JENKON INTERNATIONAL INC
8-K, 2000-04-21
COMPUTER PROGRAMMING SERVICES
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             -----------------------


                                    FORM 8-K


              Current Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)  April 6, 2000


                           JENKON INTERNATIONAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<CAPTION>

             Delaware                                  000-24637                            91-1890338
             --------                                  ---------                            ----------
    <S>                                         <C>                              <C>
    (STATE OR OTHER JURISDICTION OF             (COMMISSION FILE NUMBER)         (IRS EMPLOYER IDENTIFICATION NO.)
            INCORPORATION)

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                        7600 N.E. 41st Street, Suite 350
                           Vancouver, Washington 98662
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (360) 256-4400


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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.

     On December 16, 1999, the Company completed the acquisition of Multimedia
K.I.D. -- Intelligence in Education, Ltd., an Israeli-based interactive
educational company ("MMKid"). Through MMKid, the Company now designs,
manufactures and sells numerous software and activity systems that together
create virtual interactive learning centers for children and adults.

     Prior to the acquisition of MMKid, the Company was engaged exclusively in
the development, marketing and sale of software solutions for the direct sales
industry. The Company's direct sales operations were operated through Summit V,
Inc. ("Summit V"), a wholly-owned operating subsidiary of the Company. In
February 2000, in light of Summit V's continuing losses and ongoing development
costs, the Company's limited capital resources, and the Board's belief that the
Company and its stockholders would be better served by focusing on the
development of the business of MMKid, the Company decided to discontinue its
direct sale software operations.

     In response to the Board's decision to discontinue or sell Summit V's
direct sales software operations, a management group led by Robert Cavitt,
director and President of the Company, and Daniel O. Jensen, director and
founder of the Company, entered into discussions with the Board regarding the
possible purchase of Summit V.

     On March 15, 2000, the Company entered into a preliminary Stock Purchase
Agreement to sell Summit V to JIA, Inc., a Washington corporation ("JIA"), a
corporation affiliated with and controlled by Robert Cavitt and Dan Jensen.
At such time, the parties also entered into a Management Agreement, a copy of
which is filed as an Exhibit hereto. Pursuant to the Management Agreement,
the Company and Summit V appointed JIA to supervise and direct the day-to-day
operations of Summit V in the period between execution of the Stock Purchase
Agreement and the closing of the transactions contemplated thereby. In
connection with the proposed sale, Robert Cavitt and Dan Jensen resigned from
their respective positions as officers and/or directors of the Company, with
Cavitt remaining as President of Summit V during the transition period
between his resignation and closing.

     Immediately following the execution of the March 15, 2000 draft of the
Stock Purchase Agreement, it became clear that certain material terms of the
proposed transaction had not been adequately addressed. Accordingly, the
March 15, 2000 Stock Purchase Agreement was cancelled and the parties entered
into additional discussions regarding the terms of the proposed sale. On
April 6, 2000, the parties entered into a new definitive Stock Purchase
Agreement, a copy of which is filed as an Exhibit hereto. The sale of Summit
V is subject to many contingencies, including stockholder approval and other
events that are outside the Company's control. There can be no assurance that
the sale of Summit V will be consummated.

<PAGE>

TERMS OF AGREEMENTS

     The following summarizes the material terms of the proposed sale of
Summit V. The following discussion is qualified in its entirety by the copies
of the Stock Purchase Agreement and Management Agreement filed as Exhibits
hereto.

     STOCK PURCHASE AGREEMENT. The Company has entered into a Stock Purchase
Agreement (the "Purchase Agreement"), dated April 6, 2000, by and among JIA,
Summit V, the Company and Jenkon International, Inc., a Washington
corporation and wholly-owned subsidiary of the Company.

     Pursuant to the terms of the Purchase Agreement, JIA agreed to
purchase 100% of the outstanding shares of Summit V (the "Shares"), for an
aggregate purchase price of $1,175,000 (the "Purchase Price").

     The Purchase Price is payable as follows: (i) $500,000 in cash at
Closing, and (ii) $675,000 by delivery of a Note of JIA bearing interest at
the rate of 10% per annum payable quarterly in arrears (the "Note"), with all
principal and interest due and payable one year from the Closing Date, which
Note shall be secured by a pledge of 75,000 shares of Company common stock
held by stockholders or affiliates of JIA.

     The Closing shall be two days following stockholder approval of the
sale, or such other time following Company stockholder approval as the
parties shall agree. The Purchase Agreement contains limited but customary
representations, warranties and covenants of each of the parties, as well as
customary conditions precedent to Closing.

     Article 9 of the Purchase Agreement addresses termination of the
Purchase Agreement prior to the Closing. Section 9.1 contains provisions
allowing for termination (i) by mutual written consent, (ii) by any party
upon breach of another party's representations, warranties or agreements,
(iii) by any party if any law or regulation makes consummation of the
transactions illegal or otherwise prohibited; (iv) by JIA if the Board of
Directors of the Company or any committee thereof withdraws or modifies in
any way adverse to JIA its approval or recommendation of the sale or the
Purchase Agreement, or resolves to do so; or (v) by either the Company or JIA
if: (a) the Closing has not occurred by June 30, 2000, (b) stockholder
approval has not been obtained at the Company's stockholders meeting, or (c)
the Board of Directors of the Company, prior to the Closing Date and after

<PAGE>

consultation with outside legal counsel, makes the determination that failure to
withdraw from or modify the Purchase Agreement would create a substantial risk
of liability for breach of its fiduciary duties to the Company's stockholders
under applicable law.

     In the event that the Purchase Agreement is terminated the Company may,
in certain circumstances, be required to pay a termination fee of $200,000
plus all expenses of JIA incurred in connection with the Purchase Agreement.
Such fee will be payable in the event the Purchase Agreement is terminated
(i) by any party for failure to obtain stockholder approval at the Company's
stockholders meeting and at or prior to such meeting a Takeover Proposal
shall have been publicly announced; (ii) by JIA upon a good faith
determination by the Board of Directors of the Company, prior to the Closing
Date and after consultation with outside legal counsel, that a failure to
withdraw from or modify the Purchase Agreement would create a substantial
risk of liability for breach of its fiduciary duties to the Company's
stockholders under applicable law; (iii) by JIA upon the Company's Board's
(A) withdrawal or modification in a manner adverse to JIA of its approval or
recommendation of the sale or the Purchase Agreement, (B) failure to
reconfirm its recommendation after a written request to do so or approval or
recommendation of any Takeover Proposal, or (C) resolution to take any of the
foregoing actions; or (iv) by JIA in the event of a willful and material
breach of a covenant or agreement by the Company.

     In addition, if the Purchase Agreement is terminated and, within 12
months following such termination, the Company enters into a "Company
Acquisition," the Company will be required to pay the $200,000 termination
fee and costs described above.

     A "Company Acquisition" includes any transaction or series of related
transactions involving (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company pursuant to which the stockholders of the Company immediately
preceding such transaction or series of related transactions hold less than
60% of the equity interests in the surviving or resulting entity of such
transaction or transactions (other than the transactions contemplated by this
Agreement); (ii) a sale by the Company of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in
excess of 40% of the fair market value of the Company's business immediately
prior to such sale; or (iii) the acquisition by any person or group
(including without limitation by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership
or a right to acquire beneficial ownership of 40% or more of the then
outstanding shares of capital stock of the Company.

<PAGE>

     In addition, if the Purchase Agreement is terminated by JIA based upon
either (i) failure by the Company to obtain Company stockholder approval of
the Sale Proposal, (ii) a determination by the Board of Directors of the
Company, prior to the Closing Date and after consultation with outside legal
counsel, that a failure to withdraw from or modify the Purchase Agreement
would create a substantial risk of liability for breach of its fiduciary
duties to the Company's stockholders under applicable law, or (iii) the Board
of Directors of Company's withdrawal or modification in a manner adverse to
JIA of its approval or recommendation of the proposed sale to JIA, then in
such case, the Company will be required to pay JIA an additional fee equal to
$100,000.

     The Company may not have sufficient capital resources to pay any
termination fees or costs in the event that such payments are due.

     MANAGEMENT AGREEMENT. In connection with the Purchase Agreement, in
March 2000 the Company entered into a Management Agreement (the "Management
Agreement"), by and among the Company, Jenkon International, Inc., a
Washington corporation, Summit V and JIA, which provides for management and
operations of the business of JIA under the terms and conditions set forth in
the Management Agreement during the term set forth therein.

     The term of the Management Agreement commences on the date thereof and
continues until termination on the earliest to occur of the following: (i)
the closing of the sale of Summit V stock contemplated by the Purchase
Agreement (the "Closing") or the termination of the Purchase Agreement prior
to Closing; or (ii) the mutual written consent of the parties to the
Management Agreement; or (iii) by the Company or JIA in the event that the
other party materially breaches the terms of the Management Agreement; or
(iv) by the Company in the event that the disinterested members of the Board
of Directors of the Company make a good faith determination that JIA has
mismanaged the operation of Summit V's business in a manner that has or is
reasonably likely to have a material adverse effect on the Company, and JIA
fails to cure or give assurances of its ability to close following the
Company's having given notice and opportunity for JIA to cure such
mismanagement; or (v) by the Company or Summit V if JIA shall commence any
cause, proceeding or other action relating to bankruptcy, insolvency,
reorganization or relief of debtors.

     The material terms of the Management Agreement with respect to management
of Summit V's operations include the following: (i) the appointment of JIA to
supervise, direct and control the day-to-day operation and management of the
business during the Interim Period, as such term is defined in Section 1(b);
(ii) the establishment of a standard of operation as well as a list of JIA's
powers and authorities; (iii) a number of covenants of JIA regarding its
operations during the Interim Period; and (iv) additional covenants of JIA
regarding the business during the Interim Period.

     During the Interim Period, JIA agreed to advance to Summit V such amounts
as are necessary to fund the continuing operations of Summit V's business
(including, without limitation, the prompt payment of employee salaries,
employment and other taxes, lease payments and other operating expenses of
Summit V). In the event that a Closing does not

<PAGE>

occur (other than by reason of a breach of either the Management Agreement or
the Stock Purchase Agreement by JIA), the Company shall reimburse JIA for all
funding deposits made in connection with the operation of the business. In
the event that the Closing does not occur (for any reason), JIA shall return
all of the business and assets to Summit V in good order and repair. During
the Interim Period, JIA shall have full authority to collect all Cash
Receipts and make all Cash Disbursements, as such terms are defined in
Section 4 of the Management Agreement. JIA is not entitled to compensation
for its services in managing the operations of Summit V's business under the
Management Agreement.

     OTHER AGREEMENTS. In connection with the Purchase Agreement, the Company
has entered into a Voting Agreement dated as of March 30, 2000 (the "Voting
Agreement"), by and among the Company, JIA and David Edwards. In
consideration of the execution of the Purchase Agreement by JIA, Mr. Edwards
agreed to vote the number of shares of Company Common Stock owned by him as
of the close of business on May 5, 2000 in favor of the proposed sale of
Summit V to JIA.

     In order to facilitate the closing of the sale of Summit V, David
Edwards, the Company's Chief Executive Officer and a director, executed a
promissory note in the principal sum of $100,000 payable to JIA 11 months
after the Closing.

ITEM 5.  OTHER EVENTS

     In connection with the proposed sale of Summit V, Inc. described in Item 2
above, Robert Cavitt and Dan Jensen resigned from their respective positions as
officers and/or directors of the Company, with Cavitt remaining as President of
Summit V during the transition period between his resignation and closing.

     On February 14, 2000, Pessie Goldenberg, the chief executive officer of
MMKid, was appointed as a director of the Company to fill a vacancy.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

            (c) Exhibits.

10.1        Form of Stock Purchase Agreement among the Company, JIA, Inc.,
            Summit V, Inc. and Jenkon International, Inc., a Washington
            corporation.

10.2        Form of Management Agreement between Summit V, Inc., the Company and
            JIA, Inc.

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                              JENKON INTERNATIONAL, INC.
                              (Registrant)


                              By:  /s/ DAVID EDWARDS
                                 ------------------------------------
                                  David Edwards
                                  Chief Executive Officer and
                                  Director





<PAGE>

                             STOCK PURCHASE AGREEMENT

                                      AMONG

                                    JIA, INC.

                                  SUMMIT V, INC

                                       AND

               JENKON INTERNATIONAL, INC., A DELAWARE CORPORATION

                                       AND

              JENKON INTERNATIONAL, INC., A WASHINGTON CORPORATION



                            DATED AS OF APRIL 6, 2000


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                                TABLE OF CONTENTS

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<S>                                                                                                  <C>
ARTICLE I - DEFINITIONS...............................................................................1

ARTICLE II - PURCHASE AND SALE OF SHARES..............................................................3
         2.1      Purchase and Sale of Shares.........................................................3
         2.2      Consideration for Shares............................................................3
                  2.2.1      Closing Payment..........................................................3
                  2.2.2      Note.....................................................................3
                  2.2.3      Escrow...................................................................3
         2.3      Closing.............................................................................4

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS......................4
         3.1      Shareholder Matters.................................................................4
                  3.1.1      Good Title...............................................................4
                  3.1.2      Authority................................................................5
                  3.1.3      Enforceability...........................................................5
                  3.1.4      No Approvals or Notices Required; No Conflicts...........................5
         3.2      Company Organization; Good Standing; Corporate Authority; Enforceability............5
         3.3      Capitalization......................................................................6
         3.4      Subsidiaries and Affiliates.........................................................7
         3.5      No Approvals or Notices Required; No Conflicts......................................7
         3.6      Financial Statements; Obligations...................................................7
         3.7      Action by David Edwards.............................................................8
         3.8      Accuracy of SEC Filings.............................................................8
         3.9      Corporate Books and Records.........................................................8
         3.10     Brokers or Finders..................................................................9
         3.11     Bank Accounts.......................................................................9
         3.12     Accuracy of Representations and Warranties..........................................9
         3.13     Tax Consequences....................................................................9

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER..................................................9
         4.1      Organization.......................................................................10
         4.2      Enforceability.....................................................................10
         4.3      No Approvals or Notices Required; No Conflicts With Instruments....................10
         4.4      Claims and Legal Proceedings.......................................................10
</TABLE>


STOCK PURCHASE AGREEMENT                                                  PAGE i

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         4.5      Tax Consequences...................................................................11
         4.6      Accuracy of SEC Filings............................................................11
         4.7      Accuracy of Representations and Warranties.........................................11

ARTICLE V - COVENANTS................................................................................11
         5.1      Conduct of Business by the Company Pending the Closing.............................11
         5.2      Access to Information; Confidentiality.............................................14
         5.3      No Solicitation....................................................................14
         5.4      Notification of Certain Matters....................................................17
         5.5      Further Action.....................................................................17
         5.6      Publicity..........................................................................18

ARTICLE VI - ADDITIONAL AGREEMENTS...................................................................18
         6.1      Preparation of the Proxy Statement; Stockholders Meeting...........................18
         6.2      Certain Expenses...................................................................18
         6.3      Assignment of Intellectual Property............................

ARTICLE VII -CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............................................19
         7.1      Accuracy of Representations and Warranties.........................................19
         7.2      Performance of Agreements..........................................................19
         7.3      Opinion of Counsel for the Company and the Shareholders............................19
         7.4      Consents to Sale of Shares.........................................................19
         7.5      Officers' Certificate..............................................................20
         7.6      Shareholder's Certificate..........................................................20
         7.7      Material Adverse Change............................................................20
         7.8      Approvals and Consents.............................................................20
         7.9      Proceedings and Documents; Secretary's Certificate.................................20
         7.10     Compliance With Laws...............................................................20
         7.11     Legal Proceedings..................................................................20
         7.12     Delivery of Certificates...........................................................21
         7.14     Noncompetition Agreements..........................................................21
         7.15     Waiver by Insiders.................................................................21

ARTICLE VIII - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS...............21
         8.1      Accuracy of Representations and Warranties.........................................21
         8.2      Performance of Agreements..........................................................22
         8.3      Opinion of Counsel for Buyer.......................................................22
         8.4      Officers' Certificate..............................................................22
         8.5      Material Adverse Change............................................................22
</TABLE>


STOCK PURCHASE AGREEMENT                                                 PAGE ii

<PAGE>


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<S>                                                                                                  <C>
         8.6      Approvals and Consents.............................................................22
         8.7      Proceedings and Documents; Secretary's Certificate.................................22
         8.8      Compliance With Laws...............................................................23
         8.9      Legal Proceedings..................................................................23
         8.10     Fairness Opinion...................................................................23
         8.11     Waiver by Insiders.................................................................24

ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER.......................................................24
         9.1      Termination........................................................................24
         9.2      Effect of Termination..............................................................25
         9.3      Amendment..........................................................................25
         9.4      Waiver.............................................................................25

ARTICLE X - SURVIVAL AND INDEMNIFICATION.............................................................26
         10.1     Survival...........................................................................26
         10.2     Indemnification....................................................................26
                  10.2.1     Indemnification by the Shareholders.....................................26
                  10.2.2     Indemnification by Buyer................................................27
         10.3     Limitations........................................................................27
         10.4     Procedure for Indemnification......................................................28
                  10.4.1     Claim Notice............................................................28
                  10.4.2     Dispute Notice..........................................................28
                  10.4.3     Third-Party Claims......................................................28
         10.5     Investigations; Waivers............................................................28

ARTICLE XI - GENERAL.................................................................................29
         11.1     Expenses...........................................................................29
         11.2     Specific Enforcement...............................................................30
         11.3     Consequential Damages..............................................................30
         11.4     Assignment.........................................................................30
         11.5     Notices............................................................................31
         11.6     Governing Law; Jurisdiction; Venue.................................................32
         11.7     Successors and Assigns.............................................................32
         11.8     Severability.......................................................................32
         11.9     Entire Agreement; Counterparts.....................................................33
</TABLE>


STOCK PURCHASE AGREEMENT                                                PAGE iii

<PAGE>


                            STOCK PURCHASE AGREEMENT

        This Stock Purchase Agreement (this "AGREEMENT") is entered into as of
April 6, 2000 among JIA, Inc., a WASHINGTON, corporation ("BUYER"), Jenkon
International, Inc., a WASHINGTON corporation ("the SHAREHOLDER"), Jenkon
International, Inc., a DELAWARE corporation (the "PARENT"), and Summit V, Inc.,
a Washington corporation (the "COMPANY"). The Shareholder and Parent are
collectively referred to as the "SHAREHOLDERS." Shareholder is a wholly owned
subsidiary of Parent.

                                    RECITALS

        A.      The Shareholder owns the Shares and desires and intends to sell
the Shares to Buyer at the price and on the terms and subject to the conditions
set forth below.

        B.      Buyer desires and intends to purchase the Shares from the
Shareholder at the price and on the terms and subject to the conditions set
forth below.

                                    AGREEMENT

        In consideration of the terms hereof and for good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:

                             ARTICLE I - DEFINITIONS

        1.1.    "BALANCE SHEET": The balance sheet of the Company as of December
31, 1999.

        1.2.    "BUYER INDEMNIFIED PARTIES": As defined in Section 10.2.1.

        1.3.    "CLAIM": As defined in Section 10.2.1.

        1.4.    "CLAIM NOTICE": As defined in Section 10.4.2.

        1.5.    "CLOSING": As defined in Section 2.3.

        1.6.    "CLOSING AMOUNT": As defined in Section 2.2.1.

        1.7.    "CLOSING DATE": The date, time and place of Closing as specified
                in Section 2.3.

        1.8.    "COMMON STOCK": As defined in Section 3.3(a).


STOCK PURCHASE AGREEMENT

<PAGE>


        1.9.    "DISCLOSURE SCHEDULES": The Disclosure Schedules attached and
made a part hereof and which constitute in their entirety a representation and
warranty under Article III.

        1.10.   "ESCROW AGENT": As defined in Section 2.2.3.

        1.11.   "ESCROW AGREEMENT": As defined in Section 2.2.3.

        1.12.   "ESCROW AMOUNT": As defined in Section 2.2.3.

        1.13.   "FINANCIAL STATEMENTS": As defined in Section 3.6.

        1.14.   "GAAP": Generally accepted accounting principles in the United
                States.

        1.15.   "INDEMNIFIED PARTIES": As defined in Section 10.2.2.

        1.16.   "KNOWLEDGE": Representations and warranties to a party's
knowledge mean that in acquiring such knowledge, the party representing and
warranting such knowledge need not make any inquiry or investigation.

        1.17.   "LOSSES": As defined in Section 10.2.1.

        1.18.   "MATERIAL": Material individually or in the aggregate.

        1.19.   "NOTE": As defined in Section 2.2.2.

        1.20.   "PARENT": As defined in the first paragraph.

        1.21.   "PERSON": Any person, corporation, partnership, joint venture,
association, organization, other entity or governmental or regulatory authority.

        1.22.   "PURCHASE PRICE": The aggregate purchase price for the Shares,
as defined in Section 2.2.

        1.23.   "SHAREHOLDER": As defined in the first paragraph.

        1.24.   "SHAREHOLDERS": As defined in the first paragraph.

        1.25.   "SHAREHOLDER INDEMNIFIED PARTIES": As defined in Section 10.2.2.

        1.26.   "SHARES": The 5,000 shares of common stock of the Company to
be purchased by Buyer, representing 100% of the outstanding shares of the
Company.

STOCK PURCHASE AGREEMENT
                                      -2-


<PAGE>


        1.27.   "SUBSIDIARY": When used in reference to any Person, shall mean
any corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such Person.

        1.28.   "TRANSACTION DOCUMENTS": This Agreement and each of the
agreements, certificates, instruments and documents executed or delivered
pursuant to the terms of this Agreement.

                    ARTICLE II - PURCHASE AND SALE OF SHARES

2.1     PURCHASE AND SALE OF SHARES

        On the terms and subject to the conditions of this Agreement, Buyer
agrees to purchase the Shares from the Shareholder, and the Shareholder agrees
to sell the Shares to Buyer.

2.2     CONSIDERATION FOR SHARES

        The aggregate purchase price for the Shares is $1,175,000 (the "PURCHASE
PRICE"), payable as set forth in this Section 2.2.

        2.2.1   CLOSING PAYMENT

        The sum of $500,000 (the "CLOSING AMOUNT") shall be paid by Buyer to the
Shareholder (a) through the release to the Shareholder of the $200,000 Escrow
Amount, as defined in section 2.2.3 below, and (b) by bank wire transfer of
$300,000, in each case at the Closing.

        2.2.2   NOTE

        At the Closing, the Buyer will deliver to the Shareholder a Note in the
principal amount of $675,000. The Note will be in form mutually acceptable to
Buyer and Shareholder, will bear interest at the rate of 10% per annum payable
quarterly in arrears, and all principal and interest will be due and payable one
year from the Closing Date. The Note will be secured by a pledge in form
reasonably satisfactory to Shareholders of 75,000 shares of the common stock of
Parent.

        2.2.3   ESCROW

        Within three business days of the date of this Agreement, Buyer will
deposit the sum of $200,000 (the "ESCROW AMOUNT") with a mutually satisfactory
escrow agent (the "ESCROW AGENT") to be held in escrow as evidence of financial
capacity and


STOCK PURCHASE AGREEMENT
                                      -3-


<PAGE>


in accordance with a mutually satisfactory Escrow Agreement (the "ESCROW
AGREEMENT") to be entered into by Buyer, the Shareholder and the Escrow Agent.

2.3     CLOSING

        The closing of the transactions contemplated herein (the "CLOSING")
shall be TWO days following stockholder approval by the stockholders of Parent
and shall be held at the office of Perkins Coie, 1211 SW Fifth Avenue, Portland,
Oregon 97204, at 9:00 A.M. local time, or such other time and date as Buyer and
the Shareholder shall agree (the "CLOSING DATE"). At the Closing, each of Buyer,
and the Shareholder shall take all such action and deliver all such funds,
documents, instruments, certificates and other items as may be required, under
this Agreement or otherwise, in order to perform or fulfill all covenants,
conditions and agreements on its part to be performed or fulfilled at or before
the Closing Date and to cause all conditions precedent to the other parties'
obligations under this Agreement to be satisfied in full.

                 ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
                        THE COMPANY AND THE SHAREHOLDERS

        To induce Buyer to enter into and perform this Agreement, and except as
is otherwise set forth in the Disclosure Schedules, which exceptions shall
specifically identify the paragraph or paragraphs of this Article III to which
such exceptions relate, and which shall constitute in its entirety a
representation and warranty under this Article III, the Company, the Shareholder
and the Parent jointly and severally represent and warrant to Buyer as of the
date of this Agreement and as of the Closing as follows in this Article III
(which representations and warranties shall survive the Closing as provided in
Article X).

3.1     SHAREHOLDER MATTERS

        3.1.1   GOOD TITLE

        The Shareholder is the beneficial and record owner of the Shares which
represent all of the issued and outstanding capital stock of the Company. Such
Shares are owned free and clear of any lien, encumbrance, restriction on sale,
transfer or voting (other than restrictions imposed by applicable securities
laws), preemptive right, option or other right to purchase and upon the
consummation of the sale of such Shares as contemplated hereby, Buyer will
acquire good title to such Shares, free and clear of any lien, encumbrance,
restriction on sale, transfer or voting (other than restrictions imposed by
applicable securities laws or those created by Buyer), preemptive right, option
or other right.


STOCK PURCHASE AGREEMENT
                                      -4-


<PAGE>


        3.1.2   AUTHORITY

        Each of the Shareholders and the Parent has all requisite corporate
power, right and authority to enter into this Agreement and the other
Transaction Documents to which it is a party, to consummate the transactions
contemplated hereby and thereby, and the Shareholder has the power sell and
transfer such Shares without the consent or approval of any other Person.

        3.1.3   ENFORCEABILITY

        This Agreement has been, and the other Transaction Documents to which
any of the Shareholders is a party on the Closing will be, duly executed and
delivered by the Shareholders, and this Agreement is, and each of the other
Transaction Documents to which it is a party on the Closing will be, the legal,
valid and binding obligation of the Shareholders, enforceable against the
Shareholders in accordance with its terms.

        3.1.4   NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS

        The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Shareholders, and the consummation of the
transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of any law or any judgment, decree, order, regulation or rule of
any court, agency or other governmental authority applicable to the
Shareholders, (b) require any consent, approval or authorization of, or
declaration, filing or registration with, any Person other than (i) consent of
the stockholders of Parent (including, to the extent required, the filing and
approval of a proxy statement with the Securities and Exchange Commission), and
(ii) notification of the Nasdaq Stock Market, Inc. to the extent required under
its rules, (c) result in a default (with or without the giving of notice or
lapse of time, or both) under, acceleration or termination of, or the creation
in any party of the right to accelerate, terminate, modify or cancel, any
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which the Company is a party or by which it is bound or to which
any assets of the Company are subject, or (d) result in the creation of any lien
or encumbrance upon the assets of the Shareholders, or upon any Shares or other
securities of the Company.

3.2     COMPANY ORGANIZATION; GOOD STANDING; CORPORATE AUTHORITY; ENFORCEABILITY

        The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Washington. The Company is duly
qualified to


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                                      -5-


<PAGE>


do business, and is in good standing in the states required due to (a) the
ownership or lease of real or personal property for use in the operation of the
Company's business or (b) the nature of the business conducted by the Company
except where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company. The Company has all requisite power,
right and authority to own, operate and lease its properties and assets, to
carry on its business as now conducted and as proposed to Buyer by the Company
to be conducted, to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party, and to
carry out the transactions contemplated hereby and thereby.

        All actions on the part of the Company and its officers and directors
necessary for the authorization, execution, delivery and performance of this
Agreement and the other Transaction Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of all of the
Company's obligations under this Agreement and the other Transaction Documents
have been taken or will be taken prior to the Closing. This Agreement has been,
and the other Transaction Documents to which the Company is a party on the
Closing will be, duly executed and delivered by the Company, and this Agreement
is, and each of the other Transaction Documents to which it is a party on the
Closing will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.

3.3     CAPITALIZATION

        (a)     The authorized capital stock of the Company consists of 50,000
shares of common stock, one dollar par value (the "COMMON STOCK").

        (b)     The issued and outstanding capital stock of the Company consists
and as of the Closing will consist solely of the Shares, which are and as of the
Closing will be held of record by the Shareholder. All shares of Common Stock
that are issued and outstanding are, and as of the Closing Date will be, duly
authorized and validly issued, fully paid and nonassessable, and issued in
compliance with all applicable federal, state and foreign securities laws.
Except for the Shareholder, no Person holds any interest in any of the Shares.

        (c)     There are no outstanding rights of first refusal, preemptive
rights, options, warrants, conversion rights or other agreements, either
directly or indirectly, for the purchase or acquisition from the Company of any
of the Shares or other securities of the Company.

        (d)     The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between any Persons,
that


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                                      -6-


<PAGE>


affects or relates to the voting or giving of written consents with respect
to any securities of the Company or the voting by any director of the Company.

3.4     SUBSIDIARIES AND AFFILIATES

        The Company does not have, and has never had, any Subsidiaries. The
Company does not own, directly or indirectly, any ownership, equity, profits or
voting interest in, or otherwise control, any corporation, partnership, joint
venture or other entity, and has no agreement or commitment to purchase any such
interest.

3.5     NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS

        The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Company, and the consummation of the transactions
contemplated hereby and thereby, will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any provision of any
law or any judgment, decree, order, regulation or rule of any court, agency or
other governmental authority applicable to the Company, (b) require any consent,
approval or authorization of, or declaration, filing or registration with, any
Person other than (i) consent of the stockholders of Parent (including, to the
extent required, the filing and approval of a proxy statement with the
Securities and Exchange Commission), (ii) notification of the Nasdaq Stock
Market, Inc. to the extent required under its rules, and (iii) consent of the
landlord of the premises occupied by Summit V, (c) result in a default (with or
without the giving of notice or lapse of time, or both) under, acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any agreement, lease, note or other restriction,
encumbrance, obligation or liability to which the Company is a party or by which
it is bound or to which any assets of the Company are subject, (d) result in the
creation of any lien or encumbrance upon the assets of the Company, or upon any
Shares or other securities of the Company, (e) conflict with or result in a
breach of or constitute a default under any provision of the Articles or Bylaws
of the Company, or (f) invalidate or adversely affect any material permit,
license, authorization or status used in the conduct of the business of the
Company.

3.6     FINANCIAL STATEMENTS; OBLIGATIONS

        The Company has delivered to Buyer (a) balance sheets and statements of
operations, shareholders' equity and cash flows of the Parent at and for the
fiscal years ended June 30, 1998, 1999, and accompanying notes, audited by BDO
Seidman, independent auditors and certified public accountants, and (b)
unaudited balance sheets and unaudited statements of operations and cash flows
of the Parent at and for


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                                      -7-


<PAGE>


the six month period ended December 31, 1999. All the foregoing financial
statements (including the notes thereto) are referred to as the "FINANCIAL
STATEMENTS". The Financial Statements have been prepared in conformity with GAAP
consistently applied throughout the periods covered, except as may be indicated
in the notes thereto, and present fairly the financial position, results of
operations and changes in financial position of the Parent at the dates and for
the periods indicated, subject, in the case of the unaudited financial
statements, to normal recurring period-end adjustments.

        To the knowledge of David Edwards, the Company has no liabilities or
obligations of any nature (absolute, accrued or contingent) that are not fully
reflected or reserved against in the Balance Sheet, as prescribed by GAAP and
the Financial Accounting Standards Board, except liabilities or obligations
incurred since the date of the Balance Sheet in the ordinary course of business
and consistent with past practice. The Company maintains and will continue to
maintain standard systems of accounting established and administered in
accordance with GAAP. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person.

3.7     ACTION BY DAVID EDWARDS

         Since June 30, 1999 David Edwards has not entered into any contracts on
behalf of the Company or Jenkon International (UK) nor entered into any
employment agreement or arrangement on behalf of those entities except a bonus
arrangement with Cliff De Groot.

3.8     ACCURACY OF SEC FILINGS

        To the knowledge of David Edwards, the filings made with the Securities
and Exchange Commission by the Parent (the "SEC Documents") do not contain a
misstatement of material fact concerning the Company, its operations and
financial condition or omit to state a fact necessary to make such statements
contained therein not misleading.

3.9     CORPORATE BOOKS AND RECORDS

        The Company has furnished to Buyer true and complete copies of (a) the
Articles of Incorporation and Bylaws of the Company as currently in effect,
including all amendments thereto, (b) the minute books of the Company, and (c)
the stock transfer books of the Company. Such minutes reflect all meetings of
the Company's shareholders, Board of Directors and any committees thereof since
the Company's


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                                      -8-


<PAGE>


inception, and such minutes accurately reflect the events of and actions taken
at such meetings. Such stock transfer books accurately reflect all issuances and
transfers of shares of capital stock of the Company since its inception.

3.10    BROKERS OR FINDERS

        The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by or on behalf of the Company, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated hereby
other than such arranged or committed to by Buyer.

3.11    BANK ACCOUNTS

        Disclosure Schedule 3.11 sets forth the names and locations of all
banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains safe deposit boxes or accounts of
any nature and the names of all Persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.

3.12    ACCURACY OF REPRESENTATIONS AND WARRANTIES

        To the knowledge of David Edwards, none of the representations and
warranties of Buyer contained in this agreement is inaccurate, contains a
misstatement of material fact, or omits to state a fact necessary to make such
statements contained therein not misleading.

3.13    TAX CONSEQUENCES

        Neither Parent nor Shareholder makes any representation or warranty with
respect to, and each expressly disclaims any responsibility for, any Tax
consequences to the Buyer arising out of the structure or terms of this
Agreement, or the negotiation or consummation hereof. The Buyer shall be solely
responsible for any such Tax consequences.

                   ARTICLE IV - REPRESENTATIONS AND WARRANTIES
                                    OF BUYER

        To induce the Company and the Shareholders to enter into and perform
this Agreement, Buyer represents and warrants to the Company and the
Shareholders as of the date of this Agreement and as of the Closing as follows
in this Article IV:


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                                      -9-


<PAGE>


4.1     ORGANIZATION

        Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the state of Washington. Buyer has all requisite
corporate power and authority to own, operate and lease its properties and
assets, to carry on its business as now conducted and as proposed to be
conducted, to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party, and to carry out the
transactions contemplated hereby and thereby.

4.2     ENFORCEABILITY

        All corporate action on the part of Buyer and its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party, the consummation of the transactions contemplated hereby and thereby,
and the performance of all of Buyer's obligations under this Agreement and the
other Transaction Documents to which it is a party has been taken or will be
taken prior to the Closing. This Agreement has been, and the other Transaction
Documents to which Buyer is a party on the Closing will be duly executed and
delivered by Buyer, and this Agreement is, and each of the other Transaction
Documents to which Buyer is a party on the Closing will be, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.

4.3     NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS

        The execution, delivery and performance by Buyer of this Agreement and
the other Transaction Documents to which it is a party, and the consummation of
the transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of any law or any judgment, decree, order, regulation or rule of
any court, agency or other governmental authority applicable to Buyer, (b)
require Buyer to obtain any consent, approval or authorization of, or
declaration, filing or registration with, any Person, or (c) constitute a
violation of any provisions of Buyer's Articles of Incorporation or Bylaws.

4.4     CLAIMS AND LEGAL PROCEEDINGS

        There is no claim, action, suit, arbitration, criminal or civil
investigation or proceeding pending or involving or, to Buyer's knowledge,
threatened against Buyer before or by any court or governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person, that questions the


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                                      -10-


<PAGE>


validity of this Agreement or any action taken or to be taken by Buyer pursuant
to this Agreement or in connection with the transactions contemplated hereby.

4.5     TAX CONSEQUENCES

        Buyer does not make any representation or warranty with respect to, and
expressly disclaims any responsibility for, any Tax consequences to the
Shareholder arising out of the structure or terms of this Agreement, or the
negotiation or consummation hereof. The Shareholder shall be solely responsible
for any such Tax consequences.

4.6     ACCURACY OF SEC FILINGS

        To the knowledge of Daniel Jensen and Robert Cavitt, the filings made
with the Securities and Exchange Commission by the Shareholder (the "SEC
Documents") do not contain a misstatement of material fact concerning the
Company, its operations and financial condition or omit to state a fact
necessary to make such statements contained therein not misleading.

4.7     ACCURACY OF REPRESENTATIONS AND WARRANTIES

        To the knowledge of Daniel Jensen and Robert Cavitt, none of the
representations and warranties of Shareholders and the Company contained in this
Agreement are inaccurate, contain a misstatement of material fact, or omit to
state a fact necessary to make such statements contained therein not misleading.

                              ARTICLE V - COVENANTS

        Between the date of this Agreement and the time of Closing, the parties
covenant and agree as set forth in this Article V.

5.1     CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING

        Unless Buyer shall otherwise agree in writing, the business of the
Company shall be conducted only in, and the Company shall not take any action
except in, and the directors and officers of the Company and the Shareholders
shall cause the Company to be conducted in, the ordinary course of business and
in a manner consistent with past practice and in accordance with applicable law;
and the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company, to keep available the services
of the current directors, officers, employees and consultants of the Company and
to preserve the current relationships of the Company with customers, suppliers
and other persons with which


STOCK PURCHASE AGREEMENT
                                      -11-


<PAGE>


the Company has significant business relations. By way of amplification and not
limitation, except as otherwise contemplated by this Agreement, the Company
shall not, between the date of this Agreement and the time of Closing, directly
or indirectly do, or propose to do, any of the following without giving Buyer
prior written notice of and receiving Buyer's prior written consent:

        (a)     amend or otherwise change its Charter or Bylaws;

        (b)     except as disclosed on Disclosure Schedule 5.1(b), issue, sell,
pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of (i) any shares of capital stock of any
class of the Company, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest), of the
Company or (ii) any assets of the Company;

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

        (d)     reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;

        (e)     (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or form any corporation,
partnership, other business organization or division thereof, or acquire
directly or indirectly any material amount of assets; (ii) except as
contemplated by this Agreement incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any
loans or advances, except in the ordinary course of business and consistent with
past practice which loans shall be on terms and conditions satisfactory to
Buyer; (iii) enter into any contract or agreement other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure that is in excess of $5,000 or capital expenditures that
are, in the aggregate, in excess of $25,000; or (v) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter set
forth in this subsection (e);

        (f)     enter into any employment, consulting or agency agreement, or
increase the compensation payable or to become payable to its officers,
employees or consultants, except for increases in accordance with existing
agreements or past practices for employees of the Company who are not officers
of the Company, or grant any severance or termination pay to, or enter into any
employment or severance


STOCK PURCHASE AGREEMENT
                                      -12-


<PAGE>


agreement with, any director, officer or employee of the Company, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;

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

        (h)     make any tax election inconsistent with past practices or settle
or compromise any material federal, state, local or foreign income tax
liability;

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

        (j)     enter into any equipment lease; or

        (k)     take or agree to take any action specified in Section 3.7, or
enter into any other material transaction other than those specified above; or

        (l)     agree to do any of the foregoing.

Notwithstanding anything to the contrary contained in this Agreement, neither
the Company nor the Shareholder shall have been deemed to have breached or
violated the provisions of this Section 5.1 with respect to any action taken by
the Company that is authorized, approved, effected or implemented by the Buyer,
Daniel Jensen or Robert Cavitt following the date of this Agreement, whether
pursuant to the terms of any Management Agreement between the Company,
Shareholders and Buyer (the "Management Agreement"), or otherwise.
Notwithstanding anything to the contrary contained in this Agreement, the
Management Agreement or any other agreements contemplated hereby or thereby,
Buyer agrees that it shall not cause or permit any action described in Section
5.1 to be taken without the express written consent of Shareholder, which
consent may only be signed by David Edwards, or an independent member of the
Board of Directors of Shareholder; provided the Company is expressly


STOCK PURCHASE AGREEMENT
                                      -13-


<PAGE>


authorized to borrow operating funds from Buyer or any other person to the
Company introduced by Buyer.

Notwithstanding anything to the contrary contained elsewhere in this Agreement,
the parties hereto acknowledge and agree that prior to Closing, Shareholder
shall cause all of the issued and outstanding shares of Jenkon International
Limited, a United Kingdom corporation (Jenkon U.K.) to be contributed to the
Company, so that at Closing, Jenkon U.K. shall be a wholly-owned subsidiary of
the Company. In this regard, Parent represents and warrants that other than
liabilities reflected on the financial statements of Parent filed with the
Securities and Exchange Commission, there are no liabilities or other
outstanding obligations of Jenkon U.K.

5.2     ACCESS TO INFORMATION; CONFIDENTIALITY

        From the date hereof to the time of Closing, the Company and the
Shareholders shall, and shall cause their representatives to, afford Buyer and
its representatives complete access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and records
of the Company and shall furnish Buyer with all financial, operating and other
data and information as Buyer may reasonably request and as such access is
necessary to the consummation of the transactions contemplated hereby.

5.3     NO SOLICITATION

        (a)     The Company and Shareholders shall not, nor shall they authorize
or permit any of their officers, directors or employees or any investment
banker, attorney or other advisor or representative retained by it to, directly
or indirectly, (i) solicit, initiate or encourage the submission of any Takeover
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that if, at any time prior to the Closing
Date either of the Boards of Directors of the Shareholders determines in good
faith that (i) after consultation with outside counsel that failure to do so
would create a substantial risk of liability for breach of its fiduciary duties
to its stockholders under applicable law and (ii) that such Takeover Proposal
constitutes a Superior Proposal (as hereinafter defined), the Company and
Shareholders may, in response to a written Takeover Proposal that was
unsolicited or that did not otherwise result from a breach of this Section
5.3(a), and subject to compliance with Section 5.3(c), (x) furnish information
with respect to the Company to any person pursuant to a customary and reasonable
confidentiality agreement no less favorable to the Company, and no less


STOCK PURCHASE AGREEMENT
                                      -14-


<PAGE>


onerous to such person, than the confidentiality obligation contained herein and
(y) participate in negotiations regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any officer, director or employee of the
Company or Shareholders, or any investment banker, attorney or other advisor or
representative of the Company or Shareholders, acting on behalf of the Company
or Shareholders, shall be deemed to be a breach of this Section 5.3(a) by the
Company and Shareholders. The Company and Shareholders will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted prior to the date of this Agreement with respect to
any Takeover Proposal and request the return of all information provided to
third parties pursuant to one or more confidentiality agreements. For purposes
of this Agreement, "Takeover Proposal" means any proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company (other than products of the Company)
or at least 20% interest in the total voting securities of the Company or any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement.

        (b)     Except as expressly permitted by this Section 5.3, neither the
Boards of Directors of the Shareholders nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Buyer, the approval or recommendation by such Boards of Directors or any such
committee of this Agreement, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) cause the Company or Shareholders to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (an "Acquisition Agreement") with respect to any
Takeover Proposal. Notwithstanding the foregoing, prior to the Closing Date,
either of the Boards of Directors of Shareholders, to the extent either
determines in good faith after consultation with outside legal counsel that
failure to do so would create a substantial risk of liability for breach of its
fiduciary duties to the Parent's stockholders under applicable law, may withdraw
or modify its approval or recommendation of this Agreement or the Merger or
recommend any Superior Proposal (as hereinafter defined), in each case at any
time after the third business day following Buyer's receipt of written notice (a
"Notice of Superior Proposal") advising Buyer that the Board of Directors of one
of the Shareholders has received a Superior Proposal, specifying the identity of
the person making the Takeover Proposal and the material terms and conditions of
the Superior Proposal (it being understood that any amendment to the price or
material terms of a


STOCK PURCHASE AGREEMENT
                                      -15-


<PAGE>


Superior Proposal shall require an additional Notice of Superior Proposal and an
additional three business day period thereafter to the extent permitted under
applicable law). In addition, prior to the Closing Date, either of the Boards of
Directors of Shareholders, to the extent it determines in good faith, after
consultation with outside legal counsel, that failure to do so would result in a
substantial risk of liability for breach of its fiduciary duties to its
stockholders under applicable law, may cause the Shareholders to terminate this
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into an Acquisition Agreement with respect to a
Superior Proposal). For purposes of this Agreement, a "Superior Proposal" means
any bona fide written proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or equities, more than 50%
of the voting power of the Company Common Stock or all or substantially all the
assets of the Company and otherwise on terms which the Boards of Directors of
the Shareholders determine in good faith judgment (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the transactions contemplated by this Agreement.

        (c)     In addition to the obligations of the Shareholders set forth in
paragraphs (a) and (b) of this Section 5.3, the Company promptly shall within 24
hours after receipt advise Buyer orally and in writing of any request for
nonpublic information which either of the Shareholders reasonably believes could
lead to a Takeover Proposal or of any Takeover Proposal, or any inquiry with
respect to or which either of the Shareholders reasonably believes could lead to
any Takeover Proposal, the identity of the person making such Takeover Proposal
and the material terms and conditions of such request, Takeover Proposal or
inquiry. The Shareholders will keep Buyer promptly informed in all material
respects of the status and details (including amendments or proposed amendments)
of any such Takeover Proposal or inquiry.

        (d)     Nothing contained in this Section 5.3 or elsewhere in this
Agreement shall prohibit the Parent from (i) taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the stockholders of
Parent required by applicable laws; provided that the Shareholders shall not,
except in accordance with the provisions of Section 5.3(b), withdraw or modify,
or propose to withdraw or modify, its recommendation of the Merger or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.


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                                      -16-


<PAGE>


5.4     NOTIFICATION OF CERTAIN MATTERS

        The Company and/or the Shareholders shall give prompt written notice to
Buyer, and Buyer shall give prompt written notice to the Company and/or the
Shareholders, of (a) the occurrence or nonoccurrence of any event which would be
likely to (i) cause any representation or warranty of the Company and/or the
Shareholders or Buyer, respectively, contained in this Agreement to be
materially untrue or inaccurate or (ii) result in the material failure to
satisfy a closing condition in Article VII or VIII; (b) any material failure of
the Company and/or the Shareholders or Buyer, respectively, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it or them; and (c) any written communication from any Person alleging that the
consent of such Person may be required in connection with the transactions
contemplated by this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 5.4 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.

5.5     FURTHER ACTION

        Upon the terms and subject to the conditions hereof, each of the parties
shall (a) make promptly its respective filings, and thereafter make any other
required submissions, under applicable laws with respect to the transactions
contemplated hereby and shall cooperate with the other parties with respect to
such filings and submissions and (b) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby, including, without limitation, using its reasonable best efforts to
obtain all shareholder consents as well as waivers, licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts as are necessary for the consummation of the
transactions contemplated hereby and to fulfill the conditions to the closing of
the sale of the Shares to Buyer. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall use its reasonable best efforts to
take all such action. None of Buyer, the Company or the Shareholders will
undertake any course of action inconsistent with this Agreement or that would
make any representations, warranties or agreements made by such party in this
Agreement untrue or any conditions precedent to this Agreement unable to be
satisfied at or prior to the Closing.


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                                      -17-


<PAGE>


5.6     PUBLICITY

        None of the parties shall disclose, make or issue, or cause to be
disclosed, made or issued, any statement or announcement concerning this
Agreement or the transactions contemplated hereby to any third parties (other
than its officers, directors, employees, authorized representatives, legal
advisors and financial advisors who need to know such information in connection
with carrying out or facilitating the transactions contemplated hereby) without
the prior written consent of the other parties, except as required by law or any
listing or other agreement with any public securities trading exchange or market
to which Buyer is a party and after providing written notice to the other
parties of such required disclosure.

                       ARTICLE VI - ADDITIONAL AGREEMENTS

6.1     PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS MEETING

        As soon as practicable following the date of this Agreement, the Parent
shall prepare and file with the SEC a Proxy Statement relating to the
Transaction and seeking approval of the Transaction by stockholders of Parent.
The Parent will use its reasonable efforts to cause the Proxy Statement to be
mailed to its stockholders as promptly as practicable. Buyer shall furnish all
information concerning itself to Parent as may be reasonably requested in
connection with any such action and the preparation, filing and distribution of
the Proxy Statement.

6.2     CERTAIN EXPENSES

        Shareholder will promptly, upon receipt of billing therefor from Buyer,
reimburse Buyer for expenses, including transportation, lodging and meals
incurred by Clifford DeGroot in providing assistance to Shareholder and its
shareholders in Israel in connection with Shareholder's proxy statement.

6.3     ASSIGNMENT OF DOMAIN NAMES AND MARKS

         For good and valuable consideration, receipt of which is hereby
acknowledged, Shareholders hereby assign to Company all rights, title and
interest in and to the domain names and marks, registered or unregistered,
identified in Exhibit A attached hereto, together with the good will associated
thereto, including, the right to recover for damages and profits for past
infringements thereof. Shareholders agree to execute and deliver at the request
of Company, all papers, instruments, and assignments, and to perform any and all
other reasonable acts Company may require, including recordation of the
assignment, in order to vest all Shareholders' rights, title, and interest in
and to the said domain names and marks in Company and/or to provide


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evidence to support any of the foregoing in the event such evidence is deemed
necessary by Company, to the extent such evidence is in the possession or
control of Shareholders.

           ARTICLE VII - CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

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

7.1     ACCURACY OF REPRESENTATIONS AND WARRANTIES

        Each of the representations and warranties of the Company and the
Shareholders contained in this Agreement and the other Transaction Documents to
which each is a party (including applicable Exhibits or Disclosure Schedules)
shall be true and correct as of the date hereof and at and as of the Closing
Date as though made on that date; except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of the specified date.

7.2     PERFORMANCE OF AGREEMENTS

        The Company and the Shareholders shall have performed all obligations
and agreements and complied with all covenants and conditions contained in this
Agreement or any other Transaction Document to be performed and complied with by
them at or prior to the Closing.

7.3     OPINION OF COUNSEL FOR THE COMPANY AND THE SHAREHOLDERS

        Buyer shall have received the opinion of Jeffer, Mangels Butler &
Marmaro LLP, counsel for the Company and the Shareholders, dated the Closing
Date, in form and substance reasonably acceptable to Buyer.

7.4     CONSENTS TO SALE OF SHARES

        The Company shall have received and shall have delivered to Buyer
written consents to the sale of the Shares from each of the parties (other than
the Company) to those agreements, leases, notes or other documents set forth as
requiring such consent


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<PAGE>


on the Disclosure Schedules, which consents shall be satisfactory in all
respects to Buyer in its sole and absolute discretion.

7.5     OFFICERS' CERTIFICATE

        Buyer shall have received a certificate of the Chief Executive and the
chief financial officer of the Company, dated the Closing Date, certifying that
the conditions set forth in Sections 7.1, 7.2, 7.4, 7.7 and 7.9 have been
fulfilled.

7.6     SHAREHOLDER'S CERTIFICATE

        Buyer shall have received a certificate of each the Shareholders,
executed on behalf of such Shareholder by its Chief Executive Officer and chief
financial officer, dated the Closing Date, certifying that the conditions set
forth in Sections 7.1, 7.2, 7.4, 7.7 and 7.9 have been fulfilled.

7.7     MATERIAL ADVERSE CHANGE

        Since the date hereof and through the Closing, there shall not have
occurred (or be threatened) any material adverse change (a) in the business,
operations, assets, liabilities, earnings, condition (financial or other), or
prospects of the Company or (b) with respect to the Shareholders and the Shares,
and no material adverse change shall have occurred (or be threatened) in any
domestic or foreign laws or regulations affecting the Company or in any third
party contractual or other business relationships of the Company.

7.8     APPROVALS AND CONSENTS

        All transfers of permits or licenses and all approvals, applications or
notices to public agencies, federal, state, local or foreign, the granting or
delivery of which is necessary for the consummation of the transactions
contemplated hereby or for the continued operation of the Company as set forth
in the Disclosure Schedules, shall have been obtained, and all waiting periods
specified by law shall have passed. All other consents, approvals and notices
material to the consummation of the transactions contemplated by this Agreement
and referred to in the Disclosure Schedules shall have been obtained or
delivered. All such transfers, approvals, and consents shall be satisfactory in
all respects to Buyer in its sole and absolute discretion.

7.9      PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE

         All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions


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                                      -20-


<PAGE>


shall have been approved by counsel to Buyer, and Buyer shall have received a
certificate of the Secretary of the Company and each of the Shareholders, as to
the authenticity and effectiveness of the actions of the Board of Directors of
the Company and each of the Shareholders authorizing the sale of the Shares and
the other transactions contemplated by this Agreement and the other Transaction
Documents to which the Company or any of the Shareholders is a party, and such
other documents as are reasonably specified by counsel to Buyer.

7.10    COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement
shall be legally permitted by all laws and regulations to which Buyer is
subject.

7.11    LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.

7.12    DELIVERY OF CERTIFICATES

        The Shareholder shall deliver to Buyer at Closing certificates
representing the Shares, duly endorsed for transfer on the Company's books.

7.14    NONCOMPETITION AGREEMENTS

        David Edwards shall have entered into a two-year noncompetition
agreement reasonably acceptable to Buyer to the effect he will not compete with
the Company or Buyer as their businesses are now conducted.

7.15    WAIVER BY INSIDERS

        Each of Robert Cavitt, Daniel Jensen and David Edwards shall execute a
release, in a form and substance reasonably satisfactory to Buyer and the
Company, pursuant to which each of them releases Buyer, the Company and their
respective affiliates from and against any liability for loans, compensation and
other claims relating to or arising prior to the Closing Date (other than claims
arising under this Agreement or the Transaction Documents).


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<PAGE>


                     ARTICLE VIII - CONDITIONS PRECEDENT TO
                       OBLIGATIONS OF THE COMPANY AND THE
                                  SHAREHOLDERS

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

8.1     ACCURACY OF REPRESENTATIONS AND WARRANTIES

        Each of the representations and warranties of Buyer contained in this
Agreement and the other Transaction Documents to which it is a party shall be
true and correct as of the date hereof and at and as of the Closing Date as
though made on that date, except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of the specified date.

8.2     PERFORMANCE OF AGREEMENTS

        Buyer shall have performed all obligations and agreements and complied
with all covenants and conditions contained in this Agreement or any other
Transaction Document to be performed and complied with by it at or prior to the
Closing.

8.3     OPINION OF COUNSEL FOR BUYER

        The Company and the Shareholders shall have received the opinion of
Perkins Coie LLP, counsel for Buyer, dated the Closing Date, in form and
substance reasonably acceptable to Company and the Shareholder.

8.4     OFFICERS' CERTIFICATE

        The Shareholders shall have received a certificate of a Vice President
and another officer of Buyer, dated the Closing Date, certifying that the
conditions in Sections 8.1, 8.2, 8.5 and 8.6 have been fulfilled.

8.5     MATERIAL ADVERSE CHANGE

        Since the date hereof and through the Closing, there shall not have
occurred any material adverse change in the business, operations, assets,
liabilities, earnings,


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                                      -22-


<PAGE>


condition (financial or other) of Buyer that would render Buyer unable to
perform its obligations under the Transaction Documents.

8.6     APPROVALS AND CONSENTS

        All transfers of permits or licenses and all approvals, applications or
notices to public agencies, federal, state, local or foreign, required to be
obtained by Buyer for the consummation of the transactions contemplated hereby
shall have been obtained, and all waiting periods specified by law shall have
passed.

8.7     PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE

        All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall have been approved by counsel to the Company and the
Shareholders and the Company and the Shareholders shall have received a
certificate of the Secretary of Buyer, as to the authenticity and effectiveness
of the actions of the Board of Directors of Buyer authorizing the purchase of
the Shares and the other transactions contemplated by this Agreement and the
other Transaction Documents to which Buyer is a party, and such other documents
as are reasonably specified by counsel to the Company and the Shareholders.

8.8     COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement
shall be legally permitted by all laws and regulations to which the Company and
the Shareholders are subject.

8.9     LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.

8.10    FAIRNESS OPINION

        The Parent shall have received an opinion of a financial advisor
acceptable to it, substantially to the effect that the consideration to be
received by the Shareholder for the sale of the Shares pursuant to this
Agreement is fair, from a financial point of view, to the Shareholder.


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<PAGE>


8.11    WAIVER BY INSIDERS

        Each of Robert Cavitt, Daniel Jensen and David Edwards shall execute a
release, in a form and substance reasonably satisfactory to Shareholders,
pursuant to which each of them releases Shareholders, the Company and their
affiliates from and against any liability for loans, compensation and other
claims relating to or arising prior to the Closing Date (other than claims
arising under this Agreement or the Transaction Documents).

                 ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER

9.1     TERMINATION

        This Agreement may be terminated at any time prior to the Closing:

                (a)     by mutual written consent of the Shareholders, Company
and Buyer;

                (b)     by the Company or either of the Shareholders, if Buyer
shall have breached any of its representations, warranties or agreements;

                (c)     by Buyer, if the Company and/or either of the
Shareholders shall have breached any of its or their representations, warranties
or agreements;

                (d)     by either the Shareholder or Buyer:

                        (i)     if the Closing has not occurred by June 30,
        2000; provided, however, that the right to terminate this Agreement
        under this subsection (d) shall not be available to any party whose
        failure to fulfill any obligation under this Agreement has been the
        cause of, or resulted in, the failure of the Closing to occur on or
        before such date;

                        (ii)    if stockholder approval shall not have been
        obtained at the stockholders meeting of Parent duly convened therefor or
        at any adjournment or postponement thereof;

                        (iii)   if prior to the Closing Date, the Board of
        Directors of either of the Shareholders has made the determination
        referred to in the penultimate sentence of Section 5.3(b); provided,
        however, that neither the Company nor the Shareholders may terminate
        this Agreement pursuant to this Section 9.1(d)(iii) unless and until
        three business days have elapsed following


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<PAGE>


        delivery to Buyer of a Notice of Superior Proposal with respect to a
        Superior Proposal by the Board of Directors of Parent.

                (e)     by either the Company or Buyer if there shall be any law
or regulation that makes consummation of the sale of the Shares by the
Shareholder to Buyer illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating the
sale of the Shares by the Shareholder to Buyer is entered and such judgment,
injunction, order or decree shall become final and nonappealable.

                (f)     by Buyer if (i) the Board of Directors of Parent or any
committee thereof shall have withdrawn or modified in a manner adverse to Buyer
its approval or recommendation of the sale or this Agreement or failed to
reconfirm its recommendation within 15 business days after a written request to
do so, or approved or recommended any Takeover Proposal or approved or
recommended any Takeover Proposal or (ii) the Board of Directors of Parent shall
have resolved to take any of the foregoing actions.

9.2     EFFECT OF TERMINATION

        In the event of the termination of this Agreement, the confidentiality
obligations under Section 5.2, and Sections 9.2, 11.1, 11.2, 11.3 and 11.6 shall
survive any such termination and nothing shall relieve any party from liability
for any breach. In addition, the following shall apply:

                (a)     In the event of the termination of this Agreement
pursuant to Section 9.1(a), or by the Company or one of the Shareholders
pursuant to Section 9.1(d), there shall be no further obligation on the part of
any party.

                (b)     In the event of the termination of this Agreement
pursuant to Section 9.1(e) or by the Buyer pursuant to Section 9.1(c), (d) or
(f), Company and the Shareholders shall promptly repay any amounts advanced by
Buyer to the Company.

9.3     AMENDMENT

        Buyer, the Company and the Shareholders may amend, modify or supplement
this Agreement at any time, but only in writing duly executed on behalf of each
of the parties to be bound thereby.


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                                      -25-


<PAGE>


9.4     WAIVER

        At any time prior to the Closing, any party may (a) extend the time for
the performance of any obligation or other act of any other party, (b) waive any
inaccuracy in the representations and warranties contained in any Transaction
Document, or (c) waive compliance with any agreement or condition in any
Transaction Document. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound.
The failure of any party at any time or times to require performance of any
provisions shall in no manner affect its right at a later time to enforce the
same. No waiver by any party of any condition or of any breach of any terms,
covenants, representations, warranties or agreements contained in this Agreement
shall be deemed to be a further or continuing waiver of any such condition or
breach in other instances or a waiver of any other condition or any breach of
any other terms, covenants, representations, warranties or agreements.

                    ARTICLE X - SURVIVAL AND INDEMNIFICATION

10.1    SURVIVAL

        All representations and warranties contained in this Agreement or the
other Transaction Documents shall survive for a period of two years following
the Closing, except that the representations and warranties of the Company shall
terminate immediately after Closing. The covenants and agreements contained in
this Agreement that contemplate performance after the Closing shall survive the
Closing and shall continue until all obligations with respect thereto shall have
been performed or satisfied or shall have been terminated in accordance with
their terms.

10.2    INDEMNIFICATION

        10.2.1  INDEMNIFICATION BY THE SHAREHOLDERS

        The Shareholders shall jointly and severally indemnify and hold Buyer
and its affiliates (the "BUYER INDEMNIFIED PARTIES") harmless from and against,
and shall reimburse Buyer Indemnified Parties for, any and all losses, damages,
debts, liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or expenses (including but not limited
to any legal and accounting fees and expenses) ("LOSSES") arising out of or in
connection with:

                (a)     any material inaccuracy in or other breach of any
representation or warranty made by the Company or either of the Shareholders in
this Agreement or in any other Transaction Document;


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                                      -26-


<PAGE>


                (b)     any material failure by the Company or the Shareholders
to perform or comply, in whole or in part, with any covenant or agreement in
this Agreement or any other Transaction Document to which it is a party; or

                (c)     any claim, demand, cause of action, suit, proceeding,
hearing or investigation ("CLAIM") by any person or entity for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person or entity directly or
indirectly with the Company, any of its officers, directors or employees, (other
than Robert Cavitt or Daniel Jensen) or the Shareholders, in connection with any
of the transactions contemplated by this Agreement or any other Transaction
Document, and all taxes relating to periods on or prior to the Closing Date.

        10.2.2  INDEMNIFICATION BY BUYER

        Buyer shall indemnify and hold the Shareholders (the "SHAREHOLDER
INDEMNIFIED PARTIES"; together with Buyer Indemnified Parties, the "INDEMNIFIED
PARTIES") harmless from and against, and shall reimburse the Shareholder
Indemnified Parties for, any and all Losses arising out of or in connection
with:

                (a)     any material inaccuracy in or other breach of any
representation or warranty made by Buyer in this Agreement or in any other
Transaction Document;

                (b)     any material failure by Buyer to perform or comply, in
whole or in part, with any covenant or agreement in this Agreement or any other
Transaction Document to which it is a party;

                (c)     any Claim by any person or entity for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person or entity directly or
indirectly with Buyer or any of its officers, directors or employees in
connection with any of the transactions contemplated by this Agreement or any
other Transaction Document, or

                (d)     any Claim by any person or entity relating to operation
of the Company's business from and after the Closing Date.

10.3    LIMITATIONS

        Any claim for indemnification must be asserted as provided in Section
10.4 within two years from the Closing Date; otherwise, this Article X shall be
null, void and without effect.


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<PAGE>


10.4    PROCEDURE FOR INDEMNIFICATION

        10.4.1  CLAIM NOTICE

        In the event that any Indemnified Party sustains or incurs any Losses in
respect of which indemnification may be sought pursuant to this Article X, such
Indemnified Party may assert a claim for indemnification by giving written
notice (the "CLAIM NOTICE") to the indemnifying party, which will describe in
reasonable detail the facts and circumstances on which the asserted claim for
indemnification is based. The Claim Notice will also specify how the Indemnified
Party intends to recover such funds pursuant to this Agreement. Unless the claim
described in the Claim Notice is contested by the indemnifying party by written
notice to the Indemnified Party of the amount of the claim that is contested,
given within 30 days of the receipt of the Claim Notice, the Indemnified Party
may recover such undisputed amount of the claim described in the Claim Notice.

        10.4.2  DISPUTE NOTICE

        If, within thirty (30) days of the receipt by the indemnifying party of
the Claim Notice, the indemnifying party contests in writing to the Indemnified
Party and the Escrow Agent (if such claim is against the Shareholder) that such
Loss constitutes an indemnifiable claim (the "DISPUTE NOTICE"), then the
Indemnified Party and the indemnifying party, acting in good faith, shall
attempt to reach agreement with respect to such claim.

        10.4.3  THIRD-PARTY CLAIMS

        With respect to claims for indemnification resulting from or in
connection with any legal proceeding commenced by a third party, the Indemnified
Party will give the Claim Notice to the indemnifying party no later than 20 days
prior to the time any initial answer or response to the asserted claim is
legally required under any applicable court or procedural rule. The indemnifying
party will, subject to the limitations set forth in Section 10.3, promptly
indemnify the Indemnified Party in accordance with the provisions of this
Article X and the Escrow Agreement.

10.5    INVESTIGATIONS; WAIVERS

        An Indemnified Party's right to indemnification provided for in this
Article X will remain in effect notwithstanding any investigation at any time by
or on behalf of any party or any waiver by any party of any condition to such
party's obligations to consummate the transactions contemplated hereby.


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                                      -28-


<PAGE>


                              ARTICLE XI - GENERAL

11.1    EXPENSES

        11.1.1  Whether or not the transactions contemplated by this Agreement
are consummated, each party shall each pay its own fees and expenses for the
negotiation, preparation and carrying out of this Agreement and the other
Transaction Documents (including legal and accounting fees and expenses);
provided, however, that, should any action be brought hereunder, the attorneys'
fees and expenses of the prevailing party shall be paid by the other party to
such action. The Shareholder shall pay any transfer or similar taxes that may be
payable in connection with the transactions contemplated by this Agreement.

        11.1.2  In the event that this Agreement is terminated (i) by any party
hereto (A) pursuant to Section 9.1(d)(ii) and at or prior to the time of the
Stockholders Meeting a Takeover Proposal shall have been publicly announced or
(B) pursuant to Section 9.1(d)(iii), (ii) by Buyer pursuant to Section 9.1(f) or
(iii) by Buyer pursuant to Section 9.1(c) in respect of a willful and material
breach of a covenant or agreement by the Company or Shareholders, then in such
case Shareholders shall, promptly, but in no event later than two days after the
date of such termination, pay Buyer a fee equal to $200,000 plus all expenses of
Buyer incurred in connection with this Agreement in immediately available funds
by wire transfer (the "Termination Fee"). If this Agreement is terminated by any
party hereto pursuant to Section 9.1(d) (to the extent the Parent has
theretofore failed to hold the Stockholders Meeting in breach of its obligations
under Section 6.1, and prior to the date 12 months following the date of the
termination of this Agreement, the Company shall either (x) consummate a Company
Acquisition (as hereinafter defined) or (y) enter into a written Acquisition
Agreement providing for a Company Acquisition, then the Shareholders shall pay
the Termination Fee in the case of clause (x) concurrently with the consummation
of such Company Acquisition or in the case of clause (y) concurrently with the
consummation of the transaction subject to such Acquisition Agreement (whether
or not such transaction is consummated prior to the date 12 months following the
date of the termination of this Agreement, but only in the event that such
transaction subject to such Acquisition Agreement is in fact consummated).
Shareholders acknowledge that the agreements contained in this Section 11.1.2
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Buyer would not enter into this Agreement;
accordingly, if Shareholders fail promptly to pay the amounts due pursuant to
this Section 11.1.2, and, in order to obtain such payment, Buyer commences a
suit which results in a judgment against the Shareholders for the amounts set
forth in this Section 11.1.2, Shareholders shall pay to Buyer its reasonable
costs and expenses (including attorneys' fees and expenses) in connection with
such


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                                      -29-


<PAGE>


suit, together with interest on the amounts set forth in this Section 11.1.2 at
the prime rate of Bank of America N.T. & S.A. in effect on the date such payment
was required to be made. "Company Acquisition" shall mean any transaction or
series of related transactions involving (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or Shareholders pursuant to which the stockholders of the
Company immediately preceding such transaction or series of related transactions
hold less than 60% of the equity interests in the surviving or resulting entity
of such transaction or transactions (other than the transactions contemplated by
this Agreement); (ii) a sale by the Company of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in excess
of 40% of the fair market value of the Company's business immediately prior to
such sale; or (iii) the acquisition by any person or group (including without
limitation by way of a tender offer or an exchange offer or issuance by the
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of 40% or more of the then outstanding shares of capital
stock of the Company.

        11.1.3  If the Agreement is terminated by Buyer pursuant to Section
9.1(d)(ii)or (iii) or Section 9.1 (f) then, in addition to any fee payable
pursuant to Section 11.1.3, the Shareholders shall, promptly, but in no event
later than two business days after the date of such termination, pay Buyer a fee
equal to $100,000.

11.2    SPECIFIC ENFORCEMENT

        The parties expressly agree that they will be irreparably damaged if
this Agreement is not specifically enforced. Upon a breach or threatened breach
of the terms, covenants and/or conditions of this Agreement by any party, Buyer,
the Company and the Shareholders shall, in addition to all other remedies, be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions of this Agreement.

11.3    CONSEQUENTIAL DAMAGES

        No party shall be liable to the other parties for any special, indirect,
incidental or consequential damages resulting from any breach of this Agreement.

11.4    ASSIGNMENT

        This Agreement shall not be assigned by operation of law or otherwise,
except that Buyer may assign all or any of its rights and obligations to any of
its affiliates. In


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                                      -30-


<PAGE>


the event of any such permitted assignment, Buyer shall guarantee the
performance of such obligations by such assignee.

11.5    NOTICES

        Unless otherwise provided, any notice under this Agreement shall be
given in writing and shall be deemed effectively given (a) upon personal
delivery to the party to be notified, (b) upon confirmation of receipt by fax by
the party to be notified, (c) one business day after deposit with a reputable
overnight courier, prepaid for overnight delivery and addressed as set forth in
(d), or (d) three days after deposit with the U.S. Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated for such party below, or at such other
address as such party may designate by 10 days' advance written notice to the
other parties given in the foregoing manner.

         TO BUYER:

         JIA, INC.
         7600 NE 41st St., Suite 300
         Vancouver, WA  98662
         Facsimile:  360-256-9623
         Attention:  Robert Cavitt

         with a copy to:

         PERKINS COIE LLP
         1211 SW Fifth, Suite 1500
         Portland, OR 97204
         Facsimile:  (503) 727-2000
         Attention:  Patrick J. Simpson

         TO THE COMPANY:

         SUMMIT V, INC.
         7600 NE 41st St., Suite 300
         Vancouver, WA  98662
         Facsimile:  360-256-9623
         Attention:  David Edwards

         with a copy to:


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                                      -31-


<PAGE>


         JEFFER MANGELS BUTLER & MARMARO
         2121 Avenue of the Stars
         Los Angeles, CA  90067
         Facsimile:  310-203-90067
         Attention:  Robert Steinberg

         TO THE SHAREHOLDERS:

         JENKON INTERNATIONAL,
         7600 NE 41st St., Suite 300
         Vancouver, WA  98662
         Facsimile:  360-256-9623
         Attention:  David Edwards

         with a copy to:

         JEFFER MANGELS BUTLER & MARMARO
         2121 Avenue of the Stars
         Los Angeles, CA  90067
         Facsimile:  310-203-90067
         Attention:  Robert Steinberg

11.6    GOVERNING LAW; JURISDICTION; VENUE

        This Agreement shall be governed by and construed under the laws of the
state of Washington without regard to principles of conflict of laws. Any
dispute among the parties relating to or arising out of this Agreement shall be
settled by binding arbitration pursuant to the rules of the American Arbitration
Association. Such arbitration shall take place in Vancouver, Washington and the
parties irrevocably consent to the jurisdiction and venue of the state and
federal courts located in Clark County, Washington in connection with any action
relating to the enforcement of any arbitral award.

11.7    SUCCESSORS AND ASSIGNS

        The terms and conditions of this Agreement shall inure to the benefit of
and be binding on the respective successors and assigns of the parties.

11.8    SEVERABILITY

        If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance


STOCK PURCHASE AGREEMENT
                                      -32-


<PAGE>


of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

11.9    ENTIRE AGREEMENT; COUNTERPARTS

        This Agreement constitutes the entire agreement among the parties with
respect to this subject matter and supersedes all prior agreements and
undertakings, both written and oral, among the parties with respect to this
subject matter including the Stock Purchase Agreement dated March 15, 2000 among
the same parties. This Agreement may be executed in two or more counterparts,
which together shall constitute one instrument.

                            [SIGNATURE PAGE FOLLOWS]


STOCK PURCHASE AGREEMENT
                                      -33-


<PAGE>


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


                                  JIA, INC.

                                  By
                                    ----------------------------
                                     Its
                                        ---------------------------


                                  SUMMIT V, INC.

                                  By
                                    ----------------------------
                                     Its
                                        ---------------------------


                                  JENKON INTERNATIONAL, INC. (DELAWARE)

                                  By
                                    ----------------------------
                                  By
                                    ----------------------------
                                     Its
                                        ---------------------------


                                  JENKON INTERNATIONAL, INC. (WASHINGTON)

                                  By
                                    ----------------------------
                                  By
                                    ----------------------------
                                     Its
                                        ---------------------------


STOCK PURCHASE AGREEMENT
                                      -34-


<PAGE>


                                    EXHIBIT A

         TRADEMARKS:

         Direct Selling Today

         Jenkon

         Now!

         Summit V


         PENDING TRADEMARKS:

         JOL (stands for Jenkon On-Line)


         DOMAIN NAMES:

         jenkon.com

         jencon.com

         nownetwork.com

         jenkon-dev.com



STOCK PURCHASE AGREEMENT


<PAGE>


                              MANAGEMENT AGREEMENT

        THIS MANAGEMENT AGREEMENT is made and entered into as of March __, 2000,
among Jenkon International, Inc., a Delaware corporation ("Jenkon"), Jenkon
International, Inc., a Washington corporation ("Jenkon Washington"), Summit V,
Inc., a Washington corporation ("Summit V"), and JIA, Inc., a Washington
corporation ("JIA"), with respect to the following facts:

        A. JIA, Summit V, Jenkon Washington, and Jenkon have entered into a
Stock Purchase Agreement, of even date herewith (the "Stock Purchase
Agreement"), pursuant to which JIA has agreed to acquire, among other things,
all of the outstanding stock of Summit V.

        B. Summit V's business consists of the design, development, marketing
and sale of software solutions for the direct sales industry and related
operations (the "Business").

        C. This Agreement is entered into by Summit V, JIA, Jenkon Washington,
and Jenkon pursuant to the terms of the Stock Purchase Agreement and provides
for management of the operations of the Business by JIA during the term of this
Agreement on the terms and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein, and intending to be legally bound hereby, the parties agree
as follows:

        1.  DEFINITIONS: The following terms have the meanings given to them
below:

            (a) "COMMENCEMENT DATE" means the date of this Agreement.

            (b) "INTERIM PERIOD" means the period commencing on the Commencement
Date and ending on the Termination Date.

            (c) "CASH RECEIPTS" means all money received by JIA (directly or
through its role as manager of the Summit V) relating to the operation of the
Business during the Interim Period, including money received from collection of
accounts receivable arising prior to or during the Interim Period.

            (d) "CASH DISBURSEMENTS" means all expenses incurred and money spent
by Summit V (whether financed through Cash Receipts or other capital resources
of Summit V or through advances from JIA) relating to the liabilities or
obligations of Summit V or the operation of the Business during the Interim
Period.

        2. TERM OF AGREEMENT; TERMINATION.



<PAGE>



            (a) The term of this Agreement shall commence on the date of this
Agreement and shall continue until terminated (the "Termination Date") as set
forth below. This Agreement shall terminate on the earliest to occur of the
following:

                (i) the closing of the sale of Summit V stock contemplated by
the Stock Purchase Agreement (the "Closing") or the termination of the Stock
Purchase Agreement prior to Closing, or

                (ii) the mutual written consent of the parties hereto to
termination of this Agreement, or

                (iii) by Jenkon or JIA, as the case may be, in the event that
the other party materially breaches the terms of this Agreement, or

                (iv) by Jenkon in the event that the disinterested members of
the Board of Directors of Jenkon makes a good faith determination that JIA has
mismanaged the operation of Summit V's business in a manner that has or is
reasonably likely to have a material adverse effect on Jenkon and (1) Jenkon has
given notice of the nature of such mismanagement to JIA and (2) such
mismanagement, to the extent curable, has been cured by JIA within five (5)
business days of receipt of notice; provided, however, Jenkon may not terminate
this Agreement pursuant to this clause (iv) in the event that Jenkon, within
five (5) business days of the notice of mismanagement, receives reasonable
assurances from JIA that JIA is prepared and able to close. Such assurances from
JIA are to take the form of a written representations from JIA and its officers
as to JIA's willingness and ability to close within such time frame and which
assurances shall be supported by such objective proof of JIA's ability to close
as Jenkon may reasonably require.

                (v) by Jenkon or Summit V if JIA shall commence any cause,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to them, or seeking to adjudicate them a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to their debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for JIA or for all or any substantial part of the assets of JIA; if JIA shall
make a general assignment for the benefit of creditors; if there shall be
commenced against JIA any case, proceeding or other action of a nature referred
to in clause (i) above with (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or if there shall be commenced against
JIA any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets, which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within thirty (30) days from the entry thereof.


<PAGE>



        3.  MANAGEMENT OF BUSINESS.

            (a) APPOINTMENT OF JIA AS MANAGER. Summit V and Jenkon hereby
appoint and retain JIA to supervise, direct and control the day-to-day operation
and management of the Business during the Interim Period upon the terms and
conditions set forth herein. The services to be provided by JIA pursuant to this
Agreement shall include, but shall not be limited to, the management,
administrative and support services set forth on EXHIBIT A of this Agreement.

            (b) STANDARD OF OPERATION. JIA shall manage and operate the Business
in a commercially reasonable manner and shall be subject to and agrees to
operate under the same standard of care, duties and legal obligations as are
applicable to officers and directors of corporations under Delaware law. JIA
agrees to comply with all applicable laws, rules and regulations in connection
with the operation of the business (except where non-compliance could not have a
material adverse effect on the Business or the financial condition of Summit V
or Jenkon. Subject to the foregoing standard and the limitations on the powers
of JIA described in this Agreement, JIA's powers and authority shall include,
but shall not be limited to:

                (i) the collection of accounts receivable (including any
reasonable discounting of the same consistent with past practices);

                (ii)  the   compromise  or   settlement   of  accounts   payable
(consistent with past practices);

                (iii) the hiring, supervising, directing the work of, promoting,
discharging and determining the compensation and other benefits of all personnel
working in the Business; and

                (iv) the ability to enter into such service, supply, development
and other contracts or agreements as are in JIA's reasonable judgment necessary
for the operation of the Business; provided, however, that the terms of such
contracts and agreements (including the terms of any warranty or service
obligations by Summit V) shall be consistent with the terms of Summit V's
historical contracts and agreements of similar size and type and, in all cases
other than customer support and service agreements, shall be terminable by
Summit V, without liability, on not more than 30 days notice.

            (c) COVENANTS OF JIA REGARDING OPERATIONS. JIA covenants and agrees
that during the Interim Period,

                (i) it shall maintain the assets of the Business in good
condition and repair consistent with past practices, including, without
limitation, all necessary repairs and replacements of hardware and other
equipment used in connection with the Business;



<PAGE>


                (ii) its shall cause Summit V to keep in existence all policies
of insurance insuring the Business and the assets and the operation thereof
against liability and property damage, fire and other casualty during the
Interim Period, consistent with the policies currently maintained by Summit V
and/or Jenkon;

                (iii) to the extent that JIA elects to terminate any employees
of Summit V, such termination(s) shall be made in accordance with applicable law
after consultation with the acting head of human resources of Summit V
(currently Pat O'Hara) and only after David Edwards or any other representative
of Jenkon designated by David Edwards shall have approved such termination. Such
termination shall be made by JIA in accordance with applicable federal or state
employment law; and

                (iv) JIA agrees that Jenkon or its designated representatives
shall be provided full and complete access, during normal business hours upon
reasonable notice (which shall, in no case, be required to be more than 24 hours
in advance), to all information, documentation and physical premises maintained
by JIA in connection with the Business or the management thereof;

                (v) it shall assemble and maintain all financial accounting
records, controls and systems of Summit V in the manner currently assembled and
maintained and agrees to fully cooperate (without charge to Jenkon or Summit V)
with the preparation of any audit, review or other financial information or
statements reasonably required by Jenkon, it being understood that any failure
to do so would cause Jenkon irreparable harm. In this regard, JIA agrees to
maintain Summit V's financial records during the Interim Period in a manner
consistent with the requirements of a publicly-traded company that is required
to file periodic reports with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

                (vi) JIA understands that Jenkon is a reporting company under
the Exchange Act and, as such, has certain obligations under the Exchange Act
and under the rules and regulations of the Nasdaq Stock Market that are
applicable to the operation of the Business during the Interim Period. JIA
agrees to take all steps reasonably necessary in order to enable Jenkon to
comply with such obligations.

            (d) ADDITIONAL COVENANTS OF JIA REGARDING BUSINESS. During the
Interim Period, unless Jenkon shall otherwise agree in writing (as evidenced by
the written consent of David Edwards or any independent member of the Board of
Directors of Jenkon), which shall not be unreasonably withheld, JIA shall:

                (i) conduct the Business in the ordinary and usual course of
business and consistent with past practice;

                (ii) not purport to issue, sell, pledge or dispose of, or agree
to issue,


<PAGE>


sell, pledge or dispose of, any shares of, or any options, warrants or rights of
any kind to acquire any shares of the capital stock of Summit V or any class or
any debt or equity securities convertible into or exchangeable for such capital
stock, it being expressly agreed that JIA shall have no power to authorize the
issuance of any securities on behalf of Summit V;

                (iii) not cause Summit V to (1) incur or become contingently
liable with respect to any indebtedness for borrowed money other than trade
payables incurred in the ordinary course of business, (2) redeem, purchase,
acquire or offer to purchase or acquire any shares of capital stock of Summit V,
Jenkon or any other company, or any options, warrants or rights to acquire any
such shares, (3) make any acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of business and
expenditures for fixed or capital assets in the ordinary course of business, (4)
sell, pledge, dispose of or encumber any material assets or businesses other
than sales of businesses or assets in the ordinary course of business, or (5)
renew, extend, modify or enter into any real property (or office) lease on
behalf of Summit V (it being understood that JIA intends to negotiate and enter
into its own lease with the current landlord for the corporate headquarters of
Summit V);

                (iv) confer with David Edwards or any person designated by David
Edwards to report operational matters of materiality and the general status of
ongoing operations;

                (v) not (1) cause Summit V to acquire (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) or form
any corporation, partnership, other business organization or division thereof,
or acquire directly or indirectly any material amount of assets; (2) except as
specifically contemplated by this Agreement, cause Summit V to incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person or entity, or make any loans or advances, except
in the ordinary course of business and consistent with past practice which loans
shall be on terms and conditions satisfactory to Jenkon; (3) cause Summit V to
enter into any contract or agreement other than in the ordinary course of
business, consistent with past practice; (4) except for the capital expenditures
and purchase orders specifically described (by type and maximum expenditure) on
Schedule 1 to this Agreement, authorize any single capital expenditure by or on
behalf of Summit V that is in excess of $10,000 or capital expenditures that
are, in the aggregate, in excess of $50,000; or (5) enter into or amend or cause
Summit V to enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this subsection;

                (vi) not (1) cause Summit V to enter into any employment,
consulting or agency agreement (whether written or oral), or increase the
compensation payable or to become payable to its officers, employees or
consultants, except for increases in accordance with existing agreements or past
practices for employees of Summit V who are not officers, directors or
shareholders of Summit V or JIA, (2) cause Summit V to grant any severance or


<PAGE>

termination pay to, or enter into any employment or severance agreement with,
any director, officer employee of Summit V or JIA, (3) cause Summit V to
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee of Summit V or JIA, or (4) cause Summit V to make
any distribution of cash or other assets to JIA or any shareholder, director,
officer or affiliate thereto other than pursuant to the terms of employment or
consulting arrangements in effect on the date of this Agreement (which shall in
all cases, be consistent with past practice);

                (vii) not make, change or revoke any material tax election on
behalf of Summit V or make any material agreement or settlement regarding taxes
owed by Summit V with any taxing authority;

                (viii) not take any action, other than reasonable and usual
actions in the ordinary course of Business and consistent with Summit V's past
practice, with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable), other than as required by GAAP or as
reasonably required by Jenkon;

                (ix) not make or issue any press release on behalf of Summit V
or JIA relating to the Business or the terms of this Agreement;

                (x) cause Summit V to pay and make any required deposits of
payroll and employment taxes on a timely basis and in accordance with applicable
law; and

                (xi) cause Summit V's obligations and accounts payable to be
paid when due, consistent with past practices.

        4. CASH RECEIPTS AND CASH DISBURSEMENTS.

            (a) BANK ACCOUNT. Promptly following the execution of this
Agreement, JIA and Summit V shall jointly establish and maintain one or more
bank accounts (collectively, the "Interim Account") and shall cause all receipts
from accounts receivable of Summit V to be deposited into the Interim Account,
and shall cause all payments with respect to liabilities of Summit V to be paid
from the Interim Account. JIA shall make deposits to the Interim Account
("Funding Deposits") as required to fund Summit V's operation as provided in
Section 4(b) below. The Interim Account shall be registered in the name of
Summit V and shall provide for signatories designated by JIA (who shall, in all
cases, be officers of JIA); provided, however, that Jenkon shall have the power
(and the Interim Account shall specifically provide Jenkon the power) to change
or modify the signatories upon any breach of this Agreement by JIA, the
termination of this Agreement, or to the extent the Board of Directors makes a
reasonable good faith determination that such changes are necessary in


<PAGE>

accordance with the fiduciary duties of the Board of Directors to the
stockholders of Jenkon. Neither Jenkon nor Summit V shall make withdrawals from
the Interim Account other than in the ordinary course of Summit V's Business.
JIA shall not make withdrawals from the Interim Account except (i) to pay Summit
V liabilities and fund Summit V operating expenses during the Interim Period, or
(ii) upon termination of this Agreement or Closing, to receive any unused
Funding Deposits. Jenkon shall be entitled to receive and review all account
statements and, upon request, JIA shall provide Jenkon with account balance
information relating to the Interim Account. If this Agreement is terminated
prior to Closing (other than as a result of a breach of or failure to perform
its obligations under this Agreement or the Stock Purchase Agreement by JIA),
JIA shall have the right to withdraw from the Interim Account the aggregate
amount of all Funding Deposits.

            (b) ADVANCES AND RETURN OF PROPERTY BY JIA. During the Interim
Period, JIA agrees to advance to Summit V (through Funding Deposits as described
in (a) above), such amounts as are necessary to fund the continuing operations
of Summit V's business (including, without limitation, the prompt payment of
employee salaries, employment and other taxes, lease payments and other
operating expenses of Summit V). In the event that a Closing does not occur
(other than by reason of a breach of this Agreement or the Stock Purchase
Agreement by JIA, Jenkon shall reimburse JIA for all Funding Deposits used in
connection with the operation of the Business. In the event that the Closing
does not occur (for any reason), JIA shall return all of the business and assets
to Summit V in good order and repair, normal wear excepted.

            (c) CASH RECEIPTS. JIA shall have full authority to collect all Cash
Receipts and deposit them in the Interim Account.

            (d) CASH DISBURSEMENTS. Subject to any limitations set forth
elsewhere in this Agreement, JIA shall have full authority to make Cash
Disbursements out of Cash Receipts and Funding Deposits in connection with the
operation of the Business.

            (e) NO COMPENSATION TO JIA. JIA shall not be entitled to
compensation for its services in managing the operations of the Business
hereunder.

        5.  [Reserved]

        6.  INDEMNIFICATION.

            (a) INDEMNIFICATION OF JIA. Jenkon and Summit V hereby jointly and
severally agree to indemnify, defend and hold JIA and each of its officers,
directors and agents harmless from and against any and all liabilities, claims,
demands, rights and causes of action of whatever kind or nature arising out of
or resulting from (i) the a breach of this Agreement by Jenkon, and (ii) if the
Closing does not occur for reasons other than a breach or failure to perform by
JIA, the operation of the Business prior to the date of this Agreement.


<PAGE>

            (b) INDEMNIFICATION OF JENKON AND SUMMIT V. JIA (and, if a Closing
occurs, Summit V) hereby jointly and severally agree to indemnify, defend and
hold Jenkon (and, if a Closing does not occur, Summit V) and each of their
respective officers, directors and agents harmless from and against any and all
liabilities, claims, demands, rights and causes of action of whatever kind or
nature arising out of or resulting from (i) the a breach of this Agreement by
JIA, (ii) if the Closing occurs, the operation of the Business or any other
business by Summit V or JIA subsequent to the date of this Agreement, and (iii)
any offering or sale of securities by JIA.

        7. FORCE MAJEURE. Neither JIA, Summit V nor Jenkon shall be liable for
any delay in the performance of their respective obligations hereunder due to
any cause beyond its reasonable control, including, but not limited to, fires,
floods, strikes, or other labor disputes, accidents to machinery, delay in
performing the Services because of the installation or removal of data
processing equipment, production shutdowns, shortages of fuel, acts of sabotage,
riots, precedence or priorities granted at the request or for the benefit,
directly or indirectly, of the federal or any state government or any
subdivision or agency thereof, delay in transportation or lack of transportation
facilities, or restrictions imposed by federal, state or other governmental
legislation or rules or regulations thereof.

        8. NATURE OF RELATIONSHIP. JIA, Summit V and Jenkon acknowledge and
agree that JIA is acting as an independent contractor, and, except as otherwise
provided in this Agreement or the Stock Purchase Agreement, this Agreement is
not intended to create any other relationship between the parties, including,
without limitation, a partnership or joint venture. Jenkon, Summit V and Jenkon
Washington hereby acknowlegde and agree that during the Interim Period, Robert
Cavitt shall remain as an officer of Summit V but, subject to the duties,
standards of conduct and restrictions imposed by the terms of this Agreement
with respect to JIA's management of the Business, each of Jenkon, Summit V and
Jenkon Washington hereby waive any conflict of interest arising out of Robert
Cavitt's role as an officer of Summit V and an officer and director of JIA.

        9. AUTHORITY; AUTHORIZATIONS. Jenkon and Summit V represent and warrant
to JIA that they have the power and authority to enter into this Agreement and
to perform their obligations hereunder, and that they have taken all necessary
corporate action required to be taken to authorize the execution, delivery and
performance of this Agreement. JIA represents and warrants that it has the power
and authority to enter into this Agreement and to perform its obligations
hereunder and that it has taken all necessary corporate action required to be
taken in order to authorize the execution, delivery and performance of this
Agreement.

        10. ASSIGNMENT. No party shall assign its rights under this Agreement or
its interest herein without the other parties' prior written consent.

        11. NON-WAIVER. Failure of any party hereto to enforce any of the terms
and provisions herein or to exercise any right accruing through the default of
the other parties shall


<PAGE>



not constitute a waiver of other or future defaults of the defaulting party.

        12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington, without regard to
principles of conflicts of law thereof.

        13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relative to the subject matter of this Agreement. This
Agreement expressly supersedes all prior negotiations, representations, offers,
letters, contracts, writings or other agreements or understandings with respect
hereto. No change, amendment or modification hereof shall be valid unless it is
made in writing and signed by all parties.



<PAGE>




                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
as of the date first above written.

Attest:                                 JIA, Inc., a Washington corporation


___________________________             By:________________________________

                                        Title: ____________________________


Attest:                                 Summit V, Inc., a Washington
                                        corporation


___________________________             By:________________________________

                                        Title: ____________________________


Attest:                                 Jenkon International, Inc., a Delaware
                                        corporation


__________________________              By:________________________________

                                        Title: ____________________________


Attest:                                 Jenkon International, Inc., a Washington
                                        corporation


__________________________              By:________________________________

                                        Title: ____________________________




<PAGE>



                          MANAGEMENT SERVICES AGREEMENT
                                    EXHIBIT A


         I.       ACCOUNTING SERVICES
                  -------------------
                  Cash Management
                  Financial Statement Preparation
                  Tax Return Preparation Supervision
                  Credit & Collections Supervision
                  Accounts Payable, Cash Disbursements Supervision
                  Bank Account Reconciliations Supervision
                  Cost Accounting Assistance

         II.      MANAGEMENT INFORMATION SERVICES
                  -------------------------------
                  Data Processing Services Supervision for
                  Order Entry and Billing
                  Sales and Accounts Receivable
                  Accounts Payable and Cash Disbursement
                  Payroll
                  General Software Support
                  Productivity Planning

         III.     EMPLOYEE BENEFITS
                  -----------------
                  Administration of Employee Benefit Plans

         IV.      PERSONNEL MANAGEMENT
                  --------------------

         V.       COMPANY MANAGEMENT AND PLANNING
                  -------------------------------

         VI.      SALES ACTIVITY SUPERVISION
                  --------------------------

         VII.     PURCHASING SUPERVISION
                  ----------------------


<PAGE>


                                   SCHEDULE 1

                          APPROVED CAPITAL EXPENDITURES









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