,
accommodation or other concession made outside the Ordinary Course in
order to accelerate or induce the collection of any receivable; or

(w) agree to do any of the things described in the preceding clauses
4.3(a) through 4.3(v).

4.4 Certain Agreements. CTSI will cause all present employees and
consultants of CTSI engaged in development activity who have not previously
executed CTSI's forms of assignments of copyright and other intellectual
property rights to CTSI to execute such forms.

4.5 Stockholder Approval. CTSI shall use its best efforts to have this
Agreement approved by such percentage of CTSI's outstanding voting securities
as is required by the terms of Section 280G(b)(5)(B) of the Code to avoid the
treatment of any payment or benefit under any contract, agreement or other
arrangement, including those entered into in connection with this Agreement,
the Merger and the transactions contemplated hereby, as a parachute payment
under the federal tax laws, and to cause such stockholder approval to have been
obtained in a manner which satisfies all applicable requirements of Section
280G(b)(5)(B) of the Code and the proposed Treasury Regulations thereunder,
including (without limitation) Q-7 of Section 1.280G-1 of such proposed
regulations.

4.6 Regulatory Approvals. CTSI will execute and file, or join in the
execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which Exodus may reasonably request, in connection with the
consummation of the transactions provided for in this Agreement. CTSI will use
its best efforts to obtain or assist Exodus in obtaining all such
authorizations, approvals and consents.

4.7 Necessary Consents. CTSI will use its best efforts to obtain such
written consents and take such other actions as may be necessary or appropriate
for CTSI, in addition to those disclosed in Section 4.6, to facilitate and
allow the consummation of the transactions provided for herein and to
facilitate and allow Exodus to carry on CTSI's business after the Closing Date.

4.8 Litigation. CTSI will notify Exodus in writing promptly after
learning of any material action, suit, proceeding or investigation by or before
any court, board or governmental agency, initiated by or against CTSI or any
Subsidiary or threatened against it or any Subsidiary.

4.9 No Other Negotiations. From the date hereof until the termination of
this Agreement (provided such termination is not in breach of this Agreement)
or the consummation of the Merger, CTSI will not, and will not authorize or
permit any officer, director, employee or affiliate of CTSI, or any other
person, on its behalf, directly or indirectly, to (a) solicit, facilitate,
discuss or encourage any offer, inquiry or proposal received from any party
other than Exodus, concerning the possible disposition of all or any
substantial portion of CTSI's business, assets or capital stock by merger, sale
or any other means or to otherwise solicit, facilitate, discuss or encourage
any such disposition (other than the Merger), or (b) provide any confidential
information

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to or negotiate with any third party other than Exodus in connection with any
offer, inquiry or proposal concerning any such disposition. CTSI will
immediately notify Exodus of any such offer, inquiry or proposal.

4.10 Access to Information. Until the Closing Date, CTSI will provide
Exodus and its agents with reasonable access to the files, books, records and
offices of CTSI, including, without limitation, any and all information
relating to CTSI taxes, commitments, contracts, leases, licenses, real,
personal and intangible property, and financial condition. CTSI will cause its
accountants to cooperate with Exodus and its agents in making available all
financial information reasonably requested, including without limitation the
right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.

4.11 Satisfaction of Conditions Precedent. CTSI will use all
commercially reasonable best efforts to satisfy or cause to be satisfied all
the conditions precedent which are set forth in Section 8, and CTSI will use
its commercially reasonable best efforts to cause the transactions provided for
in this Agreement to be consummated, and, without limiting the generality of
the foregoing, to obtain all consents and authorizations of third parties and
to make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the
transactions provided for herein.

4.12 Blue Sky Laws. CTSI shall use its best efforts to assist Exodus to
the extent necessary to comply with the securities and Blue Sky laws of all
jurisdictions applicable in connection with the Merger.

4.13 Notification of Employee Problems. CTSI will promptly notify Exodus
if any of CTSI's officers becomes aware that any of the key employees disclosed
in Item 2.15.2 or 2.10(i) intends to leave its employ.

4.14 Termination of Benefit Plans. At the Closing Date, CTSI will have
terminated all Employee Plans maintained by it prior to the Closing Date except
as otherwise provided herein or unless otherwise specifically agreed to by
Exodus.

4.15 Stockholder Approval; Voting Agreement. CTSI will hold a special
meeting of its stockholders (the "Stockholders Meeting") at the earliest
practicable date to submit this Agreement, the Merger and related matters for
the consideration and approval of the CTSI Stockholders, which approval will be
recommended by CTSI's Board of Directors and management. Such meeting will be
called, held and conducted, and any proxies will be solicited, in compliance
with applicable law. Concurrently with the execution of this Agreement, certain
CTSI Stockholders have executed a Voting Agreement in the form of Exhibit B
agreeing to vote in favor of the Merger.

4.16 Prospectus/Proxy Statement. CTSI will send to its stockholders in a
timely manner, for the purpose of considering and voting upon the Merger at the
Stockholders Meeting, the Prospectus/Proxy Statement in the Form S-4. CTSI will
promptly provide all information relating to its business or operations
necessary for inclusion in the Prospectus/Proxy Statement to satisfy all
requirements of applicable state and federal securities laws. CTSI shall be
solely responsible for any statement, information or omission in the
Prospectus/Proxy Statement relating to it or its affiliates based upon written
information furnished by it. CTSI will not provide or publish to its
stockholders any material concerning it or its affiliates that violates the
Securities Act or Exchange Act with respect to the transactions contemplated
hereby.

4.17 Rescission Offer. Promptly after signing hereof and in any event
prior to Closing, CTSI shall, if Exodus and Exodus' counsel deem it advisable,
make a rescission offer to holders of CTSI Options granted, and shares of CTSI
Common Stock issued upon exercise of CTSI Options granted, in violation of the
California Securities Law of 1968, as amended pursuant to a permit issued under
that law and related regulations ("CTSI Option Securities"); provided, however,
that CTSI need not do so if it obtains a release of any rescission rights with
respect to CTSI Option Securities in a form reasonably acceptable to Exodus.

4.18 Insurance. CTSI shall, upon Exodus' request, acquire or maintain in
place errors and omissions insurance policy coverage and/or a related "tail"
policy in favor of CTSI and Subsidiaries for claims relating to Year 2000
Conformity.

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5. EXODUS PRECLOSING COVENANTS

During the period from the date of this Agreement until the Effective
Time, Exodus covenants to and agrees with CTSI as follows:

5.1 Access to Information. Until the Closing Date, Exodus will allow
CTSI and its agents reasonable access to its management and officers and
material information regarding Exodus, including without limitation, material
information relating to Exodus' business and financial condition. Exodus will
cause its accountants to cooperate with CTSI's accountants in making available
all financial information reasonably requested to evaluate Exodus' financial
statements.

5.2 Satisfaction of Conditions Precedent. Exodus will use all reasonable
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Section 7, and Exodus will use all reasonable efforts to cause
the transactions provided for in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions provided for herein.

5.3 Regulatory Approvals. Exodus will execute and file, or join in the
execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which CTSI may reasonably request, in connection with the
consummation of the transactions provided for in this Agreement. Exodus will
use all reasonable efforts to obtain all such authorizations, approvals and
consents.

5.4 Employee Matters. Exodus agrees that, as of the Effective Time, it
shall cause the surviving corporation to continue to employ all of the
employees of CTSI and its subsidiaries who are Active Employees (as hereinafter
defined), it being understood that nothing in this Agreement shall be deemed to
create any employment status other than employment at will. Employees who
continue as employees of the surviving corporation or any of its subsidiaries
shall be entitled to participate in all employee benefit plans maintained by
Exodus or the surviving corporation for employees of the surviving corporation
generally, and for purposes of eligibility in connection therewith will be
credited with prior periods of employment with CTSI.

For purposes of this Agreement, an employee shall be deemed to be an
Active Employee if:

(i) at the Effective Time, the employee is performing work duties for
CTSI or any of its subsidiaries or is absent by reason of a scheduled
day off;

(ii) at the Effective Time, the employee was absent from work by
reason of a sick day (not covered under clause (iii) below) or a paid
vacation day, personal day, or holiday;

(iii) at the Effective Time, the employee was absent from work by
reason of a family or medical leave covered under Section 102 of the
Family and Medical Leave Act of 1993; or

(iv) at the Effective Time, the employee is absent from work due to
any other authorized leave under the policies or practices of CTSI or
any of its subsidiaries and such person returns to work within the
period permitted by such policies or practices, but not later than 30
days after the Effective Time or such later time as may be required by
law.

5.5 Indemnification. From and after the Effective Time, Exodus agrees to
indemnify and hold harmless each current and former director and officer of
CTSI against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, asserted or claimed after the
Effective Time, to the fullest extent that CTSI would have been permitted under
its Certificate of Incorporation or Bylaws as in effect on the date hereof to
indemnify such person (and in connection therewith Exodus shall advance
expenses as incurred to the fullest extent provided for under Exodus'
Certificate of Incorporation and

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By-Laws as from time to time in effect, provided the person to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification); provided,
however, that this provision shall not apply to any matter that relates to a
breach of representation by CTSI or, with respect only to members of the CTSI
board appointed by Welsh, Carson, Anderson & Stowe VI, L.P. to represent that
firm's interests on the board, any liability or claim related to the Merger or
the conversion of the CTSI Preferred Stock. CTSI represents that there is no
current basis for any indemnity claim under this Section 5.5, except as set out
in Item 5.5, and in the event of breach of this representation this Section 5.5
shall be terminated with respect to any claim not disclosed in the CTSI
Disclosure Letter.

5.6 Cooperation in Obtaining Necessary Consents. Exodus will cooperate
with CTSI as reasonably requested by CTSI in order to assist CTSI to obtain
such written consents as are contemplated by Section 4.7 hereof.

6. CLOSING MATTERS

6.1 The Closing. Subject to termination of this Agreement as provided in
Section 9 below, the closing of the transactions provided for herein (the
"Closing") will take place at the offices of Fenwick & West LLP, Two Palo Alto
Square, Palo Alto, California 94306 at 10:00 a.m., Pacific Time on or before
all conditions to Closing have been satisfied or waived a mutually agreed date
promptly after, or such other place and time as CTSI and Exodus may mutually
select. Prior to or concurrently with the Closing, the Certificate of Merger
and such officers' certificates or other documents as may be required to
effectuate the Merger will be filed in the office of the Delaware Secretary of
State. Accordingly, the Merger will become effective at the Effective Time.

6.2 Exchange of Certificates and Cash.

6.2.1 As of the Effective Time, all shares of CTSI Capital Stock that
are outstanding immediately prior thereto will, by virtue of the Merger and
without further action, cease to exist, and all such shares will be converted
into the right to receive from Exodus the number of shares of Exodus Common
Stock and amount of cash determined as set forth in Section 1.1, subject to
Sections 1.2 and 1.3 hereof.

6.2.2 At and after the Effective Time, each certificate representing
outstanding shares of CTSI Common Stock will represent the number of shares of
Exodus Common Stock into which such shares of CTSI Common Stock have been
converted, and such shares of Exodus Common Stock will be deemed registered in
the name of the holder of such certificate. As soon as practicable after the
Effective Time, each holder of shares of CTSI Capital Stock will surrender (a)
the certificates for such shares (the "CTSI Certificates") to Exodus for
cancellation or (b) an affidavit of lost certificate (or nonissued) and a bond
in form reasonably satisfactory to Exodus (a "Bond"). Promptly following the
Effective Time and receipt of the CTSI Certificates and/or the Bonds, Exodus
will cause its transfer agent to issue to such surrendering holder
certificate(s) for the number of shares of Exodus Common Stock to which such
holder is entitled pursuant to Section 1.1, subject to Section 1.2 hereof and
Exodus will distribute the cash payable under Section 1.1., less the cash
deposited into escrow pursuant to Section 1.3 hereof, and any cash payable
under Section 1.2.

6.2.3 All cash and shares of Exodus Common Stock delivered upon the
surrender of CTSI Certificates in accordance with the terms hereof will be
delivered to the registered holder or placed in escrow with the Escrow Agent,
as applicable. After the Effective Time, there will be no further registration
of transfers of the shares of CTSI Capital Stock on the stock transfer books of
CTSI. If, after the Effective Time, CTSI Certificates are presented for
transfer or for any other reason, they will be canceled and exchanged and
certificates and cash therefor will be delivered or placed in escrow as
provided in this Section 6.2. Notwithstanding anything herein to the contrary,
except to the extent waived by Exodus, any CTSI Certificate that is not
properly submitted to Exodus for exchange and cancellation within three years
after the Effective Time shall no longer evidence ownership of or any right to
receive cash and shares of Exodus Common Stock

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pursuant to this Agreement and all rights of the holder of such CTSI
Certificate, with respect to the shares previously evidenced by such CTSI
Certificate, shall cease.

6.2.4 Until CTSI Certificates representing CTSI Capital Stock
outstanding prior to the Merger are surrendered pursuant to Section 6.2.2
above, such certificates will be deemed, for all purposes, to evidence
ownership of (a) the number of shares of Exodus Common Stock into which the
shares of CTSI Capital Stock will have been converted, and/or (b) the right to
receive cash determined as set forth in Section 1.1, subject to the obligation
to place a portion thereof in escrow as required hereby, and as set forth in
Section 1.2 hereof.

6.3 Assumption of Options and Warrants. Promptly after the Effective
Time, Exodus will notify in writing each holder of a CTSI Option of: (i) the
assumption of such CTSI Option by Exodus, (ii) the conversion of such CTSI
Options into Exodus Options, (iii) the number of shares of Exodus Common Stock
that are then subject to such Exodus Option and (iv) the exercise price of such
Exodus Option, all as determined pursuant to Section 1.1.2 hereof.

7. CONDITIONS TO OBLIGATIONS OF CTSI

CTSI's obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions
(any one or more of which may be waived by CTSI, but only in a writing signed
on behalf of CTSI by its Chief Executive Officer, President or Chief Financial
Officer):

7.1 Accuracy of Representations and Warranties. The representations and
warranties of Exodus set forth in Section 3 shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made at the Closing, and CTSI shall have received a
certificate to such effect executed on behalf of Exodus by its Chief Executive
Officer or Chief Financial Officer.

7.2 Covenants. Exodus shall have performed and complied in all material
respects with all of its covenants contained in Section 5 on or before the
Closing Date, and CTSI shall have received a certificate to such effect
executed on behalf of Exodus by its Chief Executive Officer or Chief Financial
Officer.

7.3 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.

7.4 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been
taken such other actions, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions
herein proposed to be taken, including but not limited to satisfaction of all
requirements under applicable federal and state securities laws.

7.5 No Litigation. No litigation or proceeding initiated by a party
other than CTSI or the CTSI Stockholders shall be pending which will have the
probable effect of enjoining or preventing the consummation of any of the
transactions provided for in this Agreement.

7.6 Opinion of Exodus' Counsel. CTSI shall have received from Fenwick &
West LLP, counsel to Exodus, an opinion in mutually agreed, customary form.

7.7 Tax Representations. Officers of Exodus shall have executed and
delivered the Officers' Certificate containing representations regarding tax
matters in a form approved by the Parties' respective counsel.

7.8 Hart-Scott-Rodino Compliance. All applicable waiting periods under
the HSR Act shall have expired or early termination shall have been granted by
both the Federal Trade Commission and the United States Department of Justice.

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7.9 Stockholder Approval. The principal terms of this Agreement shall
have been approved and adopted by CTSI Stockholders, as required by applicable
law and CTSI's Certificate of Incorporation and Bylaws.

7.10 Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order and the Prospectus/Proxy Statement shall on the Closing
not be subject to any proceedings commended or threatened by the SEC.

7.11 Discharge of Debt. All Debt shall be paid in full in cash at
Closing by Exodus.

8. CONDITIONS TO OBLIGATIONS OF EXODUS

The obligations of Exodus hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by Exodus, but only in a writing
signed on behalf of Exodus by its Chief Executive Officer or Chief Financial
Officer):

8.1 Accuracy of Representations and Warranties. The representations and
warranties of CTSI set forth in Section 2 shall be true and correct in all
material respects on and as of the Closing Date, with the same force and
effect as if made at the Closing, and Exodus shall have received a certificate
to such effect executed on behalf of CTSI by its Chief Executive Officer and
its Chief Financial Officer.

8.2 Covenants. CTSI shall have performed and complied in all material
respects with all of its covenants contained in Section 4 on or before the
Closing and Exodus shall have received a certificate to such effect signed on
behalf of CTSI by its Chief Executive Officer and its Chief Financial Officer.

8.3 Absence of Material Adverse Change. There shall not have been any
Material Adverse Change.

8.4 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency in effect that would prohibit or render
illegal the transactions provided for in this Agreement.

8.5 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been
taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions
herein proposed to be taken, including but not limited to satisfaction of all
requirements under applicable federal and state securities laws.

8.6 Consents. Exodus shall have received all written consents,
assignments, waivers, authorizations or other certificates necessary to
provide for the continuation in full force and effect of any and all contracts
and leases of CTSI or any Subsidiary which if not continued would have a
Material Adverse Effect or would impact continuance of a contract or
relationship with a Material Customer or a customer who has purchased in
excess of $500,000 of products or services from CTSI or Subsidiaries since
January 1, 1999.

8.7 Opinion of CTSI's Counsel. Exodus shall have received from Reboul
MacMurray, counsel to CTSI, an opinion in mutually agreed, customary form.

8.8 Requisite Approvals. The principal terms of this Agreement shall
have been approved and adopted by the CTSI Stockholders, as required by
applicable law and CTSI's Certificate of incorporation and Bylaws, and by
CTSI's Board of Directors.

8.9 No Litigation. No litigation or proceeding shall be threatened or
pending which will have the probable effect of enjoining or preventing the
consummation of any of the transactions provided for in this Agreement or
which could reasonably be expected to have a Material Adverse Effect on CTSI.

8.10 Escrow. Exodus shall have received the Escrow Agreement, executed
by the Representative of the CTSI Stockholders and the Escrow Agent, which
agreement provides for the escrow of the Escrow Cash on the terms and
conditions of the Escrow Agreement.

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8.11 Warrants Exercised. Any and all warrants to purchase CTSI Capital
Stock shall have been exercised.

8.12 Tax Representations. Officers of CTSI shall have executed and
delivered the Officers' Certificate containing representations regarding tax
matters in a form approved by the Parties' respective Counsel.

8.13 Hart-Scott-Rodino Compliance. All applicable waiting periods under
the HSR Act shall have expired or early termination shall have been granted by
both the Federal Trade Commission and the United States Department of Justice.

8.14 Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order and the Prospectus/Proxy Statement shall on the Closing
not be subject to any proceedings commenced or threatened by the SEC.

8.15 Discharge of Debt and Obligations to Preferred Holders. All Debt
shall have been paid in full in cash at Closing by Exodus and the payments
under Section 1.1.1 shall have fully discharged all obligations to holders of
CTSI Preferred Stock under the CTSI Certificate of Incorporation (including
rights to redemption or to notice) and under the Shareholder Agreement ("Full
Discharge") and Exodus shall have received written receipts from each holder of
Debt acknowledging payment in full (including release of any security interest
in CTSI assets held by such holder and termination of any loan or credit
agreements with such holder) and from each holder of CTSI Preferred Stock
acknowledging Full Discharge.

8.16 Resignations Tendered. Any resignations of officers or directors of
CTSI's subsidiaries requested by Exodus shall have been tendered to Exodus in
writing.

8.17 Comfort Letter. Exodus shall have obtained prior to filing of the
Form S-4 with the SEC customary auditor comfort letter with respect to those
CTSI financial statements to be included in the Form S-4 filing.

9. TERMINATION OF AGREEMENT

9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
stockholders of CTSI:

(a) by the mutual written consent of Exodus and CTSI;

(b) Unless otherwise specifically provided herein or agreed in
writing by Exodus and CTSI, upon notice by either party, if all the
conditions to Closing have not been satisfied or waived on or before
November 30, 1999 (the "Final Date") other than as a result of a breach
of this Agreement by the terminating party, or a breach by any of the
affiliates of the terminating party.

(c) by CTSI, if there has been a breach by Exodus of any
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Exodus, or if any representation of Exodus
will have become untrue, in either case which has or can reasonably be
expected to have a material adverse effect on Exodus and which Exodus
fails to cure within a reasonable time, not to exceed thirty (30) days,
after written notice thereof (except that no cure period will be
provided for a breach by Exodus which by its nature cannot be cured);

(d) by Exodus, if there has been a breach by CTSI of any
representation, warranty, covenant or agreement set forth in this
Agreement on the part of CTSI, or if any representation of CTSI will
have become untrue, in either case which has or can reasonably be
expected to have a material adverse effect on CTSI and which CTSI fails
to cure within a reasonable time not to exceed thirty (30) days after
written notice thereof (except that no cure period will be provided for
a breach by CTSI which by its nature cannot be cured); or

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(e) by either party, if a permanent injunction or other order by any
federal or state court which would make illegal or otherwise restrain
or prohibit the consummation of the Merger will have been issued and
will have become final and nonappealable; or

(f) by Exodus, in the circumstances specified in Section 1.1.4(b)(1);
or

Any termination of this Agreement under this Section 9.1 will be
effective by the delivery of written notice of the terminating party to the
other party hereto.

9.2 Certain Continuing Obligations. Following any termination of this
Agreement pursuant to this Section 9, the parties hereto will continue to
perform their respective obligations under Section 11 but will not be required
to continue to perform their other covenants under this Agreement.

10. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES, CONTINUING
COVENANTS

10.1 Survival of Representations.

10.1.1 Representations of CTSI. All representations, warranties and
covenants of CTSI contained in this Agreement will remain operative and in full
force and effect after the Closing, regardless of any investigation made by or
on behalf of the parties to this Agreement; provided, however, that no claim
for violations of representations, warranties or covenants shall be made unless
Exodus gives written notice to the Representative (as defined below) on or
prior to the first anniversary of the Closing Date.

Except for the obligations of CTSI under Section 11, the
representations, warranties and covenants of CTSI contained in this Agreement
will terminate as of the termination of this Agreement in accordance with its
terms.

10.1.2 Representations of Exodus. All representations, warranties and
covenants of Exodus contained in this Agreement will expire at Closing. Except
for the obligations of Exodus under Section 11, the representations, warranties
and covenants of Exodus contained in this Agreement will terminate as of
termination of this Agreement in accordance with its terms.

10.2 CTSI Stockholders Agreement to Indemnify.

10.2.1 Indemnification by CTSI Stockholders. Subject to the
limitations set forth in this Section 10.2, the CTSI Stockholders will
indemnify and hold harmless Exodus and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control
Exodus within the meaning of the Securities Act (hereinafter in this Section
10.2 referred to individually as an "Indemnified Person" and collectively as
"Indemnified Persons") from and against any and all claims, demands, actions,
causes of action, losses, costs, damages, liabilities and expenses including,
without limitation, reasonable legal fees (collectively, "Claims"):

(a) Arising out of any misrepresentation or breach of or default
in connection with any of the representations, warranties or
covenants given or made by CTSI in this Agreement or any
certificate, document or instrument delivered by or on behalf of
CTSI pursuant hereto;

(b) Resulting from any failure of any CTSI Stockholder to have
good, valid and marketable title to the issued and outstanding CTSI
Capital Stock held by such stockholders free and clear of all liens,
claims, pledges, options, adverse claims, assessments or charges of
any nature whatsoever, or to have full right, capacity and authority
to vote such CTSI Capital Stock in favor of the Merger and the other
transactions contemplated hereby;

(c) Relating to the Earn Out Provisions or any disputes or claims
bearing any logical or factual connection to the Earn Out Provisions
(to the extent Exodus is not already reimbursed therefor by
retention of the Maximum Earn Out Liability); or

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(d) relating to the amount of any lost tax deduction by the
Company or any of its ERISA affiliates in respect of any payment
made hereunder or with respect hereto that constitutes an excess
parachute payment under Code Section 280(g)(1);

(e) Relating to any lack of Year 2000 Conformity of or with
respect to any Systems or to any liability of CTSI or any Subsidiary
to customers under any written representations or warranties or
indemnities with respect to Year 2000 Conformity, provided, however,
that for purposes of this clause (e) any insurance recoveries (net
of premiums paid after Closing), or amounts recovered from CTSI
vendors based on their Year 2000 Conformity warranties or
indemnities to CTSI, on claims relating to any matter as to which
indemnity amounts are paid under this clause (e) shall be credited
against future amounts payable under this clause (e) (and Exodus
agrees to take commercially reasonable steps, based on advice of
counsel, to seek recovery from CTSI vendors who gave applicable,
written Year 2000 Conformity warranties or indemnities to CTSI and
whose products sold or services rendered to CTSI gave rise, in whole
or part, to the indemnity obligation under this clause (e) but
Exodus will have no liability (nor will CTSI or the CTSI
Stockholders have any set off right) due to any failure of recovery
from any such vendor);

(f) Relating to any liability to CTSI Stockholders or option
holders arising out of the grant, offer or sale of CTSI Option
Securities in violation of the California Securities Law of 1968, as
amended.

(g) Relating to any claim, made by or by right of any party to a
covenant not to compete or non-competition agreement (whether a
stand alone agreement or a provision of a larger agreement) to which
CTSI or any Subsidiary is a party or is bound, that Exodus is or
would be in breach thereof by virtue of continuing after Closing
Exodus' current business as conducted immediately prior to the
Closing or claiming that CTSI's business or activities prior to
Closing constituted a breach of any thereof.

(h) or any and all actions, suits, claims or legal,
administrative, arbitrative, governmental or other proceedings or
investigations against any Indemnified Person incident to any of the
foregoing.

10.2.2 Limitations. The sole and exclusive remedy of the Indemnified
Persons for misrepresentation or breach of or default in connection with any of
the representations, warranties or covenants given by or on behalf of CTSI
pursuant hereto or for any other indemnity claims under Section 10.2.1 shall be
to exercise their rights to recover, under and pursuant to the Escrow
Agreement, Escrow Cash and any other assets deposited in escrow pursuant to the
Escrow Agreement and no CTSI Stockholder shall be personally liable with
respect thereto, other than to the extent of such stockholder' proportionate
interest in the Escrow Cash and any other assets deposited under the Escrow
Agreement. The indemnification provided for in this Section 10.2 shall not
apply unless the aggregate Damages for which one or more Indemnified Persons
seeks indemnification exceeds $250,000 (the "Basket"), after which recovery
shall be from the first dollar without regard to the Basket.

10.2.3 Survival of Claims. Notwithstanding anything to the contrary,
if, prior to the expiration of a particular representation or warranty, an
Indemnified Person makes a claim for indemnification under either this
Agreement or the Escrow Agreement with respect to a misrepresentation or breach
of such representation or warranty, then the Indemnified Person's rights to
indemnification under this Section 10.2 for such claim shall survive any
expiration of such representation or warranty.

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however, that Exodus may retain from such refund an amount equal to Exodus'
actual costs incurred as a result of the effect of this refund and the
assignment thereof (other than payment of the net refunded cash and reduction
in CTSI's net operating loss that might otherwise be utilized by Exodus subject
to tax law imposed limitations to such utilization), the CTSI stockholders may
retain any such refund and if Exodus or CTSI receives same it will, if the
above conditions are satisfied, deliver such refund amount promptly to the
Representative for distribution pro rata among CTSI Stockholders (and upon such
deliver Exodus shall have no further liability therefore to any CTSI
Stockholder).

10.4 Distribution of Maximum Earn Out Liability Balance. After Exodus
determines, to its reasonable satisfaction, that all liabilities under the Earn
Out Provisions have been finally determined and settled and paid and no further
claims or disputes with respect thereto are pending or threatened, then any
balance of the Maximum Earn Out Liability amount retained by Exodus shall be
delivered to the Representative for distribution pro rata among CTSI
Stockholders (and upon such deliver Exodus shall have no further liability
therefore to any CTSI Stockholder). Post Closing, the Representative, as
advised by Exodus' counsel or other counsel acceptable to Exodus, may, if he so
elects, seek to discharge or settle any disputes or amounts due or allegedly
due with respect to any of the Earn Out Provisions, provided that no settlement
may be made without Exodus' consent, not to unreasonably be withheld, and
unless such settlement provides for a complete general release of Exodus and
CTSI. If Representative fails to so elect, then Exodus shall seek to discharge
or settle any disputes or amounts due or allegedly due with respect to any of
the Earn Out Provisions, provided that no settlement may be made by Exodus
without the Representative's consent, not to unreasonably be withheld.

10.5 Distribution of E-Rate Receivable Proceeds. CTSI's Subsidiary,
Cohesive Network Systems, Inc., is a party to various "E-Rate" Program
Contracts or agreements ("E-Rate Contracts") with Orleans Parish School Board,
Livingston Parish School District and Iberville Parish School District
(collectively, the "Parishes"). Certain equipment has been purchased from
Cisco, Ingram and other vendors ("Vendors") and delivered to the Parishes under
the E-Rate Contracts ("Equipment"). The payables to Vendors relating to the
Equipment are in the approximate aggregate amount of $1,876,058 (the
"Payables"). In the event that, as of Closing, the Debt is increased any amount
("Applicable Debt Increase Amount") because any of the Payables come due and
are paid by CTSI or a Subsidiary prior to payment by Parishes under the E-Rate
Contracts of an amount equal to the amount of the Payables (the "Parishes
Payment"), and CTSI draws down on its bank line to finance payment of the
Payables, then Exodus will, upon collection of the Parishes Payment from
Parishes pursuant to the E-Rate Contracts, cause the Parishes Payment to be
delivered to the Representative for distribution pro rata among CTSI
Stockholders (and upon such delivery Exodus shall have no further liability
therefore to any CTSI Stockholder with respect to the Parishes Payment);
provided, however, that in no event shall Exodus be required under this Section
10.5 to pay an amount in excess of the Applicable Debt Increase Amount.

11. MISCELLANEOUS

11.1 Governing Law; Dispute Resolution. Except to the extent governed by
the Delaware General Corporation Law, the internal laws of the State of
California (irrespective of its choice of law principles) will govern the
validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
Any dispute hereunder ("Dispute") shall be settled by arbitration in Santa
Clara County, California, and, except as herein specifically stated, in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA Rules") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now or
hereafter be contained in the AAA Rules. Any judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction over the
subject matter thereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve a Dispute.

11.1.1 Compensation of Arbitrator. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the

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American Arbitration Association, but based upon reasonable hourly or daily
consulting rates for the arbitrator in the event the parties are not able to
agree upon his or her rate of compensation.

11.1.2 Selection of Arbitrator. The American Arbitration Association
will have the authority to select an arbitrator from a list of arbitrators who
are lawyers familiar with California contract law; provided, however, that such
lawyers cannot work for a firm then performing services for either party, that
each party will have the opportunity to make such reasonable objection to any
of the arbitrators listed as such party may wish and that the American
Arbitration Association will select the arbitrator from the list of arbitrators
as to whom neither party makes any such objection. In the event that the
foregoing procedure is not followed, each party will choose one person from the
list of arbitrators provided by the American Arbitration Association (provided
that such person does not have a conflict of interest), and the two persons so
selected will select from the list provided by the American Arbitration
Association the person who will act as the arbitrator.

11.1.3 Payment of Costs. Exodus and CTSI or the CTSI Stockholders
after the Closing will bear the expense of deposits and advances required by
the arbitrator in equal proportions (with Exodus having the right to withdraw
funds from Escrow Cash if CTSI Stockholders do not pay same upon demand), but
either party may advance such amounts, subject to recovery as an addition or
offset to any award. The arbitrator will award to the prevailing party, as
determined by the arbitrator, all costs, fees and expenses related to the
arbitration, including reasonable fees and expenses of attorneys, accountants
and other professionals incurred by the prevailing party.

11.1.4 Burden of Proof. For any Dispute submitted to arbitration, the
burden of proof will be as it would be if the claim were litigated in a
judicial proceeding.

11.1.5 Award. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.

11.1.6 Terms of Arbitration. The arbitrator chosen in accordance with
these provisions will not have the power to alter, amend or otherwise affect
the terms of these arbitration provisions or the provisions of this Agreement.

11.1.7 Exclusive Remedy. Except as specifically otherwise provided in
this Agreement, arbitration will be the sole and exclusive remedy of the
parties for any Dispute arising out of this Agreement.

11.2 Assignment; Binding Upon Successors and Assigns. No party hereto
may assign any of its rights or obligations hereunder without the prior written
consent of the other party hereto. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

11.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision.

11.4 Counterparts. This Agreement may be executed in counterparts, each
of which will be an original as regards any party whose name appears thereon
and all of which together will constitute one and the same instrument. This
Agreement will become binding when one or more counterparts hereof,
individually or taken together, bear the signatures of both parties reflected
hereon as signatories.

11.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.

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11.6 Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
will not be deemed to constitute a waiver of any other default or any
succeeding breach or default. This Agreement may be amended by the parties
hereto at any time before or after approval of the CTSI Stockholders.

11.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision
on any other occasion.

11.8 Expenses. Each party will bear its respective expenses and fees of
its own accountants, attorneys, investment bankers and other professionals
incurred with respect to this Agreement and the transactions contemplated
hereby; provided that in the event of Closing Exodus shall pay all reasonable
and customary accounting and attorneys' fees and expenses, investment banking
fees and expenses and other fees and expenses incurred by CTSI and the CTSI
Stockholders in connection with the Merger, not to exceed $2,000,000 in the
aggregate. The CTSI Stockholders will pay all other accounting and attorneys'
fees and expenses, investment banking fees and expenses and other fees and
expenses incurred by CTSI and the CTSI Stockholders in connection with the
Merger in excess of $2,000,000. If such payment of such amounts in excess of
$2,000,000 is not made by the CTSI Stockholders, Exodus will pay such fees or
expenses and will be entitled to be reimbursed by the CTSI Stockholders for
such payment and, if not so reimbursed, Exodus will be entitled to treat the
amount of payment as Claims recoverable under Section 10.2 and as an
Uncontested Claim under Section 4(a) of the Escrow Agreement.

11.9 Notices. Any notice or other communication required or permitted to
be given under this Agreement will be in writing, will be delivered personally
or by mail or express delivery, postage prepaid, and will be deemed given upon
actual delivery or, if mailed by registered or certified mail, on the third
business day following deposit in the mails, addressed as follows:

(i)If to Exodus:

Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, CA 95054
Attention: Adam W. Wegner, General Counsel

with a copy to:

Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: David W. Healy, Esq.
Phone: (650) 494-0600
Fax: (650) 494-1417

(ii)If to CTSI:

Cohesive Technology Solutions, Inc.
Embarcadero Corporate Center
2465 East Bayshore Road, Suite 400
Palo Alto, CA 94303
Attention: Dennis Rohan, Chief Executive Officer

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with a copy to:

Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Karen Wiedemann, Esq.
Phone: 212 841 5700
Fax: 212 841 5725

or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 11.9.

11.10 Construction of Agreement. The language hereof will not be
construed for or against either party. A reference to an article, section or
exhibit will mean an article or section in, or an exhibit to, this Agreement,
unless otherwise explicitly set forth. The titles and headings in this
Agreement are for reference purposes only and will not in any manner limit the
construction of this Agreement. For the purposes of such construction, this
Agreement will be considered as a whole.

11.11 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.

11.12 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
the other party to evidence and reflect the transactions provided for herein
and to carry into effect the intent of this Agreement.

11.13 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other
person or entity, unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.

11.14 Public Announcement. Exodus and CTSI will issue a press release
approved by both parties announcing the Merger as soon as practicable following
the execution of this Agreement. Exodus may issue such press releases, and make
such other disclosures regarding the Merger, as it determines to be required or
appropriate under applicable securities laws or Nasdaq Stock Market rules after
reasonable consultation, where possible, with CTSI. CTSI will not make any
other public announcement or disclosure of the transactions contemplated by
this Agreement. CTSI will take all reasonable precautions to prevent any
trading in the securities of Exodus by officers, directors, employees and
agents of CTSI having knowledge of any material information regarding Exodus
provided hereunder, including, without limitation, the existence of the
transactions contemplated by this Agreement (the "Exodus Material
Information"), until the information in question has been publicly disclosed.
The CTSI Stockholders agree not to trade in the securities of Exodus until the
Exodus Material Information has been disclosed.

11.15 Confidentiality. Except as expressly authorized by Exodus in
writing, CTSI will not directly or indirectly divulge to any person or entity
or use any Exodus Confidential Information, except as required for the
performance of its duties under this Agreement. Except as expressly authorized
by CTSI in writing, Exodus will not directly or indirectly divulge to any
person or entity or use any CTSI Confidential Information, except

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as required for the performance of its duties under this Agreement. As used
herein, "Exodus Confidential Information" consists of (a) any information
designated by Exodus as confidential whether developed by Exodus or disclosed
to Exodus by a third party, (b) the source code to any Exodus software and any
trade secrets relating to any of the foregoing, and (c) any information
relating to Exodus' product plans, product designs, product costs, product
prices, product names, finances, marketing plans, business opportunities,
personnel, research, development or know-how. As used herein, "CTSI
Confidential Information" consists of (x) any information designated by CTSI as
confidential whether developed by CTSI or disclosed to CTSI by a third party,
(y) the source code to any CTSI software and any trade secrets related to any
of the foregoing, and (z) any information relating to CTSI product plans,
product designs, product costs, product prices, product names, finances,
marketing plans, business opportunities, personnel, research, development or
know-how. "Exodus Confidential Information" and "CTSI Confidential Information"
also include the terms and conditions of this Agreement, except as disclosed in
accordance with Section 11.14 above. The foregoing restriction will apply to
information about a party whether or not it was obtained from such party's
employees, acquired or developed by the other party during such other party's
performance under this Agreement, or otherwise learned. The foregoing
restrictions will not apply to information that (i) has become publicly known
through no wrongful act of the receiving party, (ii) has been rightfully
received from a third party authorized by the party which is the owner, creator
or compiler to make such disclosure without restriction, (iii) has been
approved or released by written authorization of the party which is the owner,
creator or compiler or (iv) is being or has therefore been disclosed pursuant
to a valid court order after a reasonable attempt has been made to notify the
party which is the owner, creator or compiler.

11.16 Time is of the Essence. The parties hereto acknowledge and agree
that time is of the essence in connection with the execution, delivery and
performance of this Agreement, and that they will each utilize commercially
reasonable efforts to satisfy all the conditions to Closing on or before
November 30, 1999.

11.17 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect to the
subject matter hereof. The express terms hereof control and supersede any
course of performance or usage of trade inconsistent with any of the terms
hereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

EXODUS COMMUNICATIONS, INC. COHESIVE TECHNOLOGY SOLUTIONS, INC.

By: /s/ Richard S. Stoltz By: /s/ Dennis Rohan
___________________________ ___________________________
Richard S. Stoltz, Dennis Rohan,
Executive Vice President, Finance Chief Executive Officer
Chief Operating Officer and
Chief Financial Officer

MARLEY ACQUISITION CORP.

By: /s/ Adam W. Wegner
___________________________
Adam W. Wegner
President and Secretary

SIGNATURE PAGE TO
AGREEMENT AND PLAN OF REORGANIZATION

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AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION

This AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this "Amendment") is
dated as of May 28, 1999, by and among Exodus Communications, Inc., a Delaware
corporation ("Exodus"), Cohesive Technology Solutions, Inc., a Delaware
corporation ("CTSI"), and Marley Acquisition Corp., a Delaware corporation that
is a wholly-owned subsidiary of Exodus ("Newco").

WHEREAS, Exodus, CTSI and Newco are parties to that certain Agreement and
Plan of Reorganization dated as of April 21, 1999 (the "Reorganization
Agreement") and desire to amend the Reorganization Agreement as set forth
herein;

NOW, THEREFORE, the parties hereto agree as follows:

1. AMENDMENTS TO REORGANIZATION AGREEMENT

A. Section 1.1.1(b) of the Reorganization Agreement is hereby amended by
inserting the text "in cash" immediately after the text "an amount" appearing
therein.

B. Section 1.1.1(c) of the Reorganization Agreement is hereby amended such
that it reads in its entirety as follows:

(c) in the case of the holders of CTSI's Series D Preferred Stock, an
amount in cash equal to the difference between (x) $10 per share and
(y) the aggregate fair market value of the shares of Exodus Common
Stock and cash received for each share of CTSI Common Stock issued upon
conversion of the Series D Preferred Stock as of the Effective Time, as
required under Section 4.1 of that certain Shareholder Agreement dated
September 18, 1998 by and among CTSI, Paul J. Brady, John T. Towner and
Karl J. Pessinis ("Shareholder Agreement"), with the amount due under
this clause (c) to be as set forth in a spreadsheet mutually agreed
upon by the parties.

C. Section 1.1.4(a) of the Reorganization Agreement is hereby amended by
inserting the following text immediately after the text "$50,000,000" appearing
therein: ", plus an amount equal to the aggregate exercise price of all Vested
CTSI Options,".

D. Section 1.1.4(b)(1) of the Reorganization Agreement is hereby amended
such that it reads in its entirety as follows:

(1) in the event that the Closing Price Per Share would result in the
Total Exodus Shares (as calculated in subsection (b) above) exceeding
one million (1,000,000) (i.e., the Closing Price Per Share is below
fifty dollars ($50)), then Exodus may unilaterally terminate this
Agreement upon delivery of written notice to CTSI, without further
liability to CTSI or any CTSI Stockholder, unless CTSI shall agree,
within two business days of the receipt of such notice, to fix the
Total Exodus Shares at one million (1,000,000); provided further, that
notwithstanding any other provision of this Agreement, in the event
that CTSI so agrees to fix the Total Exodus Shares at one million
(1,000,000), the parties hereto agree to increase the Total Exodus
Shares to a certain number above one million (1,000,000), and to
decrease the amount of the Aggregate Cash Consideration, to the extent
necessary to ensure that the aggregate fair market value of the Total
Exodus Shares is equal to at least fifty percent (50%) of the total
fair market value of all consideration payable to CTSI Stockholders in
connection with the Merger, and agree that such increase in Total
Exodus Shares and decrease in Aggregate Cash Consideration shall be on
an equivalent dollar value basis to the greatest extent practicable;

E. Section 1.1.4(b)(2) of the Reorganization Agreement is hereby amended
such that it reads in its entirety as follows:

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(2) in the event that the Closing Price Per Share is between ninety
five dollars ($95.00) and one hundred two dollars fifty cents ($102.50)
inclusive, the Total Exodus Shares shall equal five hundred twenty six
thousand three hundred sixteen (526,316); and

F. Section 2.3(a) of the Reorganization Agreement is hereby amended by:

(1) deleting the number 633,379 appearing therein and inserting the
number 668,404 in lieu thereof;

(2) deleting the number 2,403,159 appearing therein and inserting the
number 2,700,434 in lieu thereof; and

(3) deleting the number 499,576 appearing therein and inserting the
number 530,351 in lieu thereof.

G. Section 2.8(e) of the Reorganization Agreement is hereby amended by:

(1) deleting the word "There" at the beginning of said Section and
inserting the text "Other than as set forth in Item 2.8(e), there" in
lieu thereof; and

(2) inserting the text "to which CTSI is a party" immediately after
the word "arrangement" appearing therein.

H. Section 2.15.5 of the Reorganization Agreement is hereby amended by
deleting the following text which appears therein:

"Neither CTSI nor any Subsidiary is obligated to make any parachute
payment, as defined in Section 280G(b)(2) of the Code, nor will any
parachute payment be deemed to have occurred, as a result of the
transactions contemplated by this Agreement.".

I. Section 2.23 of the Reorganization Agreement is hereby amended by
inserting the text "entered into or agreed to by CTSI on or prior to April 21,
1999" immediately after the word "indemnities" appearing therein.

J. Section 4.1 of the Reorganization Agreement is hereby amended such that
it reads in its entirety as follows:

4.1 Advice of Changes. CTSI will promptly advise Exodus in writing
(a) of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of CTSI contained in
this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect and (b) of
the occurrence of any material adverse change in the financial
condition, properties, assets, liabilities, material intellectual
property rights, business, operating results or prospects of CTSI and
its Subsidiaries taken as a whole (a "Material Adverse Change"). To
ensure compliance with this Section 4.1, CTSI shall deliver to Exodus
within fifteen (15) days after the end of each monthly accounting
period ending after the date of this Agreement and before the Closing
Date, an unaudited balance sheet and statement of operations, which
financial statements shall be prepared in the ordinary course of
business, in accordance with CTSI's books and records and generally
accepted accounting principles and shall fairly present the financial
position of CTSI as of their respective dates and the results of CTSI's
operations for the periods then ending.

K. Section 4.5 of the Reorganization Agreement is hereby amended by deleting
said Section in its entirety and inserting the text "[Intentionally Omitted]"
in lieu thereof.

L. Section 9.1(f) of the Reorganization Agreement is amended such that it
reads in its entirety as follows:

(f) by Exodus, in the circumstances specified in Section 1.1.4(b)(1).

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M. Section 10.2.1(d) of the Reorganization Agreement is hereby amended by
deleting said Section in its entirety and inserting the text "[Intentionally
Omitted]" in lieu thereof.

N. Section 10.2.1(e) of the Reorganization Agreement is hereby amended by
inserting the following text immediately after the words "provided, however"
appearing therein:

"the CTSI Stockholders shall not be required to indemnify or hold any
person harmless pursuant to this clause (e) with respect to any
liability of CTSI or any Subsidiary to customers if (and in the case of
clause (2) below, to the extent that), (1) such liability arises under
a contract entered into after April 21, 1999, (2) such liability is
based upon or arises out of a written representation or warranty or
indemnity in a form shown to, and approved in writing by, Exodus, and
(3) at the Effective Time such contract was executory with respect to
work to be performed or amounts to be paid thereunder; provided
further, however,".

O. Section 10.3 of the Reorganization Agreement is hereby amended such that
it reads in its entirety as follows:

10.3 Tax Refund. Exodus understands that the CTSI Stockholders
anticipate a tax refund of approximately $2,085,000 from the Internal
Revenue Service arising out of the carryback of CTSI's net operating
loss to offset income realized in connection with the sale of the
Centri firewall assets to Cisco. The parties shall not amend any tax
return or take any other action inconsistent with such carryback. So
long as such refund has not been included as an asset on Cohesive's
balance sheet as of December 31, 1998, the CTSI Stockholders may retain
any such refund and if Exodus or CTSI receives same it will, if the
above conditions are satisfied, deliver such refund amount promptly to
the Representative for distribution pro rata among CTSI Stockholders
(and upon such delivery Exodus shall have no further liability
therefore to any CTSI Stockholder); provided, however, that Exodus may
retain from such refund an amount equal to Exodus' actual costs
incurred as a result of the effect of this refund and the assignment
thereof (other than payment of the net refunded cash and reduction in
CTSI's net operating loss that might otherwise be utilized by Exodus
subject to tax law imposed limitations to such utilization).

P. Section 11.4 of the Reorganization Agreement is hereby amended such that
it reads in its entirety as follows:

11.4 Counterparts. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose name
appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the
signatures of all parties reflected hereon as signatories.

2. GENERAL

A. Governing Law. This Amendment will be governed by and interpreted
according to the substantive laws of the State of California, excluding that
body of laws pertaining to conflict of laws.

B. Entire Agreement. This Amendment constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect to the subject matter hereof.

C. Counterparts. This Amendment may be executed in counterparts, each of
which will be an original as regards any party whose name appears thereon and
all of which together will constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-37
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.

EXODUS COMMUNICATIONS, INC. COHESIVE TECHNOLOGY SOLUTIONS, INC.

MARLEY ACQUISITION CORP.

By: /s/ Adam W. Wegner
___________________________
Adam W. Wegner
President and Secretary

A-38
<PAGE>

Appendix B

DELAWARE GENERAL CORPORATION LAW

TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION

(S)262. Appraisal Rights.

(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to (S)228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share"
mean and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251 (other than a merger effected pursuant to (S)251(g)
of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of this title:

(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon
the agreement of merger or consolidation, were either (i) listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of (S)251 of
this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class
or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to (S)(S)251, 252, 254, 257, 258, 263 and
264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts
in respect thereof) or depository receipts at the effective date
of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or

B-1
<PAGE>

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c.
of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned
by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at
a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or all of
the shares of the constituent corporations, and shall include in
such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to
the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identify of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date
of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted
in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten
days thereafter, shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and
that appraisal rights are available for any or all shares of such
class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if
the notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of such notice, demand in writing from
the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the
holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective
date

B-2
<PAGE>

of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that
if such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be sent to
each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or
of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence
of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the
notice is given, provided, that if the notice is given on or after
the effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date shall
be the close of business on the day next preceding the day on which
the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation

B-3
<PAGE>

of the merger or consolidation, together with a fair rate of interest, if any,
to be paid upon the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded such stockholder's appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal of
such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.

B-4
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's certificate of incorporation includes a provision that eliminates
the personal liability of its directors to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law or (d) for any transaction
from which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the bylaws of
the Registrant provide that: (a) the Registrant is required to indemnify its
directors and executive officers to the fullest extent permitted by the
Delaware General Corporation Law; (b) the Registrant may, in its discretion,
indemnify other officers, employees and agents as set forth in the Delaware
General Corporation Law; (c) upon receipt of an undertaking to repay such
advances if indemnification is determined to be unavailable, the Registrant is
required to advance expenses, as incurred, to its directors and executive
officers to the fullest extent permitted by the Delaware General Corporation
Law in connection with a proceeding (except if a determination is reasonably
and promptly made by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding or, in certain
circumstances, by independent legal counsel in a written opinion that the facts
known to the decision-making party demonstrate clearly and convincingly that
such person acted in bad faith or in a manner that such person did not believe
to be in, or not opposed to, the best interests of the corporation); (d) the
rights conferred in the bylaws are not exclusive and the Registrant is
authorized to enter into indemnification agreements with its directors,
officers and employees and agents; (e) the Registrant may not retroactively
amend the bylaw provisions relating to indemnification; and (f) to the fullest
extent permitted by the Delaware General Corporation Law, a director or
executive officer will be deemed to have acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the Registrant and, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe that his or her conduct was unlawful if his
or her action is based on the records or books of account of the corporation or
on information supplied to him or her by officers of the corporation in the
course of their duties or on the advice of legal counsel for the corporation or
on information or records given or reports made to the corporation by
independent certified public accountants or appraisers or other experts.

The Registrant's policy is to enter into indemnification agreements with each
of its directors and executive officers. The indemnification agreements provide
that directors and executive officers will be indemnified and held harmless to
the fullest possible extent permitted by law including against all expenses
(including attorneys' fees), judgments, fines and settlement amounts paid or
reasonably incurred by them in any action, suit or proceeding, including any
derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise
when they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or claims
(a) initiated or brought voluntarily by the indemnified party and not by way of
defense, except with respect to a proceeding to establish or enforce a right to
indemnification under the indemnification agreements or any other agreement or
insurance policy or under the Registrant's certificate of incorporation or
bylaws now or hereafter in effect relating to indemnification, or authorized by
the board of directors or as otherwise required under Delaware statute or law,
regardless of whether the indemnified party is ultimately determined to be
entitled to such indemnification, (b) for expenses and the payment of profits
arising from the purchase and sale by the indemnified party of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934 or any
similar successor statute or (c) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.

II-1
<PAGE>

The indemnification agreement also provides for contribution in certain
situations in which the Registrant and a director or executive officer are
jointly liable for indemnification is unavailable, such contribution to be
based on the relative benefits received and the relative fault of the
Registrant and the director or executive officer. No contribution is allowed to
a person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act of 1933) from any person who was not found
guilty of such fraudulent misrepresentation.

The indemnification agreement requires a director or executive officer to
reimburse the Registrant for all expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the bylaws, the indemnification agreement or otherwise, to
be indemnified for such expenses. The indemnification agreement provides that
it is not exclusive of any rights a director or executive officer may have
under the certificate of incorporation, bylaws, other agreements, any majority-
in-interest vote of the stockholders or vote of disinterested directors,
Delaware law or otherwise.

The indemnification provision in the bylaws, and the form of indemnification
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's executive officers and directors for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act").

As authorized by the Registrant's bylaws, the Registrant, with approval by the
board, maintains director and officer liability insurance.

In addition, Thadeus Mocarski, a director of the Registrant, is indemnified in
certain circumstances by Fleet Financial Group, Inc.

Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above.

<TABLE>
<CAPTION>
Exhibit
Document Number
-------- -------
<S> <C>
Registrant's Restated Certificate of Incorporation................ 3.01
Registrant's Bylaws............................................... 3.03
Form of Registrant's Indemnification Agreement.................... 10.08
</TABLE>

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>
2.01 Agreement and Plan of Merger between Fouress, Inc. and Registrant
dated April 26, 1995. (Incorporated by reference from Exhibit 2.01
from Registrant's Registration Statement on Form S-1 (File No. 333-
44469), as amended, declared effective by the Securities and Exchange
Commission on March 18, 1998 (the "Form S-1")).

2.02 Form of Agreement and Plan of Merger by and between Registrant and
Exodus. (Incorporated by reference from Exhibit 2.20 to the Form S-1).

2.03 Agreement and Plan of Reorganization by and among Registrant, Cohesive
Technology Solutions, Inc. and Marley Acquisition Corp. dated April
22, 1999. (Included in Appendix A to the prospectus forming a part of
this Registration Statement and incorporated herein by reference).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>
2.04 Amendment to Agreement and Plan of Reorganization by and among
Registrant, Cohesive Technology Solutions, Inc. and Marley Acquisition
Corp. dated May 28, 1999. (Included in Appendix A to the prospectus
forming a part of this Registration Statement and incorporated herein
by reference).

3.01 Registrant's Restated Certificate of Incorporation. (Incorporated by
reference from Exhibit 3.07 to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 (the "March 1998 Form 10-
Q")).

3.02 Certificate of Designations specifying the terms of the Series A
Junior Participating Preferred Stock of Registrant, as filed with the
Delaware Secretary of State on January 28, 1999. (Incorporated by
reference from Exhibit 3.02 to Registrant's Registration Statement on
Form 8-A filed with the Commission on January 29, 1999 (the "1999 Form
8-A")).

3.03 Registrant's Bylaws. (Incorporated by reference from Exhibit 3.06 to
the Form S-1).

3.04 Amendment to Registrant's Restated Certificate of Incorporation.
(Incorporated by reference from Exhibit 3.04 from Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(the "March 1999 Form 10-Q")).

4.01 Form of Specimen Certificate for Registrant's common stock.
(Incorporated by reference from Exhibit 4.01 to the Form S-1).

4.02 Form of Note for Registrant's 11% Senior Notes. (Incorporated by
reference from Exhibit 4.02 to Registrant's Registration Statement on
Form S-4 (File No. 333-62413) declared effective by the Commission on
November 10, 1998 (the "Form S-4")).

4.03 Indenture between Registrant as Issuer and Chase Manhattan Bank and
Trust Company, National Association, as Trustee dated July 1, 1998.
(Incorporated by reference from Exhibit 10.30 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the
"June 1998 Form 10-Q")).

4.04 Rights Agreement dated January 27, 1999 between Registrant and
BankBoston, N.A., as Rights Agent. (Incorporated by reference from
Exhibit 4.04 to the 1999 Form 8-A).

4.05 Form of Note for Registrant's 5% Convertible Subordinated Notes.
(Incorporated by reference from Exhibit 4.05 to the March 1999 Form
10-Q).

4.06 Indenture between Registrant as Issuer and Chase Manhattan Bank and
Trust Company, National Association as Trustee dated March 1, 1999.
(Incorporated by reference from Exhibit 4.06 to the March 1999 Form
10-Q).

5.01 Opinion of Fenwick & West LLP.

10.01 Amended and Restated Investors Rights Agreement, dated as of June 25,
1997 between Registrant and certain investors, as amended December 15,
1997. (Incorporated by reference from Exhibit 10.01 to the Form S-1).

10.02 Registrant's 1995 Stock Option Plan and related forms of agreements.
(Incorporated by reference from Exhibit 10.02 to the Form S-1).

10.03 Registrant's 1995 Stock Purchase Plan and related forms of agreements.
(Incorporated by reference from Exhibit 10.03 to the Form S-1).

10.04 Registrant's 1997 Equity Incentive Plan and related forms of
agreements. (Incorporated by reference from Exhibit 10.04 to the Form
S-1).

10.05 Registrant's 1998 Equity Incentive Plan and related forms of
agreements. (Incorporated by reference from Exhibit 10.05 to the Form
S-1).

10.06 Registrant's 1998 Directors Stock Option Plan and related forms of
agreements. (Incorporated by reference from Exhibit 10.06 to the Form
S-1).
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>

10.07 Registrant's 1998 Employee Stock Purchase Plan. (Incorporated by
reference from Exhibit 10.07 to the Form S-1).

10.08 Form of Indemnification Agreement entered into by Registrant with each
of its directors and executive officers, as amended. (Incorporated by
reference from Exhibit 10.08 to the Form S-1).

10.09 Facility Lease between Washcop Associates Limited Partnership and
Registrant dated April 18, 1996. (Incorporated by reference from
Exhibit 10.09 to the Form S-1).

10.10 Facility Lease between Cal-Harbor II & III Urban Renewal Associates
and Registrant dated December 30, 1996, as amended April 29, 1997 and
January 27, 1998. (Incorporated by reference from Exhibit 10.10 to the
Form S-1).

10.11 Facility Lease between McCandless-San Tomas N. 2 and Registrant dated
April 18, 1997. (Incorporated by reference from Exhibit 10.11 to the
Form S-1).

10.12 Facility Lease between Sabey Corporation and Registrant dated April
24, 1997. (Incorporated by reference from Exhibit 10.12 to the Form S-
1).

10.13 Facility Lease between The Manufacturers Life Insurance Company and
Registrant dated June 27, 1997. (Incorporated by reference from
Exhibit 10.13 to the Form S-1).

10.14 Facility Lease between JBG/Spring Park Limited Partnership and
Registrant dated June 30, 1997. (Incorporated by reference from
Exhibit 10.14 to the Form S-1).

10.15 [Reserved.]

10.16 Software License and Marketing Agreement between Computer Associates
International, Inc. and Registrant dated April 1997. (Incorporated by
reference from Exhibit 10.16 to the Form S-1).

10.17 Form of Executive Employment Policy to be entered into between
Registrant and certain officers. (Incorporated by reference from
Exhibit 10.17 to the Form S-1).

10.18 Equipment Lease Line of Credit between Transamerica Business Credit
Corporation and Registrant dated August 28, 1997. (Incorporated by
reference from Exhibit 10.18 to the Form S-1).

10.19 Loan and Security Agreement between Silicon Valley Bank and Registrant
dated June 14, 1996, as amended on March 25, 1997, June 13, 1997,
November 24, 1997 and December 8, 1997. (Incorporated by reference
from Exhibit 10.19 to the Form S-1).

10.20 Loan and Security Agreement among MMC/GATX Partnership No. 1,
Transamerica Business Credit Corporation and Registrant dated December
31, 1997. (Incorporated by reference from Exhibit 10.20 to the Form S-
1).

10.21 Equipment Lease Line of Credit between Venture Lending & Leasing II,
Inc. and Registrant dated December 23, 1997. (Incorporated by
reference from Exhibit 10.21 to the Form S-1).

10.22 Equipment Lease Line of Credit Commitment ("Commitment Letter")
between Finova Technology Finance, Inc. ("Finova") and Registrant
dated December 17, 1997; Master Lease Agreement ("Master Lease")
between Finova and Registrant dated December 19, 1997; and
Modification to Commitment Letter and Master Lease between Finova and
Registrant dated February 6, 1998. (Incorporated by reference from
Exhibit 10.22 to the Form S-1).

10.23 Sublease Agreement dated January 12, 1998 between Amdahl Corporation
and Registrant. (Incorporated by reference from Exhibit 10.23 to the
Form S-1).

10.24 Nonqualified Stock Option Agreements between Registrant and K.B.
Chandrasekhar dated January 27, 1998. (Incorporated by reference from
Exhibit 10.24 to the Form S-1).
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>

10.25 Form of Nonqualified Stock Option Agreement between Registrant and
Ellen M. Hancock dated March 10, 1998. (Incorporated by reference from
Exhibit 10.25 to the Form S-1).

10.26 Form of Agreement used to sell stock to certain directors and an
officer of Registrant. (Incorporated by reference from Exhibit 10.26
to the Form S-1).

10.27 Facility Lease between 600 Winter Street, L.L.C. and Registrant, dated
as of December 23, 1997. (Incorporated by reference from Exhibit 10.27
to the March 1998 Form 10-Q). Certain exhibits to this agreement have
been omitted from this filing and will be furnished supplementally to
the Securities and Exchange Commission upon request.

10.28 Amendment to Loan and Security Agreement between Silicon Valley Bank
and Registrant dated June 14, 1996. (Incorporated by reference from
Exhibit 10.28 to the March 1998 Form 10-Q.)

10.29 First Amendment to Loan and Security Agreement, dated as of February
20, 1998, by and between Registrant and MMC/GATX Partnership No. 1 and
Transamerica Business Credit Corporation. (Incorporated by reference
from Exhibit 10.29 to the amendment on Form 10-Q/A amending the March
1998 Form 10-Q).

10.30 Exchange and Registration Rights Agreement among Registrant, Goldman,
Sachs & Co., Donaldson Lufkin & Jenrette Securities Corporation, BT
Alex. Brown Incorporated and NationsBanc Montgomery Securities LLC
dated July 1, 1998. (Incorporated by reference from Exhibit 10.31 to
the June 1998 Form 10-Q).

10.31 Escrow Agreement among Chase Manhattan Bank and Trust Company,
National Association, as escrow agent, Chase Manhattan Bank and Trust
Company, National Association, as trustee, and Registrant, dated July
1, 1998. (Incorporated by reference from Exhibit 10.32 to the June
1998 Form 10-Q).

10.32 Purchase Agreement among Registrant, Goldman, Sachs & Co., Donaldson
Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated
and NationsBanc Montgomery Securities LLC, dated June 26, 1998.
(Incorporated by reference from Exhibit 10.33 to the June 1998 Form
10-Q).

10.33 Form of Notice of Debt Offering and Waiver of Registration Rights
among Registrant and certain holders of stock of Registrant.
(Incorporated by reference from Exhibit 10.34 to the June 1998 Form
10-Q).

10.34 Amended and Restated Master Loan and Security Agreement between
Registrant and Transamerica Business Credit Corporation dated June 30,
1998. (Incorporated by reference from Exhibit 10.35 to the June 1998
Form 10-Q).

10.35 Agreement between Cisco Systems Capital Corporation and Registrant,
dated June 1, 1998. (Incorporated by reference from Exhibit 10.36 to
the June 1998 Form 10-Q.)

10.36* Qwest Communications Private Line Service Agreement Business Services,
between Qwest Communications Corporation and Registrant, dated as of
July 17, 1998. (Incorporated by reference from Exhibit 10.37 to the
June 1998 Form 10-Q).

10.37 Consent and Second Amendment to the Second Amended and Restated
Investors' Rights Agreement. (Incorporated by reference from Exhibit
10.37 to the Form S-4).

10.38 Lease Agreement dated August 31, 1998 between Reynolds Metals
Development Company and Registrant. (Incorporated by reference from
Exhibit 10.38 to the Form S-4).

10.39 Building Lease dated September 22, 1998 between Centerpoint Properties
Trust and Registrant. (Incorporated by reference from Exhibit 10.39 to
the Form S-4).
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>

10.40 Sublease Agreement dated September 4, 1998 between S3, Incorporated
and Registrant. (Incorporated by reference from Exhibit 10.40 to the
Form S-4).

10.41 Registrant's 1999 Stock Option Plan and related forms of agreements.
(Incorporated by reference to Exhibit 4.04 to Registrant's
Registration Statement on Form S-8 (File No. 333-72525), filed with
the SEC on February 17, 1999 (the "February 1999 Form S-8").

10.42 Form of Non-Plan Stock Option Agreement for option granted to James J.
McInerney. (Incorporated by reference to Exhibit 4.06 to the February
1999 Form S-8).

10.43 Form of Non-Plan Stock Option Agreement for option granted to Susan R.
Farber. (Incorporated by reference from Exhibit 4.07 to the February
1999 Form S-8).

10.44 Offer Letter dated September 30, 1998 between Registrant and Susan
Farber. (Incorporated by reference from Exhibit 10.44 to Annual Report
on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-
K").

10.45 Agreement for Lease dated December 24, 1998 among Helios (Park Royal)
Limited, Lloyds Bank PLC, Exodus Internet Limited, and Registrant
Certain exhibits to this agreement have been omitted from this filing
and will be furnished supplementally to the Securities and Exchange
Commission upon request. (Incorporated by reference from Exhibit 10.45
to the 1998 Form 10-K).

10.46 First Amendment to Lease Agreement dated January 1999 between Washcop
Associates Limited Partnership and Registrant. (Incorporated by
reference from Exhibit 10.46 to the 1998 Form 10-K).

10.47 First Amendment of Lease dated December 4, 1998 between David A. Sabey
and Sandra L. Sabey and Registrant. (Incorporated by reference from
Exhibit 10.47 to the 1998 Form 10-K).

10.48** Worldcom Data Services (Revenue Plan) effective February 1, 1999
between Worldcom Technologies, Inc. and Registrant. (Incorporated by
reference from Exhibit 10.48 to the March 1999 Form 10-Q).

10.49 Building Lease dated January 29, 1999 between Registrant and G&I
Walsh. (Incorporated by reference from Exhibit 10.49 to the March 1999
Form 10-Q).

10.50 Building Lease dated January 29, 1999 between Registrant and Talus
Corporation. (Incorporated by reference from Exhibit 10.50 to the
March 1999 Form 10-Q).

10.51** Capacity Sales Agreement effective February 23, 1999 between MFS
Cableco (Bermuda) Limited and Registrant. (Incorporated by reference
from Exhibit 10.51 to the March 1999 Form 10-Q.)

10.52 Building Lease dated March 26, 1999 between Registrant and Lincoln-
RECP CM-ES OPCO, LLC. (Incorporated by reference from Exhibit 10.52 to
the March 1999 Form 10-Q.)

10.53 First Amendment to Lease Agreement dated April 4, 1999 between
Registrant and Amdahl Corporation. (Incorporated by reference from
Exhibit 10.53 to the March 1999 Form 10-Q.)

10.54 Purchase Agreement dated February 25, 1999 among Registrant, Goldman,
Sachs & Co., BancBoston Robertson Stephens Inc., BT Alex. Brown
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and
Hambrecht & Quist LLC. (Incorporated by reference from Exhibit 10.54
to the March 1999 Form 10-Q.)

10.55 Registration Rights Agreement dated March 1, 1999 among Registrant,
Goldman, Sachs & Co., BancBoston Robertson Stephens Inc., BT Alex.
Brown Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation and Hambrecht & Quist LLC. (Incorporated by reference from
Exhibit 10.55 to the March 1999 Form 10-Q.)
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>

10.56** Worldcom Capacity Access Service Agreement effective March 1, 1999
between Worldcom Technologies, Inc. and Registrant. (Incorporated by
reference from Exhibit 10.56 to the March 1999 Form 10-Q.)

21.01 Subsidiaries of Registrant.

23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).

23.02 Consent of KPMG LLP, independent auditors.

23.03 Consent of Deloitte & Touche LLP, independent auditors.

24.01 Power of Attorney. (See page II-9 of this Registration Statement).

99.01 Form of Proxy for the Cohesive special meeting.
</TABLE>
- --------
* Confidential treatment has been granted for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions have been redacted and
marked with a triple asterisk. The non-redacted version of this document has
been sent to the Securities and Exchange Commission.

** Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions have been redacted and
marked with a triple asterisk. The non-redacted version of this document has
been sent to the Securities and Exchange Commission.

(b) Financial Statement Schedules

No financial statement schedules are filed herewith.

II-7
<PAGE>

Item 22. Undertakings.

(1) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Document pursuant to
Items 4, 10(b), 11 or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.

(2) The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.

(3) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(4) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and the bylaws, as amended (the "Bylaws"), of
the Registrant, the Delaware General Corporation Law or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.

(5) The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

(6) The undersigned Registrant undertakes that every prospectus: (a) that is
filed pursuant to paragraph (5) immediately preceding, or (b) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

II-8
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement on Form S-4 to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Santa Clara, State of
California, on the 28th day of May, 1999.

EXODUS COMMUNICATIONS, INC.

By: /s/ Richard S. Stoltz
-----------------------------------
Richard S. Stoltz
Executive Vice President, Finance,
Chief Operating Officerand Chief
Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ellen M. Hancock and Richard S. Stoltz, and each
or any one of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462 promulgated
under the Securities Act, and all post-effective amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

Principal Executive Officer:

<S> <C> <C>
/s/ Ellen M. Hancock President and Chief May 28, 1999
- ---------------------------------- Executive
Ellen M. Hancock Officer and Director

Principal Financial Officer
and Principal Accounting
Officer:

/s/ Richard S. Stolt Executive Vice President, May 28, 1999
- ---------------------------------- Finance Chief Operating
Richard S. Stoltz Officer and Chief Financial
Officer

Additional Directors:

/s/ K. B. Chandrasekhar Chairman of the Board of May 28, 1999
- ---------------------------------- Directors
K. B. Chandrasekhar
</TABLE>

II-9
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Frederick W. W. Bolander
____________________________________ Director May 28, 1999
Frederick W. W. Bolander

/s/ John R. Dougery
____________________________________ Director May 28, 1999
John R. Dougery

/s/ Mark Dubovoy
____________________________________ Director May 28, 1999
Mark Dubovoy

/s/ Max D. Hopper
____________________________________ Director May 28, 1999
Max D. Hopper

____________________________________ Director
Peter A. Howley

/s/ Daniel C. Lynch
____________________________________ Director May 28, 1999
Daniel C. Lynch

/s/ Thadeus J. Mocarski
____________________________________ Director May 28, 1999
Thadeus J. Mocarski

/s/ Kanwal S. Rekhi
____________________________________ Director May 28, 1999
Kanwal S. Rekhi
</TABLE>

II-10
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<S> <C>
5.01 Opinion of Fenwick & West LLP.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, independent auditors.
23.03 Consent of Deloitte & Touche LLP, independent auditors.
24.01 Power of Attorney. (See page II-9 of this Registration Statement).
99.01 Form of Proxy for the Cohesive special meeting.
</TABLE>

<PAGE>

Exhibit 5.01

May 28, 1999

Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, California 95054

Gentlemen/Ladies:

At your request, we have examined the Registration Statement on Form S-4 (the
"Registration Statement") filed by you with the Securities and Exchange
Commission (the "Commission") on or about May 28, 1999, in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
1,000,000 shares of your Common Stock (the "Stock"), to be issued pursuant to
the Agreement and Plan of Reorganization dated as of April 21, 1999, among you,
Cohesive Technology Solutions, Inc. and Marley Acquisition Corp. (the "Merger
Agreement").

In rendering this opinion, we have examined the following:

(1) your registration statements on Form 8-A filed with the Commission on
February 13, 1998 and January 29, 1999;

(2) your Annual Report on Form 10-K for the year ended December 31, 1998;

(3) your Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;

(4) your Current Reports on Form 8-K filed with the Commission on January 29,
1999, February 22, 1999 and March 2, 1999;

(5) the Registration Statement, together with the Exhibits filed as a part
thereof or incorporated by reference therein;

(6) the Prospectuses prepared in connection with the Registration Statement;

(7) the minutes of meetings and actions by written consent of the stockholders
and Board of Directors that are contained in your minute books that are in
our possession and in the minute books of Exodus Communications, Inc., a
California corporation, and of Fouress, Inc., a Maryland corporation, that
are in our possession;

(8) summary reports from you confirming the number of shares of your capital
stock outstanding as of May 28, 1999 and the number of options, warrants
and any other rights to acquire shares of your capital stock outstanding
as of May 28, 1999;

(9) oral verification from your transfer agent of the number of outstanding
shares of your capital stock as of May 28, 1999;

(10) a Management Certificate addressed to us and dated of even date herewith
executed by the Company containing certain factual and other
representations.

By telephone call to the offices of the Commission, we have also confirmed the
continued effectiveness of your registration under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the timely filing by you of all
reports required to be filed by you pursuant to Rules 13, 14 and 15 promulgated
under the Exchange Act.

In our examination of documents for purposes of this opinion, we have assumed,
and express no opinion as to, the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us
as originals, the conformity to originals and completeness of all documents
submitted to us as copies, the legal capacity of all natural persons executing
the same, the lack of any undisclosed termination,
<PAGE>

modification, waiver or amendment to any document reviewed by us and the due
authorization, execution and delivery of all documents where due authorization,
execution and delivery are prerequisites to the effectiveness thereof.

As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from public officials
referred to above. We have made no independent investigation or other attempt
to verify the accuracy of any of such information or to determine the existence
or non-existence of any other factual matters; however, we are not aware of any
facts that would cause us to believe that the opinion expressed herein is not
accurate.

We are admitted to practice law in the State of California, and we express no
opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California and, without reference to case law or secondary
sources, the existing Delaware General Corporation Law.

In connection with our opinion expressed below, we have assumed that, at or
prior to the time of the delivery of any shares of Stock, the Registration
Statement will have been declared effective under the Securities Act of 1933,
as amended, that the registration will apply to such shares of Stock and will
not have been modified or rescinded and that there will not have occurred any
change in law affecting the validity or enforceability of such shares of Stock.

Based upon the foregoing, it is our opinion that the up to 1,000,000 shares
of Stock to be issued by you pursuant to the Registration Statement when
issued, sold and delivered in accordance with the terms of the Merger Agreement
filed as an Exhibit to the Registration Statement and as provided in the
relevant Prospectus associated with the Registration Statement, will be validly
issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.

This opinion speaks only as of its date and we assume no obligation to update
this opinion should circumstances change after the date hereof. This opinion is
intended solely for the your use as an exhibit to the Registration Statement
for the purpose of the above sale of the Stock and is not to be relied upon for
any other purpose.

Very truly yours,

FENWICK & WEST LLP

By: /s/ Horace L. Nash
__________________________________

<PAGE>

Exhibit 21.01

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
Percentage
Owned by
Name Jurisdiction Exodus
---- ------------ ----------
<S> <C> <C>
Arca Systems, Inc................................. Delaware 100%
American Information Systems, Inc................. Illinois 100%
Exodus Internet Limited........................... England 100%
Marley Acquisition Corp........................... Delaware 100%
</TABLE>

<PAGE>

Exhibit 23.02

CONSENT OF KPMG LLP, INDEPENDENT AUDITORS

The Board of Directors
Exodus Communications, Inc.:

We consent to incorporation by reference herein of our report dated January 26,
1999, relating to the consolidated balance sheets of Exodus Communication, Inc.
and subsidiaries as of December 31, 1997 and 1998, and the related consolidated
statements of operations, stockholders' (deficit) equity, and cash flows for
each of the years in the three-year period ended December 31, 1998, and the
related financial statement schedule, which report appears in the December
31,1998, annual report on Form 10-K of Exodus Communications, Inc. We also
consent to the reference to our firm under the heading "Experts" in the
registration statement.

Mountain View, California /s/ KPMG LLP
May 28, 1999

<PAGE>

Exhibit 23.03

CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

We consent to the use in this Registration Statement of Exodus Communications,
Inc. on Form S-4 of our report dated April 8, 1999 (April 21, 1999 as to Note
9) relating to the consolidated financial statements of Cohesive Technology
Solutions, Inc. as of December 31, 1997 and 1998 and for each of the three
years in the period ended December 31, 1998, appearing elsewhere in this
Registration Statement, and to the reference to us under the heading "Experts"
in such Registration Statement.

/s/ Deloitte & Touche LLP
San Jose, California
May 27, 1999

<PAGE>

Exhibit 99.01

COHESIVE TECHNOLOGY SOLUTIONS, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS

The undersigned hereby appoints Dennis M. Rohan and Stephen R. Bennion, or
either of them, each with power of substitution and revocation thereof, to
represent the undersigned at the Special Meeting of Stockholders of Cohesive
Technology Solutions, Inc. to be held at 10:00 a.m. on _____, _____, 1999 at
Cohesive's corporate headquarters located at 2465 East Bayshore Road, Suite 400,
Palo Alto, California 94303, and at any adjournments or postponements thereof,
and to vote the number of shares the undersigned would be entitled to vote it
personally present as directed on the reverse side of this proxy.

This proxy is solicited on behalf of the Board of Directors of Cohesive and
will be voted as directed on the reverse side of this proxy. In the absence of
direction, this proxy will be voted for the adoption of the Agreement and Plan
of Merger, as amended, among Cohesive, Exodus Communications, Inc. and Marley
Acquisition Corp., as described further in the accompanying document. In their
discretion, the proxy holders named above are authorized to vote upon such other
business as may properly come before the meeting and any adjournment thereof.
The Cohesive Board of Directors recommends a vote "FOR" the adoption of the
Agreement and Plan of Merger.

<PAGE>

Adopt the Agreement and Plan of Merger, as amended, among Cohesive, Exodus
Communications, Inc. and Marley Acquisition Corp., as described further in the
accompanying document. The Board recommends a vote "FOR" the adoption of the
Agreement and Plan of Merger.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Signature(s) of stockholder(s):
- -------------------------------

Name:__________________________ Name:__________________________

By:____________________________ By:____________________________

Title:_________________________ Title:_________________________

Dated:_________________________ Dated:_________________________

Please sign exactly as your name(s) appear(s) on your stock certificate.
If shares of stock stand of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president and
the secretary or assistant secretary. Executors, administrators or other
fiduciaries who execute the above proxy for a deceased stockholder should give
their full title. Please date the proxy.

WHETHER OR NOT YOU PLAN ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE PROVIDED SO THAT YOUR SHARES
MAY BE PRESENTED AT THE MEETING.