PROXICOM INC, S-1/A, 1999-03-29

PROXICOM INC
S-1/A, 1999-03-29
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 1999

REGISTRATION NO. 333-72297

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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------------------
PROXICOM, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7371 52-1770631
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>

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11600 SUNRISE VALLEY DRIVE
RESTON, VA 20191
(703) 262-3200

(Address, including zip code, and telephone number,

including area code, of registrant's principal executive offices)

------------------------------------
RAUL J. FERNANDEZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PROXICOM, INC.
11600 SUNRISE VALLEY DRIVE
RESTON, VA 20191
(703) 262-3200

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

------------------------------------
Copies to:

<TABLE>
<S> <C>
DAVID B. H. MARTIN, JR., ESQ. DAVID SYLVESTER, ESQ.
HOGAN & HARTSON L.L.P. WILLIAM F. WINSLOW, ESQ.
555 THIRTEENTH STREET, N.W. BARBARA J. O'CONNELL, ESQ.
WASHINGTON, D.C. 20004 HALE AND DORR LLP
(202) 637-5600 1455 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 942-8400
</TABLE>

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION,

DATED MARCH 29, 1999

4,500,000 SHARES

[PROXICOM LOGO]

COMMON STOCK

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

This is the initial public offering of Proxicom, Inc. common stock. Proxicom is
offering 4,000,000 of the shares to be sold in this offering. The selling
stockholders that we identify in this prospectus are offering an additional
500,000 shares. Proxicom will not receive any proceeds from the sale of the
shares by the selling stockholders.

We anticipate that the initial public offering price will be between $10.00 and
$12.00 per share. We have applied to list our common stock on the Nasdaq
National Market under the symbol "PXCM."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE RISK FACTORS BEGINNING ON
PAGE 5.

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price..................................... $ $
Underwriting Discounts and Commissions.................... $ $
Proceeds, Before Expenses, to Proxicom.................... $ $
Proceeds to the Selling Stockholders...................... $ $
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Proxicom has granted the underwriters the right to purchase up to 675,000 shares
to cover any over-allotments, at any time until 30 days after the date of this
prospectus.

BT ALEX. BROWN
PRUDENTIAL SECURITIES
THOMAS WEISEL PARTNERS LLC

FRIEDMAN BILLINGS RAMSEY

, 1999
<PAGE> 3

[INSIDE FRONT COVER PAGE]

GRAPHIC:

Two-page design with "Internet" in large lettering across the top of both
pages. Upper left corner of the graphic's left page contains the statement "what
makes us different". Directly beneath this statement is the following paragraph:

In 1994, Proxicom developed some of the first Internet
commerce storefronts and discovered the key to successful
Internet solutions -- a seamless integration of strategy,
technology and creative design skills. Proxicom has continued to
grow these traditionally disparate talents within an iterative
process that shares best practices and incorporates industry
expertise. The result is a culture where people work together to
create innovative Internet solutions that improve business
processes and create new business opportunities.

The phrase "Integrated Internet Skills" is beneath this paragraph. A circle
with three pegs and the words "strategy", "technology" and "creative design" is
contained in the lower half of the left page.

The upper half of the graphic's right page contains a pyramid with five
levels. A level of the pyramid corresponds to each of the following items:

- Value Through Innovation
Creating innovative Internet solutions for our clients

- Proxicom Process(SM)
Speed, Quality and Reduced Risk

- Internet Best Practices
Sharing our collective Internet knowledge since 1994

- Industry Expertise
Internet focus with industry specific knowledge

- Integrated Skills
Strategy, Technology and Creative Design

Proxicom's logo is in the lower right corner of this page.

FRONT COVER GRAPHIC:

Contains pictures and descriptions of projects Proxicom has completed for
three clients, Calphalon, the American Electronics Association ("AEA") and GE
Plastics. This page is separated into three rows. The first row contains the
boxed word "Internet", a picture of the web site Proxicom designed for
Calphalon, and the following description of the work Proxicom performed for
Calphalon as well as the benefits Calphalon derived as a result:

CALPHALON

Business-to-Consumer Internet Commerce

Calphalon sought to launch a new site to fully exploit the
interactive potential of the Internet. Proxicom created a
solution for Calphalon that differentiates its offerings in
cookware products by uniting a complement of communications,
content and transaction capabilities through a single source.
The solution includes information for consumers, Calphalon's
full portfolio of product information, educational instructions,
a database of recipes and interactive capabilities. Calphalon
established a direct link with a new audience of prospective
customers, gaining invaluable knowledge of their interests. The
site also provides Calphalon with the ability to influence and
flexibly respond to market needs. Proxicom also created the
solutions branding

<PAGE> 4

and user interface to enhance Calphalon's marketing presence.
The solution has created efficiencies for Calphalon's business
and has been used to introduce a new line of cutlery products to
test market acceptance.

The second row contains the boxed word "Extranet" a picture of the extranet
Proxicom designed for AEA, and the following description of the work Proxicom
performed for AEA as well as the benefits AEA derived as a result:

AMERICAN ELECTRONICS ASSOCIATION

A New Internet-Based Membership Service

The American Electronics Association ("AEA"), the largest
high-tech trade association with over 3,000 member companies
nationwide such as Intel Corporation, Amazon.com and Yahoo!
Inc., sought to leverage the Internet to improve its business.
AEA wanted to transform the way it worked with its members, an
initiative central to AEA's strategic plans. Proxicom is
repositioning AEA, re-branding the company and creating a new
online membership service. The functional and dynamic extranet
Proxicom created ties into AEA's core systems enabling
distributed authoring and release of content as well as
personalization of information for its users. It will also
permit the sale of AEA products and services with real-time
pricing. The solution will redefine how AEA markets, increasing
sales, making publishing more efficient and establishing direct
communication with members and industry experts.

The third row contains the boxed word "Intranet", a picture of the intranet
Proxicom designed for GE Plastics and the following description of the work
Proxicom performed for GE Plastics as well as the benefits GE Plastics derived
as a result:

GE PLASTICS

Intranet Knowledge Management System

The employees at GE Plastics were faced with time-consuming
searches for marketing, technical, sales and customer service
information stored in decentralized databases, file systems and
non-networked PCs. Proxicom changed that by helping GE Plastics
transform its knowledge management and customer care tracking
systems through a company-wide, knowledge management Intranet.
The solution eliminated costly time spent searching for
information and provided the marketing, sales, IT and customer
service personnel with a valuable decision making tool that has
helped them dramatically improve their effectiveness and
successfully increase productivity.

The lower right corner of the graphic contains Proxicom's logo.

<PAGE> 5

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and the financial statements and notes to those financial statements
which appear elsewhere in this prospectus.

PROXICOM, INC.

OUR BUSINESS

Proxicom is a leading provider of Internet solutions to Global 1000
companies and other large organizations. Since 1994, we have focused exclusively
on the Internet and have successfully completed over 600 client engagements. As
of December 31, 1998, we had a total of approximately 150 ongoing client
engagements.

In all of our client engagements we apply the Proxicom Process, a four-step
methodology that we use to deliver Internet solutions. Using the Proxicom
Process, we integrate strategy, technology and creative design to help our
clients transform their businesses with Internet solutions.

We sell and deliver our services and expertise through teams organized into
four industry groups, or vertical markets:

- energy and telecommunications;

- financial services;

- retail and manufacturing; and

- service industries.

This structure allows us to build industry expertise, develop market-specific
solutions for clients and replicate business solutions across client
engagements.

Our Internet solutions have included

- business to consumer electronic commerce Internet sites for Calphalon
Corporation, Cox Interactive Media, Inc. and Owens Corning, enabling
these clients to provide information about and sell products to
consumers;

- business to business electronic commerce extranets for the American
Electronics Association, Mercedes-Benz Credit Corp. and McKessonHBOC,
enabling these clients to transact business with other businesses; and

- company-specific intranets for GE Plastics, Hoffmann-La Roche, Inc. and
Merrill Lynch & Co., Inc., enabling persons within these organizations
to exchange information electronically.

OUR MARKET OPPORTUNITY

The Internet presents opportunities to transform businesses and entire
industries. Companies use the Internet to

- communicate and transact business on a one-to-one basis with existing
customers;

- target and acquire new customers;

- collaborate with their supply-chain partners;

- enable electronic commerce; and

- manage distribution relationships.

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<PAGE> 6

The Internet has also allowed businesses to identify new product and service
offerings which extend and complement their core markets. As a result,
organizations invest in Internet solutions to transform their core business and
technology strategies.

These opportunities are creating a significant and growing demand for
third-party Internet professional services. International Data Corp., a
technology industry research firm, forecasts that the market for Internet and
electronic commerce services worldwide will grow from $4.6 billion in 1997 to
$43.7 billion by 2002. Forrester Research, Inc., another technology industry
research firm, estimates the market for Internet and electronic commerce
services will grow from $5.4 billion in 1998 to $32.7 billion by 2002. These
projections represent a compound annual growth rate of more than 55% over these
periods. Forrester Research predicts that the Internet will be one of the
fastest growing areas within the information technology services industry.

OUR STRATEGY

Our strategy is to build upon our position as a leading Internet solutions
provider. To do this, we plan to

- leverage existing client relationships;

- further penetrate our vertical markets;

- continue geographic expansion;

- hire and retain skilled professionals;

- evolve the Proxicom Process;

- leverage technology partnerships; and

- extend reusable solutions.

We service our engagements with multi-disciplinary teams that work as
cohesive units. We facilitate collaboration among the client's business,
information technology and marketing functions. We believe our coordinated
approach results in better Internet solutions.

OUR OFFICES AND HISTORY

We started our business in 1991 as a Maryland corporation. We reorganized
as a Delaware corporation in 1996. Our principal offices are located at 11600
Sunrise Valley Drive in Reston, VA 20191. Our telephone number is 703-262-3200.

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<PAGE> 7

THE OFFERING

Common stock offered by Proxicom............ 4,000,000 shares

Common stock offered by the selling
stockholders................................ 500,000 shares

Common stock outstanding after this
offering.................................... 23,739,447 shares

Use of proceeds............................. Proxicom will use the proceeds
of this offering for general
corporate purposes, including
working capital, expansion of
operations and sales and
marketing capabilities and
possible acquisitions. Proxicom
will not receive any proceeds
from the sale of shares by the
selling stockholders. See "Use
of Proceeds."

Proposed Nasdaq National Market symbol...... PXCM

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

"PROXICOM" IS A REGISTERED TRADEMARK OF PROXICOM, INC. IN ADDITION, PROXICOM HAS
FILED FOR TRADEMARK REGISTRATION OF "PROXICOM PROCESS" AND OTHER MARKS. THIS
PROSPECTUS ALSO INCLUDES TRADEMARKS AND TRADE NAMES OF OTHER PARTIES.

-------------------------
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<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table summarizes the financial data for our business. In
1998, our loss from operations and net loss included an $18.2 million
compensation expense associated with our merger with IBIS Consulting, Inc. Of
this expense, $17.2 million related to the exchange of stock options originally
granted to IBIS Consulting employees and did not result in cash payments. We
provide more detail about this expense in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations --Results of
Operations" section of this prospectus.

The first column of the following table summarizes our balance sheet on an
actual basis. The second column summarizes our balance sheet on a supplemental
basis to reflect our merger with ad hoc Interactive, Inc. in March 1999 as if ad
hoc Interactive had always been part of Proxicom. The third column is adjusted
to reflect

- the conversion of all outstanding shares of convertible preferred stock
into 3,219,816 shares of common stock;

- a $4.9 million charge associated with the conversion of preferred stock
into common stock;

- the exercise of warrants to purchase 1,011,378 shares of common stock at
$7.91 per share; and

- Proxicom's sale of 4,000,000 shares of common stock in this offering at
an assumed initial public offering price of $11.00 share and application
of the estimated net proceeds.

<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------
ACTUAL SUPPLEMENTAL ADJUSTED
------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash equivalents................................... $ 2,482 $ 2,586 $48,207
Working capital.................................... 2,380 1,927 29,699
Total assets....................................... 22,077 22,551 70,933
Stockholders' equity............................... 6,996 6,629 56,486
</TABLE>

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

Unless otherwise specifically stated, information in this prospectus
assumes that immediately prior to the closing of this offering (1) all
outstanding shares of preferred stock are converted into shares of common stock,
(2) 1,011,378 shares of common stock are issued upon the exercise of warrants
and (3) the underwriters' over-allotment option will not be exercised.

4
<PAGE> 9

RISK FACTORS

An investment in our common stock involves risks. You should carefully
consider the risks described below and the other information in this prospectus
including our financial statements and the related notes before you decide to
buy our common stock. The trading price of our common stock could decline due to
any of these risks, and you could lose all or part of your investment.

WE ARE GROWING QUICKLY. FUTURE GROWTH OF OUR BUSINESS COULD MAKE IT DIFFICULT TO
MANAGE OUR RESOURCES.

Our business is growing substantially, both through increased sales and
recent acquisitions. For instance, our sales have increased from $1.3 million in
1994 to $42.4 million in 1998. Our rapid growth has stretched, and could
continue to stretch, our resources. We expect that we will need to continue to
hire and retain management personnel and other employees. Our management has
limited experience managing a business of Proxicom's size or a public company.

In order to manage our growth effectively, we must establish offices in new
geographic locations, set fixed-price fees accurately, maintain high employee
utilization rates and maintain project quality, particularly if the average size
of our projects continues to increase.

Our performance may depend on the effective integration of acquired
businesses. This integration, even if successful, may be expensive and time
consuming and could strain our resources.

WE MAY NOT BE ABLE TO HIRE AND RETAIN HIGHLY SKILLED EMPLOYEES, WHICH COULD
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY.

To succeed, we must hire, train, motivate, retain and manage employees who
are highly skilled in the Internet and its rapidly changing technology. Because
of the recent and rapid growth of the Internet, individuals who have Internet
expertise and can perform the services we offer are scarce. Competition for
these individuals, therefore, is intense. We might not be able to hire enough of
them or to train, motivate, retain and manage the employees we do hire. This
could hinder our ability to complete existing projects and bid for new projects.
In addition, because the competition for qualified employees in the Internet
industry is intense, hiring, training, motivating, retaining and managing
employees with the strategic, technical and creative skills we need is both
time-consuming and expensive.

WE HAVE LOST MONEY IN THREE OF THE LAST FOUR QUARTERS AND COULD LOSE MONEY IN
THE FUTURE BECAUSE PROJECTS MAY BE DELAYED OR CANCELLED.

Our financial results may fluctuate from quarter to quarter. In fact, we
have incurred operating losses in three of our last four quarters. In future
quarters, our operating results may not meet public market analysts' and
investors' expectations. If that happens, the price of our common stock may
fall. Many factors can cause these fluctuations, including

- the number, size, timing and scope of our projects;

- customer concentration;

- long and unpredictable sales cycles;

- contract terms of projects;

- degrees of completion of projects;

- project delays or cancellations;

- competition for and utilization of employees;

- how well we estimate the resources we need to complete projects;

- the integration of acquired businesses;

- pricing changes in the industry; and

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- economic conditions specific to the Internet and information technology
consulting.

A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result, if we
experience unanticipated changes in our projects or in our employee utilization
rates, we could experience large variations in quarterly operating results and
losses in any particular quarter. Due to these factors, we believe you should
not compare our quarter-to-quarter operating results to predict our future
performance.

WE FAILED TO GENERATE CASH FROM OPERATIONS DURING 1996 AND 1998 AND COULD FAIL
TO GENERATE CASH FROM OPERATIONS IN THE FUTURE.

We did not generate cash from operations in these years largely due to the
expansion of our business. Particularly in 1998, we increased our number of
Internet solutions professionals and support personnel. We also incurred
expenses in connection with mergers. We plan to continue to expand and develop
our business, both internally and possibly through future acquisitions. This
could cause us to fail to generate cash from operations in the future.

WE HAVE A NUMBER OF SIGNIFICANT CLIENTS. IF WE LOSE A MAJOR CLIENT OR
SIGNIFICANT PROJECT, OUR REVENUES COULD BE ADVERSELY AFFECTED.

We generate much of our revenue from a limited number of major clients. As
a result, if we lose a major client or large project, our revenues could be
adversely affected. In 1998, for example, our two largest clients, Pacific Gas
and Electric Company and General Electric Company, accounted for approximately
15% and 14%, respectively, of our revenue. That year, our five largest clients
contributed approximately 38% of our revenue. In 1997, our two largest clients,
Pacific Gas and Electric Company and General Electric Company, accounted for
approximately 24% and 10%, respectively, of our revenue. Our five largest
clients contributed approximately 48% of our revenue in that year.

We perform varying amounts of work for specific clients from year to year.
A major client in one year may not use our services in another year. In
addition, we may derive revenue from a major client that constitutes a large
portion of a particular quarter's total revenue. If we lose any major clients or
any of our clients cancel or significantly reduce a large project's scope, our
business, financial condition and results of operations could be materially and
adversely affected. Also, if we fail to collect a large account receivable, we
could be subjected to significant financial exposure.

WE HAVE MANY SHORT-TERM CONTRACTS THAT CAN BE CANCELLED WITHOUT PENALTY. IF
CLIENTS TERMINATE CONTRACTS WITH US ON SHORT NOTICE, OUR RESULTS OF OPERATIONS
COULD SUFFER.

Our contracts with clients are generally short-term. Also, most clients can
reduce or cancel their contracts for our services without penalty and with
little or no notice. If a significant client or a number of small clients
terminate, significantly reduce or modify business relationships with us, our
business, financial condition and results of operations could be materially and
adversely affected. Consequently, you should not predict or anticipate our
future revenue based on the number of clients we have or the number and size of
our existing projects. When a client postpones, modifies or cancels a project,
we have to shift our employees to other projects and minimize the resulting
adverse impact on our operating results. In addition, our operating expenses are
relatively fixed and cannot be reduced on short notice.

IF WE FAIL TO MEET OUR CLIENTS' EXPECTATIONS, WE COULD DAMAGE OUR REPUTATION AND
HAVE DIFFICULTY ATTRACTING NEW BUSINESS.

Many of our projects are complex and critical to our clients. As a result,
if we fail or are unable to meet a client's expectations, we could damage our
reputation. This could adversely

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<PAGE> 11

affect our ability to attract new business from that client or others. If we
fail to perform adequately on a project, a client could sue us for economic
damages.

WE COULD LOSE MONEY ON OUR CONTRACTS.

As part of our strategy, we generally enter into fixed-price,
fixed-timeframe contracts, rather than contracts based on payment for time and
materials. Often, we fix the price or timeframe before we finalize the design
specifications. If we miscalculate the resources or time we need for these
projects, our business, financial condition and results of operations could be
materially and adversely affected.

WE MAY NOT COMPETE SUCCESSFULLY WITH OUR COMPETITORS, WHICH COULD RESULT IN
REDUCED REVENUES.

We compete in markets that are new, intensely competitive and rapidly
changing. We may not compete successfully with our competitors. We currently
compete for client assignments and experienced personnel principally with the
following:

- large systems integrators such as International Business Machines
Corporation, Andersen Consulting and Computer Sciences Corporation;

- specialty systems integrators such as Cambridge Technology Partners,
Inc. and Sapient Corporation;

- strategy consulting firms such as McKinsey & Company, Inc. and Boston
Consulting Group, Inc.; and

- Internet professional services providers such as USWeb/CKS, Viant
Corporation, Scient Corporation and iXL Enterprises, Inc.

Many of these businesses have longer operating histories and significantly
greater financial, technical, marketing and managerial resources than we do.
International Business Machines Corporation, Andersen Consulting and Computer
Sciences Corporation have much longer operating histories, generate much greater
revenue and are better known than we are. Cambridge Technology Partners, Inc.
and Sapient Corporation generate significantly more revenue than we do. McKinsey
& Company, Inc. and Boston Consulting Group, Inc. offer a greater breadth of
management consulting services and have a much longer operating history than we
do.

Our markets have relatively low barriers to entry. We expect to continue to
face competition from new market entrants, including interactive marketing firms
such as Agency.com, Ltd. and Modern Media.PoppeTyson, Inc.

Competition in our market is based primarily on the following factors:

- Internet expertise and talent;

- quality, pricing and speed of service delivery;

- client references;

- integrated strategy, technology and creative design services; and

- vertical industry knowledge.

Some competitive factors are outside of our control. These factors include
our competitors' hiring and retention of senior staff, development of software
that is competitive with our products and services and response to client needs.

LACK OF GROWTH OR DECLINE IN INTERNET USAGE COULD CAUSE OUR BUSINESS TO SUFFER.

We have derived most of our revenue from projects involving the Internet.
The Internet is new and rapidly evolving. Our business will be adversely
affected if Internet usage does not continue to grow. A number of factors may
inhibit Internet usage. These factors include inadequate network infrastructure,
security concerns, inconsistent service quality and lack of cost-effective,
high-speed service. On the other hand, if Internet usage grows, the Internet

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<PAGE> 12

infrastructure may not support the demands this growth will place on it. The
Internet's performance and reliability may decline. In addition, outages and
delays have occurred throughout the Internet network infrastructure and have
interrupted Internet service. If these outages or delays occur frequently in the
future, Internet usage could grow more slowly or decline.

We may also incur substantial costs to keep up with changes surrounding the
Internet. Unresolved critical issues concerning the commercial use and
government regulation of the Internet include the following:

- security;

- cost and ease of Internet access;

- intellectual property ownership;

- privacy;

- taxation; and

- liability issues.

Any costs we incur because of these factors could materially and adversely
affect our business, financial condition and results of operations.

IF WE FAIL TO KEEP PACE WITH CHANGING TECHNOLOGIES, WE MAY LOSE CLIENTS.

Our market is characterized by rapidly changing technologies, frequent new
product and service introductions and evolving industry standards. If we cannot
keep pace with these changes, our business could suffer. The Internet's recent
growth and intense competition in our industry exacerbate these characteristics.
To achieve our goals, we need to develop strategic business and Internet
solutions that keep pace with continuing changes in industry standards,
information technology and client preferences. We will have to improve the
performance features and reliability of our services to adapt to rapidly
changing technologies. Also, as part of our business strategy, we reuse elements
of our Internet solutions for which there is repeat customer demand. We could
incur substantial costs if we need to modify our reusable solutions to adapt to
technological changes.

IF WE LOSE THE SERVICES OF OUR FOUNDER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RAUL J. FERNANDEZ, OR OTHER KEY PERSONNEL, OUR BUSINESS AND STOCK PRICE COULD
SUFFER.

Our future success depends in large part on the continued services of a
number of our key personnel, including our founder, Chairman, President and
Chief Executive Officer, Raul J. Fernandez. We have no employment contract with
Mr. Fernandez or many of our other key personnel. The loss of the services of
Mr. Fernandez or any of our other key personnel could have a material adverse
effect on our business, financial condition and results of operations. We might
not be able to prevent key personnel, who may leave our employ in the future,
from disclosing or using our technical knowledge, practices or procedures. One
or more of our key personnel might resign and join a competitor or form a
competing company. As a result, we might lose existing or potential clients.

WE DEPEND ON INTELLECTUAL PROPERTY WHICH MAY BE DIFFICULT TO PROTECT. THIS COULD
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY.

Our success depends, in part, upon our intellectual property rights. We do
not have any patents or patent applications pending. Existing trade secret and
copyright laws afford us only limited protection. Third parties may attempt to
disclose, obtain or use our solutions or technologies. This is particularly true
in foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States. Others may independently
develop and obtain patents or copyrights for technologies that are similar or
superior to our technologies. If that happens, we may not be able to license
those technologies on reasonable terms, or at all.

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<PAGE> 13

Generally, we develop software applications for specific client
engagements. We generally assign software ownership to the client and retain
only a license for limited uses. Issues relating to ownership of and rights to
use software applications and frameworks can be complicated. We may become
involved in disputes that affect our ability to resell or reuse these
applications and frameworks. Also, we may have to pay economic damages in these
disputes.

WE ARE, AND WILL CONTINUE TO BE, CONTROLLED BY OUR OFFICERS AND DIRECTORS, WHICH
COULD RESULT IN OUR TAKING ACTIONS THAT OTHER STOCKHOLDERS DO NOT APPROVE.

When this offering closes, our directors and executive officers will
beneficially own approximately 61% of the outstanding common stock. As a result,
they will continue to be able to control most matters requiring stockholder
approval. Among other things, they will be able to elect a majority of the
directors and approve significant corporate matters.

PROBLEMS RELATED TO THE YEAR 2000 ISSUE COULD REQUIRE US TO INCUR UNANTICIPATED
DELAYS AND EXPENSES.

Year 2000 problems could require us to incur delays and unanticipated
expenses. These delays and expenses could have a material adverse effect on our
business, financial condition and results of operations. Clients' and potential
clients' purchasing patterns may be affected by year 2000 issues as companies
expend significant resources to correct or replace their current systems for
year 2000 compliance. These clients and potential clients may have fewer funds
available to purchase our services. We may experience operations difficulties
because of undetected errors or defects in the technology we use in our internal
systems. We have made representations to clients concerning year 2000 compliance
and may become involved in disputes regarding year 2000 problems involving
solutions that we have developed or implemented. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Year 2000
Readiness Disclosure."

FUTURE ACQUISITIONS OR INVESTMENTS COULD DISRUPT OUR ONGOING BUSINESS, DISTRACT
OUR MANAGEMENT AND EMPLOYEES, INCREASE OUR EXPENSES AND ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.

We have made three acquisitions and agreed to an investment in a joint
venture in the last 15 months. Any acquisitions or investments we make in the
future will involve risks. We may not be able to make acquisitions or
investments on commercially acceptable terms. If we do buy a company, we could
have difficulty retaining and assimilating that company's personnel. In
addition, we could have difficulty assimilating acquired products, services or
technologies into our operations. These difficulties could disrupt our ongoing
business, distract our management and employees, increase our expenses and
materially and adversely affect our results of operations. Furthermore, we may
incur debt or issue equity securities to pay for any future acquisitions. If we
issue equity securities, your ownership share of Proxicom could be reduced.

WE HAVE STARTED EXPANDING OUR BUSINESS OVERSEAS. OUR INTERNATIONAL EXPANSION
COULD RESULT IN FINANCIAL LOSSES DUE TO CHANGES IN FOREIGN ECONOMIC CONDITIONS
AS WELL AS FLUCTUATIONS IN CURRENCY AND EXCHANGE RATES.

We expect to expand our international operations and international sales
and marketing efforts. Recently, we commenced operations in Germany and began
servicing clients in Spain. We also plan to service clients in Italy soon. We
have limited experience in marketing, selling and distributing our services
internationally. International operations are subject to other inherent risks,
including the following:

- recessions in foreign economies;

- political and economic instability;

- fluctuations in currency exchange rates;

- difficulties and costs of staffing and managing foreign operations;

9
<PAGE> 14

- potentially adverse tax consequences;

- reduced protection for intellectual property rights in some countries;

- changes in regulatory requirements; and

- reductions in business activity during the summer months in Europe.

THIS OFFERING'S NET PROCEEDS MAY BE ALLOCATED IN WAYS WITH WHICH YOU AND OTHER
STOCKHOLDERS MAY NOT AGREE.

We have not determined how the majority of the proceeds of this offering
will be spent. Our management may spend this offering's net proceeds in ways
with which you and our other stockholders may not agree. See "Use of Proceeds."

THE TOTAL PRICE INVESTORS WILL PAY FOR OUR COMMON STOCK IN THIS OFFERING WILL
SUBSTANTIALLY EXCEED THE VALUE OF OUR ASSETS AFTER SUBTRACTING OUR LIABILITIES.

The price you will pay for our common stock will be substantially higher
than the book value per share of our outstanding stock after this offering. In
addition, investors in this offering will contribute 70.2% of the total amount
paid by all investors in our company but will own only 16.9% of the shares
outstanding.

OUR STOCK HAS NOT TRADED PUBLICLY, AND AFTER THIS OFFERING ITS MARKET PRICE MAY
FLUCTUATE WIDELY.

Prior to this offering, there has been no public market for our common
stock. The market price of our common stock could fluctuate substantially due to

- future announcements concerning us or our competitors;

- quarterly fluctuations in operating results;

- announcements of acquisitions or technological innovations; or

- changes in earnings estimates or recommendations by analysts.

In addition, the stock prices of many technology companies fluctuate widely for
reasons which may be unrelated to operating results. Fluctuations in our common
stock's market price may affect our visibility and credibility in the Internet
solutions market.

THE PRICE PER SHARE OF OUR COMMON STOCK IN THIS OFFERING MAY NOT BE INDICATIVE
OF THE MARKET PRICE THAT WILL PREVAIL AFTER THIS OFFERING.

Since our stock has not yet traded publicly, our management and the
underwriters will negotiate the common stock's initial public offering price per
share. The price they determine may not be indicative of the market price that
will prevail after this offering. As a result, you could suffer a loss if the
market price that prevails after this offering is less than the price you paid
per share.

FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD LOWER OUR STOCK
PRICE AND IMPAIR OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

After this offering and a recently completed acquisition, we will have
23,739,447 shares of common stock outstanding. If the underwriters exercise
their over-allotment option in full, we will have 24,414,447 shares outstanding.
Sales of a large number of shares could adversely affect the market price of our
common stock and could impair our ability to raise funds in additional stock
offerings.

The shares of common stock sold in this offering will be freely tradable
without restriction or further registration under the Securities Act, unless the
shares are purchased by an affiliate of ours, sales of which will be limited by
Rule 144 under the Securities Act. Holders of restricted shares generally will
be entitled to sell these shares in the public market without registration
either under Rule 144 or any other applicable exemption under the Securities
Act.

10
<PAGE> 15

As soon as practicable after this offering we intend to register up to
8,350,000 shares of common stock subject to outstanding stock options or
reserved for issuance under our stock plans. As of March 26, 1999, options to
purchase 4,977,347 shares of common stock were outstanding.

In addition, upon completion of this offering, the holders of 19,056,133
shares of common stock have the right to request registration of these shares in
future public offerings of our equity securities.

IT MAY BE HARD FOR A THIRD PARTY TO ACQUIRE OUR COMPANY, AND THIS COULD DEPRESS
OUR STOCK PRICE.

Provisions of our certificate of incorporation, our bylaws and Delaware law
could make it difficult for a third party to acquire us, even if doing so would
benefit our stockholders. This could depress our stock price.

OUR BOARD OF DIRECTORS CAN ISSUE PREFERRED STOCK WITH RIGHTS ADVERSE TO THE
HOLDERS OF COMMON STOCK.

After the offering, our board of directors will be authorized, without
further stockholder approval, to issue up to 10,000,000 shares of preferred
stock. Issuance of preferred shares with rights to distributions, voting rights
or other rights superior to the common stock would be adverse to the holders of
common stock. See "Description of Capital Stock."

YOU SHOULD NOT EXPECT TO RECEIVE DIVIDENDS FROM US.

We do not expect to declare or pay any cash dividends in the foreseeable
future.

YOU SHOULD BE AWARE THAT THERE ARE BENEFITS OF THE OFFERING TO EXISTING
STOCKHOLDERS.

Several of our stockholders are selling shares in this offering. As
calculated under "Dilution," the average price per share paid by our existing
stockholders is $0.95. The net price per share paid to the selling stockholders
in this offering is $10.23. Therefore, the average realized gain per share to
the selling stockholders is $9.28. See "Dilution."

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH MAY NOT PROVE TO BE
ACCURATE.

This prospectus contains forward-looking statements. The outcome of the
events described in these forward-looking statements is subject to risks. Actual
results could differ materially. This "Risk Factors" section and those sections
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" as well as other sections in this
prospectus discuss some of the factors that could contribute to these
differences.

11
<PAGE> 16

USE OF PROCEEDS

Proxicom will receive estimated proceeds of approximately $39.4 million
from the sale of the 4,000,000 shares of common stock it is offering, net of
underwriting discounts and estimated expenses, and based on an assumed initial
public offering price of $11.00 per share. Proxicom will not realize any
proceeds from the sale of common stock by the selling stockholders.

The primary purposes of this offering are to obtain additional capital,
create a public market for our common stock and facilitate future access to
public markets. Proxicom intends to use the majority of the offering's net
proceeds for working capital and general corporate purposes (including increases
in personnel and marketing activities). Proxicom will use a portion of the
proceeds to pay off a $1.4 million note payable to an investment bank for
services in connection with the IBIS Consulting transaction. The note accrues
interest at 7.0% per annum and matures upon the earlier of August 21, 1999 or
the completion of an initial public offering. Proxicom may use a portion of the
proceeds for strategic acquisitions. From time to time, in the ordinary course
of business, Proxicom evaluates potential acquisitions of businesses, products
or technologies. In March 1999, Proxicom reached an agreement to invest
approximately $360,000 in a joint venture company in Italy with Ericsson
Telecommunicazioni SpA. Other than this transaction, Proxicom has no present
understandings or agreements with respect to any acquisition of businesses,
products or technologies.

Pending use of the net proceeds for the above purposes, Proxicom intends to
invest such funds in short-term, interest-bearing, investment-grade securities.
In addition to the use of the net proceeds received by it from the offering,
Proxicom also expects during the next 18 months to meet its working capital
requirements through existing cash and cash equivalents, short-term investments,
cash from sales of services, its credit facility and possibly other borrowings.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

With the exception of distributions that three current Proxicom
subsidiaries made before Proxicom acquired them, Proxicom has never declared or
paid any cash dividends on its capital stock. Proxicom intends to retain future
earnings, if any, to finance the expansion of its business and does not expect
to pay any cash dividends in the foreseeable future. Also, Proxicom is
prohibited from paying cash dividends under the terms of its credit facility.
See "Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Liquidity and Capital Resources."

12
<PAGE> 17

CAPITALIZATION

The following table presents our capitalization as of December 31, 1998 on
an actual basis and an adjusted basis. The adjusted basis presentation reflects

- the conversion of all outstanding shares of convertible preferred stock
into 3,219,816 shares of common stock;

- the $4.9 million charge associated with the conversion of the Series D
convertible preferred stock into common stock;

- the issuance of 1,011,378 shares of common stock upon the exercise of
warrants at $7.91 per share as indicated in an irrevocable letter of
intent from the warrant holders;

- the issuance of 829,771 shares of our common stock in our 1999 merger
with ad hoc Interactive;

- amendments to the certificate of incorporation which will occur
immediately before the closing of this offering; and

- Proxicom's sale of 4,000,000 shares of common stock in this offering at
an assumed initial public offering price of $11.00 per share and
application of the estimated net proceeds.

The adjusted basis presentation does not include 3,243,240 shares of common
stock issuable upon exercise of stock options outstanding or rights to receive
shares as of December 31, 1998. You should read this information together with
the financial statements and notes to those financial statements appearing
elsewhere in this prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $.01 par value;
2,641,347 shares authorized, 1,629,969 shares issued
and 1,222,469 shares outstanding (actual); no shares
authorized, issued and outstanding (adjusted).......... $ 12 $ --
Series B convertible preferred stock, $.01 par value;
359,712 shares authorized, issued and outstanding
(actual); no shares authorized, issued and outstanding
(adjusted)............................................. 4 --
Series C convertible preferred stock, $.01 par value;
419,302 shares authorized, issued and outstanding
(actual); no shares authorized, issued and outstanding
(adjusted)............................................. 4 --
Series D convertible preferred stock, $.01 par value;
no shares authorized, issued and outstanding(1)........ -- --
Preferred stock, $.01 par value; no shares authorized,
issued and outstanding (actual); 10,000,000 shares
authorized, no shares issued and outstanding
(adjusted)............................................. -- --
Common stock, $.01 par value; 20,000,000 shares
authorized, 14,609,997 shares issued and 14,556,868
shares outstanding (actual); 100,000,000 shares
authorized, 23,662,500 shares issued and 23,617,833
shares outstanding (adjusted).......................... 146 236
Additional paid-in capital................................ 25,229 80,246
Retained deficit.......................................... (18,180) (23,777)
Comprehensive income...................................... 3 3
Treasury stock............................................ (222) 222
-------- --------
Total stockholders' equity........................... 6,996 56,486
-------- --------
Total capitalization............................ $ 6,996 $ 56,486
======== ========
</TABLE>

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

(1) We issued 1,218,333 shares of Series D convertible preferred stock for $7.3
million on February 1, 1999.

13
<PAGE> 18

DILUTION

Proxicom's pro forma net tangible book value as of December 31, 1998, was
approximately $17.1 million, or $0.87 per share of common stock. We have
determined pro forma net tangible book value per share by subtracting intangible
assets from pro forma stockholders' equity and dividing that number by
19,617,833 pro forma shares of common stock outstanding as of December 31, 1998.
The preceding pro forma information gives effect to

- the conversion of all outstanding shares of convertible preferred stock
into 3,219,816 shares of common stock;

- the $4.9 million charge associated with the conversion of Series D
convertible preferred stock into common stock;

- the exercise of warrants to purchase 1,011,378 shares of common stock at
$7.91 per share; and

- the issuance of 829,771 shares of our common stock in our 1999 merger
with ad hoc Interactive.

If Proxicom sells 4,000,000 shares of common stock in this offering at an
assumed initial public offering price of $11.00 per share and assuming our
receipt of the estimated net proceeds therefrom, our pro forma adjusted net
tangible book value as of December 31, 1998, would have been approximately $56.5
million, or $2.39 per share. This represents an immediate increase in such net
tangible book value of $1.52 per share to existing stockholders and an immediate
dilution of $8.61 per share to new investors. The following table illustrates
this per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value as of December 31,
1998................................................... $0.87
Increase per share of common stock attributable to the
offering(1)............................................ 1.52
-----
Pro forma net tangible book value after the offering(1)..... 2.39
------
Net tangible book value dilution to new investors(1)........ $ 8.61
======
</TABLE>

The following table summarizes on a pro forma basis as of December 31,
1998, the total number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid by existing
stockholders and by new investors (at an assumed initial offering price of
$11.00 per share and without giving effect to the underwriting discount and
estimated offering expenses).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 19,617,833 83.1% $18,709,000 29.8% $ 0.95
New investors.............. 4,000,000 16.9 44,000,000 70.2 11.00
---------- ----- ----------- -----
Total............ 23,617,833 100.0% $62,709,000 100.0%
========== ===== =========== =====
</TABLE>

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

(1) Does not include options to purchase or rights to receive outstanding as of
December 31, 1998 a total of 3,243,240 shares of common stock with a
weighted average per share exercise price of $5.93. If the options were to
be exercised in full for cash, pro forma net tangible book value per share
after the offering would be $2.82, the increase per share attributable to
new investors would be $1.23, and the dilution per share to new investors
would be $8.18.

14
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables contain selected consolidated financial data as of
December 31 in each of the years 1994 through 1998 and for each of the years in
the five-year period ended December 31, 1998. The selected consolidated
financial data for each of the years in the five-year period ended December 31,
1998 have been derived from Proxicom's consolidated financial statements, which
have been audited by PricewaterhouseCoopers LLP, independent accountants. The
selected financial data are qualified by reference to, and should be read in
conjunction with, Proxicom's consolidated financial statements and the notes to
those financial statements, included elsewhere in this prospectus. Proxicom
merged with ad hoc Interactive in March 1999. The supplemental consolidated
financial statements and the notes to those supplemental consolidated financial
statements, which reflect the merger on a pooling of interests method of
accounting, are included elsewhere in this prospectus. Amounts reflected in such
supplemental statements are not materially different than amounts shown below.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue..................................... $ 1,258 $ 6,089 $12,431 $27,356 $ 42,405
Cost of revenue............................. 758 2,620 4,756 12,077 23,862
------- ------- ------- ------- --------
Gross profit................................ 500 3,469 7,675 15,279 18,543
------- ------- ------- ------- --------
Operating expenses:
General and administrative................ 370 2,062 5,405 9,664 15,325
Selling and marketing..................... -- 242 652 1,711 2,896
Research and development.................. -- -- 404 961 692
Acquisition and merger costs.............. -- -- -- -- 2,886
Stock-based and other compensation(1)..... -- -- -- -- 18,175
------- ------- ------- ------- --------
Total.................................. 370 2,304 6,461 12,336 39,974
------- ------- ------- ------- --------
Income (loss) from operations............... 130 1,165 1,214 2,943 (21,431)
Interest income (expense), net.............. 3 5 55 80 (111)
------- ------- ------- ------- --------
Income (loss) before income taxes........... 133 1,170 1,269 3,023 (21,542)
Income tax provision (benefit).............. 37 294 185 330 (900)
------- ------- ------- ------- --------
Net income (loss)........................... $ 96 $ 876 $ 1,084 $ 2,693 $(20,642)
======= ======= ======= ======= ========
Basic net income (loss) per common share.... $ 0.01 $ 0.07 $ 0.08 $ 0.21 $ (1.50)
======= ======= ======= ======= ========
Diluted net income (loss) per common
share..................................... $ 0.01 $ 0.07 $ 0.08 $ 0.16 $ (1.50)
======= ======= ======= ======= ========
Weighted average common shares
outstanding............................... 12,492 13,027 12,993 12,626 13,762
======= ======= ======= ======= ========
Weighted average common shares and common
share equivalents......................... 12,492 13,027 13,536 16,333 13,762
======= ======= ======= ======= ========
Unaudited pro forma data(2)(3):
Basic net loss per common share........... $ (1.31)
========
Diluted net loss per common share......... $ (1.31)
========
Weighted average common shares
outstanding............................ 15,763
========
Weighted average common shares and common
share equivalents...................... 15,763
========
</TABLE>

15
<PAGE> 20

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, 1998
------------------------------------------ -----------------------------
1994 1995 1996 1997 1998 SUPPLEMENTAL(4) ADJUSTED(5)
---- ------ ------ ------- ------- --------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash equivalents........... $ 70 $ 802 $1,119 $ 2,343 $ 2,482 $ 2,586 $48,207
Working capital............ 177 718 5,663 7,520 2,380 1,927 29,699
Total assets............... 548 2,395 8,696 16,097 22,077 22,551 70,933
Stockholders' equity....... 235 1,111 7,085 10,376 6,996 6,629 56,486
</TABLE>

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

(1) Stock-based and other compensation was associated with a merger transaction
with IBIS Consulting and includes (a) a $17.2 million non-cash charge
relating to the elimination of a repurchase requirement for formula stock
and (b) $1.0 million in cash bonus payments required under the historical
IBIS Consulting plan.

(2) Pro forma data reflect the conversion of 2,001,483 shares of preferred stock
outstanding at December 31, 1998 into common stock.

(3) During 1998, Proxicom merged with two companies in transactions accounted
for as poolings of interests. Both companies had elected a status under
Subchapter S of the Internal Revenue Code that exempted them from corporate
income tax. If these Subchapter S corporations had been subject to taxation
in 1998, pro forma net loss would not have differed materially. See Note 2
to the consolidated financial statements.

(4) Supplemental data reflect the issuance of 829,771 shares of our common stock
in our 1999 merger with ad hoc Interactive and the consolidated balance
sheet data as if ad hoc Interactive had always been part of Proxicom.

(5) Adjusted data reflect (a) the conversion of all shares of convertible
preferred stock into 3,219,816 shares of common stock; (b) the $4.9 million
charge associated with the conversion of preferred stock into common stock;
(c) the issuance of 1,011,378 shares of common stock upon the exercise of
warrants at $7.91 per share; and (d) Proxicom's sale of 4,000,000 shares of
common stock in this offering at an assumed initial public offering price of
$11.00 per share and application of the estimated net proceeds.

16
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with "Selected
Consolidated Financial Data," our consolidated and supplemental consolidated
financial statements and the notes to those financial statements elsewhere in
this prospectus. The discussion below would not be materially different if based
on the supplemental consolidated financial statements and related notes. In
addition to historical information, this discussion contains forward-looking
information that involves risks and uncertainties. Proxicom's actual results
could differ materially from those anticipated by such forward-looking
information due to competitive factors, risks associated with Proxicom's
expansion plans and other factors discussed under "Risk Factors" and elsewhere
in this prospectus.

OVERVIEW

Our revenue is generally comprised of fees generated for professional
services. We provide our services primarily on a fixed-price, fixed-timeframe
basis. We use an internally developed process to estimate and propose fixed
prices for such projects. The estimation process accounts for standard billing
rates particular to each project, the technology environment and application
type to be applied, and the project's timetable and overall technical
complexity. A Proxicom senior management team member must approve all of our
fixed-price proposals. For these contracts, we recognize revenue using a
percentage-of-completion method primarily based on costs incurred. We make
provisions for estimated losses on uncompleted contracts on a contract-
by-contract basis and recognize such provisions in the period in which the
losses are determined. Less frequently, we provide services on a time and
materials basis. In such cases, we recognize revenue as we incur costs.

Proxicom's financial results may fluctuate from quarter to quarter based on
such factors as the number, complexity, size, scope and lead time of projects in
which Proxicom is engaged. More specifically, these fluctuations can result from
the contractual terms and degree of completion of such projects, any delays
incurred in connection with projects, employee utilization rates, the adequacy
of provisions for losses, the accuracy of estimates of resources required to
complete ongoing projects and general economic conditions. In addition, revenue
from a large client may constitute a significant portion of Proxicom's total
revenue in a particular quarter.

In August 1998, Proxicom completed a merger with IBIS Consulting, Inc. by
exchanging 4,988,297 shares of Proxicom common stock for all the common stock of
IBIS Consulting. In addition, IBIS Consulting options were converted into
options to purchase 345,034 shares of Proxicom common stock. Proxicom incurred
acquisition and merger costs of $2.8 million and stock-based and other
compensation expense of $18.2 million associated with IBIS Consulting. In
connection with this transaction, the president of IBIS Consulting was elected
to Proxicom's board of directors. In January 1998, Proxicom completed a merger
with Square Earth, Inc. by exchanging 534,999 shares of Proxicom common stock
for all the common stock of Square Earth. In addition, Square Earth options were
converted into options to purchase 41,474 shares of Proxicom common stock.
Proxicom incurred acquisition and merger costs of $130,000 in connection with
this transaction. Proxicom accounted for each of these transactions as a pooling
of interests. All prior period consolidated financial statements have been
restated to include IBIS Consulting's and Square Earth's results of operations,
financial position and cash flows.

RECENT DEVELOPMENTS

As of March 26, 1999, Proxicom merged with ad hoc Interactive, Inc., a
California-based Internet solutions provider, by exchanging 829,771 shares of
Proxicom common stock and rights to receive 39,333 shares of Proxicom common
stock for all of the outstanding stock and stock rights of ad hoc Interactive.
The transaction is being accounted for as a pooling of interests. In

17
<PAGE> 22

the transaction, ad hoc Interactive stockholders became parties to the
stockholders agreement and registration rights agreement described in the
"Certain Transactions" section of this prospectus.

In addition, in March 1999, Proxicom signed an agreement with Ericsson
Telecommuncazioni SpA. Under the agreement, Proxicom will make a 19.9%
investment in an Italian joint venture company. Ericsson will own the remaining
81.1% interest. The joint venture company will provide Internet solutions to
Italian-based businesses. The initial share capital of the joint venture company
will be approximately $1.7 million, which Proxicom and Ericsson will contribute
in proportion to their shareholder percentage interests. Proxicom will enter
into a services agreement with the joint venture company under which Proxicom
will provide consulting, project management and technical design services to the
joint venture's clients.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the relative
composition of revenue and selected statements of operations data as a
percentage of revenue:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Revenue..................................................... 100.0% 100.0% 100.0%
Cost of revenue............................................. 38.3 44.1 56.3
----- ----- -----
Gross profit................................................ 61.7 55.9 43.7
----- ----- -----
Operating expenses:
General and administrative................................ 43.5 35.3 36.1
Selling and marketing..................................... 5.2 6.3 6.8
Research and development.................................. 3.2 3.5 1.6
Acquisition and merger costs.............................. -- -- 6.8
Stock-based and other compensation........................ -- -- 42.9
----- ----- -----
Total.................................................. 51.9 45.1 94.2
----- ----- -----
Income (loss) from operations............................... 9.8 10.8 (50.5)
Interest income (expense), net.............................. 0.4 0.3 (0.3)
----- ----- -----
Income (loss) before income taxes........................... 10.2 11.1 (50.8)
Income tax provision (benefit).............................. 1.5 1.2 (2.1)
----- ----- -----
Net income (loss)........................................... 8.7% 9.9% (48.7)%
===== ===== =====
</TABLE>

1998 COMPARED TO 1997

Revenue. In 1998, revenue increased $15.0 million, or 55.0%, to $42.4
million from $27.4 million in 1997. This increase in revenue reflects increases
in both the size and number of our client engagements. Approximately 65% of this
increase is attributable to increased engagement size and the remainder is
attributable to increased numbers of engagements. IBIS Consulting accounted for
$8.9 million, or 59%, of the increase in Proxicom's 1998 revenues. Square
Earth's contribution was not separately accounted for because its operations
were fully integrated into ours following the merger in January 1998.

Cost of Revenue. Cost of revenue consists primarily of salaries and
associated employee benefits for personnel directly assigned to client projects,
non-research and development efforts and non-reimbursed direct expenses incurred
to complete projects, such as technical consulting fees. These costs increased
$11.8 million, or 97.6%, to $23.9 million in 1998 from $12.1 million in 1997.
The increase during 1998 was due primarily to increases in the number of
personnel needed to service these engagements and the related complexity of the
engagements. Approximately 75% of the increase was attributable to personnel
cost increases. Service project personnel increased from 199 at December 31,
1997 to 311 at December 31, 1998. We usually do not fully utilize our consulting
and delivery personnel on billable projects during their initial

18
<PAGE> 23

months of employment. During this time, they undergo training and become
integrated into our operations. Additionally, in 1998, we re-deployed engineers
who were active in developing and enhancing replicable frameworks. During this
transition phase, the engineer utilization was lower due to start-up
requirements. Also, during the second half of 1998, due to market conditions,
customer demand in our financial services and energy industry groups softened,
which adversely affected service utilization. As a percentage of revenue, cost
of revenue increased to 56.3% during 1998 as compared to 44.1% during 1997.

Gross Profit. In 1998, gross profit increased $3.2 million, or 21%, to
$18.5 million from $15.3 million in 1997. The gross profit dollar increase
reflects the increase in revenue during 1998. As a percentage of revenue, gross
profit decreased to 43.7% during 1998 as compared to 55.9% during 1997. The
percentage decrease reflects reduced overall utilization of consulting and
delivery personnel as discussed in the cost of revenue section. Employee
utilization can be affected by multiple factors, including rapid growth and
reductions in the number or size of projects in any period. Reduction in
employee utilization rates could cause further decline in gross profit as a
percentage of revenue.

General and Administrative. General and administrative costs consist of
salaries for executive and selected senior management, finance, recruiting,
administrative groups and associated employee benefits, facilities costs
including depreciation and amortization, computer and office equipment operating
leases, training, travel and all other branch and corporate costs. These costs
increased $5.6 million, or 58.6%, to $15.3 million in 1998 from $9.7 million in
1997. This increase was due primarily to increases in personnel and facilities
and related costs due to expanded leasing commitments in Reston, VA, New York,
NY, San Francisco, CA and the establishment of new offices in Chicago, IL and
Munich, Germany to support the internal growth of our operations. Approximately
70% of the increase is attributable to the facilities and related cost
increases. As a percentage of revenue, general and administrative expenses
increased to 36.1% in 1998 as compared to 35.3% in 1997. We wrote off $959,000
in doubtful accounts in 1998, which included approximately $600,000 from
disputes with two customers. We believe the current allowance for doubtful
accounts balance of $500,000 is sufficient for other doubtful accounts.

Selling and Marketing. Selling and marketing costs consist primarily of
salaries and associated benefits, travel expenses of selling and marketing
personnel and promotional expenses. Selling and marketing costs increased $1.2
million, or 69.3%, to $2.9 million in 1998 from $1.7 million in 1997.
Approximately 60% of this increase was due to marketing program expenditures and
the remaining increase was due to increased personnel-related costs incurred in
sales promotion efforts. As a percentage of revenue, selling and marketing
increased to 6.8% from 6.3% during 1997.

Research and Development. Research and development costs, primarily
software development, consist of salaries assigned directly to research and
development projects, associated employee benefits and direct expenses incurred
to complete research projects, including non-employee consulting. Research and
development costs decreased $269,000, or 28.0%, to $692,000 in 1998 from
$961,000 in 1997. We attribute this decrease to our re-deploying engineers and
technicians active in developing and enhancing replicable frameworks to client
service projects during the third quarter of 1998. For 1998 and 1997, we charged
all of our costs for research and development to operations as incurred. We did
this because the period between technological feasibility and general release
was relatively short and the costs incurred during this period were not
significant.

Acquisition and Merger Costs. We incurred charges of approximately $2.9
million in 1998 for costs associated with the Square Earth and IBIS Consulting
transactions. These transaction costs related to professional fees and other
direct expenses. We did not record any such expenses for the year ended December
31, 1997 because we did not acquire any entities during that year.

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<PAGE> 24

Stock-based and Other Compensation. We incurred charges of $18.2 million
in 1998 for costs associated with our IBIS Consulting transaction. Of these
charges, $17.2 million related to the elimination of a repurchase requirement
for formula stock options and $1.0 million consisted of cash bonus payments
required under the historical IBIS Consulting plan. We did not record any
expense of this type for the year ended December 31, 1997 because no
formula-based stock options were exercised.

Interest Income (Expense), Net. Interest income (expense), net decreased
$191,000, or 238.8%, to interest expense of $111,000 in 1998 from interest
income of $80,000 in 1997. This decrease was due primarily to interest expense
we incurred from borrowings under our lines of credit during 1998 to support our
internal growth. Interest expense of $227,000 was offset by interest income of
$116,000 earned during 1998. We generally invest in U.S. Government treasury
bills and money market accounts. The amount of interest income fluctuates based
upon the amount of funds available for investment and prevailing interest rates.

Income Tax Provision (Benefit). Operating losses generated in 1998 were
carried back for tax purposes creating a tax benefit. The $900,000 income tax
benefit in 1998 represents a benefit from combined federal and state income
taxes at an effective rate of 4.2%, or 20.9% excluding the $17.2 million
non-deductible stock-based compensation charge. Income tax expenses of $330,000
in 1997 represented combined federal and state income taxes at an effective rate
of 10.9%. Our effective tax rate was favorably impacted in both 1997 and 1998 by
the transactions with Square Earth and IBIS Consulting, which were Subchapter S
corporations with pass-through tax status before the transactions.

1997 COMPARED TO 1996

Revenue. Revenue increased $15.0 million, or 120.0%, to $27.4 million in
1997 from $12.4 million in 1996. This increase is directly attributable to
increased client engagement size. IBIS Consulting and Square Earth accounted for
$6.3 million, or 42%, and $0.8 million, or 5%, respectively, of the increase in
Proxicom's 1997 revenue.

Cost of Revenue. Cost of revenue increased $7.3 million, or 153.9%, to
$12.1 million in 1997 from $4.8 million in 1996. This increase was due primarily
to increases in the size of our client engagements and the cost of additional
consulting and delivery personnel. Approximately 85% of the increase was
attributable to the increased personnel costs. We usually do not fully utilize
our consulting and delivery personnel on billable projects during their initial
months of employment. During this time, they undergo training and become
integrated into our operations. We had 126 consulting and delivery personnel at
December 31, 1996 and 199 at December 31, 1997. As a percentage of revenue, cost
of revenue increased to 44.1% during 1997 as compared to 38.3% during 1996.

Gross Profit. In 1997, gross profit increased $7.6 million, or 99%, to
$15.3 million from $7.7 million in 1996. The gross profit dollar increase
reflects the increase in revenue during 1997. As a percentage of revenue, gross
profit decreased to 55.9% during 1997 as compared to 61.7% during 1996. The
percentage decrease reflects reduced utilization of consulting and delivery
personnel as discussed in the cost of revenue section.

General and Administrative. General and administrative costs increased
$4.3 million, or 78.8%, to $9.7 million in 1997 from $5.4 million in 1996. This
increase was due primarily to increases in personnel, the leasing of a new
company headquarters in Reston, VA, costs incurred in connection with the
opening of our New York, NY office in 1997 and related facility costs to support
the growth of our operations. Approximately 65% of the cost increase is
attributable to increased facility and related costs.

Selling and Marketing. Selling and marketing costs increased $1.0 million,
or 162.4%, to $1.7 million in 1997 from $652,000 in 1996. This increase was due
to the expansion of our

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<PAGE> 25

selling and marketing personnel to 15 employees at December 31, 1997 from nine
employees at December 31, 1996 and increased promotional activities.
Approximately 75% of the cost increase is attributable to increased personnel
costs.

Research and Development. Research and development costs increased
$557,000, or 137.9%, to $961,000 in 1997 from $404,000 in 1996. This increase is
attributable to increases in the number of engineers and technicians active in
developing and enhancing replicable frameworks. In 1997 and 1996, all of our
costs for research and development were charged to operations as incurred since
the period between technological feasibility and general release was relatively
short and the costs incurred during this period were not significant.

Interest Income (Expense), Net. Interest income increased $25,000, or
45.5%, to $80,000 in 1997 from $55,000 in 1996. This increase was due primarily
to our interest income earned on the invested portion of the proceeds of our
private financings during 1997. Interest income of $174,000 was offset by
interest expense of $94,000 from increased drawings under our lines of credit
during 1997 to support our internal growth.

Income Tax Provision. Income tax expense increased $145,000, or 78.4%, to
$330,000 in 1997 from $185,000 in 1996 and represented combined federal and
state income taxes at an effective marginal rate of 10.9% in 1997 and 14.6% in
1996. The comparatively low tax rate of 10.9% was caused primarily by the
transactions with Square Earth and IBIS Consulting, which were both Subchapter S
corporations with pass-through tax status before the transactions.

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<PAGE> 26

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth unaudited consolidated quarterly financial
data for the periods indicated. We derived this data from unaudited consolidated
financial statements, and, in the opinion of our management, they include all
adjustments, which consist only of normal recurring adjustments, necessary to
present fairly the financial results for the periods. Results of operations for
any previous fiscal quarter do not necessarily indicate what results may be for
any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEP. 30, DEC. 31, MAR. 31, JUN. 30, SEP. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue.................. $5,267 $6,835 $7,190 $8,064 $7,744 $10,065 $ 12,123 $12,473
Cost of revenue.......... 2,283 2,971 3,208 3,615 4,450 5,447 6,759 7,206
------ ------ ------ ------ ------ ------- -------- -------
Gross profit............. 2,984 3,864 3,982 4,449 3,294 4,618 5,364 5,267
------ ------ ------ ------ ------ ------- -------- -------
Operating expenses:
General and
administrative....... 1,720 2,245 2,743 2,956 3,003 3,985 4,183 4,154
Selling and
marketing............ 392 389 436 494 712 648 909 627
Research and
development.......... 89 82 183 607 228 220 244 --
Acquisition and merger
costs................ -- -- -- -- 130 -- 2,756 --
Stock-based and other
compensation......... -- -- -- -- -- -- 18,175 --
------ ------ ------ ------ ------ ------- -------- -------
Total................ 2,201 2,716 3,362 4,057 4,073 4,853 26,267 4,781
------ ------ ------ ------ ------ ------- -------- -------
Income (loss) from
operations............. 783 1,148 620 392 (779) (235) (20,903) 486
Interest income
(expense), net......... 26 22 (15) 47 43 (25) (60) (69)
------ ------ ------ ------ ------ ------- -------- -------
Income (loss) before
income taxes........... 809 1,170 605 439 (736) (260) (20,963) 417
Income tax provision
(benefit).............. 4 91 86 149 (491) (452) (132) 175
------ ------ ------ ------ ------ ------- -------- -------
Net income (loss)........ $ 805 $1,079 $ 519 $ 290 $ (245) $ 192 $(20,831) $ 242
====== ====== ====== ====== ====== ======= ======== =======
AS A PERCENTAGE OF
REVENUE:
Revenue.................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue.......... 43.3 43.5 44.6 44.8 57.5 54.1 55.8 57.8
------ ------ ------ ------ ------ ------- -------- -------
Gross profit............. 56.7 56.5 55.4 55.2 42.5 45.9 44.2 42.2
------ ------ ------ ------ ------ ------- -------- -------
Operating expenses:
General and
administrative....... 32.7 32.8 38.2 36.7 38.8 39.6 34.5 33.3
Selling and
marketing............ 7.4 5.7 6.1 6.1 9.2 6.4 7.5 5.0
Research and
development.......... 1.7 1.2 2.5 7.5 2.9 2.2 2.0 --
Acquisition and merger
costs................ -- -- -- -- 1.7 -- 22.7 --
Stock-based and other
compensation......... -- -- -- -- -- -- 149.9 --
------ ------ ------ ------ ------ ------- -------- -------
Total................ 41.8 39.7 46.8 50.3 52.6 48.2 216.6 38.3
------ ------ ------ ------ ------ ------- -------- -------
Income (loss) from
operations............. 14.9 16.8 8.6 4.9 (10.1) (2.3) (172.4) 3.9
Interest income
(expense), net......... 0.5 0.3 (0.2) 0.5 0.6 (0.3) (0.5) (0.6)
------ ------ ------ ------ ------ ------- -------- -------
Income (loss) before
income taxes........... 15.4 17.1 8.4 5.4 (9.5) (2.6) (172.9) 3.3
Income tax provision
(benefit).............. 0.1 1.3 1.2 1.8 (6.3) (4.5) (1.1) 1.4
------ ------ ------ ------ ------ ------- -------- -------
Net income (loss)........ 15.3% 15.8% 7.2% 3.6% (3.2)% 1.9% (171.8)% 1.9%
====== ====== ====== ====== ====== ======= ======== =======
</TABLE>

We have generally realized lower revenue in the first quarter of the year
than in the other quarters. We believe that this has been due primarily to
client budget cycles and the short-term nature of our contracts. We believe that
period to period comparisons of our operating results are not necessarily
meaningful and that you should not rely on these comparisons as indicators of
future performance.

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<PAGE> 27

LIQUIDITY AND CAPITAL RESOURCES

In October 1998, Proxicom entered into a $10.0 million revolving credit
facility with NationsBank, N.A. to be used for working capital purposes and
permitted acquisitions. The interest rate on amounts borrowed under the credit
agreement is LIBOR plus 2.0%. The credit facility expires on August 31, 2000,
and will renew automatically for one additional year at the sole discretion of
NationsBank. The credit facility contains restrictions on Proxicom and its
subsidiaries (including a prohibition on the payment of cash dividends by
Proxicom) and requires Proxicom to comply with financial tests and to maintain
specified financial ratios. The credit agreement is secured by a first priority
lien on all current and future assets of Proxicom and its subsidiaries and a
first priority pledge of the stock of IBIS Consulting and Square Earth. At
February 12, 1999, Proxicom had no outstanding borrowings under the credit
facility.

Cash and cash equivalents increased to $2.5 million at December 31, 1998,
from $2.3 million at December 31, 1997. Net cash provided by operating
activities of $1.3 million for 1997 was attributable to the growth in our
revenue and operations. The net cash used in operating activities of $4.0
million for 1998 was primarily offset with borrowings under our credit facility.

Unbilled services increased $2.9 million from $1.4 million at December 31,
1997 to $4.3 million at December 31, 1998. This increase was primarily due to
growth in the size and complexity of our projects. Larger, more complex projects
typically require completion of specified performance milestones prior to
billing clients, as opposed to providing for monthly progress billing.
Approximately 25% of our projects in 1998 required performance milestones to be
reached before invoicing. We believe our project size and complexity may
continue to increase in the future and that an increasing portion of our
projects will require completion of milestones prior to billing. If this occurs,
our unbilled services receivables can be expected to increase. All unbilled
services receivables as of December 31, 1998 are expected to be invoiced during
1999.

Capital expenditures of approximately $1.7 million, $2.0 million and $1.4
million for 1998, 1997 and 1996, respectively, were used primarily for computer
equipment, office equipment and leasehold improvements related to Proxicom's
growth. Capital expenditures for 1999 are expected to be approximately $2.0
million and will be made principally for computer equipment, internally used
software purchases and leasehold improvements to support our growth. A total of
approximately $631,000 was raised through the exercise of stock options in 1998,
and $3.5 million was raised through the private sale of convertible preferred
stock in 1997.

In February 1999, Proxicom completed the sale of 1,218,333 shares of Series
D convertible preferred stock for $7.3 million. At the closing of this offering,
all of these shares will be converted into common stock on a one-for-one basis.
Proxicom will be required to take a $4.9 million charge to additional paid-in
capital for the difference between the conversion feature and the estimated fair
value of the underlying common stock. Although not reflected on the statement of
operations, the charge will be reflected as a reduction to income and earnings
per share available for common stockholders. See "Certain Transactions -- Stock
Purchase Agreements and Related Matters -- Series D Purchase Agreement."

In connection with the issuance of Series A convertible preferred stock,
Proxicom issued warrants to purchase shares of Series A preferred stock that are
convertible into 1,011,378 shares of common stock. Proxicom has received an
irrevocable letter from the holders of the warrants indicating an intention to
exercise the warrants for a purchase price of $8.0 million upon closing of this
offering.

Proxicom anticipates that the net proceeds of this offering, together with
existing sources of liquidity and funds generated from operations, should
provide adequate cash to fund its currently anticipated cash needs through at
least the next 18 months. To the extent Proxicom is unable to fund its
operations from cash flows, it may need to obtain financing from external
sources in the form of either additional equity or indebtedness. There can be no
assurance that additional

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<PAGE> 28

financing will be available at all, or that, if available, such financing will
be obtainable on terms favorable to Proxicom.

YEAR 2000 READINESS DISCLOSURE

Background. Many computer systems and applications currently use two-digit
fields to designate a year. As the century date change occurs, date-sensitive
systems will recognize the year 2000 as 1900, or not at all. This inability to
recognize, or properly treat, the year 2000 may cause systems to process
financial and operational information incorrectly, resulting in system failures
and other business problems.

Risk Factors. We may experience operations interruptions because of year
2000 problems. Clients' and potential clients' purchasing patterns may be
affected by year 2000 issues as companies expend significant resources to
correct their current systems for year 2000 compliance. These clients and
potential clients may have fewer funds available to purchase our services. Also,
we may experience operations difficulties caused by undetected errors or defects
in the technology we use in our internal systems. We may become involved in
disputes regarding year 2000 problems involving solutions we developed or
implemented or the interaction of our Internet solutions with other
applications. Year 2000 problems could require us to incur delays and
unanticipated expenses. We have formulated an approach to address our exposure
to these risk factors.

Approach. We are assessing the impact of the year 2000 issue on our
current and future products, internal information systems and non-information
technology systems. We have performed a preliminary assessment of the year 2000
readiness of our information technology systems, including the hardware and
software we use to provide and deliver our Internet solutions. We plan to
perform a year 2000 simulation on our software and systems during the second
quarter of 1999. Based on the results, we will revise our solutions software
code as necessary.

We will require all vendors who provide material hardware or software for
our information technology systems to provide assurances of their year 2000
compliance. We will also seek assurances of year 2000 compliance from our
material non-information technology providers. We plan to complete this process
during the first half of 1999. Until our testing is complete and all of our
material vendors and providers are contacted, we will not be able completely to
evaluate whether our systems will need to be revised or replaced.

We have identified processes that will require year 2000 readiness testing.
We are in the process of establishing dedicated test environments for year 2000
readiness testing. We anticipate that testing will be largely complete by the
second quarter of 1999.

Status. Our testing to date has included our major infrastructure items,
hardware platforms and operating systems in our largest offices. Desktop
computing, servers, switching and routing platforms have been inventoried in
most locations, with only minor modifications required to the network and
routing platforms. Personal computer platforms have been identified and tested
in our Reston, VA and New York, NY locations. This effort is estimated to be 80%
complete. Installation of the software components that will bring the computing
platforms into compliance is estimated to be 25% complete, with full completion
scheduled in all locations by the end of April 1999. Embedded systems are
considered to be tested at a 20% level, with full testing to be completed by
June 1999.

We have largely completed the implementation of year 2000 compliant
internal computer applications for our main financial and order processing
systems.

Cost. Based on the work done to date, we predict that the cost for work
and material and upgrades needed to complete our year 2000 certification process
will be approximately $150,000. This includes the cost of material upgrades,
software modification and related consulting fees.

Contingency Plans. As discussed above, we are engaged in an ongoing year
2000 assessment and have not yet developed any contingency plans. We will assess
the results of our year 2000 simulation testing and third-party vendor and
service provider responses to determine the nature and extent of any contingency
plans.

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<PAGE> 29

BUSINESS

OVERVIEW

Our Internet solutions have included

- business to consumer electronic commerce Internet sites for Calphalon
Corporation, Cox Interactive Media, Inc. and Owens Corning;

- business to business electronic commerce extranets for the American
Electronics Association, Mercedes-Benz Credit Corp. and McKessonHBOC;
and

- company-specific intranets for GE Plastics, Hoffmann-La Roche, Inc. and
Merrill Lynch & Co., Inc.

We apply our proprietary methodology, the Proxicom Process, in all of our
client engagements. Using the Proxicom Process, we integrate strategy,
technology and creative design to help our clients transform their businesses
with Internet solutions.

INDUSTRY BACKGROUND

The Internet presents opportunities to transform businesses and entire
industries as organizations exploit its potential to extend and enhance their
business activities. Companies are using the Internet to communicate and
transact business on a one-to-one basis with existing customers and to target
and acquire new customers. At the same time, companies are using the Internet to
collaborate with their supply-chain partners, enable electronic commerce and
manage distribution relationships. The Internet has also allowed businesses to
identify new product and service offerings which extend and complement their
core markets. As a result, organizations are investing in the strategic use of
Internet solutions to transform their core business and technology strategies.

Faced with growing competition, deregulation and globalization, companies
are increasingly looking to utilize Internet technology to help build
competitive advantage. Much as client/server technologies opened information
access within organizations beginning in the late 1980s, the Internet now offers
the potential for organizations to extend their businesses beyond traditional
limits. The Internet extends the business role of technology from
employee-focused productivity enhancement to customer-focused revenue
generation, raising the importance and complexity of new technology deployment.

Successful adoption of the Internet in this new context poses strategic,
technical and creative design challenges. Alignment of business and Internet
strategies requires an understanding of how the Internet transforms
relationships between businesses and their internal organizations, customers and
business partners. Also, companies facing technology investment decisions often
need outside technical expertise to recognize \viable Internet tools, develop
feasible architectures and implement strategies. Companies must also be able to
integrate new Internet applications with their existing systems. Finally, a
successful solution requires that the Internet application, particularly the
user interface, be engaging and easy to use.

Few businesses have the range of skills necessary to successfully transform
the way they use technology and implement Internet solutions. Moreover, it is
difficult to find these skills externally in the supply-constrained Internet
professional services market. Even if businesses obtain skills in all three of
the strategy, technology and creative disciplines, they often have little
experience coordinating them to exploit fully the Internet and other advanced
technologies.

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<PAGE> 30

The combination of these factors is creating a significant and growing
demand for third-party Internet professional services. International Data Corp.,
a technology industry research firm, forecasts that the market for Internet and
electronic commerce services worldwide will grow from $4.6 billion in 1997 to
$43.7 billion by 2002. Forrester Research, Inc., another technology industry
research firm, estimates the market for Internet and electronic commerce
services will grow from $5.4 billion in 1998 to $32.7 billion by 2002. These
projections represent a compound annual growth rate of more than 55% over these
periods. Forrester Research predicts that the Internet will be one of the
fastest-growing areas within the information technology services industry. While
business to consumer solutions are expected to continue to be a large part of
the Internet and electronic commerce services market, Proxicom believes that
business to business corporate intranet/extranet solutions will represent a
growing percentage of the overall market.

Vendors addressing the Internet professional services market can be broadly
divided into four major categories:

- Large systems integrators provide technology expertise across a wide
range of offerings which address business process requirements.

- Specialty systems integrators frequently offer traditional distributed
computing models adapted to the Internet.

- Strategy consulting firms seek to help companies define models of how
they can use the Internet as a new channel and knowledge-sharing tool.

- Internet professional services providers bring Internet expertise, often
with a focus on either the creative, technology or strategy element.

While vendors in each category have specific strengths, each tends to address
only a piece of the Internet puzzle. Few vendors addressing the Internet
professional services market successfully integrate business and marketing
strategy with expertise in Internet-specific technology and creative design
services to help businesses achieve the full potential that the Internet offers.

Proxicom believes organizations are increasingly searching for a
single-source professional services firm that can deliver integrated strategy,
technology and creative design skills specifically for the Internet.
Furthermore, Proxicom believes that organizations will increasingly look to
Internet solutions providers that can leverage industry best practices, increase
predictability of success for Internet solutions and decrease risks associated
with implementation.

PROXICOM'S SOLUTION

Proxicom is an Internet solutions provider that focuses on creating
business value for its clients. Proxicom's solution has five essential elements:

- a structured methodology, the Proxicom Process;

- integrated Internet strategy, technology and creative design services;

- industry and business domain expertise;

- in-depth Internet and advanced technologies expertise; and

- knowledge management and knowledge sharing infrastructure.

Proxicom Process: Proprietary Methodology and Managed Risk. The Proxicom
Process is Proxicom's proprietary methodology for managing client engagements
that integrates strategy, technology and creative design services. The Proxicom
Process emphasizes an iterative development cycle with multiple incremental
releases to incorporate user feedback and to keep pace with the Internet's
ongoing technological changes. The four phases of the Proxicom Process'
development cycle are (a) Define Internet Strategy, (b) Plan Solution, (c)
Design Solution and (d) Implement Solution. Using the Proxicom Process, Proxicom
structures projects
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<PAGE> 31

tightly and offers fixed-price, fixed-timeframe engagements. This provides
clients with greater certainty regarding the time and cost of implementation.
Proxicom's approach improves quality of delivery and alignment of an Internet
initiative with a client's business. This approach is geared toward minimizing
the risk of technical or competitive obsolescence faced by companies using the
Internet.

Integrated Internet Strategy, Technology and Creative Design
Services. Proxicom delivers its solutions through collaborative,
multi-disciplinary teams that apply the collective strengths of their strategy,
technology and creative design professionals. Proxicom believes that this
approach results in coordinated planning among its professionals from all three
disciplines, a challenge that many organizations struggle to address. Proxicom's
delivery process fosters collaboration within its multi-disciplinary teams to
help clients achieve internal cooperation among previously independent business
functions. Proxicom believes its multi-disciplinary approach results in better,
more efficient Internet solutions in which business and communications
strategies are consistently balanced with the opportunities and capabilities of
Internet technologies.

Industry and Business Domain Expertise. Over the course of more than 600
engagements since 1994, Proxicom has gained significant expertise in specific
industries and types of business solutions. Proxicom's expertise provides
clients with a clear vision of the Internet's potential to improve their
business processes and competitive positions. Proxicom organizes its delivery of
services into vertical industry groups: energy and telecommunications, financial
services, retail and manufacturing and service industries. Through strategic
hires and numerous engagements, Proxicom has developed significant knowledge and
expertise in its targeted industries. Proxicom complements its industry
specialization with expertise in cross-industry solution areas such as
electronic commerce, supply chain management and interactive marketing. Proxicom
leverages its experience in these industries and solution areas across the
entire company through best practices as well as proprietary solution
frameworks, software tools and components to provide clients the full value of
Proxicom's industry and business domain expertise.

In-depth Internet and Advanced Technology Expertise. Proxicom has
developed an in-depth understanding of the specific challenges of deploying
Internet solutions. Proxicom is expert at building, extending and complementing
technologies that have the ability to transform businesses. Proxicom helps its
clients utilize leading-edge technologies and minimize the expenses associated
with hiring, training and retaining scarce information technology skill sets.
Because Proxicom's expertise is not limited to a single technology or
architecture, Proxicom is able to help clients choose the appropriate technology
to provide the best long-term business solution.

Knowledge Management and Knowledge Sharing Infrastructure. Through the
Proxicom Process, Proxicom continuously incorporates the multi-disciplinary
knowledge gained in Proxicom's engagements. This intellectual capital is tracked
and stored in Proxicom's corporate intranet, which acts as an integrated
knowledge management repository. Proxicom's intranet is both a solutions library
that facilitates the dissemination of intellectual capital across Proxicom and
an internal project management system that captures detailed information on the
resources required to achieve specific tasks on a project. In this way,
Proxicom's clients can benefit from industry best practices as well as
Proxicom's experiences. This system improves Proxicom's ability to predict
project completion requirements and increases the reusability of its
intellectual capital, thereby reducing risk for its clients. Proxicom's
week-long "boot camp" orientation and training program for all new employees
also facilitates knowledge sharing.

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<PAGE> 32

PROXICOM'S GROWTH STRATEGY

Proxicom's strategy is to build upon its position as a leading provider of
transformational Internet solutions that add significant and measurable business
value to Global 1000 companies and other large organizations. The following are
the key elements of Proxicom's strategy.

Leverage Existing Clients. Proxicom believes it must continue to satisfy
its customers. A strong track record of delivering high quality Internet
solutions often increases the amount, scope and sophistication of services
requested by existing clients. This reinforces Proxicom's growing reputation as
an innovative provider of mission-critical Internet solutions. Proxicom also
believes that maintaining a reputation for delivering innovative Internet
solutions and client satisfaction will increase its ability to attract new
clients through increased referral-driven sales and strong references.

Further Penetrate our Vertical Markets. Proxicom believes that its
expertise in specific industry dynamics and solutions considerably enhances its
ability to help companies apply the Internet to gain competitive advantage. In
each of its vertical industry groups, Proxicom employs industry experts, pursues
targeted sales and marketing, develops industry-specific offerings and
capitalizes on referrals from existing clients. Proxicom will continue to
emphasize this focus and seek to expand the scope of its industry expertise.

Continue Geographic Expansion. Proxicom believes that expanding
geographically will increase its ability to attract and better service clients.
Proxicom has already established offices in Reston, VA, San Francisco, CA, New
York, NY, Munich, Germany, Sacramento, CA, Chicago, IL and Houston, TX. All of
these offices have contributed to Proxicom's continued ability to attract large
clients. Proxicom plans to continue establishing offices in key geographic
locations through an integrated process of organic growth and targeted
acquisitions. Recently, Proxicom reached a preliminary understanding with
Ericsson Telecommunicazioni SpA to invest in a joint venture company. Through
the joint venture company, Proxicom would deliver its Internet consulting
services in Italy.

Hire and Retain Skilled Professionals. Proxicom believes its delivery of
integrated strategy, technology and creative design services distinguishes it
from other Internet professional services providers. To deliver these services,
Proxicom must hire and retain skilled professionals in all three disciplines and
continue to foster collaboration among them. Proxicom has a dedicated
organizational development team that initiates and oversees the training and
development of Proxicom's professionals. Key organizational development
initiatives include a week-long "boot camp" orientation and training program for
all new employees and "Proxicom University," which provides ongoing technical
and project management classes as well as career path management and guidance.
Proxicom is committed to recruiting and hiring quality professionals and to
maintaining a culture that motivates its staff while cultivating collaboration
and retention.

Evolve the Proxicom Process. Proxicom believes that continued evolution of
the Proxicom Process will strengthen its competitive position. Proxicom enhances
the Proxicom Process by incorporating best practices identified over numerous
engagements. This enables clients to benefit from Proxicom's cumulative
experience. Proxicom will continue to refine and enhance the Proxicom Process to
enable continued delivery of high quality solutions to clients on time and on
budget.

Leverage Technology Partnerships. Proxicom believes its relationships with
leading technology vendors, such as Microsoft Corporation and Netscape
Communications Corporation, will provide increased visibility and sales
opportunities. Proxicom's status as a Microsoft Certified Solution Provider
Partner has yielded considerable sales opportunities. Proxicom has also formed
strategic alliances with leading hosting and co-location providers, such as
Exodus Communications, Inc. Proxicom is committed to furthering these
relationships and building other strategic partnerships that can contribute to
its growth.

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Extend Reusable Solutions. Proxicom leverages those elements of its
Internet solutions for which there is repeat customer demand. Reusable solutions
increase productivity, accelerate solutions development and enhance the
profitability of Proxicom's engagements. Proxicom's industry and business
solutions experts develop replicable solutions for target markets, including
best practices, tools, functionality, software and standard interfaces for
leading third-party applications. Proxicom has a dedicated framework reuse group
that supports these efforts and leverages them across the organization. The
group also identifies software reuse opportunities before and after client
engagements, prepares code for reuse and maintains version control. Proxicom
intends to continue to leverage its experience to create reusable solutions that
can be used in future engagements. On most engagements, Proxicom retains the
right to reuse the solutions' underlying components.

PROXICOM'S SERVICES

Proxicom's range of Internet solutions includes business to consumer
electronic commerce Internet sites, business to business electronic commerce
extranets and company-specific intranets. Proxicom's solutions may also extend a
packaged application to the Internet. Proxicom provides Internet solutions
through an integrated set of strategy, technology and creative design services.
Proxicom sells and delivers its solutions through its vertical industry groups.
Through these vertical groups, Proxicom leverages its experience, best practices
and sales and delivery skills across clients with similar needs. Proxicom also
leverages its cross-industry specialties in electronic commerce, supply chain
management and interactive marketing. Using the Proxicom Process, Proxicom
services every engagement with a multi-disciplinary team headed by a dedicated
project manager who coordinates business strategy, technology and creative
design services.

Strategy. Proxicom uses its business and interactive marketing strategy
services to align a client's Internet strategy with its business and marketing
goals. Business strategy services include business case development, business
process consulting and competitive benchmarking. Interactive marketing strategy
services focus on understanding our clients' customers, competitors, target
markets and opportunities, and advising them on appropriate strategies to take
advantage of the Internet. Proxicom works with clients to evolve, understand and
analyze business and marketing goals, operational methods and success criteria.
Proxicom's industry and solution expertise contributes significantly to its
ability to create Internet strategies that offer distinct competitive advantage.

Technology. Proxicom develops Internet solutions that exploit the latest
proven technologies to transform business processes. Proxicom has extensive
experience providing technology implementation services, including systems and
network architecture design, custom application development, legacy and third
party software integration, as well as technology advisory services. Proxicom is
experienced at designing, developing and deploying mission-critical Internet
solutions and integrating these applications with legacy systems to capitalize
on existing technology investments.

Creative Design. Proxicom's creative design services address navigation,
layout, information architecture, personalization and branding. Proxicom's
creative design services also ensure that its Internet solutions have direct,
immediate and relevant appeal and utility. As the Internet has become an
important point of contact with customers, employees and business partners, the
user interface of these applications is an increasingly visible component of a
company's brand and identity. Proxicom creates Internet solutions that maximize
the ease and quality of experience for a variety of users.

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THE PROXICOM PROCESS

[GRAPHIC]

Proxicom delivers its services using a proprietary multi-phase methodology
called the Proxicom Process, which serves as a roadmap to define, develop and
manage Internet solutions. The Proxicom Process benefits Proxicom's clients by
enabling Proxicom to offer fixed-price, fixed-timeframe engagements and thereby
meet clients' needs for certainty. The iterative nature of the Proxicom Process
enables Proxicom to refine applications through the extensive use of prototypes
and phased application releases. Proxicom also uses the Proxicom Process to
reduce the time-to-market of a deployed solution. The Proxicom Process fully
integrates working groups and emphasizes collaboration between the Proxicom team
and the client.

Proxicom uses the Proxicom Process to manage project scope and client
expectations and to deliver solutions on time and on budget. The Proxicom
Process offers mechanisms for rapid adoption of best practices and reinforces
consistent quality across all projects. It provides for quality assurance with
unit, integration and systems testing procedures throughout design, development
and deployment to ensure quality delivery and client satisfaction. The Proxicom
Process also aggregates and replenishes the intellectual capital of Proxicom's
entire organization, thereby leveraging Proxicom's cumulative experience.
Proxicom continually seeks to evolve the Proxicom Process by identifying best
practices during project reviews with Proxicom's delivery teams and clients.

All of Proxicom's client engagements utilize the Proxicom Process, which
Proxicom customizes to suit specific project needs. The inclusion, timing and
cost of any phase will depend on the type of solution and the scope of work. The
Proxicom Process is scalable and may be used effectively for projects of all
sizes. The following are the phases of the Proxicom Process:

Define Internet Strategy. The scope of the Define Internet Strategy phase
ranges from defining an Internet vision for the client's overall business to
developing a strategy for a specific Internet solution or offering. The Internet
vision is a business strategy engagement where Proxicom assesses the client's
opportunities to leverage the Internet both as a technology and as a profitable
business medium. The Internet vision engagement often involves Proxicom's
interactive marketing discipline, which assesses market opportunities and
competition. For a specific Internet solution, the Define Internet Strategy
deliverable examines the strategic

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objectives of the solution, how its success will be measured, and how the
solution will be marketed, launched and publicized.

Plan Solution. The Plan Solution phase determines the scope and nature of
the engagement and articulates the project's tactical objectives. These
objectives are refined over the course of multiple working sessions with the
client. This phase results in a project plan outlining tasks, deliverables and
key milestones, which are translated into a detailed contractual agreement for
the next phases of the engagement. The plan includes detailed cost estimates as
well as organizational roles and responsibilities for Proxicom, the client and
other parties.

Design Solution. The Design Solution phase uses rapid prototyping
techniques in an iterative fashion to determine and refine application
requirements and specifications. A multi-disciplinary team works in tandem with
the client to translate the business, marketing, technical and creative
requirements of the solution into a cohesive design. This phase generally has
four major parts.

- Business Requirements Definition. Requirements, which form the
foundation for successful solution designs, are refined through
successive iterations and collaborations with appropriate client and
user constituencies.

- Creative Design Composition. Content and information for the solution
are defined and organized. The look and feel of the solution is designed
in a series of detailed site flow compositions that show page content,
navigation and links. Proxicom works closely with the client to
coordinate the brand image and advertising campaigns on an ongoing
basis.

- Technical Architecture Definition. The solution is analyzed from a
technical viewpoint, including the development, test and operational
architectures required. The technical, application and data
architectures of the solution are documented, addressing the
requirements for hardware, software and network environments, databases
and third party products.

- Specification and Prototype Development. Rapid prototyping is used to
construct portions of the solution. A visual prototype is used to define
page style, layout, information architecture and navigation. Functional
prototypes are used to test complex processing requirements and the
effectiveness of the application and data architectures. This iterative
process allows the client to review and refine the application as it
takes shape during the development process.

Implement Solution. The Implement Solution phase involves the further
enhancement of prototypes to construct a production-ready solution by further
developing and combining the prototypes. Unit, integration and systems testing
and quality assurance procedures are incorporated throughout the development
process to verify that the solution conforms with the design specifications.
Testing is performed across multiple browsers and environments to ensure uniform
accessibility. Once the client gives final approval of the developed solution,
Proxicom works with the client through installation and roll-out. This work may
include system migration, data conversion and training.

SALES AND MARKETING

Proxicom's sales and marketing activities are aligned with its vertical
industry groups. Each vertical industry group vice president is responsible for
developing Proxicom's business within each respective industry, targeting new
clients and cultivating repeat business with existing clients. Proxicom believes
that its vertical approach is a differentiating factor during the sales process,
as it demonstrates Proxicom's understanding of the client's specific business
and technology issues. Proxicom's sales approach is highly consultative and
involves industry and solutions experts who draw on their practical experiences
with other clients that have faced similar challenges. Proxicom also assigns
senior client executives to strategic accounts to support and expand client
relationships.
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Proxicom has 13 dedicated direct sales professionals to support the
vertical industry groups. These professionals are assigned to specific
geographic regions in order to maximize responsiveness to clients. They work
jointly with the vertical industry groups to secure new opportunities and manage
the sales process. Service directors responsible for delivery collaborate with
the sales professionals to form a joint sales approach for identifying and
winning follow-on business. Proxicom's marketing efforts are designed to create
brand recognition and demand for the Proxicom's services. Proxicom's four-person
marketing team is organized to provide support for each vertical industry group.
Marketing programs include promoting customer success stories, creating industry
and solution specific campaigns, pursuing public relations opportunities and
promoting Proxicom's executives for speaking opportunities and
Proxicom-sponsored event management.

Proxicom complements its internal sales and marketing efforts with selected
industry partnerships. Several Internet product vendors such as Microsoft
Corporation, Netscape Communications Corporation, Oracle Corporation,
BroadVision, Inc. and TRADE'ex Electronic Commerce Systems, Inc., and high-end
hosting vendors, such as Exodus Communications, Inc., MCI WorldCom, Inc. and ANS
Communications, Inc., recommend Proxicom services to their clients. See
"-- Marketing and Technology Relationships."

CLIENTS

Within each vertical group, Proxicom targets Global 1000 companies and
other large organizations. The following is a representative sample of
Proxicom's current clients.

<TABLE>
<S> <C>
ENERGY AND TELECOMMUNICATIONS RETAIL AND MANUFACTURING
Aramco Services Company Amgen, Inc.
Buckeye Pipe Line Company L.P. Calphalon Corporation
Pacific Gas and Electric Company Corning Incorporated
Schlumberger N.V. GAP, Inc.
TransCanada Pipelines Ltd. GE Plastics
Transport4 Harman International
Hewlett-Packard Corporation
FINANCIAL SERVICES Hoffmann-La Roche, Inc.
American International Group, Inc. McKessonHBOC
GE Capital Corporation Owens Corning
Kemper Insurance Companies Ritz Camera Centers, Inc.
Mercedes-Benz Credit Corp. Saab Cars USA, Inc.
Merrill Lynch & Co., Inc. Wyeth-Ayerst Laboratories

SERVICE INDUSTRIES
American Electronics Association
Booz-Allen & Hamilton Inc.
Cox Interactive Media, Inc.
Excite, Inc.
Interealty Corp.
Marriott International, Inc.
Ziff-Davis Inc.
</TABLE>

In 1998, our five largest clients accounted for approximately 38% of our
revenue. Our two largest clients in 1998, Pacific Gas and Electric Company and
General Electric Company, contributed approximately 15% and 14%, respectively,
of our revenue. In 1997, our five largest clients accounted for approximately
48% of our revenue. Our two largest clients, Pacific Gas and Electric Company
and General Electric Company, contributed approximately 24% and 10%,
respectively, of our revenue. As of December 31, 1998, we had approximately 150
ongoing client engagements.

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CASE STUDIES

CALPHALON CORPORATION: BUSINESS-TO-CONSUMER INTERNET COMMERCE

Calphalon Corporation is a leading U.S. manufacturer of cookware products
and kitchen accessories. The company's first Internet initiative was an
internally developed, one-way, static Web site. In preparation for the holidays,
Calphalon sought to launch a new site to take advantage of the full interaction
potential of the Internet. Calphalon engaged Proxicom to design and deploy its
new consumer focused transactional offering.

The consumer product experts in Proxicom's retail and manufacturing
practice began by determining an Internet strategy that would best differentiate
Calphalon. Through a rapid, iterative development process, Proxicom completed
the project's first phase in less than a month: a transaction enabled solution
including a select catalog of product information and images. Subsequent
expansion increased information for consumers, adding the full complement of
product information, new indexed product instruction, a database of recipes and
expanded transactions and interactive capabilities. A key success of the
solution was Proxicom's design of the site, which was integrated with
Calphalon's overall communications programs and image. The design, based on an
easy-to-navigate information architecture, was created to ensure an intuitive
user experience that meant quick adoption and satisfaction for its audience.

Proxicom helped Calphalon introduce a new means of doing business through
an Internet channel. The solution differentiates Calphalon's offering in
cookware products by uniting a complement of communications, content and
transaction capabilities through a single source. Using the site, Calphalon
gains invaluable knowledge of its customers and their interests. It establishes
a direct connection with a new audience and capitalizes on a new opportunity to
influence and serve the market for cooking enthusiasts. At the same time,
Calphalon enhances its brand presence. The solution has created efficiencies for
Calphalon's business and has been used to introduce a new line of cutlery
products to test market acceptance. As a result of the Internet initiative,
Calphalon has engaged Proxicom for ongoing site enhancements.

AMERICAN ELECTRONICS ASSOCIATION: A NEW INTERNET-BASED MEMBERSHIP SERVICE

The American Electronics Association is the largest high-tech trade
association, with over 3,000 member companies nationwide such as Intel
Corporation, Sun Microsystems Inc., Amazon.com, Yahoo! Inc. and Cisco Systems,
Inc. As a trusted partner for information, industry benchmarking, public policy,
international issues and conferences, AEA sought to leverage the Internet to
transform how it attracted and worked with members. Following a rigorous
competitive process, AEA selected Proxicom because of its experience and
integrated mix of strategy, technology and creative design skills. Proxicom's
charter was to reposition AEA and electronically enable their entire business
through a new Internet-based membership service.

In close collaboration with AEA, Proxicom's team repositioned the AEA brand
and communications identity. The new identity will serve as the front-end to a
fully functional Internet and extranet integrated into AEA's core systems.
Public and private sections are built on the Microsoft Site Server 3.0 Commerce
Edition platform which interacts with the legacy systems and builds off of
membership directory data. The site allows for distributed and dynamic rendering
of content that is presented to users through sophisticated personalization
based on their profile. The electronic commerce solution permits purchasing with
real-time variable pricing for AEA events and products. Additional features
include online discussions in support of grassroots campaigns, member generated
content, a comprehensive job bank section, queries across research data and a
powerful site analysis tool for audience and return on investment analysis.

The solution will redefine how AEA markets itself through a new brand and
message to the industry. AEA will gain a new, easier means to create and
distribute information and a powerful

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way to personalize it for the end user. This solution will be a vehicle that
increases sales and allows for direct, real-time communications with members and
industry experts. It will also provide a sophisticated knowledge management,
communications and commerce portal that will enable AEA to better attract and
retain members.

GE PLASTICS: INTRANET KNOWLEDGE MANAGEMENT SYSTEM

GE Plastics, a business unit of the General Electric Company, faced a
problem common to many businesses: electronic methods for internal communication
and information-sharing were inefficient. Employees attempting to share
marketing, technical, sales and customer service information were consistently
faced with time-consuming searches among decentralized databases and file
systems as well as un-networked personal computers. GE Plastics engaged Proxicom
to help define and deploy an organization-wide intranet that would facilitate
knowledge sharing across its five divisions.

Working closely with GE, Proxicom's dedicated client service team began the
project by benchmarking GE Plastics' internal business processes and
technologies. A strategy was then developed to build an intranet that was
searchable across the multiple business units and would leverage their immense
storehouses of information. Proxicom rapidly designed and deployed an
easy-to-use intranet that tied into the legacy databases. Through the intranet,
product, marketing, customer and technology data has become accessible and
searchable from a browser-based interface that simulates a centralized data
source. The intranet has facilitated many workflow improvements, including the
automation of the GE Plastics' customer satisfaction review process, which
includes extensive customer satisfaction surveys. Prior to the intranet, the
process was entirely paper-based. Currently, the surveys are not only available
on the intranet but are part of an overall workflow process incorporating trend
analysis and audit trail capabilities.

The intranet established at GE Plastics leveraged its legacy system
investments and enabled more rapid deployment of solutions at significantly
lower cost than a major infrastructure overhaul. GE Plastics' global intranet
knowledge management system produces significant benefits for GE Plastics as a
valuable decision-making tool. Effectiveness of marketing, sales, information
technology and customer service personnel has improved dramatically, as
employees throughout GE Plastics are spending less time searching and entering
information and more time doing their jobs, making decisions and implementing
strategic plans.

PACIFIC GAS AND ELECTRIC COMPANY: ENTERPRISE DISTRIBUTED OBJECT APPLICATION

Pacific Gas and Electric Company, one of the largest investor-owned
utilities in the country, provides gas and electric services to 12 million
people throughout Northern California. With the Gas Accord, approved by the
California Public Utilities Commission in August 1997, Pacific Gas and Electric
was faced with fundamental changes in its gas business and an increasingly
competitive environment. Pacific Gas and Electric had an opportunity to increase
revenue by offering value-added services, such as different levels of service,
flexible billing options, and helping customers reduce their operational and
financial risk. Pacific Gas and Electric chose Proxicom as its development
partner to design, develop and implement its comprehensive gas transportation
system.

The oil and gas experts in Proxicom's energy practice began by helping
Pacific Gas and Electric design a system that would be flexible enough to
facilitate all business transactions. This meant the system had to do more than
move the gas from place to place; it had to include functionality for selling
Pacific Gas and Electric 's transmission and storage capacity, trading the
commodity gas among energy marketers, delivering the gas to intermediaries and
end users, and billing customers (gas producers, gas marketers and end users).
The real challenge for Proxicom and Pacific Gas and Electric was that the system
had to be developed before the new structure was finalized, which meant that
requirements were changing throughout the development process. Proxicom built a
system that allowed instant access to pipeline capacity and throughput
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data, was dispersed across 20 states and Canada, and was extensible enough to
allow for quick time to market new services. Whereas the old system had taken
Pacific Gas and Electric six years to build, this system was put into operation
just 12 months after the requirements were developed. Proxicom used an iterative
object-oriented development methodology to create a multi-tiered application
architecture so that changes in business rules, as are often necessitated by a
rapidly changing industry, could be easily incorporated.

Proxicom helped Pacific Gas and Electric become a competitive player at the
forefront of the newly restructured gas industry. The system that was developed
is at the core of Pacific Gas and Electric 's gas business, accounting for $360
million in revenue, with two million residential, 1,200 industrial and 150
energy marketer customers. This new system provides strategic trend information
to Pacific Gas and Electric and enables it to offer a high level of services to
its customers, including remote access via the Internet. Because the gas
transportation system was designed to be flexible and extensible, Pacific Gas
and Electric and Proxicom were able to reuse the components developed under the
Gas Accord to develop a gas gathering contract system in just three months. This
new system allows Pacific Gas and Electric to leverage its existing system
infrastructure and reduce maintenance and support costs.

MARKETING AND TECHNOLOGY RELATIONSHIPS

Proxicom complements its internal sales and marketing efforts with formal
and selected industry partnerships. A number of Internet product vendors,
including Microsoft Corporation, Netscape Communications Corporation, Oracle
Corporation, BroadVision, Inc. and TRADE'ex Electronic Commerce Systems, Inc.,
and leading hosting providers, including Exodus Communications, Inc., Digex
Incorporated, MCI WorldCom, Inc. and ANS Communications, Inc., recommend
Proxicom services to their clients.

Proxicom has arrangements with a number of technology vendors to obtain
privileged access to their technologies. By establishing these alliances,
Proxicom has gained pre-release technology which enables it to maintain
leading-edge technical skills. Microsoft, Netscape and BroadVision have all
provided advance versions of their technologies to Proxicom. Obtaining the
validation by industry leaders such as Microsoft and Netscape has added
considerably to Proxicom's visibility, credibility and brand image. Proxicom's
relationships with Microsoft and BroadVision are summarized below.

Proxicom has been a Microsoft Certified Solution Provider Partner since
1995, when it began actively cultivating a broad base of Microsoft products,
skills and certifications. In the spring of 1998, Proxicom was promoted to
Solutions Provider Partner, the highest level within that program. The Solution
Provider Partner program provides Internet-specific technical assistance.
Through this program, Microsoft and Proxicom conduct joint marketing efforts,
training programs and sales initiatives, in particular targeting Proxicom's
specialty industries.

Recently, Proxicom has become a BroadVision Integration Partner.
BroadVision and Proxicom work together to deploy BroadVision's "One-to-One"
commerce platform. In addition, several joint marketing events and sales
activities are planned. As an Integration Partner, Proxicom receives high-level
technical and sales support from BroadVision. Creating this relationship with
BroadVision allows Proxicom to enter the packaged applications systems
integration market, leveraging its Internet expertise with the market demand for
rapid deployment of new technology.

In addition, in March 1999, Proxicom signed an agreement with Ericsson
Telecommunicazioni SpA. Under the agreement, Proxicom made a 19.9% investment in
an Italian joint venture company. Ericsson will own the remaining 81.1%
interest. Proxicom will provide Internet solutions to Italian-based businesses
through the joint venture company.

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IBIS CONSULTING MERGER

On August 21, 1998, Proxicom merged with IBIS Consulting, Inc. by
exchanging 4,988,297 shares of Proxicom common stock and options to purchase
345,034 shares of Proxicom common stock for all the common stock of IBIS
Consulting. IBIS Consulting is a San Francisco-based Internet professional
services provider. IBIS Consulting's services and culture are highly
complementary to those of Proxicom. Proxicom has integrated IBIS Consulting's
systems, Internet professionals and management into its operations. As a result
of this transaction, Proxicom has expanded its presence to the West Coast and
broadened its resource base, sales reach and expertise.

PERSONNEL AND CULTURE

As of December 31, 1998, Proxicom had 380 employees. Of these, 311 were
consulting and service delivery professionals, and 69 were management and
administrative personnel performing marketing, sales, human resources, finance,
accounting, legal, internal information systems and administrative functions.

Proxicom believes that its ability to provide integrated business strategy,
technology and creative design services is dependent upon the continuation of
its culture of mutual respect among the three disciplines. As a result,
Proxicom's employees and its culture are fundamental to the value proposition it
offers clients. Proxicom's culture is predicated on personal integrity, open
communications, collaboration and professional development. Proxicom fosters an
entrepreneurial spirit that attracts talented professionals, creates innovative
solutions and provides the opportunity for every individual to succeed.

Proxicom has a particular emphasis on recruiting and retaining people with
leading-edge technical skills and project management experience. Proxicom has
been very successful with internal referral-driven recruiting, which has
accounted for nearly one-third of its hires to date. Proxicom continues to
encourage employee referrals with monetary incentives. Proxicom has developed a
structured recruiting program including a staff of dedicated recruiters tasked
with bringing in experienced professionals, MBA and college hires, and
maintaining a tracking database of potential candidates. Proxicom runs a
year-round internship program with several leading undergraduate and MBA
programs.

In addition to recruiting, Proxicom is committed to employee training and
retention. Proxicom has a dedicated organizational development team that
initiates and oversees the training and development of Proxicom's professionals.
Key organizational development initiatives include a week-long "boot camp"
orientation and training program for all new employees and "Proxicom
University," which provides ongoing technical and project management classes as
well as career path management and guidance. To support its internal initiatives
for employee development, Proxicom has also instituted programs such as tuition
reimbursement and external training. Proxicom plans to continue to invest in
attracting the best employees and in maintaining a low turnover rate.

None of Proxicom's employees is represented by a labor union, nor has
Proxicom ever experienced a work stoppage. Proxicom believes its employee
relations are good.

COMPETITION

The market for Proxicom's services is subject to rapid technological change
and increased competition from large existing players, new entrants and internal
information systems groups.

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Traditional players competing in this space can be broken down into four major
categories -- large systems integrators (e.g., International Business Machines
Corporation, Andersen Consulting and Computer Sciences Corporation), specialty
systems integrators (e.g., Cambridge Technology Partners, Inc. and Sapient
Corporation), strategy consulting firms (e.g., McKinsey & Company, Inc. and
Boston Consulting Group, Inc.), and Internet professional services providers
(e.g., USWeb/CKS, Viant Corporation, Scient Corporation and iXL Enterprises,
Inc.) -- many of which have considerably more financial resources, marketing
depth and name recognition than Proxicom. Occasionally Proxicom competes with
newer entrants including interactive marketing firms (e.g., Agency.com, Ltd. and
Modem Media.Poppe Tyson, Inc.). Proxicom expects future consolidation in the
Internet professional services market to create larger, more viable competitors.
Potential clients' internal information systems groups also compete with
Proxicom.

Proxicom believes the principal competitive factors in the Internet
professional services market include Internet expertise and talent, client
references, integrated strategy, technology and creative design services,
quality, pricing and speed of service delivery and vertical industry knowledge.
Proxicom believes it competes favorably with respect to these factors. Proxicom
believes it is in a good position to attract talent with its growth and an
entrepreneurial culture. Proxicom believes it offers its clients a unique
combination of integrated strategy, technology and creative design services. In
addition, Proxicom believes it has established itself as a leader in
Internet-specific industry and domain expertise. Through its replicable solution
frameworks and its attention to client satisfaction, Proxicom has created a
strong track record of customer successes. Proxicom believes the market will
continue to offer significant opportunity for multiple players.

INTELLECTUAL PROPERTY RIGHTS

Proxicom's success is dependent, in part, upon its proprietary Proxicom
Process, its solution components, and other intellectual property rights. We do
not have any patents or patent applications pending. Proxicom relies on a
combination of trade secret, nondisclosure and other contractual agreements, and
copyright and trademark laws to protect its proprietary rights. Existing trade
secret and copyright laws afford us only limited protection. Proxicom enters
into confidentiality agreements with its employees, generally requires that its
consultants and clients enter into such agreements, and limits access to and
distribution of Proxicom's proprietary information. There can be no assurance
that the steps Proxicom has taken in this regard will be adequate to deter
misappropriation of its proprietary information or that Proxicom will be able to
detect unauthorized use and take appropriate steps to enforce its intellectual
property rights.

Proxicom's business generally involves the development of software
applications for specific client engagements. Ownership of such software is
frequently assigned to the client, with Proxicom retaining a license or other
contractual rights for limited uses.

FACILITIES

Proxicom's headquarters and principal administrative, finance, legal, sales
and marketing operations are located in approximately 65,000 square feet of
leased office space in Reston, VA. Proxicom's lease is for a term of seven years
and expires on July 13, 2002. The building is beneficially owned by Mario M.
Morino, one of our stockholders and a member of our board of directors. Proxicom
also leases office space in San Francisco, CA, New York, NY, Munich, Germany,
Sacramento, CA, Chicago, IL and Houston, TX. Proxicom expects that it will need
additional space as it expands its business and believes that it will be able to
obtain space as needed.

LEGAL PROCEEDINGS

Proxicom is not a party to any material legal proceedings.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table presents information about each of Proxicom's executive
officers and directors. Proxicom's board of directors is divided in to three
classes serving staggered three-year terms.

<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION(S) WITH COMPANY EXPIRES
---- --- ------------------------ --------
<S> <C> <C> <C>
Raul J. Fernandez.............. 32 President, Chief Executive Officer and Chairman 2001
Brenda A. Wong................. 34 Senior Vice President, Organizational Strategies 2001
and Director
Larry D. Clark................. 41 Senior Vice President, Services
Harold R. Gubnitsky............ 36 Senior Vice President, Sales and Marketing
Kenneth J. Tarpey.............. 46 Senior Vice President, Chief Financial Officer
and Treasurer
Christopher Capuano............ 38 Vice President, General Counsel and Corporate
Secretary
David C. Hodgson............... 42 Director 2002
Jack Kemp...................... 63 Director 2000
Theodore J. Leonsis............ 42 Director 2002
John A. McKinley, Jr........... 41 Director 2000
Mario M. Morino................ 55 Director 2000
</TABLE>

Raul J. Fernandez founded Proxicom and has served as President, Chief
Executive Officer and Chairman of the board of directors of Proxicom since its
inception in 1991. Prior to starting Proxicom, Mr. Fernandez served as the
Director of Emerging Technologies at Digicon, Inc., a government contracting
firm. Mr. Fernandez is a member of the board of directors of the Northern
Virginia Technology Council, a trade organization.

Brenda A. Wong has been Senior Vice President, Organizational Strategies
and a director since August 1998. Prior to joining Proxicom, she was president
of IBIS Consulting, Inc., an Internet and information technology solutions
provider which she co-founded in February 1994 and which merged with Proxicom in
August 1998. From 1989 to 1993, Ms. Wong was a Senior Consultant at Price
Waterhouse LLP.

Larry D. Clark has been Senior Vice President, Services since March 1998.
Prior to joining Proxicom, from May 1992 until March 1998, Mr. Clark held
various executive positions with MCI Systemhouse Corporation, the systems
integration, technology development and information technology outsourcing arm
of MCI Communications Corp., where he was, most recently, Vice President and
General Manager of the United States East Region and was responsible for
managing the company's East Region business unit. From 1990 until 1992, Mr.
Clark was a Senior Engagement Manager at McKinsey & Company, Inc., a consulting
firm. Prior to that, Mr. Clark held various management positions with The
Information Consulting Group and Andersen Consulting.

Harold R. Gubnitsky has been Senior Vice President, Sales and Marketing
since January 1999. Prior to joining Proxicom, from August 1995 to January 1999,
he served as a Vice President of Cambridge Technology Partners, Inc., a
technology systems integration firm. From 1991 to 1995, Mr. Gubnitsky was the
managing director of The Systems Consulting Group, Inc., a technology consulting
company that was sold to Cambridge Technology Partners, Inc.

Kenneth J. Tarpey has been Senior Vice President and Chief Financial
Officer of Proxicom since March 1997. Prior to joining Proxicom, from August
1996 until March 1997, Mr. Tarpey

38
<PAGE> 43

served as Vice President and Chief Financial Officer of Nat Systems
International, Inc., a developer and vendor of software application development
tools. From April 1995 to August 1996, Mr. Tarpey served as Vice President,
Finance, Chief Financial Officer, Treasurer and Assistant Secretary of SQA,
Inc., a developer and marketer of automated quality testing software products.
From November 1989 to April 1995, Mr. Tarpey held various executive positions at
Symbolics, Inc., a hardware and software company, including Chairman of the
board of directors, President, Chief Executive Officer and Chief Financial
Officer.

Christopher Capuano has been Vice President, General Counsel and Corporate
Secretary of Proxicom since June 1996 and was a director from August 1996 until
August 1998. Prior to joining Proxicom, from 1993 until June 1996, Mr. Capuano
was a Manager and Senior Manager with Price Waterhouse LLP. From 1994 to 1997,
Mr. Capuano was also an Adjunct Professor of Law at Georgetown University Law
Center. Mr. Capuano was associated previously with the law firm of Willkie, Farr
& Gallagher.

David C. Hodgson has been a director of Proxicom since August 1996. Mr.
Hodgson is a managing member of General Atlantic Partners, LLC, a private equity
investment firm that invests in software and information technology companies on
a worldwide basis. Mr. Hodgson has been with General Atlantic Partners, LLC (or
its predecessor) since 1982. Mr. Hodgson is also a director of Atlantic Data
Services, Inc., a provider of professional computer services for the banking
industry, Baan Company N.V., a business management software company, ProBusiness
Services, Inc., an employee administrative services company, and several private
information technology companies.

Jack Kemp has been a director of Proxicom since January 1997. Mr. Kemp has
been Co-Director of Empower America from 1993 to the present. Mr. Kemp served as
the Secretary of Housing and Urban Development from February 1989 until January
1992 and, before that, for 18 years as a member of the United States House of
Representatives. Mr. Kemp is also a director of Oracle Corporation, American
Bankers Insurance Group, Inc., Carson, Inc., a manufacturer and marketer of
personal care products, Everen Capital Corporation, a securities firm, and The
Sports Authority, Inc., a sporting goods retailer.

Theodore J. Leonsis has been a director of Proxicom since January 1999. In
March 1999, Mr. Leonsis was appointed President, Interactive Properties Group of
America Online, Inc. From November 1996 to March 1999, Mr. Leonsis was President
of America Online Studios, a division of America Online, Inc. Prior to that, Mr.
Leonsis was President of America Online Services Company, also a division of
America Online, Inc. from 1994 to 1996. Mr. Leonsis was previously Chief
Executive Officer of Redgate Communications Corporation, a media marketing
company which was founded in 1987 and sold to America Online, Inc. in 1994. Mr.
Leonsis is also a director of U.S.A. Floral Products, Inc., a floral retailer,
and Preview Travel, Inc., an Internet travel company.

John A. McKinley, Jr. has been a director of Proxicom since January 1997.
Mr. McKinley has been Senior Vice President, Chief Technology Officer of Merrill
Lynch & Co., Inc. since October 1998. Prior to that, from 1995 to 1998, Mr.
McKinley was the Chief Technology and Information Officer for GE Capital
Corporation. From February 1982 until January 1995, Mr. McKinley held various
positions with Ernst & Young LLP, where he was most recently a partner
concentrating in the financial services and airline industries.

Mario M. Morino has been a director of Proxicom since January 1997. Mr.
Morino is an investor in and adviser to various firms in the information
technology sector. Mr. Morino was co-founder and Vice Chairman of Legent
Corporation until his retirement in September 1992.

39
<PAGE> 44

BOARD COMMITTEES

The audit committee reviews, acts on and reports to the board of directors
with respect to various auditing and accounting matters. These matters include
the selection of Proxicom's auditors, the scope of the annual audits, fees to be
paid to the auditors, the performance of Proxicom's independent auditors and
Proxicom's accounting practices. The audit committee consists of Messrs. Hodgson
and McKinley.

The compensation committee determines the salaries and incentive
compensation of Proxicom's officers and provides recommendations for the
salaries and incentive compensation of other employees and consultants. The
compensation committee also administers Proxicom's various incentive
compensation, stock and benefit plans. The compensation committee consists of
Messrs. Hodgson, Leonsis and Morino.

DIRECTOR COMPENSATION

Proxicom does not currently compensate its directors who are also employees
of Proxicom. Each non-employee director currently receives $1,500 of cash
compensation and is reimbursed for reasonable travel expenses for each board
meeting attended. For a description of the 1997 Stock Option Plan for
Non-Employee Directors, see "-- Stock Plans."

SEVERANCE AGREEMENTS

On February 16, 1999, Christopher Capuano, Larry D. Clark and Kenneth J.
Tarpey each entered into severance agreements with Proxicom. These agreements
provide that, in the event of termination, each of Messrs. Capuano, Clark and
Tarpey are to receive severance payments from Proxicom for services previously
rendered. These payments are to include the following amounts: (1) any
compensation accrued by the employee, but not yet paid by Proxicom, including
any unpaid salary, a pro rata portion of the employee's annual bonus and any
accrued vacation pay and (2) one year of the employee's salary and annual bonus.
Proxicom will also continue for a period of one year or such longer period as
may be required by law to provide benefits to the employee at least equal to
those that would have been provided to him had his employment not been
terminated. Messrs. Capuano, Clark and Tarpey are entitled to these payments and
benefits if (1) they are terminated other than for cause or (2) they terminate
their employment for good reason, as defined in the agreement, following a
change in control.

40
<PAGE> 45

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to or earned by
Proxicom's Chief Executive Officer and all other executive officers whose salary
and bonus for services rendered in all capacities to Proxicom for the fiscal
year ended December 31, 1998 exceeded $100,000. We will use the term "named
executive officers" to refer to these people later in this prospectus.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
----------------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION(S) SALARY BONUS OTHER OPTIONS/SARS
- ------------------------------ -------- -------- ----- ------------
<S> <C> <C> <C> <C>
Raul J. Fernandez............. $185,742 $ -- $720(1) --
Chairman, Chief Executive
Officer
and President
Larry D. Clark................ 262,990 113,836 -- 300,000
Senior Vice President,
Services
Christopher Capuano........... 166,300 41,450 -- 25,000
Vice President, General
Counsel and Secretary
Kenneth J. Tarpey............. 154,553 44,250 -- 50,000
Senior Vice President, Chief
Financial Officer and
Treasurer
</TABLE>

- -------------------------
(1) Pertains to an automobile allowance.

OPTION GRANTS IN LAST FISCAL YEAR

The following table summarizes the options granted to each of Proxicom's
named executive officers during the fiscal year ended December 31, 1998.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR PRICE(2) DATE 5% 10%
- ---- ---------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Larry D. Clark............ 300,000 13.5% $4.77 3/30/08 $899,948 $2,280,645
Christopher Capuano....... 25,000 1.1 4.77 1/23/08 74,996 190,054
Kenneth J. Tarpey......... 50,000 2.2 7.00 4/1/08 220,113 557,810
</TABLE>

- -------------------------
(1) The potential realizable value is calculated based on the term of the option
at the time of grant (10 years). Assumed stock price appreciation of 5% and
10% is based on the fair value at the time of the grant.

(2) The exercise price equals the fair market value of the common stock as of
the grant date as determined by the board of directors.

41
<PAGE> 46

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table presents information with respect to stock options
owned by the named executive officers at December 31, 1998 and with respect to
stock options exercised by the named executive officers during the fiscal year
ended December 31, 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry D. Clark................... -- 300,000 -- $1,869,000
Christopher Capuano.............. 20,000 55,000 149,650 373,700
Kenneth J. Tarpey................ 25,000 125,000 170,750 712,250
</TABLE>

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

(1) There was no public trading market for the common stock as of December 31,
1998. Accordingly, these values have been calculated on the basis of the
assumed initial public offering price of $11.00 per share, less the
applicable exercise price per share, multiplied by the number of shares
underlying such options.

STOCK PLANS

1996 Stock Option Plan. The 1996 Stock Option Plan provides for the grant
of options and other stock-based compensation to employees, directors, officers
and consultants of Proxicom. There are 7,000,000 shares of common stock reserved
for issuance under this plan. As of March 26, 1999 there were options to
purchase or rights to receive 4,790,680 shares of common stock at a weighted
average exercise price of $7.77 per share outstanding under this plan. Options
granted under this plan typically vest over time, subject to acceleration in the
event of a change of control of Proxicom. No option granted under this plan is
exercisable after the tenth anniversary of the option's date of grant.

1997 Stock Option Plan for Non-Employee Directors. The 1997 Stock Option
Plan for Non-Employee Directors provides for automatic grants of stock options
to eligible non-employee directors. There are 350,000 shares of common stock
reserved for issuance under this plan. As of March 26, 1999, there were options
to purchase 186,667 of these shares at a weighted average price of $5.26 per
share outstanding under this plan. Under the Directors Plan, each non-employee
director is granted an option to purchase 35,000 shares of common stock upon
first election to the board. Each non-employee director is also granted an
additional option to purchase 35,000 shares of common stock upon reelection to
the board. See "-- Director Compensation." Options granted under this plan
before December 15, 1998 vest over three years, subject to acceleration in the
event of a change of control of Proxicom. Options granted after December 15,
1998 vest on the date of grant. No option granted under this plan is exercisable
after the tenth anniversary of the option's date of grant.

Employee Stock Purchase Plan. Proxicom's Employee Stock Purchase Plan
provides for the issuance of 1,000,000 shares of common stock. All Proxicom
employees whose customary employment is more than 20 hours per week and for more
than five months in any calendar year are eligible to participate in the Stock
Purchase Plan, provided that any employee who would own five percent or more of
the total combined voting power or value of Proxicom's stock immediately after
any grant is not eligible to participate. Eligible employees must authorize
Proxicom to deduct an amount from their pay during offering periods established
by the

42
<PAGE> 47

compensation committee. Common stock may be purchased at not less than 85% of
the lesser of the market price of the common stock on the first or last business
day of each offering period.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

For more information about transactions and relationships between Proxicom
and Messrs. Hodgson, Leonsis and Morino, you should see the "-- Executive
Officers and Directors" and "Certain Transactions" subsections of this
prospectus.

43
<PAGE> 48

CERTAIN TRANSACTIONS

STOCK PURCHASE AGREEMENTS AND RELATED MATTERS

Series A Purchase Agreement. On August 30, 1996, Proxicom sold the
following numbers of shares of Series A convertible preferred stock to the
following purchasers at a price of $3.27 per share.

<TABLE>
<S> <C>
General Atlantic Partners 34, L.L.P. ....................... 1,389,218
GAP Coinvestment Partners, L.P. ............................ 240,751
</TABLE>

At the same time, Proxicom also granted General Atlantic Partners 34 and GAP
Coinvestment warrants exercisable for 861,834 shares and 149,544 shares,
respectively, of Series A preferred stock, or common stock in the event of an
initial public offering of securities, at an exercise price of $7.91 per share.
In this transaction, Proxicom repurchased from Mr. Fernandez, Proxicom's
Chairman, President and Chief Executive Officer, 100,917 shares of common stock
at a price of $3.27 per share. In addition, Proxicom, General Atlantic Partners
34, GAP Coinvestment and Mr. Fernandez entered into a stockholders agreement and
a registration rights agreement. See "-- Stockholders Agreement" and
"-- Registration Rights Agreement." Under the terms of the Series A preferred
stock, Mr. Hodgson was elected to the board of directors. See "Management." In
January 1998, General Atlantic Partners 34 and GAP Coinvestment converted
347,311 shares and 60,189 shares of Series A preferred stock, respectively, into
an equivalent number of shares of common stock. General Atlantic Partners 34 and
GAP Coinvestment have executed an irrevocable commitment to exercise their
warrants immediately prior to completion of this offering.

Series B Purchase Agreement. On February 20, 1997, Proxicom sold the
following numbers of shares of Series B convertible preferred stock to the
following purchasers at a price of $4.17 per share.

<TABLE>
<S> <C>
General Atlantic Partners 34, L.L.P. ....................... 81,535
GAP Coinvestment Partners, L.P. ............................ 14,388
FBR Technology Venture Partners L.P. ....................... 23,981
The Mario M. Morino Trust................................... 239,808
</TABLE>

In this transaction, Proxicom repurchased from Mr. Fernandez 359,712 shares of
common stock at a price of $4.17 per share. Also, FBR Technology Venture
Partners and the Morino Trust became parties to the above referenced
stockholders agreement and registration rights agreement. See "-- Stockholders
Agreement" and "-- Registration Rights Agreement." Under the stockholders
agreement's terms, Mr. Morino was elected to the board of directors. See
"Management."

Series C Purchase Agreement. On November 24, 1997, Proxicom sold 419,302
shares of Proxicom Series C convertible preferred stock to GE Capital
Corporation at a price of $4.77 per share. In this transaction, GE Capital
became a party to the above referenced stockholders agreement and the
registration rights agreement. See "-- Stockholders Agreement" and
"-- Registration Rights Agreement."

During the fiscal years ended December 31, 1996, 1997 and 1998, GE Capital
paid Proxicom approximately $463,000, $1,056,000 and $775,000 for Internet
professional services. Proxicom expects to continue to provide Internet
professional services to GE Capital.

44
<PAGE> 49

Series D Purchase Agreement. On February 1, 1999, Proxicom sold the
following number of shares of Series D convertible preferred stock to the
following purchasers at a purchase price of $6.00 per share.

<TABLE>
<S> <C>
Jack Kemp................................................... 16,373
Theodore Leonsis............................................ 43,660
John McKinley............................................... 43,660
General Atlantic Partners 52, L.P. ......................... 628,850
GAP Coinvestment Partners II, L.P. ......................... 141,571
The Mario M. Morino Trust................................... 54,575
GE Capital Equity Investments, Inc. ........................ 250,350
The Washington Post Company................................. 39,294
</TABLE>

In this transaction, all new investors became parties to the stockholders
agreement and the registration rights agreement. See "-- Stockholders Agreement"
and "-- Registration Rights Agreement." Also, simultaneously with this
transaction, Messrs. Fernandez, Hoenigman and McDonald and Ms. Wong sold a total
of 698,667 shares of common stock to the purchasers of the Series D preferred
stock for aggregate consideration of $4.2 million.

Stockholders Agreement. Proxicom, Messrs. Fernandez, Hoenigman and
McDonald, Ms. Wong each of the preferred stockholders and the former
stockholders of ad hoc Interactive, Inc. are parties to a stockholders
agreement. The stockholders agreement contains arrangements with respect to
voting, rights of first refusal and "tag-along" rights, as well as other
agreements relating to corporate governance. The stockholders agreement will
terminate by its terms immediately prior to the closing of this offering.

REGISTRATION RIGHTS AGREEMENT

Proxicom has a registration rights agreement with Messrs. Fernandez,
Hoenigman and McDonald, Ms. Wong, the former stockholders of ad hoc Interactive,
Inc. and each of the preferred stockholders. The stockholder parties to this
agreement own beneficially an aggregate of 19,056,133 shares of common stock.
After this offering closes, General Atlantic Partners 34 and 52, GAP
Coinvestment and GAP Coinvestment II will be entitled to one demand registration
right under the Securities Act, subject to limitations. This means they can
demand that Proxicom register the sale of shares. In addition, all stockholder
parties will be entitled to piggyback registration rights as to the registration
of the sale of their shares of common stock under the Securities Act. In the
event that Proxicom proposes to register any shares of its common stock under
the Securities Act, either for its account or for the account of other security
holders, the holders of shares to be registered are entitled to receive notice
of the registration and are entitled to include their shares in it. The
underwriters of an offering can limit the number of shares of common stock held
by security holders with registration rights to be included in the registration.

OTHER TRANSACTIONS

In December 1995, Proxicom loaned $155,000 to a partnership owned by Mr.
Fernandez. The partnership purchased computer equipment with the borrowed funds
and leased the equipment to Proxicom. The partnership ceased operations in 1997
and all assets and liabilities of the partnership were transferred to Proxicom
at book value of approximately $90,000.

In February 1997, Proxicom leased approximately 65,000 square feet of
office space in Reston, VA. The lessor is 11600 Sunrise Limited Partnership, a
limited partnership of which Mario M. Morino, a Proxicom director and
stockholder, is the general partner. The lease term commenced on July 1, 1997
and has a seven-year term. Lease payments totaled approximately $331,000 for
1997 and $864,000 for 1998 and will increase at an annual rate of 3%.

We believe that all transactions disclosed above were made on terms no less
favorable to Proxicom than would have been obtained from unaffiliated third
parties.
45
<PAGE> 50

PRINCIPAL AND SELLING STOCKHOLDERS

The following table presents information regarding the beneficial ownership
of common stock as of March 26, 1999 and as adjusted to reflect the sale of
common stock in this offering by:

- each person (or group of affiliated persons) who is the beneficial owner
of more than 5% of the outstanding common stock;

- each of the named executive officers;

- each Proxicom director;

- all of the executive officers and directors as a group; and

- each selling stockholder.

The persons named in this table have sole voting power for all shares of
common stock shown as beneficially owned by them, subject to community property
laws where applicable and except as indicated in the footnotes to this table.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, or SEC. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days after March 26, 1999, are deemed
outstanding. Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.

The "Beneficial Ownership After the Offering" share numbers and percentages
assume that the option granted to the underwriters to purchase additional shares
is not exercised.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING AFTER THE OFFERING
----------------------- SHARES -----------------------
NAME NUMBER PERCENTAGE TO BE SOLD NUMBER PERCENTAGE
- ---- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Raul J. Fernandez.............. 8,101,759 41.0% -- 8,101,759 34.1%
General Atlantic Partners,
LLC(1)....................... 3,913,664 19.8 -- 3,913,664 16.5
Vincent Hoenigman(2)........... 1,446,494 7.7 250,000 1,196,494 5.0
Scott McDonald(3).............. 1,377,983 7.0 200,000 1,177,983 5.0
Carsten Sorensen(4)............ 262,537 1.3 50,000 212,537 *
Christopher Capuano............ 56,250 * -- 56,250 *
Larry D. Clark(5).............. 75,000 * -- 75,000 *
Kenneth J. Tarpey(6)........... 65,500 * -- 65,500 *
David C. Hodgson(1)(7)......... 3,936,998 19.9 -- 3,936,998 16.6
Jack Kemp(8)................... 48,334 * -- 48,344 *
Theodore J. Leonsis(9)......... 101,667 * -- 101,667 *
John A. McKinley, Jr.(10)...... 90,001 * -- 90,001 *
Mario M. Morino(11)............ 346,475 1.8 -- 346,475 1.5
Brenda A. Wong(12)............. 1,730,820 8.8 -- 1,730,820 7.3
All executive officers and
directors as a group (11
persons)..................... 14,552,804 72.9 -- 14,552,804 60.7
</TABLE>

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

* Less than 1% of the outstanding shares.

(1) General Atlantic Partners 34 holds 1,041,907 shares of Series A preferred
stock, 81,535 shares of Series B preferred stock, 347,311 shares of common
stock and a warrant to

46
<PAGE> 51

purchase 861,834 shares of Series A preferred stock. GAP Coinvestment holds
180,562 shares of Series A preferred stock, 14,388 shares of Series B
preferred stock, 60,189 shares of common stock and a warrant to purchase
149,544 shares of Series A preferred stock. Upon the closing of this
offering, the warrants will be exercised for shares of common stock.
General Atlantic Partners 52 holds 628,850 shares of Series D preferred
stock and 331,372 shares of common stock. GAP Coinvestment II holds 141,571
shares of Series D preferred stock and 74,601 shares of common stock. The
general partner of General Atlantic Partners 34 and General Atlantic
Partners 52 is GAP, LLC, a Delaware limited liability company. The managing
members of GAP LLC are also the general partners of GAP Coinvestment and
GAP Coinvestment II. Mr. Hodgson is a managing member of GAP LLC. Mr.
Hodgson is a general partner of GAP Coinvestment and GAP Coinvestment II.
General Atlantic Partners 34, General Atlantic Partners 52, GAP
Coinvestment, GAP Coinvestment II and GAP LLC, together, are a "group"
within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934.
Mr. Hodgson disclaims beneficial ownership of the securities held by
General Atlantic Partners 34, General Atlantic Partners 52, GAP
Coinvestment and GAP Coinvestment II, except to the extent of his
respective pecuniary interest in those entities. The address of GAP LLC and
Mr. Hodgson is c/o General Atlantic Service Corporation, 3 Pickwick Plaza,
Greenwich, CT 06830.

(2) Includes 149,650 shares of common stock held in escrow over which Mr.
Hoenigman has sole voting power. Mr. Hoenigman is an employee of Proxicom.
His address is c/o Proxicom, Inc., 11600 Sunrise Valley Drive, Reston, VA
20191.

(3) Includes 171,099 shares of common stock held in escrow over which Mr.
McDonald has sole voting power. Mr. McDonald is an employee of Proxicom.
His address is c/o Proxicom, Inc., 11600 Sunrise Valley Drive, Reston, VA
20191.

(4) Represents shares of common stock issuable upon the exercise of stock
options. Mr. Sorensen is an employee of Proxicom.

(5) Represents 75,000 shares of common stock issuable upon the exercise of
stock options.

(6) Includes 12,500 shares of common stock issuable upon the exercise of stock
options and 3,000 shares of common stock owned by members of Mr. Tarpey's
immediate family.

(7) Includes all of the shares beneficially owned by GAP LLC and 23,334 shares
of common stock issuable upon the exercise of stock options.

(8) Includes 23,334 shares of common stock issuable upon the exercise of stock
options and 16,373 shares of Series D preferred stock.

(9) Includes 35,000 shares of common stock issuable upon the exercise of stock
options and 43,660 shares of Series D preferred stock.

(10) Includes 23,334 shares of common stock issuable upon the exercise of stock
options and 43,660 shares of Series D preferred stock.

(11) Represents (a) 239,808 shares of Series B preferred stock held by the Mario
M. Morino Trust, (b) 54,575 shares of Series D preferred stock held by the
Mario M. Morino Trust and (c) 23,334 shares of common stock issuable upon
the exercise of stock options.

(12) Includes 178,082 shares of common stock held in escrow over which Ms. Wong
has sole voting power.

47
<PAGE> 52

DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the closing of the offering, Proxicom's authorized capital stock will
consist of 100,000,000 shares of common stock, $.01 par value per share, and
10,000,000 shares of preferred stock, $.01 par value per share.

COMMON STOCK

As of March 26, 1999, there were 15,508,253 shares of common stock
outstanding and held of record by 164 stockholders. Based upon the number of
shares outstanding as of that date and giving effect to the issuance of
4,000,000 shares of common stock by Proxicom in this offering and the conversion
of the outstanding preferred stock and warrants there will be 23,739,447 shares
of common stock outstanding upon completion of this offering.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders. They do not have cumulative voting
rights. As a result, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably,
dividends, if any, as the board of directors may declare out of funds legally
available, subject to any preferential dividend rights of any then-outstanding
preferred stock. Upon the liquidation, dissolution or winding up of Proxicom,
the holders of common stock are entitled to receive ratably the net assets of
Proxicom available after the payment of all debts and other liabilities and
subject to the prior rights of any then-outstanding preferred stock. Holders of
the common stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of common stock are, and the shares offered by
Proxicom in the offering will be, when issued in consideration for payment,
fully paid and nonassessable. The rights, preferences and privileges of holders
of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock which Proxicom may
designate and issue in the future. See "-- Preferred Stock."

PREFERRED STOCK

As of March 26, 1999, Proxicom had outstanding an aggregate of 3,219,816
shares of preferred stock, consisting of 1,222,469 shares of Series A
convertible preferred stock, 359,712 shares of Series B convertible preferred
stock, 419,302 shares of Series C convertible preferred stock and 1,218,333
shares of Series D convertible preferred stock. All of these shares will
automatically convert to common stock, on a one share for one share basis,
immediately prior to this offering's closing.

Following the closing of this offering, the board of directors will be
authorized, without further stockholder approval, to issue from time to time up
to an aggregate of 10,000,000 shares of preferred stock in one or more series.
The board of directors may fix or alter the designations, preferences, rights
and any qualification, limitations or restrictions of the shares of any series,
including the dividend rights, dividend rates, conversion rights, voting rights,
redemption terms and prices, liquidation preferences and the numbers of shares
constituting any series. As of the closing of this offering, no shares of
preferred stock will be outstanding. Although the ability of the board of
directors to designate and issue preferred stock could provide flexibility in
possible acquisitions or other corporate purposes, issuance of preferred stock
may have adverse effects on the holders of common stock. The effects include

- restrictions on dividends on the common stock if dividends on the
preferred stock have not been paid;

- dilution of voting power of the common stock to the extent the
preferred stock has voting rights; or

48
<PAGE> 53

- deferral of participation in Proxicom's assets upon liquidation until
satisfaction of any liquidation preference granted to holders of the
preferred stock.

In addition, issuance of preferred stock could make it more difficult for a
third party to acquire a majority of the outstanding voting stock and
accordingly may be used as an "anti-takeover" device. The board of directors,
however, currently does not contemplate the issuance of any preferred stock and
is not aware of any pending transactions that would be affected by such
issuance.

ANTI-TAKEOVER EFFECTS OF PROXICOM'S CERTIFICATE OF INCORPORATION AND BYLAWS AND
PROVISIONS OF DELAWARE LAW

Proxicom's certificate of incorporation and bylaws and provisions of
Delaware corporate law may hinder or delay a third party's attempt to acquire
Proxicom. They may also make it difficult for the stockholders to remove
incumbent management.

Classified Board of Directors; Removal; Vacancies. The certificate of
incorporation divides the board of directors into three classes. The directors
in each class serve three-year terms. The directors' terms are staggered by
class. Proxicom's classified board of directors is intended to provide
continuity and stability in the board of director's membership and policies.
However, the classified board of directors makes it more difficult for
stockholders to change the board of directors' composition quickly. Also, under
the certificate of incorporation, directors may be removed only for cause by a
two-thirds stockholder vote. In addition, a majority of the directors then in
office can fill board vacancies and newly created directorships resulting from
any increase in the size of the board of directors. This is true even if those
directors do not constitute a quorum or if only one director is left in office.
These provisions could prevent stockholders, including parties who want to take
over or acquire Proxicom, from removing incumbent directors without cause and
filling the resulting vacancies with their own nominees.

Advance Notice Provisions for Stockholder Proposals and Stockholder
Nominations of Directors. The bylaws will establish an advance notice procedure
regarding nominations of directors by stockholders and other stockholder
proposals. The advance notice procedure will not apply to nominations of
directors by the board of directors. For matters a stockholder wishes to bring
before an annual meeting of stockholders, the stockholder must deliver Proxicom
notice not less than 60 days nor more than 90 days before the first anniversary
of the preceding year's annual meeting of nominations and other business to be
brought before a Proxicom annual meeting. The stockholder must put information
in the notice regarding

- the stockholder and its holdings;

- the background of any nominee for director;

- the written consent to being named as a nominee and to serving as a
director if elected;

- any business desired to be brought before the meeting;

- the reasons for conducting the business at the meeting; and

- any material interest of the stockholder in the business proposed.

At a special meeting of stockholders called to elect directors,
stockholders can make a nomination only if they deliver to Proxicom a notice
that complies with the above requirements to Proxicom no later than the tenth
day following the day on which public announcement of the special meeting is
made. The bylaws could preclude a nomination for the election of directors or
the conduct of certain business at a particular meeting if the proper procedures
are not followed. This may discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or otherwise
attempting to obtain control of Proxicom.

Special Stockholders' Meetings. Proxicom's certificate of incorporation
and bylaws will permit special meetings of the stockholders to be called only by
the board of directors, the

49
<PAGE> 54

Chairman, the Chief Executive Officer or the President or holders of at least
75% of Proxicom's securities that are outstanding and entitled to vote in an
election of directors.

Limitations on Stockholder Action by Written Consent. The certificate of
incorporation will place limits on the stockholders' ability to act by written
consent. Specifically, any action to be taken at a stockholders' meeting may be
taken without a meeting only if consented to generally by stockholders having
voting power of at least 75% of the voting power of all shares of each class or
series entitled to vote on the action.

Authorized But Unissued Shares. Proxicom without stockholder approval can
issue shares of common stock and preferred stock up to the number of shares
authorized for issuance in its certificate of incorporation, except as limited
by Nasdaq rules. Proxicom could use these additional shares for a variety of
corporate purposes. These purposes include future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans.
Proxicom's ability to issue these shares of common stock and preferred stock
could make it more difficult or discourage an attempt to obtain control of
Proxicom by means of a proxy contest, tender offer, merger or otherwise.

Section 203 of Delaware Law. After this offering is completed, Section 203
of the Delaware General Corporation Law will apply to Proxicom. This section
will prohibit Proxicom from engaging in a "business combination" with an
"interested stockholder." This restriction will apply for three years after the
date of the transaction in which the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. A "business
combination" includes (1) mergers, (2) asset sales and (3) other transactions
resulting in a financial benefit to an interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of Proxicom's
voting stock. Section 203 could delay, defer or prevent a change in control of
Proxicom. It might also reduce the price that investors might be willing to pay
in the future for shares of common stock.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The certificate of incorporation will provide that directors of Proxicom
shall not be personally liable to Proxicom or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (1) for
any breach of the director's duty of loyalty to Proxicom or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) under a provision of Delaware law
relating to unlawful payment of dividends or unlawful stock purchase or
redemption of stock or (4) for any transaction from which the director derives
an improper personal benefit. As a result of this provision, Proxicom and its
stockholders may be unable to obtain monetary damages from a director for breach
of his or her duty of care.

The bylaws will provide for the indemnification of directors and officers
and any person who is or was serving at the request of Proxicom as a director,
officer, employee, partner or agent of another corporation or of a partnership,
joint venture, limited liability company, trust or other enterprise to the
fullest extent authorized by, and subject to the conditions set forth in, the
Delaware General Corporation Law against all expenses, liabilities and losses.
The indemnification provided under the bylaws will include the right to be paid
by Proxicom the expenses in advance of any proceeding for which indemnification
may be had in advance of its final disposition.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is the Bank of New
York.

LISTING

We have applied to have our common stock listed on the Nasdaq National
Market under the trading symbol "PXCM."

50
<PAGE> 55

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our common stock in the public market could
adversely affect our common stock's prevailing market price. Upon completion of
this offering, we will have outstanding an aggregate of 23,739,447 shares of our
common stock, assuming no exercise of the underwriters over-allotment option and
no exercise of outstanding options. Of these shares, all of the shares sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, unless the shares are purchased by
"affiliates" of Proxicom as that term is defined in Rule 144 under the
Securities Act.

The remaining 19,239,447 shares of common stock held by existing
stockholders are "restricted securities" as that term is defined in Rule 144
under the Securities Act. Restricted securities may be sold in the public market
only if registered or if they qualify for an exemption from registration under
Securities Act Rule 144 or 701. We summarize these two rules below. The
provisions of Rules 144 and 701 provide that the restricted securities will be
available for sale in the public market on the date which is one year from the
date they were issued, subject to the volume limitations and other conditions of
Rule 144.

LOCK-UP AGREEMENTS

All of Proxicom's officers and directors, and several of its stockholders,
who will own an aggregate of 19,769,412 shares (of which 1,380,454 shares are
issuable upon the exercise of options) of common stock after this offering
closes, have signed lock-up agreements. Under these agreements, they agreed,
among other things, not to transfer or dispose of any shares of common stock, or
any securities convertible into shares of common stock, for a period of 180 days
after the date of this prospectus. Transfers or dispositions can be made sooner
with the prior written consent of BT Alex. Brown Incorporated. This consent may
be given at any time without public notice.

RULE 144

Under Rule 144, 12,156,044 shares of common stock will be freely tradable
90 days after this offering closes. Of these shares of common stock, 11,507,439
shares are subject to lock-up agreements. In general, under Rule 144, beginning
90 days after the closing of this offering, a person who has owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- one percent of the number of shares of common stock then outstanding,
which will equal approximately 237,394 shares immediately after this
offering; or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about
Proxicom.

Under Rule 144(k), 23,981 shares of common stock will be freely tradable
after this offering closes. None of these shares of common stock are subject to
lock-up agreements. Under Rule 144(k), a person who is not one of our affiliates
at any time during the 90 days preceding a sale, and who has owned the shares
proposed to be sold for at least two years, is entitled to sell the shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144. Therefore, unless otherwise restricted, "Rule
144(k) shares" may be sold immediately upon the completion of this offering.

51
<PAGE> 56

RULE 701

A total of 5,185,662 shares of common stock have been issued or are
issuable upon the exercise of options. All of these shares, subject to option
vesting, will be eligible for sale in reliance on Rule 701 beginning 90 days
after the closing of this offering. Of these shares of common stock, 1,380,454
are subject to lock-up agreements. In general, under Rule 701 as currently in
effect, any of our employees, consultants or advisors who has purchased shares
from us in connection with a compensatory plan or other agreement is eligible to
resell such shares 90 days after the effective date of this offering in reliance
on Rule 144, but without compliance with restrictions, including the holding
period, contained in Rule 144.

REGISTRATION RIGHTS

Upon completion of this offering, Proxicom stockholders, who will own an
aggregate of 19,056,133 shares of common stock, will have registration rights as
to their shares. Of these shares of common stock, 17,958,048 shares are subject
to lock-up agreements. GAP 34, GAP 52, GAP Coinvestment and GAP Coinvestment II,
who will own an aggregate of 3,913,664 shares of our common stock, or their
transferees, will be entitled to demand that Proxicom register their shares. In
addition, all of the Proxicom stockholders who have registration rights are
entitled to piggyback registration. See "Certain Transactions -- Registration
Rights Agreement." After registration, these shares will be freely tradable
without restriction under the Securities Act, unless the shares are purchased by
affiliates. Any sales of securities by these stockholders could have a material
adverse effect on the trading price of our common stock.

STOCK PLANS

As soon as practicable after this offering, we intend to file a
registration statement under the Securities Act covering 8,350,000 shares of
common stock reserved for issuance under our stock plans. As of March 26, 1999,
options to purchase 4,977,347 shares of common stock were outstanding. The
registration statement is expected to be filed and become effective as soon as
practicable after the effective date of this offering. Accordingly, shares
registered under such registration statement will, subject to vesting provisions
and Rule 144 volume limitations applicable to our affiliates, be available for
sale in the open market shortly after this offering closes, and in the case of
our officers, directors and stockholders who have entered into lock-up
agreements, after the 180-day lock-up agreements expire.

52
<PAGE> 57

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement dated the
date hereof, the underwriters named below, through their representatives BT
Alex. Brown Incorporated, Prudential Securities Incorporated, Thomas Weisel
Partners LLC and Friedman, Billings, Ramsey & Co., Inc., have severally agreed
to purchase from Proxicom and the selling stockholders the following respective
numbers of shares of common stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
BT Alex. Brown Incorporated.................................
Prudential Securities Incorporated..........................
Thomas Weisel Partners LLC..................................
Friedman, Billings, Ramsey & Co., Inc. .....................
---------

Total............................................. 4,500,000
=========
</TABLE>

The underwriters are obligated to purchase all of the shares of common
stock offered hereby, other than those covered by the over-allotment option
described below, if any such shares are purchased.

The underwriters propose to offer the shares of common stock to the public
at the public offering price set forth on the cover page of this prospectus and
to some dealers at a price that represents a concession not in excess of $
per share under the public offering price. The underwriters may allow, and such
dealers may re-allow, a concession not in excess of $ per share to other
dealers. After the initial offering, the offering price and other selling terms
may be changed by the representatives of the underwriters.

Proxicom has granted to the underwriters an option, exercisable not later
than 30 days after the date of this prospectus, to purchase up to 675,000
additional shares of common stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the common stock offered
hereby. To the extent that the underwriters exercise such options, each of the
underwriters will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to 675,000. Proxicom will be obligated, pursuant to the option, to sell such
shares to the underwriters to the extent the option is exercised. If any
additional shares of common stock are purchased, the underwriters will offer
additional shares on the same terms as those on which the shares are being
offered.

The following table summarizes the compensation to be paid to the
underwriters by the Proxicom and the selling stockholders, and the expenses
payable by Proxicom.

<TABLE>
<CAPTION>
TOTAL
--------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting Discounts and Commissions paid by
Proxicom.......................................
Expenses payable by Proxicom.....................
Underwriting Discounts and Commissions paid by
selling stockholders...........................
</TABLE>

53
<PAGE> 58

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 10% of the shares of the common stock offered
hereby for purchase by our directors, officers and employees and their business
associates and related persons. The number of shares of our common stock offered
to the public will be reduced to the extent these persons purchase such reserved
shares. The underwriters will offer to the public on the same basis as the other
shares offered hereby any reserved shares which are not so purchased by these
persons.

Proxicom has agreed to indemnify the underwriters against liabilities in
connection with this offering, including liabilities under the Securities Act.

Each of Proxicom's officers and directors and Proxicom's larger
stockholders have agreed not to offer, sell, contract to sell or otherwise
dispose of, or enter into any transaction which is designed to, or could be
expected to, result in the disposition of any portion of, any common stock for a
period of 180 days after the effective date of the registration statement of
which this prospectus is a part without the prior written consent of BT Alex.
Brown Incorporated. This consent may be given at any time without public notice.

Proxicom has entered into a similar agreement, except that we may issue,
and grant options or warrants to purchase, shares of common stock or any
securities convertible into, exercisable for or exchangeable for shares of
common stock, pursuant to the exercise of outstanding options and warrants and
our issuance of options and stock granted under the existing stock option and
stock purchase plans.

The representatives of the underwriters have advised Proxicom that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the common stock. Specifically, the underwriters may over-allot
shares of the common stock in connection with this offering, thereby creating a
short position in the common stock for their own account. Additionally, to cover
such over-allotments or to stabilize the market price of the common stock, the
underwriters may bid for, and purchase, shares of the common stock in the open
market. Finally, the representatives, on behalf of the underwriters, also may
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of our common
stock at a level above that which might otherwise prevail in the open market.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has co-managed 15 public offerings of equity
securities and has acted as an underwriter in an additional five public
offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or controlling
persons, except that Jack Kemp is a member of Proxicom's board of directors and
a member of the advisory board of Thomas Weisel Partners and except with respect
to the contractual relationship created by the underwriting agreement.

FBR Technology Venture Partners L.P., an affiliate of Friedman, Billings,
Ramsey & Co., Inc., owns 23,981 shares of Series B preferred stock.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be negotiated among Proxicom, the selling stockholders and the representatives
of the underwriters. Among the factors to be considered in determining the
public offering price will be:
54
<PAGE> 59

- the history and prospects of Proxicom's business and the industry in
which it competes;

- an assessment of Proxicom's management and the present state of
Proxicom's development;

- prevailing market conditions in the U.S. economy and the industry in
which Proxicom competes;

- Proxicom's revenues, operating cash flow and earnings in recent periods;

- the market capitalizations and stages of development of other companies
which the representatives of the underwriters believe to be comparable to
Proxicom; and

- estimates of Proxicom's business potential.

LEGAL MATTERS

The validity of the shares of common stock being offered hereby and other
legal matters will be passed upon for Proxicom by Hogan & Hartson L.L.P.,
Washington, D.C. Legal matters in connection with the offering will be passed
upon for the underwriters by Hale and Dorr LLP, Washington, D.C.

EXPERTS

The financial statements as of December 31, 1998 and 1997 and for each of
the three years in the period ended December 31, 1998 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1. It
includes exhibits and schedules. This prospectus is part of the registration
statement. It does not contain all of the information that is in the
registration statement. The registration statement contains more information
about Proxicom and the common stock. Statements contained in this prospectus
concerning the provisions of documents filed as exhibits to the registration
statement are necessarily summaries which disclose the material terms of such
documents. Each of these statements is qualified in its entirety by reference to
the copy of the applicable document filed with the SEC. You may read and copy
all or any portion of the registration statement at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies
of these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room's operations. The registration statement is also available to you
on the SEC's Internet site (http://www.sec.gov). We intend to furnish our
stockholders with annual reports containing financial statements audited by our
independent accountants and quarterly reports containing unaudited financial
statements for the first three quarters of each fiscal year.

55
<PAGE> 60

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 61

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Changes in Stockholders'
Equity.................................................... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 62

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors

of Proxicom, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of Proxicom, Inc. (the "Company") and its subsidiaries at December 31,
1998 and 1997, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As described in Note 2, on March 26, 1999, Proxicom, Inc. merged with ad
hoc Interactive, Inc. in a transaction accounted for as a pooling of interests.
The accompanying supplemental consolidated financial statements give retroactive
effect to the merger of Proxicom, Inc. with ad hoc Interactive, Inc.

In our opinion, based upon our audits, the accompanying supplemental
consolidated balance sheets and the related supplemental consolidated statements
of operations, of changes in stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of Proxicom, Inc. and
its subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

February 5, 1999,

except as to the pooling of interests with

ad hoc Interactive, Inc. which is as of March 26, 1999

F-2
<PAGE> 63

PROXICOM, INC.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------ DECEMBER 31,
1997 1998 1998
------- -------- -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,343 $ 2,482
Investments............................................... 1,101 278
Accounts receivable, net of allowance of $626 and $500,
respectively............................................ 7,747 9,613
Unbilled services......................................... 1,369 4,259
Prepaid income taxes...................................... 207 130
Prepaid expenses.......................................... 305 402
Other current assets...................................... 169 297
------- --------
Total current assets.................................... 13,241 17,461
Property and equipment, net................................. 2,572 2,858
Deferred tax assets and other............................... 284 1,758
------- --------
Total assets............................................ $16,097 $ 22,077
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit........................................... $ 264 $ 5,436
Trade accounts payable.................................... 1,245 639
Accrued compensation...................................... 1,404 3,714
Deferred revenue.......................................... 1,147 1,356
Deferred tax liabilities.................................. 616 1,423
Note payable.............................................. -- 1,400
Other accrued liabilities................................. 1,045 1,113
------- --------
Total current liabilities............................... 5,721 15,081
------- --------
Commitments and contingencies (Note 14)
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $.01 par value;
2,641,347 shares authorized; 1,629,969 shares issued
and outstanding at December 31, 1996 and 1997;
1,629,969 shares issued and 1,222,469 shares
outstanding at December 31, 1998..................... 16 12 --
Series B convertible preferred stock, $.01 par value;
359,712 shares authorized, issued and outstanding at
December 31, 1997 and 1998........................... 4 4 --
Series C convertible preferred stock, $.01 par value;
419,302 shares authorized, issued and outstanding at
December 31, 1997 and 1998........................... 4 4 --
Common stock, $.01 par value, 20,000,000 shares
authorized; 13,026,801 shares and 14,609,997 shares
issued at December 31, 1997 and 1998, respectively;
12,566,172 and 14,556,868 shares outstanding at December
31, 1997 and 1998, respectively......................... 130 146 166
Additional paid-in capital................................ 8,794 25,229 25,229
Retained earnings (deficit)............................... 3,255 (18,180) (18,180)
Comprehensive income...................................... 3 3 3
Treasury stock............................................ (1,830) (222) (222)
------- -------- -------
Total stockholders' equity.............................. 10,376 6,996 6,996
------- -------- -------
Total liabilities and stockholders' equity.............. $16,097 $ 22,077
======= ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 64

PROXICOM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Revenue.................................................. $12,431 $27,356 $ 42,405
Cost of revenue.......................................... 4,756 12,077 23,862
------- ------- --------
Gross profit............................................. 7,675 15,279 18,543
------- ------- --------
Operating expenses:
General and administrative............................. 5,405 9,664 15,325
Selling and marketing.................................. 652 1,711 2,896
Research and development............................... 404 961 692
Acquisition and merger costs........................... -- -- 2,886
Stock-based and other compensation..................... -- -- 18,175
------- ------- --------
Total............................................... 6,461 12,336 39,974
------- ------- --------
Income (loss) from operations............................ 1,214 2,943 (21,431)
Interest income (expense), net........................... 55 80 (111)
------- ------- --------
Income (loss) before income taxes........................ 1,269 3,023 (21,542)
Income tax provision (benefit)........................... 185 330 (900)
------- ------- --------
Net income (loss)........................................ $ 1,084 $ 2,693 $(20,642)
======= ======= ========
Basic net income (loss) per common share................. $ 0.08 $ 0.21 $ (1.50)
======= ======= ========
Diluted net income (loss) per common share............... $ 0.08 $ 0.16 $ (1.50)
======= ======= ========
Weighted average common shares outstanding............... 12,993 12,626 13,762
======= ======= ========
Weighted average common shares and common share
equivalents............................................ 13,536 16,333 13,762
======= ======= ========
Unaudited pro forma data (Note 3):
Basic net loss per common share........................ $ (1.31)
========
Diluted net loss per common share...................... $ (1.31)
========
Weighted average common shares outstanding............. 15,763
========
Weighted average common shares and common share
equivalents......................................... 15,763
========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 65

PROXICOM, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands)

<TABLE>
<CAPTION>
UNREALIZED
GAIN
COMMON STOCK PREFERRED STOCK ADDITIONAL (LOSS) TREASURY STOCK RETAINED
------------------- ------------------ PAID-IN ON ------------------ EARNINGS
SHARES AMOUNT SHARES AMOUNT CAPITAL SECURITIES SHARES AMOUNT (DEFICIT)
---------- ------ --------- ------ ---------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995.................... 12,491,802 $125 -- $-- $ -- $-- -- $ -- $ 986
Issuance of preferred
Series A and warrants... -- -- 1,629,969 16 5,314 -- -- -- --
Capitalization of Square
Earth, Inc.............. 534,999 5 -- -- 17 -- -- -- (8)
Treasury stock
acquired................ -- -- -- -- -- -- 100,917 (330) --
Comprehensive income
(loss).................. -- -- -- -- -- (4) -- -- --
Net income............... -- -- -- -- -- -- -- -- 1,084
Distributions............ -- -- -- -- -- -- -- -- (120)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1996.................... 13,026,801 130 1,629,969 16 5,331 (4) 100,917 (330) 1,942
Issuance of preferred
Series B................ -- -- 359,712 4 1,496 -- -- -- --
Treasury stock
acquired................ -- -- -- -- -- -- 359,712 (1,500) --
Issuance of preferred
Series C................ -- -- 419,302 4 1,967 -- -- -- --
Comprehensive income..... -- -- -- -- -- 7 -- -- --
Net income............... -- -- -- -- -- -- -- -- 2,693
Subchapter S Corporation
distributions........... -- -- -- -- -- -- -- -- (1,380)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1997.................... 13,026,801 130 2,408,983 24 8,794 3 460,629 (1,830) 3,255
Conversion of preferred
Series A................ -- -- (407,500) (4) (1,604) -- (407,500) 1,608 --
Exercise of stock
options................. 86,702 1 -- -- 302 -- -- -- --
Subchapter S Corporation
distributions........... -- -- -- -- -- -- -- -- (793)
Stock-based
compensation............ 1,496,494 15 -- -- 17,956 -- -- -- --
Unearned stock-based
compensation............ -- -- -- -- (219) -- -- -- --
Net loss................. -- -- -- -- -- -- -- -- (20,642)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1998.................... 14,609,997 $146 2,001,483 $20 $25,229 $ 3 53,129 $ (222) $(18,180)
========== ==== ========= === ======= === ======== ======= ========

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance at December 31,
1995.................... $ 1,111
Issuance of preferred
Series A and warrants... 5,330
Capitalization of Square
Earth, Inc.............. 14
Treasury stock
acquired................ (330)
Comprehensive income
(loss).................. (4)
Net income............... 1,084
Distributions............ (120)
--------
Balance at December 31,
1996.................... 7,085
Issuance of preferred
Series B................ 1,500
Treasury stock
acquired................ (1,500)
Issuance of preferred
Series C................ 1,971
Comprehensive income..... 7
Net income............... 2,693
Subchapter S Corporation
distributions........... (1,380)
--------
Balance at December 31,
1997.................... 10,376
Conversion of preferred
Series A................ --
Exercise of stock
options................. 303
Subchapter S Corporation
distributions........... (793)
Stock-based
compensation............ 17,971
Unearned stock-based
compensation............ (219)
Net loss................. (20,642)
--------
Balance at December 31,
1998.................... $ 6,996
========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 66

PROXICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 1,084 $ 2,693 $ (20,642)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization.......................... 356 818 1,407
Increase (decrease) in deferred income taxes........... 52 321 (667)
Provision for stock compensation....................... -- 220 17,425
Provision for doubtful accounts........................ 225 389 (126)
Changes in assets and liabilities:
Increase in accounts receivable...................... (2,104) (5,506) (1,740)
Increase in unbilled services........................ (383) (649) (2,890)
(Increase) decrease in prepaid income taxes.......... (276) 77 77
Increase in prepaid expenses......................... (122) (175) (97)
Increase in other assets............................. (43) (55) (128)
Increase (decrease) in trade accounts payable........ 173 979 (606)
(Decrease) increase in accrued compensation.......... (201) 769 2,310
Increase in note payable............................. -- -- 1,400
Increase in deferred revenue......................... 499 648 209
Increase in other accrued liabilities................ 255 722 68
------- ------- ---------
Net cash (used in) provided by operating
activities...................................... (485) 1,251 (4,000)
------- ------- ---------
Cash flows from investing activities:
Purchases of property and equipment....................... (1,374) (1,999) (1,694)
Purchases of investments.................................. (2,285) (104) (390)
Sales of investments...................................... -- 1,288 1,213
------- ------- ---------
Net cash used in investing activities............. (3,659) (815) (871)
------- ------- ---------
Cash flows from financing activities:
Issuance of preferred stock and warrants, Series A........ 5,330 -- --
Issuance of preferred stock, Series B..................... -- 1,500 --
Issuance of preferred stock, Series C..................... -- 1,971 --
Issuance of common stock.................................. 22 -- --
Exercise of stock options................................. -- -- 631
Purchase of treasury stock................................ (330) (1,500) --
Borrowings under line of credit........................... 3,585 6,690 11,881
Payments under line of credit............................. (3,826) (6,493) (6,709)
Subchapter S corporation distributions.................... (120) (1,380) (793)
Decrease in due to majority stockholder................... (200) -- --
------- ------- ---------
Net cash provided by financing activities......... 4,461 788 5,010
------- ------- ---------
Net increase in cash and cash equivalents................... 317 1,224 139
Cash and cash equivalents at beginning of period............ 802 1,119 2,343
------- ------- ---------
Cash and cash equivalents at end of period.................. $ 1,119 $ 2,343 $ 2,482
======= ======= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 67

PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

Proxicom, Inc. ("Proxicom") is a leading provider of Internet solutions to
Global 1000 companies and other large organizations. Since 1994, Proxicom has
focused exclusively on the Internet. Proxicom's Internet solutions include
business to consumer electronic commerce Internet sites, business to business
electronic commerce extranets, and company-specific intranets.

In August 1996, Proxima, Inc. ("Proxima"), a Maryland corporation
reincorporated as a Delaware corporation, through a merger transaction, changing
its name to Proxicom, Inc.

Renaissance Leasing Corp. ("Renaissance") was a partnership substantially
owned by the majority stockholder of Proxicom. Renaissance purchased computer
equipment with funds borrowed from Proxicom and leased all such assets to
Proxicom. Renaissance ceased operations in 1997 and all assets and liabilities
of Renaissance were transferred to Proxicom at book value of approximately
$90,000. Proxicom and Renaissance were companies under common control and have
been accounted for in a manner similar to a pooling of interests.

2. MERGERS

In August 1998, Proxicom completed a merger with IBIS Consulting, Inc.
("IBIS Consulting"), a Subchapter S Corporation incorporated during 1994, by
exchanging 4,988,297 shares of Proxicom's common stock for all the common stock
of IBIS Consulting. Each share of IBIS Consulting was exchanged for 0.2327868
shares of Proxicom common stock. In addition, outstanding IBIS Consulting
employee stock options were converted at the same exchange factor into options
to purchase 345,034 shares of Proxicom common stock (Note 9).

There were no transactions between Proxicom and IBIS Consulting prior to
the combination. No material adjustments were made to conform to Proxicom's
accounting policies.

Effective January 1, 1998, Proxicom completed a merger with Square Earth,
Inc. ("Square Earth"), a Subchapter S Corporation incorporated during 1996, by
exchanging 534,999 shares of its common stock for all the common stock of Square
Earth. Each share of Square Earth was exchanged for 0.445833 shares of Proxicom
common stock. In addition, outstanding Square Earth employee stock options were
converted at the same exchange factor into options to purchase 41,474 shares of
Proxicom common stock (Note 9).

There were no transactions between Proxicom and Square Earth prior to the
combination. No material adjustments were made to conform to Proxicom's
accounting policies.

F-7
<PAGE> 68
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stand-alone financial information is shown in the following table.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
----------------- JUNE 30,
1996 1997 1998
------ ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue
IBIS Consulting.................... $3,884 $10,170 $8,054
Square Earth....................... 593 1,403 *
Net income (loss)
IBIS Consulting.................... $ 938 $ 2,078 $1,391
Square Earth....................... (95) 2 *
</TABLE>

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

* Not applicable to reporting period.

The IBIS Consulting and Square Earth mergers constituted tax-free
reorganizations and have been accounted for as poolings of interests under
Accounting Principles Board Opinion No. 16, Business Combinations. Accordingly,
all prior period consolidated financial statements presented have been restated
to include the combined results of operations, financial position and cash flows
of IBIS Consulting and Square Earth as though they had been a part of Proxicom
since their inception.

Proxicom incurred charges of approximately $2.9 million in 1998 for costs
associated with the IBIS Consulting and Square Earth transactions. Those
transaction costs related to professional fees and other direct expenses
relating to the acquisitions.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements. Actual results may differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts and
balances of Proxicom, IBIS Consulting, Square Earth and Renaissance (hereafter
collectively the "Company" or "Proxicom"). All significant intercompany
transactions and balances have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

Highly liquid investments having original maturities of 90 days or less at
the date of acquisition are classified as cash equivalents. The carrying values
of cash equivalents approximate fair values.

REVENUE RECOGNITION

F-8
<PAGE> 69
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

materials contracts is accounted for as time is incurred and billed. Net
revenues exclude reimburseable expenses charged to clients.

The Company periodically evaluates cost and revenue assumptions in
fixed-price contracts. Provisions for estimated losses on uncompleted contracts
are made on a contract by contract basis and are recognized in the period in
which such losses are determined. Most contracts are cancellable by either the
Company or the customer upon 30 days notice, with payment due for services
completed through the date of termination. No significant losses have been
incurred on cancelled contracts.

Deferred revenue is recognized on fixed-price contracts to reflect billings
in excess of revenue recognized under the percentage-of-completion method.

Unbilled services on contracts are comprised of costs plus earnings in
excess of contractual billings on such contracts. Billings in excess of cost
plus earnings are classified as deferred revenue.

RESEARCH AND DEVELOPMENT EXPENSES FOR SOFTWARE PRODUCTS

Research and development costs are expensed as incurred. Statement of
Financial Accounting Standards ("SFAS") No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed, requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility and prior to general release of the
software. Based on the Company's development process, technological feasibility
is established upon completion of a working model. The period between
technological feasibility and general release is relatively short and the costs
incurred during this period have been insignificant for capitalization.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization
are computed on the straight-line method over the estimated useful lives of the
related assets ranging from three to five years. Leasehold improvements are
amortized on a straight-line method over the shorter of the improvements'
estimated useful lives or related remaining lease term. Long-lived assets held
and used by the Company are reviewed for impairment whenever changes in
circumstances indicate the carrying value of an asset may not be recoverable.

INVESTMENTS

The Company classifies its investments as available-for-sale as defined by
SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of taxes, reported as comprehensive income within
stockholders' equity. Comprehensive income is not materially different from net
income in any period presented.

INCOME TAXES

The provision for income taxes is determined in accordance with SFAS No.
109, Accounting for Income Taxes, which requires the use of the asset and
liability approach. Under this approach, deferred taxes represent the expected
future tax consequences of temporary differences between the carrying amounts
and tax bases of assets and liabilities.

F-9
<PAGE> 70
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board ("APB") Opinion No.
25, Accounting for Stock Issued to Employees, and complies with the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB
No. 25, compensation expense is based on the difference, if any, on the date of
the grant, between the fair value of the Company's stock and the exercise price.
A new measurement date for purposes of determining compensation is established
when there is a substantive change to the terms of an underlying option. See
Note 9.

BASIC AND DILUTED NET INCOME PER COMMON SHARE

Basic net income per common share is based on the weighted average number
of shares of common stock outstanding during each year. Diluted net income per
common share is based on the weighted average number of shares of common stock
outstanding during each year, adjusted for the effect of common stock
equivalents arising from the assumed exercise of stock options, if dilutive. See
Note 15.

All per share amounts have been restated to reflect the re-incorporation
discussed at Note 1 and the mergers of IBIS Consulting and Square Earth
discussed at Note 2.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's cash and cash equivalents,
investments, accounts receivable, trade accounts payable and note payable
approximate fair value due to the short maturity and ready liquidity of those
instruments.

CONCENTRATION OF CREDIT RISK

Revenue in the years ended 1996, 1997 and 1998 and receivables as of
December 31, 1997 and 1998 were concentrated with four customers as follows
(amounts represent percentage of total revenue and accounts receivable,
respectively):

<TABLE>
<CAPTION>
ACCOUNTS
REVENUE RECEIVABLE
--------------------- -------------
YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------- -------------
1996 1997 1998 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Customer A....................................... 14.4% 23.8% 14.7% 20.2% 7.8%
Customer B....................................... * 10.1 13.7 3.8 13.7
Customer C....................................... 14.7 * * * *
Customer D....................................... 13.5 * * * *
</TABLE>

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

* Represents less than 10% of total.

The Company performs initial credit evaluations of its new customers and
generally does not require collateral from its customers. The Company maintains
an allowance for potential losses when identified.

F-10
<PAGE> 71
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

During 1998, the Company adopted FAS 131, Disclosures About Segments of An
Enterprise and Related Information. This Statement changes the way public
companies report information about segments of their business in annual
financial statements and requires disclosure of selected segment information. It
also requires entity-wide disclosures about the products and services an entity
provides, the material countries in which it holds assets and reports revenues,
and its major customers. The Company currently operates in one operating and
geographic segment. The adoption of SFAS No. 131 does not have a material effect
on the current reporting or disclosure requirements.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. SFAS No. 133 will be effective for the Company's
fiscal year ending December 31, 2000. The Company has no derivative or hedging
activity in any of the periods presented.

PRO FORMA BALANCE SHEET, NET INCOME AND EARNINGS PER SHARE (UNAUDITED)

The pro forma stockholders' equity presents the effect of the automatic
conversion of the preferred stock outstanding as of December 31, 1998, as
described in Note 10, at the consummation of the public offering.

As discussed in Note 2, the Company merged with IBIS Consulting and Square
Earth during 1998, both previously Subchapter S Corporations. Pro forma net
income (loss) assuming that IBIS Consulting and Square Earth were taxable
entities during the periods presented is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------ ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before income taxes........................... $1,269 $3,023 $(21,542)
Pro forma income tax provision (benefit).................... 781 1,248 (900)
Pro forma net income (loss)................................. 488 1,775 (20,642)
</TABLE>

4. INVESTMENTS

The following is a summary of investments classified as current assets at
December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------ ---------- ---------- ------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
U.S. Treasury securities and obligations
of U.S. government agencies............ $1,098 $4 $(1) $1,101
DECEMBER 31, 1998
U.S. Treasury securities and obligations
of U.S. government agencies............ $275 $3 $-- $ 278
</TABLE>

F-11
<PAGE> 72
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The cost and fair value of available-for-sale securities by contractual
maturity are as follows (in thousands):

<TABLE>
<CAPTION>
FAIR
COST VALUE
------ ------
<S> <C> <C>
DECEMBER 31, 1997
Due in one year or less................................... $ 501 $ 501
Due after one year through three years.................... 597 600
------ ------
$1,098 $1,101
====== ======
DECEMBER 31, 1998
Due in one year or less................................... $ 200 $ 202
Due after one year through three years.................... 75 76
------ ------
$ 275 $ 278
====== ======
</TABLE>

The Company realized gains from the sales of investments of $2,000 and
$9,000 for the years 1997 and 1998, respectively, and realized losses from the
sales of investments of $2,000 in 1998.

5. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------ -------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable......................................... $8,373 $10,113
Allowance for doubtful accounts............................. (626) (500)
------ -------
Net accounts receivable..................................... $7,747 $ 9,613
====== =======
</TABLE>

No accounts receivable at December 31, 1998 or 1997 were the result of
long-term contracts.

The Company wrote off doubtful accounts of $59,000, $71,000 and $959,000
for the years ended December 31, 1996, 1997 and 1998, respectively.

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Computer equipment.......................................... $2,530 $3,304
Office and other equipment.................................. 536 693
Purchased software.......................................... 397 596
Leasehold improvements...................................... 345 934
Automobile.................................................. 26 --
------ ------
3,834 5,527
Less: Accumulated depreciation and amortization............. (1,262) (2,669)
------ ------
Total property and equipment, net........................... $2,572 $2,858
====== ======
</TABLE>

F-12
<PAGE> 73
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LINES OF CREDIT

At December 31, 1997, the Company had a $2.0 million revolving line of
credit with a bank. Interest is payable monthly at the bank's prime rate plus
0.5% (9.00% at December 31, 1997). The line of credit is secured by
substantially all of the Company's assets, and includes various customary
financial and other covenants including maintenance of a minimum level of
tangible net worth. No borrowings were outstanding under the line of credit as
of December 31, 1997. There are no commitment fees under this line of credit.

In February 1998, the Company increased the line of credit to $5.0 million
and the bank decreased the interest rate to prime. All other material financial
covenants remained unchanged. No borrowings were outstanding under this facility
as of December 31, 1998.

At December 31, 1997, Square Earth had a $350,000 line of credit with a
bank. The line of credit included various customary financial and other
covenants including maintenance of a minimum level of tangible net worth.
Borrowings of $264,000 and $0 were outstanding under the line of credit as of
December 31, 1997 and 1998, respectively.

In July 1998, IBIS Consulting entered into a line of credit with a bank in
the amount of $500,000. The line expires in August 1999. This line of credit
replaced a previously existing $200,000 line of credit with the same bank. No
borrowings were outstanding under this facility as of December 31, 1998.

In October 1998, the Company entered into a $10.0 million revolving line of
credit with a bank. All prior existing lines of credit were paid in full and
terminated. The use of the line generally is restricted to working capital
requirements and approved acquisitions as defined in the line of credit
agreement. Interest on this line is payable on a monthly basis at a variable
rate of LIBOR plus 2%. The line of credit is secured by the Company's
consolidated real and personal property, including intellectual property rights
and all cash and non-cash proceeds of these assets. Included in the line of
credit are various customary financial and other covenants including maintenance
of a minimum level of tangible net worth. The line of credit expires on August
31, 2000. At December 31, 1998, the Company has outstanding letters of credit of
$205,000 which reduce amounts available under the line. Borrowings of $5.4
million and $4.4 million were outstanding and available, respectively, against
the line as of December 31, 1998.

Commitment fees of 0.25% paid on the unused line of credit during 1998 were
not material. There were no commitment fees under the previous lines of credit
for 1997 and 1998.

Interest expense was $33,000, $94,000 and $227,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.

8. NOTE PAYABLE

On August 10, 1998, the Company entered into a $1.4 million note payable
with an investment banking firm in connection with professional services for the
IBIS Consulting transaction. The note accrues interest at 7% per annum and
matures in the earlier of August 21, 1999 or upon completion of an initial
public offering. This unsecured note is subordinated only to the Company's
senior bank facilities.

F-13
<PAGE> 74
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTION PLANS

PROXICOM STOCK OPTION PLANS FOR EMPLOYEES AND NON-EMPLOYEES

In 1996, Proxicom established a stock option plan (the "Plan") under which
eligible employees and eligible non-employees may be granted options to purchase
shares of the Company's common stock. The Plan provides for the issuance of a
maximum of 4,150,000 shares of common stock. Under the Plan, the option purchase
price for each grant is equal to the fair value of the common stock at the date
of the grant as determined by the Board of Directors. Options granted under the
plan generally vest ratably over a four-year period and expire 10 years from the
date of the grant.

IBIS CONSULTING

In January and August 1997, IBIS Consulting granted options to two key
employees to purchase 1,759,031 shares with an exercise price of $0.219 per
share. Options for 1,496,494 shares became exercisable upon grant, with the
remaining 262,537 shares vesting over a two-year period commencing January 1,
1999. Under the terms of the option agreement, prior to the completion of an
initial public offering or sale of IBIS Consulting, IBIS Consulting was required
to repurchase and the employee was required to sell the shares or vested options
upon termination of employment, based on a pre-determined formula. After
exercise, IBIS Consulting retained the right and obligation to reacquire the
shares based on the formula price upon termination of the employee prior to the
completion of an initial public offering or sale of IBIS Consulting.

In July 1998, one employee exercised his option to acquire 1,496,494
shares. The employee paid IBIS Consulting $330,000 to exercise the options and
received $275,000, less applicable taxes under a tax reimbursement cash bonus
arrangement.

The Company recognized compensation expense in 1997 and a liability related
to both these options and the underlying cash bonus arrangement in the amount of
$220,000.

In January 1997, IBIS Consulting granted options to purchase 256,065 shares
to another employee with an exercise price of $0.403 per share. These options
were subject to a vesting schedule. Employment was terminated in 1997 and the
unvested options lapsed upon termination.

In January 1998, IBIS Consulting announced the grant of options under a
1998 plan and the conversion of options outstanding under the 1997 plan. In July
1998, IBIS Consulting granted such options to employees covering 82,497 shares
with an exercise price of $4.72 per share. The options are subject to an
18-month vesting schedule. Concurrent with this 1998 option grant, the remaining
1997 options of 262,537 shares were converted to the 1998 Plan. IBIS
Consulting's previous obligation to repurchase and the employees obligation to
sell the vested options upon termination of employment was eliminated.

In connection with the Company's merger with IBIS Consulting, the Company
assumed all outstanding options to purchase shares of common stock of IBIS
Consulting. These options were converted into options to purchase equivalent
shares of the Company's common stock based on the merger exchange formula and
subsequently included under the Plan.

F-14
<PAGE> 75
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SQUARE EARTH, INC.

In connection with the Company's merger with Square Earth, the Company
assumed all outstanding options to purchase shares of common stock of Square
Earth. These options were converted into options to purchase equivalent shares
of the Company's common stock based on the merger exchange formula and
subsequently included under the Plan.

STOCK-BASED AND OTHER COMPENSATION

In early 1997, prior to Proxicom's investment in IBIS Consulting, IBIS
Consulting entered into an arrangement with an employee providing that
individual with 1,496,494 fully vested stock options which were subject to
certain conditions, including provisions requiring IBIS Consulting to buy back
the common stock resulting from exercise of the options and requiring the
employee to sell such shares to IBIS Consulting at a pre-determined formula upon
termination of employment. The employee exercised these options in July 1998.
Due to a change of control provision in the initial option agreement, concurrent
to the merger of IBIS Consulting and Proxicom, the repurchase requirement on the
stock and stock options was eliminated allowing the employees to freely trade
the stock.

As a consequence of the above change of control provision triggered by the
merger, and the conversion of options from the 1997 plan to the 1998 plan, the
Company recorded non-cash stock-based compensation of approximately $17.0
million equal to the difference between the pre-determined formula price and the
then fair value of the underlying stock or stock options. As the shares were
fully vested, the compensation expense was recognized at the time of the merger.

In connection with other stock option grants during the year ended December
31, 1998, the Company recognized additional stock-based compensation totaling
$219,000, and deferred stock-based compensation which is being amortized through
December 31, 1999, the 18-month vesting period of the related options. The
Company did not recognize any amortization expense during the years ended
December 31, 1996 and 1997.

PROXICOM STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

In February 1997, the Company established a stock option plan for
non-employee directors (the "Directors Plan") and has reserved 350,000 shares of
common stock for issuance under the provisions of this plan. Options granted
prior to December 15, 1998 generally vest over the three-year term as a
director. Options under the Directors Plan issued subsequent to December 15,
1998 are expected to be issued on a fully vested basis. Options for 175,000
shares have been granted through December 31, 1998 under the Directors Plan.

ACCOUNTING FOR STOCK OPTIONS ISSUED TO EMPLOYEES AND NON-EMPLOYEE DIRECTORS

The Company accounts for its stock options issued to employees and
non-employee directors in accordance with APB 25 under which compensation
expense of $0, $220,000, and $17.2 million was recognized for the options
granted in 1996, 1997 and 1998, respectively. The Company has provided
additional pro forma disclosures as required by SFAS No. 123, "Accounting for
Stock-Based Compensation."

For disclosure purposes, the fair value of each stock option granted is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted average

F-15
<PAGE> 76
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assumptions used for stock options granted in 1996, 1997 and 1998: no annual
dividends, expected volatility of 0.0%, risk-free interest rate ranging from
5.1% to 6.1% and expected life of one to four years. The weighted-average fair
values of the stock options granted in 1996, 1997 and 1998 were $0.75, $3.18 and
$1.21, respectively.

Under the above model, the total value of stock options granted in 1996,
1997 and 1998 were $490,000, $8.8 million and $2.4 million, respectively, which
would be amortized on a pro forma basis over the option vesting period. Had the
Company determined compensation cost for these plans in accordance with SFAS No.
123, the Company's pro forma net income (loss) would have been approximately
$1.1 million, ($635,000) and ($7.0 million) in 1996, 1997 and 1998,
respectively, and pro forma basic and diluted earnings per common share would
have been $0.08, ($0.05) and ($0.51) in 1996, 1997 and 1998, respectively.

ACCOUNTING FOR STOCK OPTIONS ISSUED TO NON-EMPLOYEES

The Company accounts for its stock options granted to eligible
non-employees on the fair value method in accordance with SFAS No. 123.
Stock-based compensation related to non-employee stock option grants is not
material in any period presented.

STOCK OPTION ACTIVITY

The following tables summarize stock option activity for Proxicom and IBIS
Consulting option grants:

<TABLE>
<CAPTION>
PROXICOM IBIS CONSULTING
OPTIONS OUTSTANDING OPTIONS OUTSTANDING
------------------------- --------------------------
NUMBER OF NUMBER OF
SHARES OPTION PRICE SHARES OPTION PRICE
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
December 31, 1995
Grants........................... 652,750 $3.30 -- $ --
Exercised........................ -- -- -- --
Cancellations.................... -- -- -- --
--------- ----------
December 31, 1996................ 652,750 3.30 -- --
Grants........................... 756,324 4.25 2,015,096 0.24
Exercised........................ -- --
Cancellations.................... (161,550) 3.41 (256,065) .40
--------- ----------
December 31, 1997................ 1,247,524 3.86 1,759,031 0.22
Grants........................... 2,051,584 7.94 82,497 4.72
Exercised........................ (86,702) 3.49 (1,496,494) 0.22
Cancellations.................... (353,533) 5.75 -- --
--------- ----------
December 31, 1998................ 2,858,873 6.57 345,034 1.30
========= ==========
Options exercisable at:
December 31, 1998................ 365,030 3.73 304,183 0.83
========= ==========
December 31, 1997................ 132,115 3.30 1,496,494 0.22
========= ==========
December 31, 1996................ -- -- -- --
========= ==========
</TABLE>

The weighted-average exercise prices for Proxicom options outstanding at
December 31, 1996, 1997 and 1998 were $3.30, $3.86 and $6.57, respectively and
exercise prices ranged from

F-16
<PAGE> 77
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$3.30 to $4.78 at December 31, 1998. The weighted-average exercise prices for
IBIS Consulting options at December 31, 1997, and 1998 were $0.22 and $1.30 and
exercise prices ranged from $0.22 to $4.72 at December 31, 1998. These options
will expire if not exercised at specific dates ranging from January 1998 to
December 2008 and the weighted-average remaining contractual life of the options
outstanding was approximately nine years.

10. CONVERTIBLE PREFERRED STOCK AND WARRANTS

On August 30, 1996, the Company consummated a transaction whereby: (i) the
Company repurchased from the Company's Chief Executive Officer 100,917 shares of
common stock at a price of $3.27 per share, for a total purchase price of
approximately $330,000; and, (ii) the Company issued a total of 1,629,969 shares
of Series A convertible preferred stock (the "Series A Preferred Stock") at a
price of $3.27 per share, or approximately $5.3 million. At the stockholders'
option, but in any event automatically upon an initial public offering of the
Company's common stock, each share of Series A Preferred Stock will be
convertible into one share of common stock. The Series A Preferred Stock has a
liquidation preference and is not entitled to any dividends (unless cash
dividends are declared and paid on the common stock, in which case the Series A
Preferred Stock will share on an "as if" converted basis). The holders of the
Series A Preferred Stock have registration rights and are entitled to place two
persons on the Company's Board.

One investor in the Series A Preferred Stock also received warrants to
purchase 1,011,378 additional shares of Series A Preferred Stock from the
Company at a price of $7.91 per share. The warrants expire in August 2003 and
are exercisable after December 31, 1997. After December 31, 1997, the warrants
may be converted into shares of common stock at the option of the warrant
holder. The conversion formula is based on the difference between the market
value of the common stock less the warrant exercise price divided by the market
value of the common stock. The value of the warrants was not material.

In February 1997, the Company consummated a transaction whereby: (i) the
Company repurchased from the Company's Chief Executive Officer 359,712 shares of
common stock at a price of $4.17 per share, for a total purchase price of
approximately $1.5 million; (ii) the Company issued a total of 359,712 shares of
Series B convertible preferred stock (the "Series B Preferred Stock") at a price
of $4.17 per share or approximately $1.5 million. The Series B Preferred Stock
has essentially the same rights and privileges as the Series A Preferred Stock.

In December 1997, the Company issued a total of 419,302 shares of Series C
convertible preferred stock (the "Series C Preferred Stock") at a price of $4.77
per share or approximately $2.0 million. The Series C Preferred Stock has
essentially the same rights and privileges as the Series A and B Preferred
Stock.

In January 1998, the Company issued 407,500 shares of treasury stock in
conjunction with the conversion of 407,500 shares of Series A Preferred Stock
into common stock.

F-17
<PAGE> 78
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$4.9 million charge against additional paid-in capital to reflect the difference
between the conversion feature and the estimated fair value of the underlying
common stock. Although not reflected on the statement of operations, the
beneficial conversion charge will be reflected as a reduction to income and
earnings per share available for common stockholders.

11. INCOME TAXES

The provision for income taxes is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1996 1997 1998
---- ---- -----
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT TAXES:
Federal................................................... $ 82 $ -- $(155)
State..................................................... 16 10 (52)
---- ---- -----
Total current income tax provision (benefit)........... 98 10 (207)
---- ---- -----
DEFERRED TAXES:
Federal................................................... 78 249 (589)
State..................................................... 9 71 (104)
---- ---- -----
Total current income tax provision (benefit)........... 87 320 (693)
---- ---- -----
Total provision (benefit) for income taxes........... $185 $330 $(900)
==== ==== =====
</TABLE>

The reconciliation of the Company's income tax provision to the federal
statutory tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
---- ---- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax provision (benefit) at federal statutory tax rate
of 34%.................................................... $144 $321 $(7,324)
State income taxes, net..................................... 17 57 (34)
Subchapter S Corporation income............................. -- (72) (455)
Stock option revaluation.................................... -- -- 4,905
Acquisition costs........................................... -- -- 646
Increase in valuation allowance............................. -- -- 944
Other....................................................... 24 24 418
---- ---- -------
Income tax provision (benefit).............................. $185 $330 $ (900)
==== ==== =======
</TABLE>

F-18
<PAGE> 79
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred tax assets (liabilities) were comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997 1998
----- ----- -------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
NOL carryforward.......................................... $ -- $ 107 $ 1,796
Revenue recognition....................................... 349 -- --
Vacation accrual.......................................... 35 49 81
Bad debt expense.......................................... 14 149 137
Depreciation.............................................. -- -- 176
Other accrued expenses.................................... -- -- 241
Revaluation of stock options.............................. -- -- 1,083
Other..................................................... 2 -- 37
----- ----- -------
Total gross deferred tax assets...................... 400 305 3,551
----- -----
Valuation allowance......................................... (1,083)
-------
Net deferred tax assets.............................. 2,468
-------
LIABILITIES:
Depreciation.............................................. (30) 5 --
Unbilled service revenue.................................. (396) (665) (1,654)
Subchapter S Corporation cash to accrual adjustment....... -- -- (479)
Other..................................................... (11) (2) --
----- ----- -------
Total gross deferred tax liabilities................. (437) (662) (2,133)
----- ----- -------
Net deferred tax (liability) asset................... $ (37) $(357) $ 335
===== ===== =======
</TABLE>

The Company paid $374,000, $196,000 and ($207,000) for income taxes for the
year ended December 31, 1996, 1997, and 1998, respectively.

At December 31, 1998, the Company has a $4.6 million net operating loss
carryforward and a $20,000 research and development tax credit carryforward both
expiring in 2018. The Company establishes valuation allowances in accordance
with the provisions of SFAS No. 109. The Company continually reviews the
adequacy of the valuation allowance.

12. RELATED PARTY TRANSACTIONS

In February 1997, the Company entered into a lease for office space in
Reston, VA. The lease commenced on July 1, 1997 and has a term of seven years.
Rent payments for the years ended December 31, 1997 and 1998 were approximately
$331,000 and $864,000, respectively, and increased at an annual rate of 3.0%.
The lessor is a company wholly-owned by a member of the Company's Board of
Directors and stockholder. In accordance with the lease agreement, the Company
must maintain a letter of credit in the amount of $131,000 as a security deposit
during the term of the lease. The Company's current letter of credit expires in
December 1999.

The Company has provided Internet professional services to two
stockholders. Revenue generated from one stockholder totalled $463,000,
$1,056,000 and $775,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. The Company recorded receivable balances of $0 and $316,000 as of
December 31, 1997 and 1998, respectively. A second stockholder generated revenue
of $68,000 and $181,000 for the years ended December 31, 1997 and 1998,

F-19
<PAGE> 80
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respectively. The Company recorded receivable balances of $19,000 and $1,000 as
of December 31, 1997 and 1998, respectively.

13. EMPLOYEE BENEFIT PLANS

PROFIT SHARING AND BONUS PLANS

In August 1996, the Company adopted a 401(k) defined contribution profit
sharing plan. The plan covers all full-time employees who are at least 21 years
of age. Participants may contribute up to 15.0% of pretax compensation, subject
to certain limitations. The Company may make discretionary annual profit sharing
contributions up to the total of each participant's annual contribution. The
Company has made no profit sharing contributions to date.

In January 1996, IBIS Consulting adopted a 401(k) defined contribution
profit sharing plan. The plan covers all full-time employees who are at least 21
years of age. Participants may contribute up to 15.0% of pretax compensation,
subject to certain limitations. The Company may make discretionary annual profit
sharing contributions up to 25.0% of each participant's annual contribution, up
to 6.0% of the respective participant's annual compensation. Company
contributions vest ratably over five years. No contributions were made in 1996
and 1997. The Company has made profit sharing contributions of $71,000 in 1998.

The Company recorded $1.0 million in bonuses due under the 1998 IBIS
Consulting plan. No bonus plan existed in 1997.

EMPLOYEE STOCK PURCHASE PLAN

In February 1999, the Company's Board of Directors authorized an Employee
Stock Purchase Plan ("ESPP"). The ESPP, which commences upon completion of an
initial public offering, provides substantially all full time employees an
opportunity to purchase shares of Proxicom Common Stock through payroll
deductions of up to 10.0% of eligible compensation, not to exceed $25,000
annually. Semi-annually, participant account balances will be used to purchase
stock at the lesser of 85.0% of the fair market value on the trading day before
the participation period starts or the trading day preceding the day on which
the participation period ends. A total of 1,000,000 shares are available for
purchase under the ESPP.

F-20
<PAGE> 81
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES

The Company leases certain office space in Virginia, California, New York,
and Illinois under non-cancelable operating leases expiring in various years
through 2005. Total rent expense for all operating leases amounted to
approximately $258,000, $796,000 and $2,574,000 in 1996, 1997, and 1998,
respectively. Future minimum lease payments under non-cancelable operating
leases as of December 31, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
1999..................................................... $ 3,640
2000..................................................... 3,123
2001..................................................... 2,722
2002..................................................... 2,459
2003..................................................... 1,785
Thereafter............................................... 3,522
-------
Total............................................. $17,251
=======
</TABLE>

In March 1997 the Company entered into a lease for office space in New
York, NY ("Initial Lease") which was subsequently incorporated into the
September 1997 additional space agreement ("Amended Lease"). The Initial Lease
commenced July 1, 1997 and ends in August 2002 and has minimum annual lease
payments ranging from approximately $144,000 to approximately $160,000 over the
lease term. The Amended Lease approximately doubled the office space and
extended the initial lease term to seven years through March 2005. In accordance
with the Amended Lease, the Company is required to have a letter of credit as a
security deposit in the amount of $74,000 throughout the lease term. The current
letter of credit will expire in December 1999.

15. BASIC AND DILUTED EARNINGS PER COMMON SHARE

The Company implemented SFAS No. 128, Earnings per Share, in 1997, which
requires certain disclosures relating to the calculation of earnings per common
share. The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per common share computations for net income.

BASIC NET INCOME (LOSS) PER COMMON SHARE

SFAS No. 128 replaces primary earnings per share with basic net income per
share and excludes the effect of common stock equivalents when computing basic
net income per share.

F-21
<PAGE> 82
PROXICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DILUTED NET INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1997 1998
------- ------- --------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss).......................................... $1,084 $2,693 $(20,642)
======= ======= ========
Adjustment of shares outstanding:
Weighted average shares of common stock outstanding...... 12,993 12,626 13,762
Shares of common stock issuable upon the assumed
conversion of preferred stock......................... 543 1,965 --
Incremental shares assumed exercised under common stock
options plans......................................... -- 1,742 --
------- ------- --------
Adjusted shares of common stock and common stock
equivalents for computation........................... 13,536 16,333 13,762
======= ======= ========
Diluted net income (loss) per common share................. $0.08 $0.16 $(1.50)
======= ======= ========
</TABLE>

SFAS No. 128 replaces fully diluted earnings per share with diluted net
income per share which reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.

16. PENDING INVESTMENT

In December 1998, Proxicom executed a letter of intent to make a cash
investment of approximately $360,000 in a recently formed joint venture entity
in Italy (the "Entity") created by Ericsson Telecommunicazioni SpA ("Ericsson").
Proxicom will own 19.9% of the common stock of the Entity and will have the
ability to nominate one member of the entity's board of directors. The Entity
was formed to deliver Internet professional services in Italy. It is anticipated
that the Entity will contract with Proxicom for certain consulting services, at
arm's length market rates on a time and materials basis. Also the Entity will
utilize the "Proxicom Process," Proxicom's proprietary, multi-phase methodology,
which Ericsson will transfer to the Entity for a fee. Proxicom will not
participate in the management or policy making of the business. Inasmuch as
Proxicom will not have the ability to influence significantly the entity or is
operations, Proxicom intends to account for its investment on the cost basis.
Proxicom also will have an option to buy an additional 20.0% share in the common
stock of the Entity, subject to certain conditions and restrictions. In March
1999, Proxicom signed a final agreement relating to this transaction.

F-22
<PAGE> 83

INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Supplemental Consolidated Balance Sheets.................... F-24
Supplemental Consolidated Statements of Operations.......... F-25
Supplemental Consolidated Statements of Changes in
Stockholders' Equity...................................... F-26
Supplemental Consolidated Statements of Cash Flows.......... F-27
Notes to Supplemental Consolidated Financial Statements..... F-28
</TABLE>

F-23
<PAGE> 84

PROXICOM, INC.

SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------ DECEMBER 31,
1997 1998 1998
------- -------- -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,343 $ 2,586
Investments............................................... 1,101 278
Accounts receivable, net of allowance of $660 and $669,
respectively............................................ 7,855 9,893
Unbilled services......................................... 1,369 4,259
Prepaid income taxes...................................... 207 130
Prepaid expenses.......................................... 305 402
Other current assets...................................... 175 301
------- --------
Total current assets.................................... 13,355 17,849
Property and equipment, net................................. 2,678 2,944
Deferred tax assets and other............................... 284 1,758
------- --------
Total assets............................................ $16,317 $ 22,551
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit........................................... $ 287 $ 5,554
Trade accounts payable.................................... 1,249 662
Accrued compensation...................................... 1,404 3,779
Deferred revenue.......................................... 1,218 1,889
Deferred tax liabilities.................................. 616 1,423
Note payable.............................................. -- 1,400
Other accrued liabilities................................. 1,047 1,215
------- --------
Total current liabilities............................... 5,821 15,922
------- --------
Commitments and contingencies (Note 14)
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $.01 par value;
2,641,347 shares authorized; 1,629,969 shares issued
and outstanding at December 31, 1996 and 1997;
1,629,969 shares issued and 1,222,469 shares
outstanding at December 31, 1998...................... 16 12 --
Series B convertible preferred stock, $.01 par value;
359,712 shares authorized, issued and outstanding at
December 31, 1997 and 1998............................ 4 4 --
Series C convertible preferred stock, $.01 par value;
419,302 shares authorized, issued and outstanding at
December 31, 1997 and 1998............................ 4 4 --
Common stock, $.01 par value, 20,000,000 shares
authorized; 13,776,431 shares and 15,431,306 shares
issued at December 31, 1997 and 1998, respectively;
13,315,802 and 15,378,177 shares outstanding at December
31, 1997 and 1998, respectively......................... 138 154 174
Additional paid-in capital................................ 8,846 25,578 25,578
Retained earnings (deficit)............................... 3,315 (18,904) (18,904)
Comprehensive income...................................... 3 3 3
Treasury stock............................................ (1,830) (222) (222)
------- -------- -------
Total stockholders' equity.............................. 10,496 6,629 6,629
------- -------- -------
Total liabilities and stockholders' equity.............. $16,317 $ 22,551
======= ========
</TABLE>

The accompanying notes are an integral part of

these supplemental consolidated financial statements.

F-24
<PAGE> 85

PROXICOM, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Revenue.................................................. $13,372 $28,452 $ 44,006
Cost of revenue.......................................... 5,085 12,736 24,928
------- ------- --------
Gross profit............................................. 8,287 15,716 19,078
------- ------- --------
Operating expenses:
General and administrative............................. 5,746 10,180 16,397
Selling and marketing.................................. 670 1,710 2,919
Research and development............................... 404 961 692
Acquisition and merger costs........................... -- -- 2,886
Stock-based and other compensation..................... 8 44 18,308
------- ------- --------
Total............................................... 6,828 12,895 41,202
------- ------- --------
Income (loss) from operations............................ 1,459 2,821 (22,124)
Interest income (expense), net........................... 55 80 (121)
------- ------- --------
Income (loss) before income taxes........................ 1,514 2,901 (22,245)
Income tax provision (benefit)........................... 185 330 (900)
------- ------- --------
Net income (loss)........................................ $ 1,329 $ 2,571 $(21,345)
======= ======= ========
Basic net income (loss) per common share................. $ 0.10 $ 0.19 $ (1.46)
======= ======= ========
Diluted net income (loss) per common share............... $ 0.09 $ 0.15 $ (1.46)
======= ======= ========
Weighted average common shares outstanding............... 13,740 13,374 14,576
======= ======= ========
Weighted average common shares and common share
equivalents............................................ 14,310 17,128 14,576
======= ======= ========
Unaudited pro forma data (Note 3):
Basic net loss per common share........................ $ (1.29)
========
Diluted net loss per common share...................... $ (1.29)
========
Weighted average common shares outstanding............. 16,577
========
Weighted average common shares and common share
equivalents......................................... 16,577
========
</TABLE>

The accompanying notes are an integral part of

these supplemental consolidated financial statements.

F-25
<PAGE> 86

PROXICOM, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(dollars in thousands)

<TABLE>
<CAPTION>
UNREALIZED
GAIN
COMMON STOCK PREFERRED STOCK ADDITIONAL (LOSS) TREASURY STOCK RETAINED
------------------- ------------------ PAID-IN ON ------------------ EARNINGS
SHARES AMOUNT SHARES AMOUNT CAPITAL SECURITIES SHARES AMOUNT (DEFICIT)
---------- ------ --------- ------ ---------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995.................... 13,238,444 $133 -- $-- $ -- $-- -- $ -- $ 999
Issuance of preferred
Series A and warrants... -- -- 1,629,969 16 5,314 -- -- -- --
Capitalization of Square
Earth, Inc.............. 534,999 5 -- -- 17 -- -- -- (8)
Stock-based
compensation............ -- -- -- -- 31 -- -- -- --
Unearned stock-based
compensation............ -- -- -- -- (23) -- -- -- --
Treasury stock
acquired................ -- -- -- -- -- -- 100,917 (330) --
Comprehensive income
(loss).................. -- -- -- -- -- (4) -- -- --
Net income............... -- -- -- -- -- -- -- -- 1,329
Subchapter S Corporation
distributions........... -- -- -- -- -- -- -- -- (135)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1996.................... 13,773,443 138 1,629,969 16 5,339 (4) 100,917 (330) 2,185
Issuance of preferred
Series B................ -- -- 359,712 4 1,496 -- -- -- --
Exercise of stock options
and issuance of
restricted shares....... 2,988 -- -- -- -- -- -- -- --
Treasury stock
acquired................ -- -- -- -- -- -- 359,712 (1,500) --
Issuance of preferred
Series C................ -- -- 419,302 4 1,967 -- -- -- --
Stock-based
compensation............ -- -- -- -- 63 -- -- -- --
Unearned stock-based
compensation............ -- -- -- -- (19) -- -- -- --
Comprehensive income..... -- -- -- -- -- 7 -- -- --
Net income............... -- -- -- -- -- -- -- -- 2,571
Subchapter S Corporation
distributions........... -- -- -- -- -- -- -- -- (1,441)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1997.................... 13,776,431 138 2,408,983 24 8,846 3 460,629 (1,830) 3,315
Conversion of preferred
Series A................ -- -- (407,500) (4) (1,604) -- (407,500) 1,608 --
Exercise of stock options
and issuance of
restricted shares....... 158,381 1 -- -- 302 -- -- -- --
Subchapter S Corporation
distributions........... -- -- -- -- -- -- -- -- (874)
Stock-based
compensation............ 1,496,494 15 -- -- 18,531 -- -- -- --
Unearned stock-based
compensation............ -- -- -- -- (497) -- -- -- --
Net loss................. -- -- -- -- -- -- -- -- (21,345)
---------- ---- --------- --- ------- --- -------- ------- --------
Balance at December 31,
1998.................... 15,431,306 $154 2,001,483 $20 $25,578 $ 3 53,129 $ (222) $(18,904)
========== ==== ========= === ======= === ======== ======= ========

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance at December 31,
1995.................... $ 1,132
Issuance of preferred
Series A and warrants... 5,330
Capitalization of Square
Earth, Inc.............. 14
Stock-based
compensation............ 31
Unearned stock-based
compensation............ (23)
Treasury stock
acquired................ (330)
Comprehensive income
(loss).................. (4)
Net income............... 1,329
Subchapter S Corporation
distributions........... (135)
--------
Balance at December 31,
1996.................... 7,344
Issuance of preferred
Series B................ 1,500
Exercise of stock options
and issuance of
restricted shares....... --
Treasury stock
acquired................ (1,500)
Issuance of preferred
Series C................ 1,971
Stock-based
compensation............ 63
Unearned stock-based
compensation............ (19)
Comprehensive income..... 7
Net income............... 2,571
Subchapter S Corporation
distributions........... (1,441)
--------
Balance at December 31,
1997.................... 10,496
Conversion of preferred
Series A................ --
Exercise of stock options
and issuance of
restricted shares....... 303
Subchapter S Corporation
distributions........... (874)
Stock-based
compensation............ 18,546
Unearned stock-based
compensation............ (497)
Net loss................. (21,345)
--------
Balance at December 31,
1998.................... $ 6,629
========
</TABLE>

The accompanying notes are an integral part of

these supplemental consolidated financial statements.

F-26
<PAGE> 87

PROXICOM, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 1,329 $ 2,571 $ (21,345)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization.......................... 397 904 1,516
Increase (decrease) in deferred income taxes........... 52 320 (667)
Provision for stock compensation....................... 8 264 17,555
Provision for doubtful accounts........................ 260 384 9
Common stock issued in exchange for services........... 166
Changes in assets and liabilities:
Increase in accounts receivable...................... (2,247) (5,483) (2,047)
Increase in unbilled services........................ (383) (649) (2,890)
(Increase) decrease in prepaid income taxes.......... (276) 77 77
Increase in prepaid expenses......................... (122) (175) (97)
Increase in other assets............................. (38) (52) (126)
Increase (decrease) in trade accounts payable........ 156 957 (587)
(Decrease) increase in accrued compensation.......... (201) 769 2,375
Increase in note payable............................. -- -- 1,400
Increase in deferred revenue......................... 499 719 671
Increase in other accrued liabilities................ 255 722 168
------- ------- ---------
Net cash (used in) provided by operating
activities...................................... (311) 1,328 (3,822)
------- ------- ---------
Cash flows from investing activities:
Purchases of property and equipment....................... (1,492) (2,079) (1,782)
Purchases of investments.................................. (2,285) (104) (390)
Sales of investments...................................... -- 1,288 1,213
------- ------- ---------
Net cash used in investing activities............. (3,777) (895) (959)
------- ------- ---------
Cash flows from financing activities:
Issuance of preferred stock and warrants, Series A........ 5,330 -- --
Issuance of preferred stock, Series B..................... -- 1,500 --
Issuance of preferred stock, Series C..................... -- 1,971 --
Issuance of common stock.................................. 22 -- --
Exercise of stock options................................. -- -- 631
Purchase of treasury stock................................ (330) (1,500) --
Borrowings under line of credit........................... 3,585 6,713 11,976
Payments under line of credit............................. (3,826) (6,493) (6,709)
Subchapter S Corporation distributions.................... (135) (1,441) (874)
Decrease in due to majority stockholder................... (200) -- --
------- ------- ---------
Net cash provided by financing activities......... 4,446 750 5,024
------- ------- ---------
Net increase in cash and cash equivalents................... 358 1,183 243
Cash and cash equivalents at beginning of period............ 802 1,160 2,343
------- ------- ---------
Cash and cash equivalents at end of period.................. $ 1,160 $ 2,343 $ 2,586
======= ======= =========
</TABLE>

The accompanying notes are an integral part of

these supplemental consolidated financial statements.

F-27
<PAGE> 88

PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

In August 1996, Proxima, Inc. ("Proxima"), a Maryland corporation
reincorporated as a Delaware corporation, through a merger transaction, changing
its name to Proxicom, Inc.

2. MERGERS

On March 26, 1999, Proxicom completed a merger with ad hoc Interactive,
Inc. ("Ad Hoc"), a Subchapter S Corporation incorporated during 1994, by
exchanging 829,771 shares of Proxicom's common stock for all the common stock of
Ad Hoc. Each share of Ad Hoc stock was exchanged for 9.955223 shares of Proxicom
common stock. In addition, outstanding rights to receive Ad Hoc stock were
exchanged for rights to receive Proxicom common stock (Note 9).

There were no transactions between Proxicom and Ad Hoc prior to the
combination. No material adjustments were made to conform to Proxicom's
accounting policies.

There were no transactions between Proxicom and IBIS Consulting prior to
the combination. No material adjustments were made to conform to Proxicom's
accounting policies.

There were no transactions between Proxicom and Square Earth prior to the
combination. No material adjustments were made to conform to Proxicom's
accounting policies.

F-28
<PAGE> 89
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stand-alone financial information is shown in the following table.

<TABLE>
<CAPTION>
SIX
YEAR ENDED MONTHS YEAR ENDED
DECEMBER 31, ENDED DECEMBER 31,
------------------- JUNE 30, ------------
1996 1997 1998 1998
-------- -------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue
IBIS Consulting.......... $3,884 $10,170 $8,054 $*
Square Earth............. 593 1,403 * *
Ad Hoc................... 941 1,095 * 1,601
Net income (loss)
IBIS Consulting.......... $ 938 $ 2,078 $1,391 *
Square Earth............. (95) 2 * *
Ad Hoc................... 246 (122) * (702)
</TABLE>

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

* Not applicable to reporting period.

The IBIS Consulting, Ad Hoc and Square Earth mergers constituted tax-free
reorganizations and have been accounted for as poolings of interests under
Accounting Principles Board Opinion No. 16, Business Combinations. Accordingly,
all prior period consolidated financial statements presented have been restated
to include the combined results of operations, financial position and cash flows
of IBIS Consulting, Ad Hoc and Square Earth as though they had been a part of
Proxicom since their inception.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

PRINCIPLES OF CONSOLIDATION

The accompanying supplemental consolidated financial statements include the
accounts and balances of Proxicom, IBIS Consulting, Square Earth, Ad Hoc and
Renaissance (hereafter collectively the "Company" or "Proxicom"). All
significant intercompany transactions and balances have been eliminated in
consolidation.

CASH AND CASH EQUIVALENTS

Highly liquid investments having original maturities of 90 days or less at
the date of acquisition are classified as cash equivalents. The carrying values
of cash equivalents approximate fair values.

F-29
<PAGE> 90
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

REVENUE RECOGNITION

Revenue from Internet professional services are recognized based on the
nature of the contract. Revenue from fixed-price contracts is recognized using
the percentage-of-completion method based on the ratio of costs incurred to
total estimated costs. Revenue from time-and-materials contracts is accounted
for as time is incurred and billed. Net revenues exclude reimburseable expenses
charged to clients.

Deferred revenue is recognized on fixed-price contracts to reflect billings
in excess of revenue recognized under the percentage-of-completion method.

Unbilled services on contracts are comprised of costs plus earnings in
excess of contractual billings on such contracts. Billings in excess of cost
plus earnings are classified as deferred revenue.

RESEARCH AND DEVELOPMENT EXPENSES FOR SOFTWARE PRODUCTS

PROPERTY AND EQUIPMENT

INVESTMENTS

INCOME TAXES

The provision for income taxes is determined in accordance with SFAS No.
109, Accounting for Income Taxes, which requires the use of the asset and
liability approach. Under this
F-30
<PAGE> 91
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approach, deferred taxes represent the expected future tax consequences of
temporary differences between the carrying amounts and tax bases of assets and
liabilities.

STOCK-BASED COMPENSATION

BASIC AND DILUTED NET INCOME PER COMMON SHARE

All per share amounts have been restated to reflect the re-incorporation
discussed at Note 1 and the mergers of IBIS Consulting, Ad Hoc and Square Earth
discussed at Note 2.

FAIR VALUE OF FINANCIAL INSTRUMENTS

CONCENTRATION OF CREDIT RISK

<TABLE>
<CAPTION>
ACCOUNTS
REVENUE RECEIVABLE
--------------------- -------------
YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------- -------------
1996 1997 1998 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Customer A....................................... 13.4% 22.9% 14.2% 19.9% 7.4%
Customer B....................................... * * 13.2 3.7 13.2
Customer C....................................... 13.6 * * * *
Customer D....................................... 12.6 * * * *
</TABLE>

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

* Represents less than 10% of total.

F-31
<PAGE> 92
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

PRO FORMA BALANCE SHEET, NET INCOME AND EARNINGS PER SHARE (UNAUDITED)

As discussed in Note 2, the Company merged with IBIS Consulting and Square
Earth during 1998, and Ad Hoc during 1999, all previously Subchapter S
Corporations. Pro forma net income (loss) assuming that IBIS Consulting, Ad Hoc
and Square Earth were taxable entities during the periods presented is as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1996 1997 1998
-------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before income taxes........................... $1,514 $2,901 $(22,245)
Pro forma income tax provision (benefit).................... 683 1,241 (900)
Pro forma net income (loss)................................. 831 1,660 (21,345)
</TABLE>

4. INVESTMENTS

The following is a summary of investments classified as current assets at
December 31, 1998 (in thousands):

F-32
<PAGE> 93
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The cost and fair value of available-for-sale securities by contractual
maturity are as follows (in thousands):

The Company realized gains from the sale of investments of $2,000 and
$9,000 for the years 1997 and 1998, respectively, and realized losses from the
sales of investments of $2,000 in 1998.

5. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------ -------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable......................................... $8,515 $10,562
Allowance for doubtful accounts............................. (660) (669)
------ -------
Net accounts receivable..................................... $7,855 $ 9,893
====== =======
</TABLE>

No accounts receivable at December 31, 1998 or 1997 were the result of
long-term contracts.

The Company wrote off doubtful accounts of $59,000, $71,000 and $959,000
for the years ended December 31, 1996, 1997 and 1998, respectively.

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Computer equipment.......................................... $2,794 $3,635
Office and other equipment.................................. 550 729
Purchased software.......................................... 397 596
Leasehold improvements...................................... 345 934
Automobile.................................................. 26 --
------ ------
4,112 5,894
Less: Accumulated depreciation and amortization............. (1,434) (2,950)
------ ------
Total property and equipment, net........................... $2,678 $2,944
====== ======
</TABLE>

F-33
<PAGE> 94
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LINES OF CREDIT

At December 31, 1997, the Company had a $2.0 million revolving line of
credit with a bank. Interest is payable monthly at the bank's prime rate plus
0.5% (9.0% at December 31, 1997). The line of credit is secured by substantially
all of the Company's assets, and includes various customary financial and other
covenants including maintenance of a minimum level of tangible net worth. No
borrowings were outstanding under the line of credit as of December 31, 1997.
There are no commitment fees under this line of credit.

Commitment fees of 0.25% paid on the unused line of credit during 1998 were
not material. There were no commitment fees under the previous lines of credit
for 1997 and 1998.

Interest expense was $33,000, $94,000 and $227,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.

As of May 1998, Ad Hoc entered into a line of credit with a bank in the
amount of $100,000. The line expires in November 1999. This line of credit
replaced a previously existing $50,000 line of credit with the same bank.
Interest on this line is payable on a monthly basis at a fixed rate of 10.25%.
Advances under the line of credit are secured by substantially all assets of the
Ad Hoc. Borrowings of approximately $23,000 and $96,000 were outstanding under
the line of credit as of December 31, 1997 and 1998, respectively. Ad Hoc has an
additional $25,000 equipment line which was established in March 1998. Equipment
notes for the full amount of the line have been drawn with terms ranging from
three to five years at an interest rate of 13.5%. As of December 31, 1998,
approximately $22,000 remained outstanding under this equipment line. Interest
expense was $0, $136 and $11,000 for the years ended December 31, 1996, 1997 and
1998, respectively.

F-34
<PAGE> 95
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. NOTE PAYABLE

On August 10, 1998, the Company entered into a $1.4 million note payable
with an investment banking firm in connection with professional services for the
IBIS Consulting transaction. The note accrues interest at 7.0% per annum and
matures in the earlier of August 21, 1999 or upon completion of an initial
public offering. This unsecured note is subordinated only to the Company's
senior bank facilities.

9. STOCK OPTION PLANS

PROXICOM STOCK OPTION PLANS FOR EMPLOYEES AND NON-EMPLOYEES

IBIS CONSULTING

The Company recognized compensation expense in 1997 and a liability related
to both these options and the underlying cash bonus arrangement in the amount of
$220,000.

F-35
<PAGE> 96
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SQUARE EARTH, INC.

IBIS CONSULTING STOCK-BASED AND OTHER COMPENSATION

AD HOC

During 1997 and 1998, Ad Hoc granted employees the right to receive 14,435
shares and 62,226 shares of common stock, respectively, at no cost on the first
or second anniversary of their employment start date, provided that they remain
full-time employees during such period. Ad Hoc recognized non-cash compensation
expense of $44,000 and $133,000 in 1997 and 1998, respectively, related to these
rights. $19,000 and $278,000 were recorded as unearned stock compensation as of
December 31, 1997 and 1998, respectively, which will be amortized over 1999 and
2000.

F-36
<PAGE> 97
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROXICOM STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

ACCOUNTING FOR STOCK OPTIONS ISSUED TO EMPLOYEES AND NON-EMPLOYEE DIRECTORS

The Company accounts for its stock options and rights to receive stock
issued to employees and non-employee directors in accordance with APB 25 under
which compensation expense of $8,000, $264,000, and $17.3 million was recognized
for the options and rights to receive stock granted in 1996, 1997 and 1998,
respectively. The Company has provided additional pro forma disclosures as
required by SFAS No. 123, "Accounting for Stock-Based Compensation."

For disclosure purposes, the fair value of each stock option and right to
receive stock is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions used for
stock options and rights to receive stock in 1996, 1997 and 1998: no annual
dividends, expected volatility of 0.0%, risk-free interest rate ranging from
5.1% to 6.1% and expected life of one to four years. The weighted-average fair
values of the stock options granted in 1996, 1997 and 1998 were $0.75, $3.18 and
$1.21, respectively. The weighted average fair values of the rights to receive
stock granted in 1996, 1997 and 1998 were $1.00, $3.76 and $6.39, respectively.

Under the above model, the total value of stock options and rights to
receive stock granted in 1996, 1997 and 1998 were $521,000, $8.9 million and
$2.8 million, respectively, which would be amortized on a pro forma basis over
the vesting period. Had the Company determined compensation cost for these plans
in accordance with SFAS No. 123, the Company's pro forma net income (loss) would
have been approximately $1.3 million, ($796,000) and ($7.2 million) in 1996,
1997 and 1998, respectively, and pro forma basic and diluted earnings per common
share would have been $0.09, ($0.06) and ($0.49) in 1996, 1997 and 1998,
respectively.

ACCOUNTING FOR STOCK OPTIONS ISSUED TO NON-EMPLOYEES

The Company accounts for its stock options granted to eligible
non-employees on the fair value method in accordance with SFAS No. 123. In
January 1998, Ad Hoc issued 34,843 shares of stock to a non-employee consultant
for services in lieu of cash. The Company recognized non-cash compensation
expense of $166,302 as general and administrative expenses in 1998 related to
this grant.

F-37
<PAGE> 98
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK OPTION ACTIVITY

The following tables summarize stock option activity for Proxicom and IBIS
Consulting option grants:

<TABLE>
<CAPTION>
PROXICOM IBIS CONSULTING
OPTIONS OUTSTANDING OPTIONS OUTSTANDING
------------------------- --------------------------
NUMBER OF NUMBER OF
SHARES OPTION PRICE SHARES OPTION PRICE
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
December 31, 1995
Grants........................... 652,750 $3.30 -- $ --
Exercised........................ -- -- -- --
Cancellations.................... -- -- -- --
--------- ----------
December 31, 1996................ 652,750 3.30 -- --
Grants........................... 756,324 4.25 2,015,096 0.24
Exercised........................ -- --
Cancellations.................... (161,550) 3.41 (256,065) .40
--------- ----------
December 31, 1997................ 1,247,524 3.86 1,759,031 0.22
Grants........................... 2,051,584 7.94 82,497 4.72
Exercised........................ (86,702) 3.49 (1,496,494) 0.22
Cancellations.................... (353,533) 5.75 -- --
--------- ----------
December 31, 1998................ 2,858,873 6.57 345,034 1.30
========= ==========
Options exercisable at:
December 31, 1998................ 365,030 3.73 304,183 0.83
December 31, 1997................ 132,115 3.30 1,496,494 0.22
December 31, 1996................ -- -- -- --
</TABLE>

The weighted-average exercise price for Proxicom options outstanding at
December 31, 1996, 1997 and 1998 were $3.30, $3.86 and $6.57, respectively and
exercise prices ranged from $3.30 to $4.78 at December 31, 1998. The
weighted-average exercise price for IBIS Consulting options at December 31,
1997, and 1998 were $0.22 and $1.30 and exercise prices ranged from $0.22 to
$4.72 at December 31, 1998. These options will expire if not exercised at
specific dates ranging from January 1998 to December 2008 and the
weighted-average remaining contractual life of the options outstanding was
approximately nine years.

F-38
<PAGE> 99
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes rights to receive stock of Ad Hoc:

<TABLE>
<CAPTION>
AD HOC
STOCK RIGHTS OUTSTANDING
-------------------------------
NUMBER OF SHARES OPTION PRICE
---------------- ------------
<S> <C> <C>
December 31, 1995.......................................... -- --
Grants..................................................... 31,362 --
Exercised.................................................. -- --
Cancellations.............................................. -- --
--------

December 31, 1996.......................................... 31,362 --
Grants..................................................... 14,435 --
Exercises.................................................. (2,988) --
Cancellations.............................................. -- --
--------

December 31, 1997.......................................... 42,809 --
Grants..................................................... 62,226 --
Exercises.................................................. (71,679) --
Cancellations.............................................. -- --
--------

December 31, 1998.......................................... 33,356
========
</TABLE>

10. CONVERTIBLE PREFERRED STOCK AND WARRANTS

F-39
<PAGE> 100
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Preferred Stock") at a price of $4.17 per share or approximately $1.5 million.
The Series B Preferred Stock has essentially the same rights and privileges as
the Series A Preferred Stock.

In January 1998, the Company issued 407,500 shares of treasury stock in
conjunction with the conversion of 407,500 shares of Series A Preferred Stock
into common stock.

In February 1999, the Company issued a total of 1,218,333 shares of Series
D convertible preferred stock (the "Series D Preferred Stock") at a price of
$6.00 per share or approximately $7.3 million. In connection with this
transaction, 758,667 shares of common stock were purchased by the investors from
selling stockholders in amounts proportionate to the investors participation in
the Series D Preferred Stock issuance. The Series D Preferred Stock has
essentially the same rights and privileges as the Series A, B and C Preferred
Stock. Because the Series D Preferred Stock was sold at a price of $6.00, it is
anticipated that such securities will be accounted for giving effect to its
beneficial conversion features. Under such accounting, the Company will record a
charge against additional paid-in capital to reflect the difference between the
conversion feature and the estimated fair value of the underlying common stock.
Although not reflected on the statement of operations, the beneficial conversion
charge will be reflected as a reduction to income and earnings per share
available for common stockholders.

11. INCOME TAXES

The provision for income taxes is as follows:

F-40
<PAGE> 101
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The reconciliation of the Company's income tax provision to the federal
statutory tax rate is as follows:

Deferred tax assets (liabilities) were comprised of the following:

The Company paid $374,000, $196,000 and ($207,000) for income taxes for the
year ended December 31, 1996, 1997, and 1998, respectively.

F-41
<PAGE> 102
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. RELATED PARTY TRANSACTIONS

13. EMPLOYEE BENEFIT PLANS

PROFIT SHARING AND BONUS PLANS

The Company recorded $1.0 million in bonuses due under the 1998 IBIS
Consulting plan. No bonus plan existed in 1997.

In December 1996, Ad Hoc adopted a 401(k) defined contribution profit
sharing plan. The plan covers all full-time employees who are at least 21 years
of age and have completed at least one year of employment with Ad Hoc.
Participants may contribute up to 15.0% of pretax compensation, subject to
certain limitations. Beginning in 1997 Ad Hoc may make discretionary annual
profit sharing contributions equal to 4.0% of each participant's annual
contribution, up to 6.0% of the respective participant's annual compensation.
For the years ended December 31, 1997 and 1998 Ad Hoc has contributed $500 and
$1,200 in profit sharing contributions, respectively.

EMPLOYEE STOCK PURCHASE PLAN

F-42
<PAGE> 103
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exceed $25,000 annually. Semi-annually, participant account balances will be
used to purchase stock at the lesser of 85.0% of the fair market value on the
trading day before the participation period starts or the trading day preceding
the day on which the participation period ends. A total of 1,000,000 shares are
available for purchase under the ESPP.

14. COMMITMENTS AND CONTINGENCIES

The Company leases certain office space in Virginia, California, New York,
and Illinois under non-cancelable operating leases expiring in various years
through 2005. Total rent expense for all operating leases amounted to
approximately $303,000, $926,000 and $2,705,000 in 1996, 1997, and 1998,
respectively. Future minimum lease payments under non-cancelable operating
leases as of December 31, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
1999..................................................... $ 3,789
2000..................................................... 3,170
2001..................................................... 2,724
2002..................................................... 2,459
2003..................................................... 1,785
Thereafter............................................... 3,522
-------
Total............................................. $17,449
=======
</TABLE>

15. BASIC AND DILUTED EARNINGS PER COMMON SHARE

BASIC NET INCOME (LOSS) PER COMMON SHARE

F-43
<PAGE> 104
PROXICOM, INC.

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SFAS No. 128 replaces primary earnings per share with basic net income per
share and excludes the effect of common stock equivalents when computing basic
net income per share.

DILUTED NET INCOME PER COMMON SHARE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1997 1998
------- ------- --------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss).......................................... $1,329 $2,571 $(21,345)
======= ======= ========
Adjustment of shares outstanding:
Weighted average shares of common stock outstanding...... 13,740 13,374 14,576
Shares of common stock issuable upon the assumed
conversion of preferred stock......................... 543 1,965 --
Incremental shares for rights to receive shares and
options assumed exercised under common stock options
plans................................................. 27 1,789 --
------- ------- --------
Adjusted shares of common stock and common stock
equivalents for computation........................... 14,310 17,128 14,576
======= ======= ========
Diluted net income (loss) per common share................. $0.09 $0.15 $(1.46)
======= ======= ========
</TABLE>

16. PENDING INVESTMENT

In December 1998, Proxicom executed a letter of intent to make a cash
investment of approximately $360,000 in a recently formed joint venture entity
in Italy (the "Entity") created by Ericsson Telecommunicazioni SpA ("Ericsson").
Proxicom will own 19.9% of the common stock of the Entity and will have the
ability to nominate one member of the Entity's board of directors. The Entity
was formed to deliver Internet professional services in Italy. It is anticipated
that the Entity will contract with Proxicom for certain consulting services, at
arm's length market rates on a time and materials basis. Also the Entity will
utilize the "Proxicom Process," Proxicom's proprietary, multi-phase methodology,
which Ericsson will transfer to the Entity for a fee. Proxicom will not
participate in the management or policy making of the business. Inasmuch as
Proxicom will not have the ability to influence significantly the entity or is
operations, Proxicom intends to account for its investment on the cost basis.
Proxicom also will have an option to buy an additional 20.0% share in the common
stock of the Entity, subject to certain conditions and restrictions. In March
1999, Proxicom signed a final agreement relating to this transaction.

F-44
<PAGE> 105

[INSIDE BACK COVER PAGE]
BACK COVER GRAPHIC:

The graphic contains the logos and names of some of Proxicom's clients. The
upper half of the graphic contains the logos of the following corporations:

- Merrill Lynch & Co., Inc.

- Marriott International, Inc.

- Ritz Camera Centers, Inc.

- Owens Corning

- Amgen

- Mercedes-Benz Credit Corp.

- ZD Net

- American Electronics Association

- Pacific Gas and Electric Company

- Cox Interactive Media, Inc.

- Excite, Inc.

- SAAB Cars USA, Inc.

- Corning, Inc.

- Calphalon Corporation

The bottom half of the graphic contains the names of the following corporations:

- GE Plastics

- GAP, Inc.

- Harman International

- Hewlett-Packard Corporation

- Kemper Insurance Companies

- GE Capital Corporation

- ARAMCO Services Company

- Buckeye Pipeline Company L.P.

- Schlumberger N.V.

- Wyeth-Ayerst Laboratories

- Transcanada Pipelines Ltd.

- American International Group, Inc.

- Booz-Allen & Hamilton, Inc.

- Hoffmann-La Roche, Inc.

- McKessonHBOC

- Transport4

The lower right corner of the graphic contains Proxicom's logo.
<PAGE> 106

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

YOU MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NEITHER WE NOR ANY
OF THE UNDERWRITERS OR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO
PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. WHEN YOU
MAKE A DECISION ABOUT WHETHER TO INVEST IN OUR COMMON STOCK, YOU SHOULD NOT RELY
UPON ANY INFORMATION OTHER THAN THE INFORMATION IN THIS PROSPECTUS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK MEANS THAT INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF THIS PROSPECTUS. THIS
PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY THESE
SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR
SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 25
Management............................ 38
Certain Transactions.................. 44
Principal and Selling Stockholders.... 46
Description of Capital Stock.......... 48
Shares Eligible for Future Sale....... 51
Underwriting.......................... 53
Legal Matters......................... 55
Experts............................... 55
Where You Can Find More Information... 55
Index to Financial Statements......... F-1
</TABLE>

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

DEALER PROSPECTUS DELIVERY OBLIGATION:

UNTIL , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

4,500,000 SHARES

[PROXICOM LOGO]

COMMON STOCK

-------------------------
PROSPECTUS
-------------------------

BT ALEX. BROWN

PRUDENTIAL SECURITIES

THOMAS WEISEL PARTNERS LLC

FRIEDMAN BILLINGS RAMSEY

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

, 1999

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 107

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various fees and expenses, other than
the underwriting discounts and commissions, payable by the Registrant in
connection with the sale of the common stock being registered hereby. All
amounts shown are estimates except for the Securities and Exchange Commission
("SEC") registration fee, the NASD filing fee and the Nasdaq National Market
listing fee.

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
SEC registration fee........................................ $ 20,850
NASD filing fee............................................. 8,000
Nasdaq National Market listing fee.......................... 95,000
Blue sky qualification fees and expenses.................... 5,000
Accounting fees and expenses................................ 350,000
Legal fees and expenses..................................... 500,000
Printing and engraving expenses............................. 350,000
Transfer agent and registrar fees........................... 20,000
Miscellaneous expenses...................................... 151,150
----------
Total.................................................. $1,500,000
==========
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The information presented below does not reflect the conversion of the
Registrant's Convertible Preferred Stock into common stock upon the closing of
the Offering:

(a) In July 1996, the Registrant sold one share of common stock to its
founder, Raul J. Fernandez, for aggregate consideration of $.01. This share
was issued without registration under the Securities Act of 1933 (the
"Securities Act"), in reliance upon an exemption from registration under
Section 4(2) thereof ("Section 4(2)").

(b) In August 1996, the Registrant sold 1,629,969 shares of Series A
Convertible Preferred Stock to two institutional investors. In connection
with this transaction, the Registrant issued these investors two warrants
exercisable for an aggregate of 1,011,378 shares of Series A Convertible
Preferred Stock at an exercise price of $7.91. These securities were issued
without registration under the Securities Act in reliance upon an exemption
from registration under Section 4(2).

(c) In February 1997, the Registrant sold 359,712 shares of Series B
Convertible Preferred Stock to four institutional investors for aggregate
consideration of $1,500,000. These shares were issued without registration
under the Securities Act in reliance upon an exemption from registration
under Section 4(2).

(d) In November 1997, the Registrant sold 419,302 shares of Series C
Convertible Preferred Stock to an institutional investor for aggregate
consideration of $2,000,071. These shares were issued without registration
under the Securities Act in reliance upon an exemption from registration
under Section 4(2).

(e) On February 1, 1999, the Registrant sold 1,218,333 shares of
Series D Convertible Preferred Stock to eight investors for aggregate
consideration of $7,310,000. These sales were issued without registration
under the Securities Act in reliance upon an exemption from registration
under Section 4(2).

II-1
<PAGE> 108

(f) In January 1998, the holders of Series A Convertible Preferred
Stock converted 407,500 shares of Series A Preferred Stock into an
equivalent number of shares of common stock. The shares of common stock
were issued without registration under the Securities Act in reliance upon
an exemption from registration under Section 3(a)(9).

(g) In January 1998, the Registrant issued 534,999 shares of common
stock in a merger with Square Earth, Inc. ("Square Earth") in exchange for
all of the shares of common stock of Square Earth. In addition, outstanding
Square Earth employee stock options were converted into options to purchase
41,474 shares of Proxicom common stock. These shares were issued without
registration under the Securities Act in reliance upon an exemption from
registration under Section 4(2).

(h) In August 1998, the Registrant issued 4,988,297 shares of common
stock in a merger with IBIS Consulting, Inc. ("IBIS") in exchange for all
of the shares of common stock of IBIS. In addition, outstanding IBIS
employee stock options were converted into options to purchase 310,420
shares of Proxicom common stock. These shares were issued without
registration under the Securities Act in reliance upon an exemption from
registration under Section 4(2) and Rule 701.

(i) Between October 15, 1996 and March 26, 1999, Proxicom granted
options to purchase a total of 5,899,783 shares of common stock under the
1996 Stock Option Plan and 1997 Stock Option Plan for Non-Employee
Directors to certain of its employees and directors. During that period, 48
optionees exercised options to purchase 208,315 shares of common stock.
These securities were issued without registration under the Securities Act
in reliance upon an exemption from registration under Rule 701.

(j) On March 26, 1999, Proxicom issued 829,771 shares of its common
stock and rights to acquire an additional 39,333 shares of its common stock
in exchange for all of the outstanding securities of ad hoc Interactive,
Inc. These shares were issued without registration under the Securities Act
in reliance upon an exemption from registration under Section 4(2).

None of these transactions were effected with an underwriter.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

II-2
<PAGE> 109

<TABLE>
<C> <S>
10.1+ Preferred Stock and Warrant Purchase Agreement, dated August
30, 1996, among the Registrant, General Atlantic Partners
34, L.P. and GAP Coinvestment Partners, L.P.
10.2+ Preferred Stock Purchase Agreement, dated February 20, 1997,
among the Registrant, General Atlantic Partners 34, L.P.,
GAP Coinvestment Partners, L.P., FBR Venture Capital
Managers, Inc. and The Mario M. Morino Trust
10.3+ Preferred Stock Purchase Agreement, dated November 24, 1997,
between the Registrant and General Electric Capital
Corporation
10.4+ Preferred Stock Purchase Agreement, dated February 1, 1999,
among the Registrant, Jack Kemp, Theodore J. Leonsis, John
McKinley, The Washington Post Company, General Atlantic
Partners 52, L.P., GAP Coinvestment Partners II, L.P., The
Mario M. Morino Trust and GE Capital Equity Investments,
Inc.
10.5+ Second Amended and Restated Registration Rights Agreement,
dated February 1, 1999, among the Registrant, General
Atlantic Partners 34, L.P., General Atlantic Partners 52,
L.P., GAP Coinvestment Partners, L.P., GAP Coinvestment
Partners II, L.P., Raul Fernandez, The Mario M. Morino
Trust, FBR Venture Capital Managers Inc., General Electric
Capital Corporation, GE Capital Equity Investments, Inc.,
Brenda Wong, Scott McDonald, Vincent Hoenigman, Jack Kemp,
Theodore J. Leonsis, John McKinley, and The Washington Post
Company
10.6 Proxicom, Inc. 1996 Stock Option Plan
10.7 Proxicom, Inc. 1997 Stock Option Plan for Non-employee
Directors
10.8 Proxicom, Inc. Employee Stock Purchase Plan
10.9 Lease Agreement, dated July 14, 1997 between Sunrise Limited
Partnership and the Registrant
10.10+ Secured Credit Agreement, dated as of October 30, 1998,
between the Registrant and NationsBank, N.A.
10.11 Third Amended and Restated Registration Rights Agreement of
the Registrant, dated March 26, 1999
10.12* Severance Agreement between the Registrant and Christopher
Capuano
10.13* Severance Agreement between the Registrant and Larry Clark
10.14* Severance Agreement between the Registrant and Kenneth J.
Tarpey
21.1 Subsidiaries of the Registrant
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
24.1+ Power of Attorney
27.1+ Financial Data Schedule
</TABLE>

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

+ Previously filed.

* To be filed by amendment.

(b) FINANCIAL STATEMENT SCHEDULES

Schedules have been omitted because the information required to be set
forth therein is not applicable or is included elsewhere in the Financial
Statements or the notes thereto.

II-3
<PAGE> 110

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Reston, Commonwealth of Virginia, on March 29, 1999.

PROXICOM, INC.

By:
------------------------------------------

Raul J. Fernandez
Chairman, President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman, President and Chief March 29, 1999
- --------------------------------------------- Executive Officer (Principal
Raul J. Fernandez Executive Officer)

/s/ KENNETH J. TARPEY Senior Vice President, Chief March 29, 1999
- --------------------------------------------- Financial Officer and Treasurer
Kenneth J. Tarpey (Principal Financial and Accounting
Officer)

* Director March 29, 1999
- ---------------------------------------------
Jack Kemp
<C> <S> <C>
* Director March 29, 1999
- ---------------------------------------------
Theodore J. Leonsis

* Director March 29, 1999
- ---------------------------------------------
John A. McKinley, Jr.

* Director March 29, 1999
- ---------------------------------------------
Mario M. Morino

*By: /s/ KENNETH J. TARPEY March 29, 1999
---------------------------------------
Kenneth J. Tarpey
Attorney-in-Fact
</TABLE>

II-4
<PAGE> 111

EXHIBIT INDEX

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Agreement and Plan of Merger, dated August 23, 1996, between
Proxima, Inc. and the Registrant
2.2+ Agreement and Plan of Merger, dated as of January 30, 1998,
among the Registrant, Proxicom Acquisition Corp., Square
Earth, Inc. and the stockholders of Square Earth, Inc.
2.3+ Agreement and Plan of Merger, dated as of August 21, 1998,
among the Registrant, Proxicom Merger Sub, Inc., IBIS
Consulting, Inc. and the stockholders of IBIS Consulting,
Inc.
2.4 Agreement and Plan of Merger, dated as of March 22, 1999,
among the Registrant, Proxicom Merger Sub II, Inc., ad hoc
Interactive, Inc. and the Principal Stockholders of ad hoc
Interactive, Inc.
3.1 Certificate of Incorporation of the Registrant, as amended
3.2 Form of Restated Certificate of Incorporation of the
Registrant to be effective upon closing of the Offering.
3.3 Bylaws of the Registrant
3.4 Form of Bylaws of the Registrant to be effective upon
closing of the Offering.
4.1* Form of Common Stock Certificate of the Registrant
5.1* Opinion of Hogan & Hartson L.L.P.
10.1+ Preferred Stock and Warrant Purchase Agreement, dated August
30, 1996, among the Registrant, General Atlantic Partners
34, L.P. and GAP Coinvestment Partners, L.P.
10.2+ Preferred Stock Purchase Agreement, dated February 20, 1997,
among the Registrant, General Atlantic Partners 34, L.P.,
GAP Coinvestment Partners, L.P., FBR Venture Capital
Managers, Inc. and The Mario M. Morino Trust
10.3+ Preferred Stock Purchase Agreement, dated November 24, 1997,
between the Registrant and General Electric Capital
Corporation
10.4+ Preferred Stock Purchase Agreement, dated February 1, 1999,
among the Registrant, Jack Kemp, Theodore J. Leonsis, John
McKinley, The Washington Post Company, General Atlantic
Partners 52, L.P., GAP Coinvestment Partners II, L.P., The
Mario M. Morino Trust and GE Capital Equity Investments,
Inc.
10.5+ Second Amended and Restated Registration Rights Agreement,
dated February 1, 1999, among the Registrant, General
Atlantic Partners 34, L.P., General Atlantic Partners 52,
L.P., GAP Coinvestment Partners, L.P., GAP Coinvestment
Partners II, L.P., Raul Fernandez, The Mario M. Morino
Trust, FBR Venture Capital Managers Inc., General Electric
Capital Corporation, GE Capital Equity Investments, Inc.,
Brenda Wong, Scott McDonald, Vincent Hoenigman, Jack Kemp,
Theodore J. Leonsis, John McKinley, and The Washington Post
Company
10.6 Proxicom, Inc. 1996 Stock Option Plan
10.7 Proxicom, Inc. 1997 Stock Option Plan for Non-employee
Directors
10.8 Proxicom, Inc. Employee Stock Purchase Plan
10.9 Lease Agreement, dated July 14, 1997 between Sunrise Limited
Partnership and the Registrant
10.10+ Secured Credit Agreement, dated as of October 30, 1998,
between the Registrant and NationsBank, N.A.
10.11 Third Amended and Restated Registration Rights Agreement of
the Registrant, dated March 26, 1999
</TABLE>

<PAGE> 112

<TABLE>
<C> <S>
10.12* Severance Agreement between the Registrant and Christopher
Capuano
10.13* Severance Agreement between the Registrant and Larry Clark
10.14* Severance Agreement between the Registrant and Kenneth J.
Tarpey
21.1 Subsidiaries of the Registrant
23.1 Consent of PricewaterhouseCoopers LLP
23.2* Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
24.1+ Power of Attorney
27.1+ Financial Data Schedule
</TABLE>

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

+ Previously filed.

* To be filed by amendment.

<PAGE> 1

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

AGREEMENT OF MERGER, dated this 23rd day of August, 1996, pursuant to
Section 252 of the Delaware General Corporation Law, between Proxicom, Inc., a
Delaware corporation (hereinafter referred to as "Proxicom") and Proxima, Inc.,
a Maryland corporation (hereinafter referred to as "Proxima"),

WITNESSETH that:

WHEREAS, RAUL J. FERNANDEZ, owns all of the outstanding capital stock of
Proxima and Proxicom, and

WHEREAS, Proxima and Proxicom desire to merge into a single corporation;
and

WHEREAS, the registered offices of Proxima in the State of Maryland are
located at 9727 Mount Pisgah Rd., Suite 404, Silver Springs, Maryland 20903, and
the name of the registered agent at such address is Raul J. Fernandez.

WHEREAS, the registered offices of Proxicom in the State of Delaware are
located at 1013 Centre Road, in the City of Wilmington, County of New Castle,
and the name of the registered agent at such address is Corporation Service
Company.

NOW, THEREFORE, the parties to this Agreement, in consideration of the
mutual covenants, agreements and provisions hereinafter contained, do hereby
prescribe the terms and conditions of said merger and mode of carrying the same
into effect as follows:

1
<PAGE> 2

FIRST: Proxima and Proxicom agree to merge and hereby do merge, with
Proxicom as the surviving corporation pursuant to the General Corporation Law of
the State of Delaware.

SECOND: The number of outstanding shares of Proxima is l,OOO shares of
Capital Stock, par value $1.00 per share, all of which is owned by Raul J.
Fernandez.

THIRD: The number of outstanding shares of Proxicom is 1 share of Common
Stock, par value $.0l per share, all of which is owned by Raul J. Fernandez.

FOURTH: There shall be no conversion of the outstanding shares of the
capital stock of either of the constituent corporations into shares or other
securities or obligations of Proxicom, and with respect to the outstanding
shares of the corporations the effect of the merger shall be as follows:

(a) Each share of common stock of Proxicom which shall be issued and
outstanding on the effective date of this merger shall continue to be one share
of the common stock of Proxicom, the corporation surviving the merger.

(b) Each share of common stock of Proxima which shall be issued and
outstanding on the effective date of this merger, and all rights in respect
thereof, shall be exchanged for Nine Thousand (9,000) shares of Proxicom Common
Stock.

FIFTH: The Certificate of Incorporation of Proxicom, as in effect on the
date of the merger provided for in this Agreement, shall continue in full force
and effect as the Certificate of Incorporation of Proxicom, the corporation
surviving this merger.

2
<PAGE> 3

SIXTH: The By-Laws of Proxicom in effect on the effective date of this
merger shall remain in full force and effect until the same shall be altered,
amended or repealed as therein provided.

SEVENTH: The directors and officers of Proxicom shall continue in office
until the next annual meeting of stockholders until their successors shall have
been elected and qualified.

EIGHTH: To carry out this Agreement, the President or any Vice
President, and the Secretary or any Assistant Secretary, of each constituent
corporation upon approval of this Agreement shall be vested with full authority
to do and perform each and every act or thing necessary or proper to be done or
performed in order to give effect to and to consummate this Agreement and Plan
of Merger.

NINTH: The merger contemplated herein shall become effective on the
filing date of the Certificate of Merger.

TENTH: Upon the merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of Proxima shall be transferred to, vested
in and devolve upon Proxicom without further act or deed and all property,
rights, and every other interest of Proxima shall be as effectively the property
of Proxicom as they were of Proxima.

Upon the merger becoming effective, Proxicom shall assume and shall be
responsible for all of the liabilities and obligations of Proxima, including but
not limited to, all liabilities and obligations of Proxima.

3
<PAGE> 4

The directors and the proper officers of Proxima and Proxicom are fully
authorized to take any and all such action to complete the purposes of this
Agreement.

IN WITNESS WHEREOF, each of the undersigned corporations has caused this
Agreement for Merger to be executed in its name by its President or Vice
President and Secretary or Assistant Secretary, as of the 23 day of August,
1996.

PROXIMA, INC. PROXICOM, INC.

BY: /S/ RAUL J. FERNANDEZ BY:/S/ RAUL J. FERNANDEZ
--------------------- ---------------------
RAUL J. FERNANDEZ RAUL J. FERNANDEZ
CHAIRMAN OF BOARD/PRESIDENT CHAIRMAN OF BOARD/PRESIDENT

ATTEST: ATTEST:

/S/ RAUL J. FERNANDEZ /S/ CHRISTOPHER CAPUANO
- ------------------------- -------------------------
RAUL J. FERNANDEZ CHRISTOPHER CAPUANO
SECRETARY SECRETARY

<PAGE> 1
EXHIBIT 2.4

AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PROXICOM, INC.,
PROXICOM MERGER SUB II, INC.
AD HOC INTERACTIVE, INC.
AND
THE PRINCIPAL STOCKHOLDERS OF AD HOC INTERACTIVE, INC.

DATED AS OF MARCH 22, 1999

- 1 -
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. EFFECTIVE TIME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3. EFFECT OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. ARTICLES OF INCORPORATION; BYLAWS. . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5. DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.7. SUBSEQUENT ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.8. TAX AND ACCOUNTING TREATMENT OF THE MERGER. . . . . . . . . . . . . . . . . 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . 3
SECTION 2.1. CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2. ESCROWED MERGER STOCK; STOCKHOLDERS' REPRESENTATIVE. . . . . . . . . . . . . 4
SECTION 2.3. EXCHANGE OF CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4. STOCK TRANSFER BOOKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

- i -
<PAGE> 3
<TABLE>
<S> <C>
SECTION 2.5. DISSENTER'S RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6. TRANSFERABILITY OF ACQUIROR COMMON STOCK. . . . . . . . . . . . . . . . . . 6
SECTION 2.7. LEGEND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.8. CONVERSION OF COMPANY DEFERRED STOCK RIGHTS. . . . . . . . . . . . . . . . . 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS . . . 10
SECTION 3.1. ORGANIZATION AND QUALIFICATION. . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3. ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . . . . . 10
SECTION 3.4. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.5. AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. . . . . . . . . . . . . . . . . 11
SECTION 3.7. THE COMPANY FINANCIAL STATEMENTS; NO LIABILITIES. . . . . . . . . . . . . . 12
SECTION 3.8. ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. . . . . . . . . . . . . . . . . . . . 13
SECTION 3.10. ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.11. LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.12. CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.13. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

- ii -
<PAGE> 4
<TABLE>
<S> <C>
SECTION 3.14 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.15. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.16 ABSENCE OF LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.17 POOLING OF INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.18. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.19. TAXES AND ASSESSMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.20. EMPLOYMENT MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.21. EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.22. TRANSACTIONS WITH RELATED PARTIES. . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.23. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.24. COMPLIANCE WITH LAWS; PERMITS. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.25. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.26. MINUTE BOOKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.27. REORGANIZATION TREATMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.28 HSR ACT COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.29. DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS . . . . . . . . . . . 25
</TABLE>

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<TABLE>
<S> <C>
SECTION 4.1. AUTHORITY AND CAPACITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.2. ABSENCE OF VIOLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3. RESTRICTIONS AND CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.4. TITLE TO CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.5. NON-REGISTRATION OF SECURITIES; PURCHASE FOR INVESTMENT ONLY. . . . . . . . 26
SECTION 4.6. ABILITY OF PRINCIPAL STOCKHOLDER TO EVALUATE INVESTMENT AND BEAR ECONOMIC
RISK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.7. WAIVER OF DISSENTER'S RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.1. ORGANIZATION AND QUALIFICATION. . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.2. AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. . . . . . . . . . . . . . . . . 28
SECTION 5.4. ABSENCE OF LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.5. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.6. REORGANIZATION TREATMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.7. DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF MERGER SUB . . . . . . . . . . . . . . . . . . . 30
SECTION 6.1. ORGANIZATION AND QUALIFICATION. . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>

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<TABLE>
<S> <C>
SECTION 6.2. ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . . . . . 30
SECTION 6.3. AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. . . . . . . . . . . . . . . . . 31
ARTICLE VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.1. AFFIRMATIVE COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . 31
SECTION 7.2. NEGATIVE COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.3. NEGATIVE COVENANTS OF THE PRINCIPAL STOCKHOLDERS. . . . . . . . . . . . . . 34
SECTION 7.4. STOCKHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.1. CONSENTS AND APPROVALS; FILINGS AND NOTICES. . . . . . . . . . . . . . . . . 34
SECTION 8.2. ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.3. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.4. FURTHER ACTION; REASONABLE BEST EFFORTS. . . . . . . . . . . . . . . . . . . 36
SECTION 8.5. PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.6. NO SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.7. EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.8. POOLING ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>

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<TABLE>
<S> <C>
SECTION 8.9. PRINCIPAL STOCKHOLDERS' COVENANTS NOT TO COMPETE. . . . . . . . . . . . . . 37
SECTION 8.10. CERTAIN TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.11. COPIES OF CERTAIN SEC FILINGS. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR AND MERGER SUB. . . . . . . . . . . . 41
SECTION 9.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS. . 43
ARTICLE X TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.1. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.2. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.3. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.4. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XI SURVIVAL OF REPRESENTATIONS; ESCROW ARRANGEMENTS; REMEDIES . . . . . . . . . . . . 46
SECTION 11.1. SURVIVAL OF REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2. INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS; ESCROW ARRANGEMENTS. . . . . 46
SECTION 11.3. THIRD PARTY CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.4. NO RECOURSE AGAINST THE COMPANY. . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>

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<TABLE>
<S> <C>
SECTION 11.5. SPECIFIC PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.6. REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.7. LIMITATION OF LIABILITY OF ACQUIROR, MERGER SUB AND THE SURVIVING
CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.1. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.2. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.3. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.4. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.5. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.6. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.7. THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.8. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.9. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 12.10. FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>

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<PAGE> 9
EXHIBITS

<TABLE>
<S> <C>
EXHIBIT A ESCROW AGREEMENT

EXHIBIT B AMENDMENT NO. 4 TO AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT

EXHIBIT C AFFILIATE AGREEMENT

EXHIBIT D THIRD AMENDED AND RESTATED REGISTRATION
RIGHTS AGREEMENT
</TABLE>

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<PAGE> 10
INDEX OF DEFINED TERMS
SECTION

<TABLE>
<S> <C>
ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(H)
ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
ACQUIROR COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
ACQUIROR INDEMNIFIED PERSONS . . . . . . . . . . . . . . . . . . . . 11.2
ACQUIROR MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . 12.2(A)
ADDITIONAL AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . 2.6(D)
AFFILIATE(S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(C); 2.6(D); 12.2(B)
AFFILIATE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(D)
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
AMENDMENT NO. 4 TO STOCKHOLDERS AGREEMENT . . . . . . . . . . . . . . 2.6(B)
ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(C)
BALANCE SHEET DATE . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
BASKET AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2
BENEFIT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(C)
BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(A)
BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(D)
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
CGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
COMMONLY CONTROLLED ENTITY . . . . . . . . . . . . . . . . . . . . . 3.21(A)
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
COMPANY BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . 3.7
COMPANY COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
COMPANY FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 3.7
COMPANY MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . . 12.2(E)
COMPANY SOFTWARE . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(F)
COMPETITIVE BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 8.9(A)
CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(A)
CONTROL, CONTROLLED BY, UNDER COMMON CONTROL WITH . . . . . . . . . . 12.2(G)
DEFERRED STOCK RIGHT . . . . . . . . . . . . . . . . . . . . . . . . 2.8
</TABLE>

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<PAGE> 11
<TABLE>
<S> <C>
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . 3.21(A)
EMPLOYEE PENSION BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . 3.21(A)
EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 9.1(K)
ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(H)
ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(B)(I)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(A)
ERISA PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(A)
ESCROW AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(A)
ESCROW AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(A)
ESCROW STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(A)
EXCHANGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
GE CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(B)
GOVERNMENT ENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(I)
HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(B)(II)
HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(J)
IBIS STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(B)
INDEMNIFIED PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3(A)
INDEMNIFYING PARTY . . . . . . . . . . . . . . . . . . . . . . . . . 11.3(A)
INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 12.2(K)
LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(L)
LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(M)
MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
MERGER FILING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . 1.2
MERGER STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
MULTIEMPLOYER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(D)
NONCOMPETE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9(A)
ORIGINAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 2.6(B)
PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(N)
PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.28
PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 1.8
POOLING OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . 9.1(H)
POOLING OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(H)
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
QUALIFIED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(B)
</TABLE>

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<PAGE> 12
<TABLE>
<S> <C>
REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13
REGISTRATION RIGHTS AGREEMENT . . . . . . . . . . . . . . . . . . . . 9.2(G)
RELATED AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(O)
RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(B)(III)
S CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(H); 11.2
SEC RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(C)
SECURITIES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(A)
SOFTWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(H)
STOCKHOLDER(S) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(A)
STOCKHOLDER DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . 7.4
STOCKHOLDERS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 2.6(B)
STOCKHOLDERS' REPRESENTATIVE . . . . . . . . . . . . . . . . . . . . 2.2(B)
SUBJECT RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . 11.2(F)
SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(P)
SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . 1.1
TAX DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10(E)
TAX DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10(E)
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(Q)
THIRD PARTY CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2(R)
THIRD PARTY PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . 3.14(G)
UNFUNDED CURRENT LIABILITY . . . . . . . . . . . . . . . . . . . . . 3.21(C)
YEAR 2000 READY . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(G)
</TABLE>

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<PAGE> 13
AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
this 22nd day of March, 1999, by and among PROXICOM, INC., a Delaware
corporation ("Acquiror"), PROXICOM MERGER SUB II, INC., a Delaware corporation
and a wholly-owned subsidiary of Acquiror ("Merger Sub"), AD HOC INTERACTIVE,
INC., a California corporation (the "Company"), and the undersigned
stockholders of the Company (the "Principal Stockholders").

WHEREAS, the Boards of Directors of each of Acquiror, Merger Sub and the
Company have determined that it is in the best interests of their respective
companies and stockholders that Merger Sub merge with and into the Company,
pursuant to and subject to the terms and conditions of this Agreement and the
General Corporation Law of the State of California (the "CGCL") and the General
Corporation Law of the State of Delaware ("DGCL");

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:

ARTICLE I

THE MERGER

SECTION 1.1. THE MERGER.

Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the CGCL and the DGCL, at the Effective Time
(as defined in Section 1.2), Merger Sub shall be merged with and into the
Company (the "Merger"). As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (sometimes referred to herein as the
"Surviving Corporation") as a wholly-owned subsidiary of Acquiror. The name of
the Company shall continue as the name of the Surviving Corporation.

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<PAGE> 14
SECTION 1.2. EFFECTIVE TIME.

At the Closing (as defined in Section 1.6), the parties hereto
shall cause the Merger to be consummated by filing (a) a merger agreement and
required officer's certificates with the Secretary of State of the State of
California, and (b) a certificate of merger with the Secretary of State of the
State of Delaware (collectively, the "Merger Filing Documents") in such form as
required by, and executed in accordance with the relevant provisions of the
CGCL and the DGCL and in such form as approved by the Company and Acquiror
prior to such filing (the date and time that the Merger Filing Documents are
deemed effective by the Secretary of State of the State of California and the
Secretary of State of the State of Delaware or such subsequent date or time
specified therein being the "Effective Time").

SECTION 1.3. EFFECT OF THE MERGER.

At the Effective Time, the effect of the Merger shall be as provided in
this Agreement and the applicable provisions of the CGCL and the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Merger Sub and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Merger Sub
and the Company shall become the debts, liabilities and duties of the Surviving
Corporation.

SECTION 1.4. ARTICLES OF INCORPORATION; BYLAWS.

At the Effective Time, the articles of incorporation of the
Surviving Corporation shall be amended and restated as provided for in the
Merger Filing Documents, and the bylaws of the Surviving Corporation shall be
amended and restated to be substantially the same as the bylaws of Merger Sub,
as in effect immediately prior to the Effective Time.

SECTION 1.5. DIRECTORS AND OFFICERS.

The directors of Merger Sub (or such other or additional
individuals as Acquiror may designate prior to Closing) shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the articles of incorporation and bylaws of the Surviving Corporation; and the
officers of Merger Sub shall continue as the officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.

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<PAGE> 15
SECTION 1.6. CLOSING.

Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place as promptly as
practicable after satisfaction of the latest to occur or, if permissible,
waiver of the conditions set forth in Article IX hereof (the "Closing Date"),
at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100,
McLean, Virginia 22102, unless another date or place is agreed to in writing by
the parties hereto.

SECTION 1.7. SUBSEQUENT ACTIONS.

If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties, privileges, franchises or Assets of either of its
constituent corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be directed and authorized to execute and deliver, in the
name and on behalf of either of such constituent corporations, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and
on behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or Assets in the Surviving Corporation or otherwise to carry out
this Agreement.

SECTION 1.8. TAX AND ACCOUNTING TREATMENT OF THE MERGER.

It is intended by the parties hereto that the Merger shall (a)
constitute a reorganization of Merger Sub and the Company within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code") and
(b) qualify for accounting treatment as a pooling of interests under Accounting
Principle Board Opinion No. 16. The parties hereby adopt this Agreement as a
"plan of reorganization" of Merger Sub and the Company within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.

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<PAGE> 16
ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

SECTION 2.1. CONVERSION OF SECURITIES.

At the Effective Time, by virtue of the Merger and without any
further action on the part of the parties hereto or the holders of the
following securities:

(a) Outstanding Company Common Stock. Subject to the
provisions of this Agreement, each share of common stock, no par value per
share, of the Company (the "Company Common Stock"), issued and outstanding
immediately prior to the Effective Time (excluding any Dissenting Shares),
shall be converted into the right to receive 9.955223 shares of common stock,
par value $0.01 per share, of Acquiror ("Acquiror Common Stock") (such number,
the "Exchange Ratio") (the shares of Acquiror Common Stock issuable pursuant to
this Section 2.1(a) to the registered holders of the Company Common Stock as of
the Effective Time (each, a "Stockholder" and collectively, the "Stockholders")
are referred to herein as the "Merger Stock"). All such shares of the Company
Common Stock shall cease to be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate (a "Certificate")
previously evidencing such shares shall thereafter represent only the right to
receive Acquiror Common Stock. The Stockholders shall cease to have any rights
with respect to such shares of the Company Common Stock other than the right to
receive Acquiror Common Stock pursuant to the terms and conditions of this
Agreement.

(b) Merger Sub Stock. Each share of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one (1) duly
and validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.

(c) No Fractional Shares. No fraction of a share of
Acquiror Common Stock shall be issued in connection with the Merger. The total
number of shares of Acquiror Common Stock issuable to each Stockholder pursuant
to Section 2.1(a) shall be rounded up or down, as the case may be, to the
nearest whole number.

SECTION 2.2. ESCROWED MERGER STOCK; STOCKHOLDERS' REPRESENTATIVE.

(a) When making the issuances of the Merger Stock
pursuant to Section 2.1(a) above, Acquiror shall withhold and retain in escrow
from the Principal Stockholders ten

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<PAGE> 17
percent (10%) of the aggregate number of shares of Acquiror Common Stock
issuable to the Principal Stockholders pursuant to Section 2.1(a) (after
rounding pursuant to Section 2.1(c)) (such shares, collectively, the "Escrow
Stock"). The Escrow Stock will be placed in escrow pursuant to an Escrow
Agreement, in the form of Exhibit A hereto (the "Escrow Agreement"), to be
entered into at Closing among Acquiror, the Surviving Corporation, the
Stockholders' Representative (as defined below) and Crestar Bank, as escrow
agent (the "Escrow Agent"). The Escrow Stock shall be held in escrow pursuant
to the Escrow Agreement as security for the performance of the indemnity
obligations of the Principal Stockholders under Section 11.2 of this Agreement.
The Escrow Stock shall be registered in the name of the Principal Stockholders
and the certificates therefor shall contain a legend to the effect that the
Escrow Stock is being held in escrow pursuant to the Escrow Agreement. The
Escrow Stock shall be released to the Principal Stockholders or Acquiror, as
the case may be, only in accordance with the terms of the Escrow Agreement.

(b) Each Principal Stockholder hereby, and each other
Stockholder by approving the terms and conditions of the Merger hereby,
appoints Saul Aaron Singer as attorney-in-fact with full power and authority to
act for and on behalf of any or all of the Stockholders (with full power of
substitution in the premises), in connection with the indemnity provisions of
Section 11.2 as they relate to the Principal Stockholders generally and such
other matters as are reasonably necessary for the consummation of the
transactions contemplated hereby including, without limitation, (i) to review
all claims for indemnification asserted by an Acquiror Indemnified Person, and,
to the extent deemed appropriate, dispute, question the accuracy of,
compromise, settle or otherwise resolve any and all such claims, (ii) to
compromise on their behalf with Acquiror any claims asserted thereunder, (iii)
to authorize payments to be made with respect to any such claims for
indemnification, (iv) to execute and deliver on behalf of the Stockholders any
document or agreement contemplated by or necessary or desirable in connection
with this Agreement and the transactions contemplated hereby, and (v) to take
such further actions including coordinating and administering post-closing
matters related to the rights and obligations of the Stockholders as are
authorized in this Agreement (including the matters described in Section 8.10
hereof) (the above named representative, as well as any subsequent
representative of the Stockholders appointed by the Stockholders being referred
to herein as the

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<PAGE> 18
"Stockholders' Representative"). Acquiror and Merger Sub shall be entitled to
rely on such appointment and treat such Stockholders' Representative as the
duly appointed attorney-in-fact of each Stockholder.

SECTION 2.3. EXCHANGE OF CERTIFICATES.

At the Closing, the Company shall deliver or cause to be
delivered to Acquiror for cancellation, the Certificates representing all of
the issued and outstanding shares of the Company Common Stock held immediately
prior to the Effective Time, duly endorsed in blank or with duly executed stock
powers attached, and the Stockholder Deliveries described in Section 7.4. In
exchange for the Certificates and the Stockholder Deliveries, promptly
following the Effective Time, Acquiror shall deliver to each Stockholder (other
than holders of Dissenting Shares) a stock certificate representing the
aggregate number of whole shares of Merger Stock issuable pursuant to Section
2.1(a) (less shares of Escrow Stock to be deposited in escrow pursuant to
Section 2.2(a)), which shares of Merger Stock shall be deemed to have been
issued at the Effective Time.

SECTION 2.4. STOCK TRANSFER BOOKS.

At the Effective Time, the stock transfer books of the Company
with respect to all shares of capital stock of the Company shall be closed and
no further registration of transfers of such shares of capital stock shall
thereafter be made on the records of the Company.

SECTION 2.5. DISSENTER'S RIGHTS.

Notwithstanding any other provisions of this Agreement to the
contrary, shares of the Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by Stockholders who
shall not have voted in favor of the Merger and who shall have complied with
Sections 1300 et seq. of the CGCL, shall be entitled to obtain payment from
Acquiror of the fair value of such Stockholder's shares of the Company Common
Stock, as determined pursuant to Sections 1300 et seq. of the CGCL
(collectively, the "Dissenting Shares"), and such Dissenting Shares shall not
be converted into or represent the right to receive the Merger. Stockholders
holding Dissenting Shares shall be entitled to receive payment of the fair
value of such shares of the Company Common Stock held by them in accordance
with the provisions of Sections 1300 et seq. of the CGCL, except that all
Dissenting Shares held by Stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their dissenters' rights under
Sections 1300 et seq. of the CGCL shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any

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<PAGE> 19
interest thereon, Merger Stock at the Exchange Ratio, upon surrender to
Acquiror of the certificate or certificates that formerly evidenced such shares
of the Company Common Stock, duly endorsed in blank or with duly executed stock
powers attached.

SECTION 2.6. TRANSFERABILITY OF ACQUIROR COMMON STOCK.

(a) The shares of Acquiror Common Stock to be issued and
delivered to the Stockholders in the Merger in accordance with the provisions
of this Article II will not have been registered under the Securities Act of
1933, as amended (the "Securities Act") or under the securities laws of any
state as of the Effective Time. Accordingly, such shares of Acquiror Common
Stock will not be transferable except upon compliance with the Securities Act,
any state securities laws, the rules, regulations and other administrative
regulations promulgated under the Securities Act and any state securities laws
and shall bear appropriate legends to this effect as set forth in Section 2.7
below. In addition, where applicable, the shares of Escrow Stock shall contain
a legend providing notice as to the Escrow Agreement.

(b) The shares of Acquiror Common Stock to be issued and
delivered to the Stockholders in the Merger in accordance with the provisions
of this Article II will also be subject to that certain Amended and Restated
Stockholders Agreement, dated February 20, 1997, among Acquiror, General
Atlantic Partners 34, L.P., GAP Coinvestment Partners, L.P., Raul Fernandez,
The Mario M. Morino Trust and FBR Venture Capital Managers Inc. (collectively,
the "Original Stockholders"), as amended by that certain Amendment No. 1 to
Amended and Restated Stockholders Agreement, dated November 24, 1997, among the
Original Stockholders and General Electric Capital Corporation ("GE Capital"),
as further amended by that certain Amendment No. 2 to Amended and Restated
Stockholders Agreement, dated August 21, 1998, among the Original Stockholders,
GE Capital, Brenda Wong, Scott McDonald and Vincent Hoenigman (collectively,
the "IBIS Stockholders"), as further amended by that certain Amendment No. 3 to
Amended and Restated Stockholders Agreement, dated February 1, 1999, among the
Original Stockholders, GE Capital, the IBIS Stockholders, General Atlantic
Partners 52, L.P., GAP Coinvestment Partners II, L.P., GE Capital Equity
Investments, Inc., Theodore J. Leonsis, Jack Kemp, John McKinley and The
Washington Post Company (collectively the "Stockholders Agreement"). Each
Principal Stockholder acknowledges and agrees that such Principal Stockholder
has

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<PAGE> 20
been given a copy of the Stockholders Agreement and afforded ample opportunity
to read it, and is thoroughly familiar with its terms. In addition to the
other legends described in this Agreement, the certificates evidencing the
shares of Merger Stock (including the Escrow Stock) will contain a legend
providing notice as to the Stockholders Agreement. At Closing, each
Stockholder shall execute and deliver an Amendment No. 4 to Amended and
Restated Stockholders Agreement in the form of Exhibit B hereto (the "Amendment
No. 4 to Stockholders Agreement").

(c) Each Principal Stockholder further acknowledges and
agrees that such Principal Stockholder may be deemed to be an "affiliate" of
the Company as that term is used in SEC Accounting Series Release Nos. 130 and
135 (together, the "SEC Release") and Rule 145 of the rules and regulations of
the SEC under the Securities Act. Accordingly, each Principal Stockholder
agrees not to sell, exchange, transfer, pledge or otherwise dispose of such
Principal Stockholder's interests in, or reduce such Principal Stockholder's
risk relative to, any of the (i) shares of the Company Common Stock over which
such Principal Stockholder has or shares voting or dispositive power or (ii)
shares of Acquiror Common Stock into which such shares of the Company Common
Stock are converted upon consummation of the Merger or upon the exercise of any
Acquiror options, at any time prior to the Effective Time and, thereafter,
until such time as financial results covering at least thirty (30) days of
post-Merger combined operations of Acquiror and the Company have been published
by Acquiror within the meaning of the SEC Release. Each Principal Stockholder
understands that reducing such Principal Stockholder's risk relative to such
shares of the Company Common Stock or Acquiror Common Stock includes, but is
not limited to, using such shares to secure a non-recourse loan, purchasing a
put option to sell such shares or otherwise entering a put agreement with
respect to such shares.

(d) Schedule 2.6(d) sets forth those persons who, in
addition to the Principal Stockholders, are or may be "affiliates" of the
Company as such term is used in the SEC Release and Rule 145 of the rules and
regulations of the SEC under the Securities Act (the "Additional Affiliates").
The Company shall deliver or cause to be delivered to Acquiror, on or before
the Effective Time, from each of the Additional Affiliates, a written agreement
in the form of Exhibit C hereto (each an "Affiliate Agreement"). If any
Additional Affiliate refuses to execute an Affiliate Agreement, Acquiror may,
in lieu of receipt of such Affiliate Agreement, be entitled to place
appropriate legends on the certificates evidencing the Acquiror Common Stock to
be received by such Additional Affiliate pursuant to the terms of this
Agreement, and to issue appropriate stock transfer instructions to the transfer
agent for Acquiror Common Stock, to the effect that the shares received or to
be received by such Affiliate

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<PAGE> 21
pursuant to this Agreement may only be sold, transferred or otherwise conveyed,
and the holder thereof may only reduce his or her interest in or risks relating
to such shares, pursuant to the requirements set forth in the Affiliate
Agreement. The foregoing restrictions on the transferability of Acquiror
Common Stock shall apply to all purported sales, transfers and other
conveyances of the shares received or to be received by such Additional
Affiliate pursuant to this Agreement and to all purported reductions in the
interest in or risks relating to such shares, whether or not such Additional
Affiliate has exchanged the Certificate previously evidencing shares of the
Company's capital stock, into which such shares were converted.

SECTION 2.7. LEGEND.

Each certificate representing Acquiror Common Stock issued to
the Stockholders hereunder shall be stamped or otherwise imprinted with a
legend (the "Legend") in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE HYPOTHECATED OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES
LAWS UPON RECEIPT BY PROXICOM, INC. (THE "COMPANY") OF A WRITTEN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.

IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
PURSUANT TO A BUSINESS COMBINATION WHICH IS ACCOUNTED FOR AS A "POOLING
OF INTERESTS" AND MAY NOT BE SOLD, NOR MAY THE OWNER THEREOF REDUCE HIS
OR HER RISKS RELATIVE THERETO IN ANY WAY, UNTIL SUCH TIME AS THE COMPANY
HAS PUBLISHED THE FINANCIAL RESULTS COVERING AT LEAST 30 DAYS OF
COMBINED OPERATIONS AFTER THE EFFECTIVE DATE OF THE MERGER THROUGH WHICH
THE BUSINESS COMBINATION WAS EFFECTED.

THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, DATED FEBRUARY 20, 1997,
AMONG PROXICOM, INC., GENERAL ATLANTIC PARTNERS 34, L.P., GAP
COINVESTMENT PARTNERS, L.P., RAUL FERNANDEZ, THE MARIO M. MORINO TRUST,
AND FBR VENTURE CAPITAL MANAGERS INC. (COLLECTIVELY, THE "ORIGINAL
STOCKHOLDERS"), AS AMENDED BY AMENDMENT NO. 1 TO THE AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT DATED NOVEMBER 24, 1997 AMONG THE
COMPANY, THE ORIGINAL STOCKHOLDERS AND GENERAL ELECTRIC CAPITAL
CORPORATION ("GE CAPITAL"), AS AMENDED BY AMENDMENT NO. 2 TO THE AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT DATED AUGUST 21, 1998 AMONG THE
COMPANY, THE ORIGINAL STOCKHOLDERS, GE CAPITAL AND BRENDA WONG, SCOTT
MCDONALD AND VINCENT HOENIGMAN (COLLECTIVELY, THE "IBIS STOCKHOLDERS"),
AS AMENDED BY AMENDMENT NO. 3 TO THE AMENDED AND

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<PAGE> 22
RESTATED STOCKHOLDERS AGREEMENT DATED FEBRUARY 1, 1999 AMONG THE
COMPANY, THE ORIGINAL STOCKHOLDERS, GE CAPITAL, THE IBIS STOCKHOLDERS,
GENERAL ATLANTIC PARTNERS 52, L.P., GAP COINVESTMENT PARTNERS II, L.P.,
GE CAPITAL EQUITY INVESTMENTS, INC., THEODORE J. LEONSIS, JACK KEMP,
JOHN MCKINLEY AND THE WASHINGTON POST COMPANY (COLLECTIVELY, THE
"ADDITIONAL STOCKHOLDERS"), AS AMENDED BY AMENDMENT NO. 4 TO THE AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT DATED MARCH ___________, 1999, AMONG
THE COMPANY, THE ORIGINAL STOCKHOLDERS, GE CAPITAL, THE IBIS
STOCKHOLDERS, THE ADDITIONAL STOCKHOLDERS AND THE AD HOC STOCKHOLDERS
NAMED THEREIN (COLLECTIVELY, THE "STOCKHOLDERS AGREEMENT"), A COPY OF
WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY
WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH
THE TERMS OF THE STOCKHOLDERS AGREEMENT.

Such legend will also be placed on any certificate
representing Acquiror securities issued subsequent to the original issuance of
the Acquiror Common Stock pursuant to the Merger as a result of any stock
dividend, stock split, or other recapitalization, or upon the exercise of any
Acquiror stock options, as long as the Acquiror Common Stock issued to the
Stockholder pursuant to the Merger is subject to the restrictions set forth
herein or in the Stockholders Agreement.

SECTION 2.8. CONVERSION OF COMPANY DEFERRED STOCK RIGHTS.

As of the Effective Time, each outstanding unexpired right to
receive shares of Company Common Stock as described in Schedule 3.4 hereto
under the heading "Contingent Stock Rights" (each a "Deferred Stock Right"),
shall automatically be converted into a right to receive a number of whole
shares of Acquiror Common Stock equal to the number of shares of Company Common
Stock issuable pursuant to such Deferred Stock Right multiplied by the Exchange
Ratio (as adjusted after the Effective Time to take into account any Acquiror
stock split, stock dividend, recapitalization or similar event). Except for
such conversion, nothing in this Section 2.8 shall affect the terms and
conditions of such Deferred Stock Rights in effect as of the date hereof. If at
the time of issuance of any Acquiror Common Stock pursuant to a Deferred Stock
Right the Stockholders Agreement shall be in effect, then the issuance of such
stock shall be subject to the execution and delivery to Acquiror by the
recipient of such stock of an Acknowledgment and Agreement in a form reasonably
acceptable to Acquiror pursuant to which such recipient shall agree to be bound
by the Stockholders Agreement and to matters related to compliance with federal
and state securities laws. Any issuances of Acquiror Common Stock pursuant to
the Deferred Stock Rights shall be subject to all applicable federal, state and
local tax withholding requirements.

ARTICLE III

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<PAGE> 23
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS

Subject to the qualifications, exceptions and other
disclosures set forth on the Disclosure Schedule attached hereto, the Company
and the Principal Stockholders jointly and severally represent and warrant to
Acquiror and Merger Sub as follows:

SECTION 3.1. ORGANIZATION AND QUALIFICATION.

The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. The Company
has the requisite power and authority to own, lease and operate its business as
it is now being conducted and to perform the terms of this Agreement and the
transactions contemplated hereby. The Company is duly qualified to conduct its
business as a foreign corporation, and is in good standing, in each
jurisdiction in which the ownership or leasing of its Assets or the nature of
its activities in connection with the conduct of its business makes such
qualification necessary, except where such failure to be so qualified would not
have a Company Material Adverse Effect.

SECTION 3.2. SUBSIDIARIES.

The Company has no Subsidiaries and no equity interest or
other investment in, nor has the Company made advances or loans to, any person.

SECTION 3.3. ARTICLES OF INCORPORATION AND BYLAWS.

The Company has heretofore delivered to Acquiror a complete
and correct copy of each of the articles of incorporation and bylaws of the
Company, each as amended to date. Such articles of incorporation and bylaws
are in full force and effect. The Company is not in violation of any of the
provisions of its articles of incorporation or bylaws.

SECTION 3.4. CAPITALIZATION.

The authorized capital stock of the Company consists of one
million (1,000,000) shares of the Company Common Stock, of which eighty-three
thousand four hundred fifty (83,450) shares are issued and outstanding. All of
the outstanding shares of capital stock of the Company are owned beneficially
and of record by the

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<PAGE> 24
Stockholders as set forth in Schedule 3.4, free and clear of all Encumbrances.
Except as set forth in Schedule 3.4, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to
the issued or unissued capital stock of the Company or obligating the Company
to issue or sell any shares of capital stock of, or other equity interests in
the Company, including any securities directly or indirectly convertible into
or exercisable or exchangeable for any capital stock or other equity securities
of the Company. There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any shares of its capital stock or make
any investment (in the form of a loan, capital contribution or otherwise) in
any other person. All of the issued and outstanding shares of the Company
Common Stock have been duly authorized and validly issued in accordance with
applicable laws and are fully paid and nonassessable and not subject to
preemptive rights. No shares of capital stock of the Company have been
reserved for any purpose.

SECTION 3.5. AUTHORITY.

The Company has the necessary corporate power and authority to
enter into this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement and the Related
Agreements or to consummate the transactions contemplated hereby and thereby.
This Agreement and the Related Agreements have been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Acquiror and Merger Sub, constitute legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.

SECTION 3.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

(a) Except as set forth in Schedule 3.6, the execution
and delivery of this Agreement and the Related Agreements by the Company do
not, and the performance by the Company of its obligations under this Agreement
and the Related Agreements will not, (i) conflict with or violate the articles
of incorporation, bylaws or other organizational document of the Company, (ii)
conflict with or violate any Laws

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<PAGE> 25
applicable to the Company or to its Assets, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company is a party or by which the Company is bound or to which
any of its Assets is subject except, in the case of clauses (ii) and (iii), for
such conflicts, violations, breaches and defaults which, individually or in the
aggregate, would not have a Company Material Adverse Effect.

(b) Except as set forth in Schedule 3.6, the Company's
execution and delivery of this Agreement and the Related Agreements does not,
and the Company's performance of this Agreement and the Related Agreements will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any third party or any court, arbitral tribunal, regulatory
body, administrative agency or commission, whether national or foreign, or
Government Entity, except for the filing and recordation of appropriate merger
documents as required by the CGCL and the DGCL, and applicable state and
federal securities related filings.

SECTION 3.7. THE COMPANY FINANCIAL STATEMENTS; NO LIABILITIES.

The Company has furnished to Acquiror an unaudited balance
sheet of the Company as at each of December 31, 1998, and an unaudited
statement of income and cash flow for the fiscal year ended December 31, 1998,
(such financial statements, collectively, the "Company Financial Statements").
The Company Financial Statements, including the related schedules and notes,
have been prepared internally, present fairly the financial condition of the
Company as of their respective dates and for the respective periods indicated
and have been prepared substantially in accordance with generally accepted
accounting principles applied on a consistent basis (except as otherwise noted
in the notes thereto and that the Company Financial Statements do not contain
all required footnotes and are subject to normal recurring year-end
adjustments). Except as reflected in the balance sheet of the Company (the
"Company Balance Sheet") dated December 31, 1998 (the "Balance Sheet Date"),
the Company has no liabilities, contingent or absolute, matured or unmatured,
except for liabilities incurred in the ordinary course of business since the
Balance Sheet Date and which would not have a Company Material Adverse Effect.

SECTION 3.8. ACCOUNTS RECEIVABLE.

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<PAGE> 26
Except as set forth in Schedule 3.8, the accounts receivable
of the Company shown on the Company Balance Sheet, or acquired by the Company
after the Balance Sheet Date, have been collected or are collectible in amounts
not less than the amounts thereof carried on the books of the Company, except
to the extent of the allowance for doubtful accounts shown on the Company
Balance Sheet.

SECTION 3.9. ABSENCE OF CERTAIN CHANGES OR EVENTS.

Since the Balance Sheet Date, there has been no Company
Material Adverse Effect. Since the Balance Sheet Date, the Company has
conducted its business in the ordinary course, and the Company has not (a) paid
any dividend or distribution in respect of, or redeemed or repurchased any of,
its capital stock; (b) except as set forth in Schedule 3.4, issued any capital
stock, bonds or other corporate securities or debt instruments, granted any
options, warrants or other rights calling for the issuance thereof, or borrowed
any funds; (c) incurred loss of, or significant injury to, any of the Assets as
the result of any fire, explosion, flood, windstorm, earthquake, labor trouble,
riot, accident, act of God or public enemy or armed forces, or other casualty;
(d) incurred, or become subject to, any obligation or liability (absolute or
contingent, matured or unmatured, known or unknown), except current liabilities
incurred in the ordinary course of business; (e) mortgaged, pledged or
subjected to any Encumbrance any of its Assets; (f) sold, exchanged,
transferred or otherwise disposed of any of its Assets or canceled any debts or
claims; (g) written down the value of any of its Assets or written off as
uncollectible any accounts receivable, except write downs and write-offs in the
ordinary course of business, none of which, individually or in the aggregate,
are material; (h) entered into any transactions other than in the ordinary
course of business and consistent with its past practice; (i) made any change
in any method of accounting or accounting practice; or (j) made any agreement
or is otherwise legally obligated to do any of the foregoing.

SECTION 3.10. ASSETS.

The Company is the sole and exclusive legal and equitable
owner of and has good title to, or has a good and valid leasehold or license
interest in and to, its Assets (including, without limitation, its Intellectual
Property), free and clear of all Encumbrances. No person or Government Entity
has an option to purchase, right of first refusal or other similar right with
respect to all or any part of the Company's Assets. All of the personal
property of the Company is in good working order and repair, ordinary wear and
tear excepted, and is suitable and adequate for the uses for which it is
intended or is being used.

SECTION 3.11. LEASES.

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Schedule 3.11 lists and describes all leases and other
agreements under which the Company is lessee or lessor of any Asset, or holds,
manages or operates any Asset owned by any third party, or under which any
Asset owned by the Company is held, operated or managed by a third party. Each
such lease and other agreement is in full force and effect and constitutes a
legal, valid and binding obligation of, and is legally enforceable against, the
Company and, to the knowledge of the Company, the other party or respective
parties thereto. With respect to each such lease and other agreement, (a) all
necessary governmental approvals with respect thereto required to be obtained
by the Company have been obtained, (b) all necessary filings or registrations
therefor required to be made by the Company have been made, and (c) there have
been no threatened cancellations thereof and no outstanding disputes
thereunder. The Company has performed in all material respects all obligations
thereunder required to be performed by the Company to date. The Company is
not, and to the Company's knowledge, no other party is in default in any
material respect under any of the foregoing, and there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default.

SECTION 3.12. CONTRACTS.

(a) Schedule 3.12 sets forth a complete and correct list
of all agreements, contracts and commitments (whether written or oral) to which
the Company is a party or by which the Company or any of its Assets are bound
(collectively, the "Contracts"), including, without limitation, the following
types of contracts and agreements: (i) employment, severance, termination,
consulting and retirement agreements; (ii) license agreements or distributor,
dealer, manufacturer's representative, sales agency and advertising agreements;
(iii) agreements with any labor organization or other collective bargaining
unit; (iv) agreements for the future purchase of materials, supplies, services,
merchandise or equipment involving payments of more than Five Thousand Dollars
($5,000) individually (or Twenty Thousand Dollars ($20,000) in the aggregate
for all such agreements) over its remaining term (including, without
limitation, periods covered by any option to renew by either party); (v)
agreements for the purchase, sale or lease of any real estate or other Assets;
(vi) profit-sharing, bonus, incentive compensation, deferred compensation,
stock option, severance pay, stock purchase, employee benefit,

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<PAGE> 28
insurance, hospitalization, pension, retirement or other similar plans or
agreements; (vii) agreements for the sale of Assets other than in the ordinary
course of business or the grant of any preferential rights to purchase Assets;
(viii) agreements which contain provisions requiring the Company to indemnify
any person; (ix) joint venture agreements or other agreements involving the
sharing of profits; (x) outstanding loans to any persons or entities or
receivables due from any stockholders or any affiliates of the Company; (xi)
agreements (including, without limitation, agreements not to compete and
exclusivity agreements) that reasonably could be interpreted to impose any
material restriction on any business operations of the Company; (xii)
agreements, notes and other instruments evidencing indebtedness for borrowed
money and grants of Encumbrances on any of the Assets of the Company; (xiii)
customer and client contracts; and (xiv) other agreement which by its terms
does not terminate or is not terminable by the Company within thirty (30) days
or upon thirty (30) days' (or less) notice. Schedule 3.12 includes a brief
description of all oral Contracts of the types described in clauses (i) through
(xiv) above.

(b) All the Contracts are valid and in full force and
effect and constitute legal, valid and binding obligations of, and are legally
enforceable against, the Company and, to the knowledge of the Company, the
other party or respective parties thereto. With respect to each such Contract,
(i) all necessary governmental approvals with respect thereto required to be
obtained by the Company have been obtained, (ii) all necessary filings or
registrations therefor required to be made by the Company have been made, and
(iii) there have been no threatened cancellations thereof and no outstanding
disputes thereunder. The Company has performed in all material respects all
obligations thereunder required to be performed by the Company to date. The
Company is not, and to the knowledge of the Company, no other party is in
default in any material respect under any of the Contracts, and there has not
occurred any event which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default.
True and complete copies of all Contracts have been delivered to Acquiror.

SECTION 3.13. REAL PROPERTY.

Schedule 3.13 contains a list and brief description of all
leasehold interests in real estate, easements, rights to access, rights-of-way
and other real property interests which are owned, leased, used or held for use
by the Company (collectively, the "Real Property"). The Company does not hold
any fee simple interest in any real estate. The Real Property described in
Schedule 3.13 constitutes all real property interests

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<PAGE> 29
necessary to conduct the business and operations of the Company as now
conducted and is suitable and adequate for the uses for which it is currently
devoted.

SECTION 3.14 INTELLECTUAL PROPERTY.

(a) Schedule 3.14 sets forth: (i) all registered and
unregistered trademarks, service marks, trade names, maskworks, registered and,
to the Company's knowledge, all unregistered copyrights, including the
jurisdictions in which each such Intellectual Property right has been
registered or in which any application for such registration has been filed,
and (ii) all current written and to the best of the Company's knowledge, oral
license, sublicense, franchise and other agreements under which the Company
licenses the Company's Intellectual Property to third parties or pursuant to
which the Company is authorized to use a third party's Intellectual Property.
Schedule 3.14 sets forth whether the Company is the sole owner or joint owner
or licensee of each item of Intellectual Property identified therein, and any
license fees, royalties or similar compensation which, are payable or are due
in the future from the Company.

(b) The Company either owns or has adequate rights to use
all of the Intellectual Property that is necessary to and currently used for
its business as now conducted, and the Company Software is free and clear of
Encumbrances and, to the Company's knowledge, all other Intellectual Property
of the Company is free and clear of Encumbrances. The Company has previously
furnished to Acquiror evidence of either ownership by the Company of or license
rights to use its Intellectual Property. Except as set forth in Schedule 3.14,
the Company Software does not contain any third party Intellectual Property.

(c) There are no pending or, to the Company's knowledge,
threatened claims against the Company alleging that the conduct of its business
infringes any Intellectual Property rights of others. The Intellectual
Property of the Company is not subject to any outstanding injunction, judgment,
order, decree, ruling or charge. To the Company's knowledge, the Company has
not engaged in unfair competition against any third party and the business of
the Company as now conducted does not infringe any third party Intellectual
Property rights.

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<PAGE> 30
(d) To the Company's knowledge, no third party is
infringing upon any of the Company's Intellectual Property, and the Company has
not notified any third party that it believes such third party is interfering
with, infringing, or misappropriating any of the Company's Intellectual
Property or engaging in any act of unfair competition. The Company has the
right to bring an action for the infringement of all of its Intellectual
Property.

(e) Except as set forth in Schedule 3.14, each present or
former employee, consultant, officer, director or stockholder of the Company
has executed a confidentiality and nondisclosure agreement, and an Intellectual
Property assignment agreement, substantially in the forms which have been
furnished to Acquiror.
(f) Any third party to which the Company has disclosed or
allowed access to proprietary, confidential Intellectual Property of the
Company has executed a confidentiality and nondisclosure agreement with respect
to such Intellectual Property.

(g) To the best knowledge of the Company and the
Principal Stockholders after due investigation and inquiry, any hardware,
software or firmware licensed or purchased by the Company from third parties
and all Company Software accurately processes date/time data (including but not
limited to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations when either (i) used as a standalone application, or (ii)
integrated into or otherwise used in conjunction with third party hardware,
software, firmware and data ("Third Party Products") with which such Company
Software was designed or intended to operate at the time such Company Software
was (A) developed for internal use or (B) provided to the Company's customers
or tested by the Company for such customers, whichever is later ("Year 2000
Ready").

(h) The Company represents and warrants that (i) the
Company has taken, is taking, and will take all measures it reasonably believes
are necessary to make the Company's computer systems and software, including
without limitation Third Party Products and the Company Software (collectively,
the "Software"), particularly the operating systems and software upon which the
Company will rely to provide services to its customers, Year 2000 Ready,
including remediation and the use of contingency plans, if necessary, should a
year 2000 problem arise from any cause within the Company's control which may
affect those services; and (ii) the Company has requested or is in the process
of requesting from those third-party vendors and suppliers of the Company that
directly support the services that the Company provides

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<PAGE> 31
to customers reasonable assurances that their computer systems and related
software are Year 2000 Ready, and that they are taking or have taken adequate
measures to prevent problems caused by the year 2000 that may impact the
services and products they provide to the Company. The Company has previously
furnished Acquiror with copies of all year 2000 warranties that the Company has
provided, and currently provides, to its customers.

SECTION 3.15. ENVIRONMENTAL MATTERS.

(a) The Company has complied and is in compliance in all
material respects with all Environmental Laws. The Company does not have any
liability under any Environmental Law, nor is the Company responsible for any
liability of any other person under any Environmental Law. There are no
pending or, to the knowledge of the Company, threatened actions, suits, claims,
legal proceedings or other proceedings based on, and the Company has not
directly or indirectly received any notice of any complaint, order, directive,
citation, notice of responsibility, notice of potential responsibility, or
information request from any Government Entity or any other person arising out
of or attributable to: (i) the current or past presence, Release or threatened
Release of Hazardous Materials at or from any part of the Real Property; (ii)
the off-site disposal or treatment of Hazardous Materials originating on or
from the Real Property or the businesses or Assets of the Company; or (iv) any
violation of Environmental Laws at any part of the Real Property or otherwise
arising from the Company's activities involving Hazardous Materials.

(b) As used herein, these terms shall have the following
meanings:

(i) "Environmental Laws" means all Laws
(including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act), including any plans, other criteria, or
guidelines promulgated pursuant to such Laws, now or hereafter in effect
relating to the generation, production, installation, use, storage, treatment,
transportation, release, threatened release, or disposal of Hazardous
Materials, noise control, or the protection of human health or safety, natural
resources, or the environment.

(ii) "Hazardous Materials" means wastes,
substances, radiation, or materials (whether solids, liquids or gases) (i)
which are hazardous, toxic, infectious, explosive, radioactive, carcinogenic,
or mutagenic; (ii) which are or become defined as a "pollutants",
"contaminants", "hazardous materials", "hazardous wastes", "hazardous
substances", "toxic substances", "radioactive materials", "solid wastes", or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws; (iii) the presence of which on the Real Property cause or
threaten to cause a nuisance pursuant to applicable statutory or common law
upon the Real Property or to adjacent

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<PAGE> 32
properties; (iv) without limitation, which contain polychlorinated biphenyls
(PCBs), asbestos and asbestos-containing materials, lead-based paints,
urea-formaldehyde foam insulation, and petroleum or petroleum products
(including, without limitation, crude oil or any fraction thereof) or (v) which
pose a hazard to human health, safety, natural resources, industrial hygiene,
or the environment, or an impediment to working conditions.

(iii) "Release" means any emission, spill, seepage,
leak, escape, leaching, discharge, injection, pumping, pouring, emptying,
dumping, disposal, or release of Hazardous Materials from any source
(including, without limitation, the Real Property and property adjacent to the
Real Property) into or upon the environment, including the air, soil,
improvements, surface water, groundwater, the sewer, septic system, storm
drain, publicly owned treatment works, or waste treatment, storage, or disposal
systems at, on, from, above, or under the Real Property or any other property
at which Hazardous Materials originating on or from the Real Property or the
businesses or Assets of the Company have been stored, treated or disposed.

SECTION 3.16 ABSENCE OF LITIGATION.

There are (a) no claims, actions, suits, investigations, or
proceedings pending or, to the Company's knowledge, threatened against the
Company or any of its properties or Assets before any court, administrative,
governmental, arbitral, mediation or regulatory authority or body, domestic or
foreign, and (b) no judgments, decrees, injunctions or orders of any Government
Entity or arbitrator outstanding against the Company or any of its properties
or Assets.

SECTION 3.17 POOLING OF INTERESTS.

To the best knowledge of the Company and the Principal
Stockholders after due investigation and inquiry, neither the Company nor any
of its directors, officers or stockholders has taken any action which would
interfere with Acquiror's ability to account for the Merger as a pooling of
interests. Acquiror shall be entitled to rely on the representations,
warranties, covenants and agreements made by the Company to the Accounting Firm
in connection with the Pooling Opinion, which representations, warranties,
covenants and agreements are incorporated herein by reference and made a part
of this Agreement.

SECTION 3.18. BOOKS AND RECORDS.

Except as set forth in Schedule 3.18, the books of account,
stock records, minute books and other records of the Company are true and
complete in all material respects, and the matters contained therein are
appropriately and accurately reflected in the financial statements to the
extent required to be reflected therein.

SECTION 3.19. TAXES AND ASSESSMENTS.

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<PAGE> 33
(a) The Company has (or, in the case of returns becoming
due after the date hereof and on or before the Effective Time, will have prior
to the Effective Time) duly filed all Tax returns required to be filed by the
Company on or before the Effective Time with respect to all applicable Taxes.
No penalties or other charges are or will become due with respect to any of the
Company's Tax returns as the result of the late filing thereof. All of the
Company Tax returns are (or, in the case of returns becoming due after the date
hereof and on or before the Effective Time, will be) true and complete in all
material respects. The Company: (i) has paid all Taxes due or claimed to be
due by any taxing authority in connection with any of the Company Tax returns
(without regard to whether or not such Taxes are shown as due on such Company
Tax returns); or (ii) has established (or, in the case of amounts becoming due
after the date hereof, prior to the Effective Time will have paid or
established) in its financial statements provided to Acquiror adequate reserves
(in conformity with generally accepted accounting principles consistently
applied) for the payment of such Taxes. The amounts set up as reserves for
Taxes on the financial statements of the Company furnished to Acquiror are
sufficient for the payment of all unpaid Taxes, whether or not such Taxes are
disputed or are yet due and payable, for or with respect to the period, and for
which the Company may be liable or as a transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity.

(b) The Company, either in its own right or as a
transferee, has not or on the Effective Time will not have any liability for
Taxes payable for or with respect to any periods prior to and including the
Effective Time in excess of the amounts actually paid prior to the Effective
Time or reserved for in financial statements furnished to Acquiror.

(c) There is no action, suit, proceeding, audit,
investigation or claim pending or, to the knowledge of the Company, threatened
in respect of any Taxes for which the Company is or may become liable, nor has
any deficiency or claim for any such Taxes been proposed, asserted or, to the
knowledge of the Company, threatened. The Company has not consented to any
waivers or extensions of any statute of limitations with respect to any taxable
year of the Company. There is no agreement, waiver or consent providing for an
extension of time with respect to the assessment or

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<PAGE> 34
collection of any Taxes against the Company, and no power of attorney granted
by the Company with respect to any tax matters is currently in force.

(d) The Company has furnished to Acquiror true and
complete copies of all Company Tax returns and all written communications by or
to the Company relating to any such Company Tax returns or to any deficiency or
claim proposed and/or asserted, irrespective of the outcome of such matter, but
only to the extent such items relate to tax years (i) which are subject to an
audit, investigation, examination or other proceeding, or (ii) with respect to
which the statute of limitations has not expired.

(e) Schedule 3.19 sets forth (i) all federal tax
elections that currently are in effect with respect to the Company and which
are not reflected in the Company's Tax returns provided to Acquiror, and (ii)
all elections for purposes of foreign, state or local Taxes and all consents or
agreements for purposes of federal, foreign, state or local Taxes in each case
that reasonably could be expected to affect or be binding upon the Company or
its assets or operations after the Effective Time. Schedule 3.19 sets forth
all changes in accounting methods for Tax purposes at any time made, agreed to,
requested or required with respect to the Company.

(f) The Company (i) is not and never has been a partner
in a partnership or an owner of an interest in an entity treated as a
partnership for federal income tax purposes; (ii) has not executed or filed
with the Internal Revenue Service any consent to have the provisions of Section
341(f) of the Code apply to it; (iii) is not subject to Section 999 of the
Code; (iv) is not a passive foreign investment company as defined in Section
1296(a) of the Code; and (v) except as set forth on Schedule 3.19, is not a
party to an agreement relating to the sharing, allocation or payment of, or
indemnity for, Taxes.

SECTION 3.20. EMPLOYMENT MATTERS.

(a) Schedule 3.20 contains a true and complete list of
names, positions and annual rates of compensation (including bonuses and other
special compensation arrangements) of all current directors, officers and
employees of the Company. With respect to any persons employed by the Company,
the Company is in compliance with all Laws respecting employment conditions and
practices in all material respects and has withheld all amounts required by any
applicable Laws to be withheld from wages or any Taxes or penalties for failure
to comply with any of the foregoing.

(b) There are no collective bargaining agreements
applicable to any Company employees and the Company does not have a duty to
bargain with any labor organization with respect to any such persons. There is
not pending any demand for

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<PAGE> 35
recognition or any other request or demand from a labor organization for
representative status with respect to any persons employed by the Company.

(c) With respect to any persons employed by the Company,
(i) the Company has not engaged in any unfair labor practice within the meaning
of the National Labor Relations Act and has not violated any legal requirement
prohibiting discrimination on the basis of race, color, national origin, sex,
religion, age, marital status, or handicap in its employment conditions or
practices; and (ii) there are no pending or, to the knowledge of the Company,
threatened unfair labor practice charges or discrimination complaints relating
to race, color, national origin, sex, religion, age, marital status, or
handicap against the Company before any Government Entity nor, to the knowledge
of the Company, does any basis therefor exist.

SECTION 3.21. EMPLOYEE BENEFIT PLANS.

(a) Schedule 3.21 sets forth a list of all of the
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, sabbatical, vacation, bonus, loans,
medical, dental, vision care, disability, life insurance or other employee
programs, arrangements or agreements and all other material employee benefit
plans or fringe benefit plans, including, without limitation, all "employee
benefit plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
the Company or for which the Company could incur a liability or any entity
required to be aggregated with the Company (each, a "Commonly Controlled
Entity") pursuant to Section 414 of the Code for the benefit of present and
former employees or directors of the Company or their beneficiaries, or
providing benefits to such persons in respect of services provided to any such
entity (collectively, the "Benefit Plans"). Any of the Benefit Plans which is
an "employee pension benefit plan", as that term is defined in Section 3(2) of
ERISA, is referred to herein as an "ERISA Plan".

(b) Each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) or 501 of the Code has been determined by
the Internal Revenue Service to be so qualified and to the Company's knowledge,
no circumstances exist that could reasonably be expected by the Company to
result in the revocation of

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<PAGE> 36
any such determination. Each of the Benefit Plans is in compliance with their
terms and the applicable terms of ERISA and the Code and any other applicable
laws, rules and regulations the breach or violation of which could result in a
material liability to the Company or any Commonly Controlled Entity.

(c) No ERISA Plan which is a defined benefit pension plan
has any "unfunded current liability", as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan equals or exceeds the plan's "benefit liabilities", as that term is
defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. All contributions, premiums and other payments
with respect to each ERISA Plan which have become due and payable have been
paid.

(d) No Benefit Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan"). Neither
the Company nor any Commonly Controlled Entity has completely or partially
withdrawn from any Multiemployer Plan. No termination liability to the Pension
Benefit Guaranty Corporation or withdrawal liability to any Multiemployer Plan
that is material in the aggregate has been or is reasonably expected to be
incurred with respect to any Multiemployer Plan by the Company or any Commonly
Controlled Entity.

(e) The Company has made available to Acquiror complete
copies, as of the date hereof, of all of the Benefit Plans that have been
reduced to writing, together with all documents establishing or constituting
any related trust, annuity contract, insurance contract or other funding
instrument. The Company has made available to Acquiror complete copies of
current plan summaries, employee booklets, personnel manuals and other material
documents or written materials concerning the Benefit Plans that are in the
possession of the Company as of the date hereof.

(f) No claim, lawsuit, arbitration or other action has
been threatened or instituted against any Benefit Plan.

(g) Except to the extent expressly provided for in this
Agreement and the Related Agreements, the consummation of the transactions
contemplated by this Agreement will not give rise to any liability, including,
without limitation, liability for severance pay or termination pay, or
accelerate the time of payment or vesting or increase the amount of
compensation or benefits due to any employee, director or stockholder of the
Company (whether current, former, or retired) or their beneficiaries

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<PAGE> 37
solely by reason of such transactions. No amounts payable under any Benefit
Plan will fail to be deductible for federal income tax purposes by virtue of
Section 280G or 162(m) of the Code.

(h) The Company does not maintain, contribute to, or in
any way provide for any benefits of any kind (other than under Section 4980B of
the Code, the Federal Social Security Act, or a plan qualified under Section
401(a) of the Code) to any current or future retiree or terminee.

(i) Neither the Company nor any Commonly Controlled
Entity has (or reasonably expects to have) any liability under Title IV of
ERISA.

SECTION 3.22. TRANSACTIONS WITH RELATED PARTIES.

No present or former officer, director, stockholder or person
known by the Company to be an affiliate of the Company, nor any person known by
the Company to be an affiliate of any such person, is currently a party to any
transaction or agreement with the Company, including any agreement providing
for any loans, advances, the employment of, furnishing of services by, rental
of their respective Assets from or to, or otherwise requiring payments to, any
such officer, director, stockholder or affiliate.

SECTION 3.23. INSURANCE.

Schedule 3.23 contains a list of all insurance policies of
title, property, fire, casualty, liability, life, worker's compensation, libel
and slander, and other forms of insurance of any kind relating to the Assets or
the business and operations of the Company, true and correct copies of which
have been made available to Acquiror. All premiums with respect to such
policies covering all periods up to and including the date hereof have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. All such policies (a) are in full force and
effect; (b) are sufficient for compliance by the Company with all requirements
of applicable Law and of all licenses, franchises and other agreements to which
the Company is a party; and (c) are valid, outstanding, and enforceable
policies.

SECTION 3.24. COMPLIANCE WITH LAWS; PERMITS.

The Company is in compliance in all material respects with all
Laws applicable to the Company, its Assets and to the business and operations
of the Company. The Company holds all licenses and permits from

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<PAGE> 38
Government Entities which are necessary for the conduct of its business, except
where the failure to hold any such license or permit would not have a Company
Material Adverse Effect.

SECTION 3.25. BROKERS.

No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.

SECTION 3.26. MINUTE BOOKS.

The minute books of the Company made available to Acquiror
contain a complete and accurate summary of all meetings of directors and
stockholders or actions by written consent since the time of incorporation of
the Company through the date of this Agreement, and reflect all transactions
referred to in such minutes accurately in all material respects.

SECTION 3.27. REORGANIZATION TREATMENT.

Neither the Company nor any Principal Stockholder has taken,
agreed to take, is obligated to take or intends to take any action that would
cause the Merger to fail to qualify as a reorganization within the meaning of
Section 368 of the Code.

SECTION 3.28 HSR ACT COMPLIANCE.

The "Person" (as that term is defined in the HSR Act and
implementing regulations) in which the Company is included does not have total
assets of Ten Million Dollars ($10,000,000) or more as stated on the last
regularly prepared consolidated balance sheet of that "Person", and does not
have annual net sales of Ten Million Dollars ($10,000,000) or more as stated on
the last regularly prepared consolidated annual statement of income and
expenses of that "Person".

SECTION 3.29. DISCLOSURE.

No representations or warranties by the Company in this
Agreement and no statement or information contained in the Schedules hereto or
any certificate furnished or to be furnished by the Company to Acquiror
pursuant to the provisions of this Agreement or included in the Information
Statement to be provided to the Stockholders in connection with the
transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any fact
necessary, in light of the circumstances under which it was made, in order to
make the statements herein or therein not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS

In addition to the representations and
warranties made by the Principal Stockholders in Article III hereof, each
Principal Stockholder hereby jointly and severally represents and warrants to
Acquiror and Merger Sub as follows:

SECTION 4.1. AUTHORITY AND CAPACITY.

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Such Principal Stockholder has full legal right, capacity,
power and authority necessary to execute and deliver this Agreement and all
other Related Agreements, to perform the obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. This
Agreement and the Related Agreements have been duly executed and delivered by
such Principal Stockholder and, assuming due authorization, execution and
delivery by Acquiror, Merger Sub and the other parties hereto and thereto,
constitute legal, valid and binding obligations of such Principal Stockholder,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditor's rights generally and by the applications of general
principles of equity.

SECTION 4.2. ABSENCE OF VIOLATION.

The execution, delivery and performance by such Principal
Stockholder of this Agreement and all other Related Agreements, the fulfillment
of and the compliance with the respective terms and provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby, do not and will not (a) conflict with, or violate any provision of,
any Laws applicable to the Principal Stockholder; or (b) conflict with, or
result in any breach of, or constitute a default under, any agreement to which
such Principal Stockholder is a party or by which such Principal Stockholder or
such Principal Stockholder's property is bound or affected.

SECTION 4.3. RESTRICTIONS AND CONSENTS.

Such Principal Stockholder's execution and delivery of this
Agreement and the Related Agreements does not, and such Principal Stockholder's
performance of this Agreement and the Related Agreements will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any third party or any court, arbitral tribunal, regulatory body,
administrative agency or commission or Government Entity, except for the filing
and recordation of appropriate merger documents as required by the CGCL and the
DGCL and applicable state and federal securities related filings.

SECTION 4.4. TITLE TO CAPITAL STOCK.

The shares of the Company Common Stock reflected on Schedule
3.4 as being owned by such Principal Stockholder are the only shares of voting
stock of the Company owned beneficially or of record by such Principal
Stockholder, and except as set forth in Schedule 3.4, such Principal
Stockholder does not own any other options, warrants or rights to acquire
shares of any class of capital stock of the Company. Such Principal
Stockholder has the sole power respecting voting and transfer of such Principal
Stockholder's shares. The shares of the Company Common Stock of such Principal
Stockholder are now, and at all times prior to the Effective Time will be,
owned as indicated on Schedule 3.4 by such Principal Stockholder, free and
clear of all Encumbrances.

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SECTION 4.5. NON-REGISTRATION OF SECURITIES; PURCHASE FOR
INVESTMENT ONLY.

(a) The Merger Stock issued to such Principal Stockholder
will be acquired for investment for such Principal Stockholder's own account,
not as a nominee or agent, and not with a view to the sale or distribution of
any part thereof, and such Principal Stockholder has no present intention of
selling, granting any participation in, or otherwise distributing the same.
Such Principal Stockholder represents that the legal and beneficial interest of
the Merger Stock issued to such Principal Stockholder (including the Escrow
Stock) will be held for such Principal Stockholder's account only, and neither
in whole nor in part for any other person. Such Principal Stockholder further
represents that such Principal Stockholder has no present contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participation to such person or to any third person, with respect to any
of the Merger Stock.

(b) Such Principal Stockholder understands and
acknowledges that the offering of the Merger Stock pursuant to the Merger
Agreement is being conducted on the basis of an exemption from registration
under the Securities Act and that Acquiror's reliance upon such exemption is
predicated in part upon such Principal Stockholder's representations.

SECTION 4.6. ABILITY OF PRINCIPAL STOCKHOLDER TO EVALUATE
INVESTMENT AND BEAR ECONOMIC RISK.

Such Principal Stockholder further represents that such
Principal Stockholder: (a) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of such
Principal Stockholder's prospective investment in the Merger Stock and such
Principal Stockholder's liabilities and obligations under this Agreement; (b)
has received all of the information such Principal Stockholder has requested
from Acquiror for deciding whether to accept the Merger Stock; (c) has the
ability to bear the economic risks of such Principal Stockholder's prospective
investment; (d) is able, without materially impairing such Principal
Stockholder's financial condition, to hold the Merger Stock for an indefinite
period of time and to suffer complete loss on such Principal Stockholder's
investment; and (e) has been given sufficient time and opportunity to seek the
advice of counsel regarding such Principal Stockholder's liabilities and
obligations hereunder.

SECTION 4.7. WAIVER OF DISSENTER'S RIGHTS.

Such Principal Stockholder, by executing this Agreement,
approves the Merger and all other transactions contemplated by this Agreement,
and hereby waives any dissenter's rights to receive payment of the appraised
value of such shares of the Company Common Stock pursuant to Sections 1300
through 1312 of the CGCL.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF ACQUIROR

Acquiror represents and warrants to the Company and the
Principal Stockholders as follows:

SECTION 5.1. ORGANIZATION AND QUALIFICATION.

Acquiror is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Acquiror has the
requisite power

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and authority to own, lease and operate its Assets and properties and to carry
on its business as it is now being conducted and to perform the terms of this
Agreement and the transaction contemplated hereby. Acquiror is duly qualified
to conduct its business, and is in good standing, in each jurisdiction where
the ownership or leasing of its properties or the nature of its activities in
connection with the conduct of its business makes such qualification necessary,
except where such failure to be so qualified would not have an Acquiror
Material Adverse Effect.

SECTION 5.2. AUTHORITY.

Acquiror has the necessary corporate power and authority to
enter into this Agreement and the Related Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Acquiror are necessary to authorize this Agreement and the Related Agreements
or to consummate the transactions contemplated hereby and thereby. This
Agreement and the Related Agreements have been duly executed and delivered by
Acquiror and, assuming the due authorization, execution and delivery by the
Company, constitute legal, valid and binding obligations of Acquiror,
enforceable in accordance with their terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or affecting creditors'
rights generally and by the application of general principles of equity. The
Merger Stock (and the shares of Acquiror Common Stock to be issued pursuant to
Section 2.8 hereof) will, when issued, be duly authorized and validly issued in
accordance with applicable laws and will be fully paid and nonassessable and
not subject to preemptive rights, subject to the terms and conditions of the
Stockholders Agreement.

SECTION 5.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

(a) The execution and delivery of this Agreement and the
Related Agreements by Acquiror do not, and the performance by Acquiror of its
obligations under this Agreement and the Related Agreements will not, (i)
conflict with or violate

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<PAGE> 42
the certificate of incorporation, bylaws or other organizational document of
Acquiror, (ii) conflict with or violate any Laws applicable to Acquiror or its
Assets, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror is a party or by
which Acquiror is bound, or by which any of its Assets is subject, except, in
the case of clauses (ii) and (iii), for such conflicts, violations, breaches
and defaults which, individually or in the aggregate, would not have an
Acquiror Material Adverse Effect.

(b) The execution and delivery of this Agreement and the
Related Agreements by Acquiror does not, and the performance of this Agreement
by Acquiror will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any third party or any court, arbitral
tribunal, regulatory body, administrative agency or commission, whether
national or foreign, or Government Entity, except for the filing and
recordation of appropriate merger documents as required by the CGCL and the
DGCL, and applicable state and federal securities related filings.

SECTION 5.4. ABSENCE OF LITIGATION.

There are (a) no claims, actions, suits, investigations, or
proceedings pending or, to Acquiror's knowledge, threatened against Acquiror or
any of its properties or Assets before any court, administrative, governmental,
arbitral, mediation or regulatory authority or body, domestic or foreign, that
challenge or seek to prevent, enjoin, alter or materially delay the
transactions contemplated hereby, or which, if determined adversely against
Acquiror or Merger Sub would have an Acquiror Material Adverse Effect, and (b)
no judgments, decrees, injunctions or orders of any Government Entity or
arbitrator outstanding against Acquiror or any of its properties or Assets
which would have an Acquiror Material Adverse Effect.

SECTION 5.5. BROKERS.

SECTION 5.6. REORGANIZATION TREATMENT.

Neither Acquiror nor the Merger Sub has taken, agreed to take,
or intends to take any action that would cause the Merger to fail to qualify as
a reorganization within the meaning of Section 368 of the Code.

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<PAGE> 43
SECTION 5.7. DISCLOSURE.

No representations or warranties by Acquiror in this Agreement
and no statement or information contained in the Schedules hereto or any
certificate furnished or to be furnished by Acquiror to the Company pursuant to
the provisions of this Agreement or included in the Information Statement to be
provided to the Stockholders in connection with the transactions contemplated
by this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state any fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
or therein not misleading.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES
OF MERGER SUB

Acquiror and Merger Sub jointly and severally represent and
warrant to the Company and the Principal Stockholders as follows:

SECTION 6.1. ORGANIZATION AND QUALIFICATION.

Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date of this Agreement, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, Merger Sub has not incurred,
directly or indirectly, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.

SECTION 6.2. ARTICLES OF INCORPORATION AND BYLAWS.

Merger Sub has heretofore made available to the Company a
complete and correct copy of the articles of incorporation and the bylaws of
Merger Sub, each as amended to date. Such articles of incorporation and bylaws
are in full force and effect. Merger Sub is not in violation of any of the
provisions of its articles of incorporation or bylaws or other organizational
or governing document.

SECTION 6.3. AUTHORITY.

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<PAGE> 44
Merger Sub has the necessary corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Merger Sub and the consummation by Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming the due authorization, execution and
delivery by the Company and Acquiror, constitutes a legal, valid and binding
obligation of Merger Sub, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.

SECTION 6.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

(a) The execution and delivery of this Agreement by
Merger Sub do not, and the performance by Merger Sub of its obligations under
this Agreement will not, (i) conflict with or violate the articles of
incorporation or bylaws of Merger Sub, (ii) conflict with or violate any Laws
applicable to Merger Sub or its Assets, or (iii) result in any breach of or
constitute a default under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Merger Sub is a party or by which Merger Sub is bound, or by which any
of its Assets is subject, except, in the case of clauses (ii) and (iii), for
such conflicts, violations, breaches and defaults which, individually or in the
aggregate, would not have an Acquiror Material Adverse Effect.

(b) The execution and delivery of this Agreement by
Merger Sub does not, and the performance of this Agreement by Merger Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Government Entity, except for the filing and
recordation of appropriate merger documents as required by the CGCL and the
DGCL, and applicable state and federal securities related filings.

ARTICLE VII

COVENANTS

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<PAGE> 45
SECTION 7.1. AFFIRMATIVE COVENANTS OF THE COMPANY.

The Company hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this Agreement or
consented to in writing by Acquiror, the Company shall (a) operate its business
in the usual and ordinary course consistent with past practices and in
accordance with applicable Laws; (b) preserve intact its business organization,
maintain its rights and material contracts, use its best efforts to retain the
services of its respective principal officers and key employees and maintain
its relationship with its respective suppliers, contractors, distributors,
customers and others having business relationships with it; (c) keep its Assets
in as good repair and condition as at present, ordinary wear and tear excepted;
and (d) keep in full force and effect insurance comparable in amount and scope
of coverage to that currently maintained.

SECTION 7.2. NEGATIVE COVENANTS OF THE COMPANY.

Except as expressly contemplated by this Agreement or
otherwise consented to in writing by Acquiror, from the date hereof until the
Effective Time, the Company shall not do any of the following:

(a) (i) increase the compensation payable to or to become
payable to any of its directors, officers or employees; (ii) grant any
severance or termination pay to, or enter into or modify any employment or
severance agreement with, any of its directors, officers or employees; or (iii)
adopt or amend any employee benefit plan or arrangement, except as may be
required by applicable Law;

(b) except as set forth under item (a) of Schedule 3.19
hereto, declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock;

(c) (i) redeem, repurchase or otherwise reacquire any
share of its capital stock or any securities or obligations convertible into or
exchangeable for any share of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its

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<PAGE> 46
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of its
capital stock;

(d) (i) issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale (including
the grant of any Encumbrances) of, any shares of any class of its capital stock
or other equity securities, any securities or obligations directly or
indirectly convertible into or exercisable or exchangeable for any such shares,
or any rights, warrants or options to acquire, any such shares or securities or
any rights, warrants or options directly or indirectly to acquire any such
shares or securities; or (ii) amend or otherwise modify the terms of any such
securities, obligations, rights, warrants or options in a manner inconsistent
with the provisions of this Agreement or the effect of which shall be to make
such terms more favorable to the holders thereof;

(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
Assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any Assets of any other person (other
than the purchase of inventory in the ordinary course of business and
consistent with past practice), or make or commit to make any capital
expenditures;

(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its Assets;

(g) propose or adopt any amendments to its articles of
incorporation or bylaws;

(h) (i) change any of its methods of accounting, (ii)
make or rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to taxes, or change any of its
methods of reporting income or deductions for federal income tax purposes,
except, in the case of clause (i) or clause (ii), as may be required by law or
generally accepted accounting principles, consistently applied; or (iii) take
any action, or permit any of the Stockholders to take any action, that would
cause the Company to not be classified as an "S Corporation" within the meaning
of Code Sections 1361 and 1362 at any time prior to the Effective Time;

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<PAGE> 47
(i) prepay, before the scheduled maturity thereof, any of
its long-term debt, or incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, other than trade
payables incurred in the ordinary course of business consistent with past
practices.

(j) enter into or modify in any material respect any
Contract, except as requested by a customer of the Company in the ordinary
course of business consistent with past practice of the Company, and provided
that Acquiror shall have approved such customer request (which approval shall
not be unreasonably withheld);

(k) take any action that would or could reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being untrue or in any of the conditions to the Merger set forth
in Article IX not being satisfied; or

(l) agree in writing or otherwise to do any of the
foregoing.

SECTION 7.3. NEGATIVE COVENANTS OF THE PRINCIPAL STOCKHOLDERS.

Each Principal Stockholder covenants and agrees that prior to
the Effective Time such Principal Stockholder will not sell, transfer, pledge,
assign or otherwise encumber or dispose of or enter into any contract, option
or other agreement with respect to, the sale, transfer, pledge, assignment or
other encumbrance or disposition of, any shares of the Company Common Stock or
any other voting interests in the Company now owned or hereafter acquired
beneficially or of record by such Principal Stockholder.

SECTION 7.4. STOCKHOLDER APPROVAL.

As promptly as practicable after the execution of this Agreement, the Company
shall submit this Agreement and the transactions contemplated hereby to the
Stockholders for approval and adoption in accordance with the CGCL and the
Company's articles of incorporation and bylaws. The Company shall use its best
efforts to solicit and obtain the consent of the Stockholders sufficient to
approve the Merger and this Agreement and to enable the Closing to occur as
promptly as practicable. The materials submitted to the Stockholders shall be
subject to review and reasonable approval by Acquiror and include, without
limitation, information regarding the Company and Acquiror, the terms of the
Merger and this Agreement, the unanimous recommendation of the Board of
Directors of the Company in favor of the Merger and this Agreement, Amendment
No. 4 to Stockholders Agreement and such other agreements, certificates and
documents as Acquiror shall reasonably request to be executed by the
Stockholders in connection with the transactions

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<PAGE> 48
contemplated hereby (Amendment No. 4 to Stockholders Agreement, together with
such other agreements, certificates and documents, the "Stockholder
Deliveries").

ARTICLE VIII

ADDITIONAL AGREEMENTS

SECTION 8.1. CONSENTS AND APPROVALS; FILINGS AND NOTICES.

(a) The Company shall use reasonable efforts to as
promptly as possible make all filings with, provide all notices to and obtain
all consents and approvals from third parties required to be obtained by the
Company in connection with the transactions contemplated hereunder, including
all filings with, notices to and consents and approvals from any Government
Entities and other persons.

(b) Acquiror shall use reasonable efforts to as promptly
as possible make all filings with, provide all notices to and obtain all
consents and approvals from third parties required to be obtained by Acquiror
in connection with the transactions contemplated hereunder, including all
filings with, notices to and consents and approvals from any Government
Entities and other persons.

SECTION 8.2. ACCESS TO INFORMATION.

The Company shall afford Acquiror and its accountants, counsel
and other representatives, reasonable access during normal business hours
during the period prior to the Effective Time to (a) all of the Company's
properties, books, contracts, commitments and records, and (b) all other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Acquiror may
reasonably request. The Company agrees to provide to Acquiror and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request, and to provide to Acquiror's independent
accountants such customary management representation letters as they may
reasonably request in connection with the audit of the Company's financial
statements. No information or knowledge obtained in any investigation pursuant
to this Section 8.2 shall affect or be deemed to modify any representation or
warranty of the Company or the Principal Stockholders contained herein. In the
event of the termination of this Agreement, Acquiror shall destroy or deliver
to the Company all confidential documents, work papers and other materials, and
all copies thereof, obtained by Acquiror from the Company as a result of this
Agreement or in connection herewith, whether obtained before or after the
execution and delivery of this Agreement.

SECTION 8.3. CONFIDENTIALITY.

Subject to the requirements of applicable Law, all information delivered or
made available to either party hereto or to the representatives of such party
or otherwise disclosed in writing by a party hereto (or the representatives of
such

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<PAGE> 49
disclosing party) before or after the date hereof, in connection with the
transactions contemplated by this Agreement, shall be kept confidential by the
party to whom such information is disclosed and the representatives of the
party to whom such information is disclosed and shall not be used other than as
contemplated by this Agreement, except to the extent that such information (a)
was otherwise publicly available when received, (b) is or hereafter becomes
lawfully obtainable from third parties not related to the disclosing party or
its affiliates, (c) is required to be disclosed to a Government Entity, (d) is
required by Law or the rules of any stock exchange to be disclosed or (e) to
the extent such duty as to confidentiality is waived in writing by the
disclosing party.

SECTION 8.4. FURTHER ACTION; REASONABLE BEST EFFORTS.

Subject to the terms and conditions herein provided, each of
the parties shall use reasonable best efforts to take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Laws or otherwise to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Government Entities and parties to contracts with the Company and
Acquiror as are necessary for the transactions contemplated herein.

SECTION 8.5. PUBLIC ANNOUNCEMENTS.

The Company and the Principal Stockholders on the one hand,
and Acquiror and Merger Sub on the other hand, agree that neither will issue
any press release or otherwise make any public statements concerning this
Agreement or the transactions contemplated hereby at any time prior to the
Effective Time without the prior written consent of the other party, except to
the extent that any such disclosure is required by Law.

SECTION 8.6. NO SOLICITATION.

During the term of this Agreement, neither the Company, any
Principal Stockholder nor any of their respective affiliates or any person
acting on behalf of such party or affiliate shall (a) solicit or favorably
respond to indications of interest from, or enter into negotiations with, any
third party for any proposed merger, consolidation, sale or acquisition of the
Company, the Assets or the Company Common Stock or (b) furnish or cause to be
furnished any nonpublic information concerning the business to any person other
than in the ordinary course of business or pursuant to applicable Laws and
after prior written notice to Acquiror.

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<PAGE> 50
SECTION 8.7. EMPLOYEES.

The Company shall, subject to the terms and conditions of this
Agreement, use its reasonable best efforts to encourage the current employees
of the Company to continue their employment and relationship with the Surviving
Corporation following the Effective Time.

SECTION 8.8. POOLING ACCOUNTING.

Acquiror and the Company shall each use its reasonable efforts to cause the
business combination to be effected by the Merger to be accounted for as a
pooling of interests. Each of Acquiror and the Company shall use its
reasonable efforts to cause its affiliates not to take any action that would
adversely affect the ability of Acquiror to account for the business
combination to be effected by the Merger as a pooling of interests.

SECTION 8.9. PRINCIPAL STOCKHOLDERS' COVENANTS NOT TO COMPETE.

(a) Each Principal Stockholder acknowledges that the
business of the Company and Acquiror are conducted throughout the United
States, and acknowledges and recognizes the highly competitive nature of the
industry in which such business is involved. Accordingly, in consideration of
the premises contained herein, the consideration to be received by the
Principal Stockholders hereunder for the sale of the goodwill of the Company's
business, and in consideration of and as an inducement to Acquiror to
consummate the transactions contemplated hereby, each Principal Stockholder
covenants and agrees that during the Noncompete Period (as defined below), such
Principal Stockholder shall not, directly or indirectly: (i) engage in,
participate in, represent in any way or be connected with, as officer,
director, partner, owner, employee, agent, sales representative, distributor,
independent contractor, consultant, proprietor, stockholder or otherwise, any
Competitive Business (as defined below) in the United States; (ii) solicit
(other than on behalf of the Company or Acquiror) business or contracts for any
products or services of the type provided, developed or under development by
the Company or Acquiror during the Noncompete Period, from or with (A) any
person or entity which was a client of the Company or Acquiror for such
products or services as of, or within twelve (12) months prior to the
expiration of, the Noncompete Period, or (B) any prospective client which the
Company or Acquiror was actively soliciting as of, or within twelve (12) months
prior to the expiration of, the Noncompete Period; (iii) solicit or induce or
attempt to solicit or induce any employee of the Company or Acquiror to leave
the employ of the Company or Acquiror for any reason whatsoever; (iv) hire any
employee or any person who was an employee of the Company or Acquiror within
the three (3) month period prior to such hiring; or (v) interfere with, disrupt
or attempt to disrupt the relationship,

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<PAGE> 51
contractual or otherwise, between the Company or Acquiror and any third party,
including, without limitation, any customer, supplier or employee of the
Company or Acquiror; provided, however, that the foregoing shall not preclude
any Principal Stockholder from owning less than five percent (5%) of the
securities of a company engaged in a Competitive Business as long as such
securities are traded on a national securities exchange or reported on the
NASDAQ National Market.

The "Noncompete Period" for each Principal
Stockholder shall mean the period from and after the Effective Time until one
(1) year after the Effective Time. A "Competitive Business" shall mean any
business in which the Company or Acquiror is engaged at any time during the
Noncompete Period, unless such business is thereafter terminated.

(b) The covenants contained in this Section 8.9 shall be
construed as a series of separate and severable covenants which are identical
in terms except for geographic coverage. The parties hereto agree that if in
any proceeding, the tribunal shall refuse to enforce fully any covenants
contained herein because such covenants cover too extensive a geographic area
or too long a period of time or for any other reason whatsoever, any such
covenant shall be deemed amended to the extent (but only to the extent)
required by law. Each party acknowledges that the covenants contained in this
Section 8.9 are reasonable and necessary to protect the business and interests
of the Company and Acquiror and that any violation of these covenants would
cause substantial irreparable injury. Accordingly, each party agrees that a
remedy at law for any breach of the foregoing covenants would be inadequate and
that the Company and Acquiror, in addition to any other remedies available,
shall be entitled to obtain preliminary and permanent injunctive relief to
secure specific performance of such covenants and to prevent a breach or
contemplated breach of such covenants without the necessity of proving actual
damage.

SECTION 8.10. CERTAIN TAX MATTERS.

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(a) After the Effective Time, the Principal Stockholders
will be responsible for preparing and filing (or causing the preparation and
filing of) all Tax returns (and any amendments thereto) required to be filed by
the Company for any taxable period ending on or before the Effective Time;
provided, however, that the Principal Stockholders shall: (i) permit Acquiror
and the Surviving Corporation to reasonably review and comment on each such Tax
return prior to timely filing; and (ii) make such revisions to such Tax returns
as are reasonably requested by Acquiror. The parties shall cooperate (each at
their own expense) in the preparation and filing of any such Tax returns, and
shall use commercially reasonable efforts to make the officers and former
officers of the Company available to sign any such Tax returns. The Principal
Stockholders shall prepare such Tax returns in a manner reasonably consistent
with prior years; provided that in all events such Tax returns shall be
prepared in a manner consistent with applicable law. Subject to Section 11.2
of this Agreement, Acquiror shall, on or before the due date of any Tax
liabilities, pay all Taxes arising with respect to such returns which are
imposed on the Company, unless Acquiror shall elect to contest all or any part
of such Tax liabilities, or file an extension for payment thereof.

(b) The Principal Stockholders shall have the right (but
not the obligation) to control, defend, settle, compromise or prosecute in any
manner any audit, examination, investigation, hearing or other proceeding with
respect to any Tax return of the Company involving only periods ending on or
before the Effective Time; provided, however, that the Principal Stockholders
shall not settle, compromise or abandon without Acquiror's timely and
reasonable prior written consent any claim for any material Tax would adversely
affect the Tax liability of Acquiror or the Company.

(c) Except as expressly provided in (b), above, Acquiror
shall have the sole right (but not the obligation) to control, defend, settle,
compromise, or prosecute in any manner an audit, examination, investigation,
hearing or other proceeding with respect to any Tax return of the Company;
provided, however, that no Taxes or Tax issues for any period ending on or
before the Effective Time for which the Principal Stockholders may be liable,
may be settled or compromised without the prior written consent of the
Stockholders' Representative, which consent shall not be unreasonably withheld
or delayed.

(d) Acquiror shall as soon as reasonably practicable (i)
forward to the Stockholders' Representative all written notifications and other
written communications from any Tax authority received by Acquiror or the
Company relating to any period of the Company ending on or before the Effective
Time and (ii) communicate to the Stockholders' Representative all oral
notifications and communications from any Tax authority received by or
communicated to Acquiror or

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the Company relating to any such period of the Company; provided, however, that
the failure give any such notice or make any such communication shall not
affect the rights of Acquiror hereunder.

(e) Acquiror, the Company, and the Principal Stockholders
shall each at their own expense cooperate with, and make available to, each
other such Tax information relating to the period prior to the Effective Time
as may be reasonably required in connection with (i) the preparation or filing
of any Tax return, election, consent or certification, or any claim for refund,
(ii) any determinations of liability for Taxes, or (iii) an audit, examination
or other proceeding with respect to Taxes ("Tax Data"); provided, however, that
neither Acquiror nor the Company shall have any obligation to compile, generate
or produce any reports, documentation or information that is not compiled,
generated or produced by Acquiror or the Company in the ordinary course of
business. Such cooperation shall include, without limitation, making their
respective employees and independent auditors reasonably available on a
mutually convenient basis for all reasonable purposes, including, without
limitation, to provide explanations and background information and to permit
the copying of books, records, schedules, workpapers, notices, revenue agent
reports, settlement or closing agreements and other documents containing the
Tax Data ("Tax Documentation").

(f) The Tax Data and the Tax Documentation shall be
retained until the expiration of all applicable statutes of limitations
(including extensions thereof); provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration of an applicable statute of limitations, the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired).

(g) Nothing in this Section 8.10 shall be deemed to limit
or diminish the representations, warranties, covenants and agreements of the
Company and the Principal Stockholders contained in this Agreement.

SECTION 8.11. COPIES OF CERTAIN SEC FILINGS.

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In the event that at any time prior to the Effective Time,
Acquiror shall file with the Securities and Exchange Commission, any amendment
to Acquiror's registration statement on Form S-1, Acquiror shall promptly
provide a copy of such filing to the Company.

SECTION 8.12. INDEMNIFICATION.

From and after the Effective Time, Acquiror agrees to cause
the Surviving Corporation to indemnify each director and officer of the Company
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation arising out of
matters existing or occurring at or prior to the Effective Time to the same
extent as provided for by the Company pursuant to the Company's articles of
incorporation or bylaws as in effect on the date hereof; provided, however,
that the foregoing shall not apply to any claim, action, suit, proceeding or
investigation (a) with respect to which the Principal Stockholders have an
obligation to indemnify Acquiror pursuant to this Agreement, or (b) the
existence of which constitutes a breach of a representation, warranty, covenant
or agreement of the Company or the Principal Stockholders hereunder.

ARTICLE IX

CLOSING CONDITIONS

SECTION 9.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR AND MERGER SUB.

The obligations of Acquiror and Merger Sub to effect the
Merger and the other transactions contemplated in this Agreement are also
subject to the fulfillment at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:

(a) Representations and Warranties. The representations
and warranties of the Company and the Principal Stockholders made in this
Agreement shall be true and correct in all material respects, on and as of the
Effective Time with the same effect as though such representations and
warranties had been made on and as of the Effective Time (provided that any
representation or warranty contained herein that is qualified by a materiality
standard shall not be further qualified hereby), except for representations and
warranties that speak as of a specific date or time (which need only be true
and correct in all material respects as of such date or time). Acquiror shall
have received a certificate signed on behalf of the Company by the President of
the Company to that effect and a certificate signed by each Principal
Stockholder to that effect.

(b) Agreements and Covenants. The agreements and
covenants of the Company and the Principal Stockholders required to be
performed on or before the

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<PAGE> 55
Effective Time shall have been performed in all material respects. Acquiror
shall have received a certificate signed on behalf of the Company by the
President of the Company to that effect with respect to the Company's covenants
and agreements and a certificate signed by each Principal Stockholder to that
effect with respect to such Stockholder's covenants and agreements.

(c) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the Stockholders, and all required notices shall have been
provided to the Stockholders, all in accordance with the CGCL and the articles
of incorporation and bylaws of the Company.

(d) Dissenting Shares. The Dissenting Shares shall
constitute not greater than five percent (5%) of the shares of the Company
Common Stock outstanding on the Closing Date.

(e) No Company Material Adverse Effect. Since the date
of this Agreement, no Company Material Adverse Effect shall have occurred and
be continuing.

(f) Legal Proceedings. No action or proceeding before
any Government Entity shall have been instituted or threatened (and not
subsequently settled, dismissed, or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the Merger or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by a party hereto.

(g) Required Consents. The Company shall have delivered
to Acquiror at or before Closing all consents or notices necessary to be
obtained or made by the Company in connection with the transactions
contemplated by this Agreement.

(h) Pooling of Interests. Acquiror shall have received
reasonable assurances from PricewaterhouseCoopers LLP (the "Accounting Firm")
in form and substance reasonably satisfactory to Acquiror, that the Merger will
qualify as a

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<PAGE> 56
"pooling of interests" in accordance with generally accepted accounting
principles (the "Pooling Opinion").

(i) Escrow Agreement. Acquiror, Merger Sub, the Escrow
Agent and the Stockholders' Representative shall have entered into the Escrow
Agreement at or before Closing pursuant to which the Escrow Stock shall have
been retained in escrow.

(j) Legal Opinion. Acquiror shall have received an
opinion from Howard, Rice, Nemerovski, Canady, Falk & Rabkin, P.C., counsel to
the Company and the Principal Stockholders, in a form reasonably acceptable to
Acquiror and its counsel.

(k) Employment Agreements. Each of Megan Wheeler and
Aaron Singer shall have entered into an Employment Agreement with Acquiror
which shall be in full force and effect (collectively, the "Employment
Agreements").

(l) Stockholder Deliveries. Each Stockholder shall have
executed Amendment No. 4 to Stockholders Agreement and the other Stockholder
Deliveries.

(m) Stock Certificates. The Company shall have delivered
to Acquiror the Certificates, duly endorsed in blank or with executed stock
powers attached.

(n) Affiliate Agreements. Acquiror shall have received
from each of the Additional Affiliates an executed Affiliate Agreement which
shall be in full force and effect.

(o) Other Closing Documents. The Company shall have
executed and/or delivered to Acquiror such additional documents, certificates,
opinions and agreements as Acquiror may reasonably request.

SECTION 9.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY
AND THE PRINCIPAL STOCKHOLDERS.

The obligations of the Company and the Principal Stockholders
to effect the Merger and the other transactions contemplated in this Agreement
are also subject to the fulfillment at or prior to the Effective Time of the
following conditions any or all of which may be waived, in whole or in part, to
the extent permitted by applicable law:

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<PAGE> 57
(a) Representations and Warranties. The representations
and warranties of Acquiror and Merger Sub made in this Agreement shall be true
and correct in all material respects, on and as of the Effective Time with the
same effect as though such representations and warranties had been made on and
as of the Effective Time (provided that any representation or warranty
contained herein that is qualified by a materiality standard shall not be
further qualified hereby), except for representations and warranties that speak
as of a specific date or time other than the Effective Time (which need only be
true and correct in all material respects as of such date or time). The Company
shall have received a certificate of the chief executive officer of Acquiror to
that effect.

(b) Agreements and Covenants. The agreements and
covenants of Acquiror and Merger Sub required to be performed on or before the
Effective Time shall have been performed in all material respects. The Company
shall have received a certificate of the chief executive officer of Acquiror to
that effect.

(c) Legal Proceedings. No action or proceeding before
any Government Entity shall have been instituted or threatened (and not
subsequently settled, dismissed, or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the Merger or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by a party hereto.

(d) No Acquiror Material Adverse Effect. Since the date
of this Agreement, no Acquiror Material Adverse Effect shall have occurred and
be continuing.

(e) Legal Opinion. The Principal Stockholders shall have
received an opinion from Acquiror's General Counsel in a form reasonably
acceptable to the Principal Stockholders.

(f) Amendment No. 4 to Stockholders Agreement. Acquiror
and each of the other parties to the Stockholders Agreement shall have executed
and delivered the Amendment No. 4 to Stockholders Agreement.

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<PAGE> 58
(g) Registration Rights Agreement. Acquiror and the
other parties to Acquiror's Second Amended and Restated Registration Rights
Agreement dated February 1, 1999, shall have executed and delivered the Third
Amended and Restated Registration Rights Agreement in substantially the same
form as Exhibit D hereto (the "Registration Rights Agreement").

ARTICLE X

TERMINATION, AMENDMENT AND WAIVER

SECTION 10.1. TERMINATION.

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

(a) by mutual written consent of Acquiror and the
Company;

(b) by Acquiror if the Company or any Principal
Stockholder shall have breached any of its representations, warranties,
covenants or agreements contained in this Agreement, or any such representation
or warranty shall have become untrue, in any such case such that the conditions
precedent to the obligations of Acquiror to close specified in Section 9.1 will
not be satisfied and such breach has not been promptly cured within fifteen
(15) days following receipt by the Company of written notice of such breach;

(c) by the Company if Acquiror or Merger Sub shall have
breached any of its representations, warranties, covenants or agreements
contained in this Agreement, or any such representation or warranty shall have
become untrue, in any such case such that the conditions precedent to the
obligation of the Company and the Principal Stockholders to close specified in
Section 9.2, will not be satisfied and such breach has not been promptly cured
within fifteen (15) days following receipt by Acquiror of written notice of
such breach;

(d) by either Acquiror or the Company if any decree,
permanent injunction, judgment, order or other action by any court of competent
jurisdiction or any Government Entity preventing or prohibiting consummation of
the Merger shall have become final and non-appealable; or

(e) by either Acquiror or the Company if the Effective
Time has not occurred on or prior to April 9, 1999 (unless such date shall be
extended by the mutual

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<PAGE> 59
written consent of the Company and Acquiror); provided, that the right to
terminate this Agreement under this Section 10.1(e) shall not be available to
any party whose breach of representations, warranties, covenants or agreements
contained in this Agreement has been the sole cause of, or resulted in, the
failure of the Effective Time to occur by such date or the inability of such
condition to be satisfied.

SECTION 10.2. EFFECT OF TERMINATION.

If this Agreement is terminated pursuant to Section 10.1, this
Agreement and all Related Agreements shall forthwith become void and there
shall be no liability or obligation on the part of any party hereto, except
that the provisions of Sections 8.3 and 12.10 shall not be extinguished but
shall survive such termination, and nothing herein shall relieve any party from
liability for any breach hereof and each party shall be entitled to any
remedies at law or in equity for such breach.

SECTION 10.3. AMENDMENT.

This Agreement may not be amended except by an instrument in
writing signed by the Company, Acquiror, Merger Sub and the Stockholders'
Representative.

SECTION 10.4. WAIVER.

At any time prior to the Effective Time, one party may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement of the other party and (c) waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

ARTICLE XI

SURVIVAL OF REPRESENTATIONS; ESCROW ARRANGEMENTS; REMEDIES

SECTION 11.1. SURVIVAL OF REPRESENTATIONS.

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All representations, warranties, covenants, indemnities and
other agreements made by any party to this Agreement and in any other agreement
required to be exercised by the parties pursuant to this Agreement, shall be
deemed made on and as of the Effective Time as though such representations,
warranties, covenants, indemnities and other agreements were made on and as of
such date, and all such representations, warranties, covenants, indemnities and
other agreements shall remain in full force and effect as follows: (a) unless
otherwise specified hereinbelow, representations, warranties, covenants and
agreements shall survive for a period of twelve (12) months after the Effective
Time; (b) the representations, warranties, covenants and agreements of the
Principal Stockholders set forth in Section 3.19 and Section 8.10 shall survive
for a period of three (3) years after the Effective Time; (c) the covenants and
agreements in this Article XI shall continue in full force and effect until
fully discharged; (d) any claim arising out of the Employment Agreements shall
be governed by the terms and conditions of such agreements; and (e) any
representation, warranty, covenant, indemnity or agreement that is the subject
of a claim which is asserted in writing prior to the expiration of the
applicable survival period set forth above shall survive with respect to such
claim until the final resolution thereof.

SECTION 11.2. INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS; ESCROW
ARRANGEMENTS.

Each Principal Stockholder, jointly and severally, hereby
agrees to indemnify and hold Acquiror, the Surviving Corporation, and their
respective officers, directors, agents and representatives (collectively, the
"Acquiror Indemnified Persons") harmless against all Losses resulting from,
imposed upon or incurred by any Acquiror Indemnified Person, directly or
indirectly, as a result of (a) any inaccuracy or breach of a representation or
warranty of the Company or any Principal Stockholder; (b) any failure by the
Company or any Principal Stockholder to perform or comply with any covenant or
agreement contained in this Agreement, any Related Agreement or any document,
certificate or agreement furnished pursuant to this Agreement; (c) the failure
(or any failure alleged by a third party) of the Company to be classified as an
"S Corporation" within the meaning of Code Sections 1361 and 1362 for any
period prior to the Effective Time (including, without limitation, any claims
against any Acquiror Indemnified Person for Losses made by any Person as a
result thereof); (d) any Taxes payable (or alleged by a third party to be
payable) by the Company or Acquiror with respect to any period prior to the
Effective Time that have either not been paid as of the Effective Time, or for
which adequate reserves have not been established on the Company Financial
Statements; (e) any unlawful dividends or distributions of cash or Assets by
the Company during the period prior to the Effective Time; (f) the failure of
Acquiror or the Surviving Corporation to collect any account receivable arising
in connection with services provided by the Company to the account

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<PAGE> 61
debtor identified at item (b) of Schedule 3.8 hereto between January 1, 1999,
and the Effective Time (the "Subject Receivables"); provided, however, that the
Principal Stockholders shall have no liability under this Section 11.2(f) for
any Subject Receivable with respect to which Acquiror and the Surviving
Corporation elect not to pursue collection; provided, further, that for
purposes of this Secion 11.2(f), all payments received by Acquiror or the
Surviving Corporation from such account debtor as part of a settlement of
disputed amounts, shall be applied pro rata (based on oustanding balances)
among the Subject Receivables and all other outstanding receivables of the
Company from such account debtor with respect to the period prior to January 1,
1999; provided, further, that any such settlement shall be subject to the prior
written approval of the Principal Stockholders (which approval shall not be
unreasonably withheld, delayed or conditioned), unless Acquiror shall notify
the Principal Stockholders in writing that the Principal Stockholders shall
have no further liability under this Section 11.2(f), in which case no such
approval shall be required; or (g) the matters disclosed under item (g) of
Schedule 3.14, except for the out-of-pocket expenses incurred to purchase the
necessary software licenses for the software listed under item (g) of Schedule
3.14 up to an aggregate amount of Forty Thousand Dollars ($40,000).
Notwithstanding the foregoing, the Principal Stockholders shall not have any
liability under Section 11.2(c), (d), or (e), except to the extent that the
amount of claims for Losses asserted under such Sections exceeds Twelve
Thousand Five Hundred Dollars ($12,500) (the "Basket Amount") in the aggregate,
and then only to the extent of such excess above the Basket Amount; and the
Principal Stockholders shall not have any liability under Section 11.2(f),
except to the extent that the amount of claims for Losses asserted under such
Section exceeds the Basket Amount, and then only to the extent of such excess
above the Basket Amount. From and after the Effective Time, the Escrow Stock
shall be available to the Acquiror Indemnified Persons as their sole recourse
to compensate them for any Losses, and such recourse shall be pursuant to the
terms and conditions of the Escrow Agreement; provided, however, that nothing
herein shall limit (i) the remedies that the Acquiror Indemnified Persons may
have for Losses based on fraud; (ii) the indemnification obligations of the
Principal Stockholders set forth in Sections 11.2(c), (d) and (e); (iii) the
equitable remedies of specific performance and injunctive relief that may be
available to the Acquiror Indemnified Persons; or (iv) any remedies for Losses
that the Acquiror Indemnified Persons may have in the event of a termination of
this Agreement.

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SECTION 11.3. THIRD PARTY CLAIMS.

The obligations and liabilities of the Principal Stockholders
pursuant to Section 11.2 resulting from any Third Party Claim shall be subject
to the following terms and conditions:

(a) The Acquiror Indemnified Person seeking
indemnification (the "Indemnified Party") must give the Stockholders'
Representative notice of any Third Party Claim which is asserted against,
resulting to, imposed upon or incurred by the Indemnified Party and which may
give rise to liability of the Principal Stockholders (collectively, the
"Indemnifying Party") pursuant to this Article XI, stating (to the extent known
or reasonably anticipated) the nature and basis of such Third Party Claim and
the amount thereof; provided that the failure to give such notice shall not
affect the rights of the Indemnified Party hereunder except to the extent (i)
that the Indemnifying Party shall have suffered actual material damage by
reason of such failure, or (ii) such failure or delay materially adversely
affects the ability of the Indemnifying Party to defend, settle or compromise
such Third Party Claim.

(b) Subject to Section 11.3(c) below, if the Indemnifying
Party assumes responsibility for Losses arising out of such Third Party Claim,
then the Indemnifying Party shall have the right to undertake, by counsel or
other representatives of its own choosing, the defense of such Third Party
Claim at the Indemnifying Party's risk and expense.

(c) In the event that (i) the Indemnifying Party shall
elect not to undertake such defense, (ii) within a reasonable time after notice
from the Indemnified Party of any such Third Party Claim, the Indemnifying
Party shall fail to undertake to defend such Third Party Claim, (iii) there is
a reasonable probability that such Third Party Claim may materially and
adversely affect the Indemnified Party other than as a result of money damages
or other money payments, or (iv) there is a reasonable probability that the
amount of Losses asserted under such Third Party Claim may exceed the
Indemnifying Party's obligations under this Article XI, then the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Third Party
Claim, by counsel or other representatives of its own choosing, on behalf of
and for the account and risk of the Indemnifying Party (subject to Section
11.2). In the event that the Indemnified Party undertakes the defense of a
Third Party Claim under this Section 11.3(c), the Indemnifying Party shall pay
to the Indemnified Party, in addition

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to the other sums required to be paid hereunder, the reasonable costs and
expenses incurred by the Indemnified Party in connection with such defense,
compromise or settlement as and when such costs and expenses are so incurred
(subject to Section 11.2).

(d) Anything in this Section 11.3 to the contrary
notwithstanding, (i) neither Party shall, without the other party's written
consent (which consent shall not be unreasonably withheld or delayed), settle
or compromise such Third Party Claim or consent to entry of any judgment which
does not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party of a release from all liability in
respect of such Third Party Claim in form and substance reasonably satisfactory
to the Indemnified Party; (ii) in the event that a party hereto undertakes
defense of such Third Party Claim in accordance with this Section 11.3, the
other parties, by counsel or other representative of their own choosing and at
their sole cost and expense, shall have the right to participate in the
defense, compromise or settlement thereof and each party and its counsel and
other representatives shall cooperate with the other party and its counsel and
representatives in connection therewith; and (iii) the party that undertakes
the defense of such Third Party Claim in accordance with this Section 11.3,
shall have an obligation to keep the other parties informed of the status of
the defense of such Third Party Claim and furnish the other parties with all
documents, instruments and information that the other parties shall reasonably
request in connection therewith.

(e) Any claim for indemnification under this Article XI
must be made (i) on or prior to the Claims Deadline (as defined in the Escrow
Agreement) for any claims against the Escrow Stock, and (ii) on or prior to the
expiration of the applicable survival period set forth in Section 11.1
otherwise.

SECTION 11.4. NO RECOURSE AGAINST THE COMPANY.

The Principal Stockholders each hereby irrevocably waives, and
each other Stockholder by approving the terms and conditions of the Merger
irrevocably waives, any and all right to recourse against the Company and the
Surviving Corporation with respect to any misrepresentation or breach of any
representation, warranty or indemnity, or noncompliance with any conditions or
covenants, given or made by any Principal Stockholder or the Company in this
Agreement or any of the other agreements and documents executed or to be
executed by the parties in order to consummate the transactions contemplated by
this Agreement. No Stockholder shall be entitled to contribution from,

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subrogation to or recovery against the Company or the Surviving Corporation
with respect to any liability of any Stockholder that may arise under or
pursuant to this Agreement or any of the other agreements and documents
executed or to be executed by the parties in order to consummate the
transactions contemplated by this Agreement or such other agreements and
documents contemplated hereby.

SECTION 11.5. SPECIFIC PERFORMANCE.

In addition to any other remedies which Acquiror may have at
law or in equity, the Company and the Principal Stockholders hereby acknowledge
that the Company and its capital stock are unique, and that the harm to
Acquiror resulting from breaches by the Company or the Principal Stockholders
of their respective obligations cannot be adequately compensated by damages.
Accordingly, the Company and the Principal Stockholders agree that Acquiror
shall have the right to have all obligations, undertakings, agreements,
covenants and other provisions of this Agreement specifically performed by the
Company and the Principal Stockholders, as the case may be, and that Acquiror
shall have the right to obtain an order or decree of such specific performance
in any of the courts of the United States of America or of any state or other
political subdivision thereof.

SECTION 11.6. REMEDIES CUMULATIVE.

Subject to the limitations and qualifications set forth in
this Article XI, the remedies provided herein shall be cumulative and shall not
preclude the assertion by the parties hereto of any other rights or the seeking
of any other remedies against the other, or their respective successors or
assigns.

SECTION 11.7. LIMITATION OF LIABILITY OF ACQUIROR, MERGER SUB AND
THE SURVIVING CORPORATION.

Notwithstanding any other provision of this Agreement to the
contrary, and except for (i) remedies that the Principal Stockholders may have
for Losses based on fraud; (ii) the equitable remedies of specific performance
and injunctive relief that may be available to the Principal Stockholders; and
(iii) any remedies for Losses that the Company or the Principal Stockholders
may have in the event of a termination of this Agreement, the Company and the
Principal Stockholders acknowledge and agree that the maximum aggregate
liability of Acquiror, Merger Sub and the Surviving Corporation (taken as a
whole) pursuant to this Agreement or otherwise, shall not exceed an amount
equal to the number of shares of Escrow Stock issued as of the Effective Time
multiplied by Eleven Dollars ($11.00).

ARTICLE XII

GENERAL PROVISIONS

SECTION 12.1. NOTICES.

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All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:

(a) If to Acquiror:

Proxicom, Inc.

11600 Sunrise Valley Drive

Reston, Virginia 20191

Telecopy: (703) 262-3201

Attention: Christopher Capuano, Esq.,

General Counsel

With a copy (which shall not constitute notice) to:

Hogan & Hartson L.L.P.

555 Thirteenth Street, N.W.

Washington, D.C. 20004

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Telecopier No.: (202) 637-5910

Attention: David B.H. Martin, Jr.

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(b) If to the Company:

ad hoc Interactive, Inc.

Libertyship Building

80 Libertyship Way

Suite 1

Sausalito, California 94965

Telecopier No.: (415) 332-0180

Attention: Mr. Saul Aaron Singer

Chief Executive Officer

With a copy (which shall not constitute notice) to:

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, P.C.

3 Embarcadero Center

7th Floor

San Francisco, California 94111

Telecopier No.: (415) 217-5910

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Attention: Howard Lasky, Esq.

c/o Stockholders' Representative

Mr. Saul Aaron Singer

ad hoc Interactive, Inc.

Libertyship Building

80 Libertyship Way

Suite 1

Sausalito, California 94965

Telecopier No.: (415) 332-0180

Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, telecopied or telexed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy or telex) the answerback being
deemed conclusive, but not exclusive, evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.

SECTION 12.2. CERTAIN DEFINITIONS.

For purposes of this Agreement, the term:

a. "Acquiror Material Adverse Effect" means any material
adverse effect on the Assets or the business, financial condition or results of
operations of Acquiror.

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b. "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person.

c. "Assets" shall mean the assets, rights and
properties, whether owned, leased or licensed, real, personal or mixed,
tangible or intangible, that are used, useful or held for use in connection
with the business of an entity.

d. "business day" shall mean any day other than a day on
which banks in the Commonwealth of Virginia are authorized or obligated to be
closed.

e. "Company Material Adverse Effect" means any material
adverse effect on the Assets or the business, financial condition or results of
operations of the Company.

f. "Company Software" means the software developed by
employees, consultants, and independent contractors of the Company which is
provided by the Company to the Company's customers and/or is for the Company's
internal use, including any documentation relating to such software.

g. "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise.

h. "Encumbrances" means mortgages, liens, pledges,
encumbrances, security interests, deeds of trust, options, encroachments,
reservations, orders, decrees, judgments, restrictions, charges, contract
rights, claims or equity of any kind.

i. "Government Entity" means any United States or other
national, state, municipal or local government, domestic or foreign, any
subdivision,

- 57 -
<PAGE> 70
agency, entity, commission or authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority.

j. "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

k. "Intellectual Property" means all inventions,
improvements thereto, patents, patent applications, patent disclosures,
trademarks, service marks, trade dress, logos, trade names, and corporate
names, domain names, copyrights, maskworks, moral rights, know-how, computer
software, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, business and marketing plans and proposals, and general
intangibles of a like nature, trade secrets, licenses, and rights and filings
with respect to the foregoing, and all reissues, extensions and renewals
thereof.

l. "Laws" means all foreign, federal, state and local
laws, statutes, ordinances, regulations, rules, resolutions, orders,
determinations, writs, injunctions, awards (including, without limitation,
awards of any arbitrator), judgments and decrees applicable to the specified
persons or entities.

m. "Losses" means all demands, losses, claims, actions
or causes of action, assessments, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements.

n. "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended).

o. "Related Agreements" mean the Escrow Agreement, the
Employment Agreements, the Amendment No. 4 to Stockholders Agreement, the
Registration Rights Agreement and all other agreements entered into pursuant to
this Agreement.

p. "Subsidiary" means any corporation, partnership,
joint venture or other legal entity of which such person (either alone or
through or together with any other Subsidiary) (i) owns, directly or
indirectly, fifty percent (50%) or more of the stock, partnership interests or
other equity interests the holders of which are

- 58 -
<PAGE> 71
generally entitled to vote for the election of the board of directors or other
governing body of such corporation, partnership, joint venture or other legal
entity; or (ii) possesses, directly or indirectly, control over the direction
of management or policies of such corporation, partnership, joint venture or
other legal entity (whether through ownership of voting securities, by
agreement or otherwise).

q. "Taxes" shall mean all federal, state, local and
foreign taxes (including income, profit, franchise, sales, use, real property,
personal property, ad valorem, excise, employment, social security and wage
withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration, fees,
withholdings or other similar charges of every kind, character or description
imposed by any governmental authorities, and any interest, penalties or
additions to tax imposed thereon or in connection therewith.

r. "Third Party Claim" means any claim or other
assertion of liability by any third party.

SECTION 12.3. HEADINGS.

The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

SECTION 12.4. SEVERABILITY.

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

SECTION 12.5. ENTIRE AGREEMENT.

- 59 -
<PAGE> 72
This Agreement (together with the Exhibits, the Schedules and
the other documents delivered pursuant hereto), together with the Related
Agreements, constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder.

SECTION 12.6. ASSIGNMENT.

Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other party; provided, however, that Acquiror and Merger Sub shall have the
right to assign this Agreement without the prior written consent of the Company
to a direct or indirect subsidiary of Acquiror, but no such assignment shall
relieve Acquiror or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.

SECTION 12.7. THIRD PARTY BENEFICIARIES.

This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

SECTION 12.8. GOVERNING LAW.

This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
law, except that, to the extent applicable, the laws of the State of California
and the State of Delaware shall govern the effectiveness and effect of the
Merger.

SECTION 12.9. COUNTERPARTS.

This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.

- 60 -
<PAGE> 73
SECTION 12.10. FEES AND EXPENSES.

Except as otherwise provided for in this Agreement, each party
hereto shall pay its own fees, costs and expenses incurred in connection with
this Agreement and in the preparation for and consummation of the transactions
provided for herein. In the event of any litigation arising out of or
connected with this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party all reasonable attorneys' fees and costs
incurred therein.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

- 61 -
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this
AGREEMENT AND PLAN OF MERGER to be executed and delivered as of the date first
written above.

PROXICOM, INC.

By: /s/ Raul J. Fernandez
-----------------------------------------
Name: Raul J. Fernandez
----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------

PROXICOM MERGER SUB II, INC.

By: /s/ Kenneth J. Tarpey
-----------------------------------------
Name: Kenneth J. Tarpey
----------------------------------------
Title: President
----------------------------------------

AD HOC INTERACTIVE, INC.

- 1 -
<PAGE> 75
By: /s/ Saul Aaron Singer
-----------------------------------------
Name: Saul Aaron Singer
----------------------------------------
Title: Chief Executive Officer
----------------------------------------

PRINCIPAL STOCKHOLDERS

/s/ Megan Wheeler
----------------------------------------
MEGAN WHEELER
/s/ Saul Aaron Singer
----------------------------------------
SAUL AARON SINGER

- 2 -

<PAGE> 76
SCHEDULE 2.6(D)

ADDITIONAL AFFILIATES

1. Shawn McKee
2. Robert Tsuyuki
3. Kenneth Kula

- i -

<PAGE> 1
EXHIBIT 3.1

CERTIFICATE OF INCORPORATION

PROXIMATION, INC.

The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:

FIRST: The name of the corporation (hereinafter called the
"corporation") is

PROXIMATION, INC.

SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 1013
Centre Road, City of Wilmington 19805, County of New Castle; and the name of
the registered agent of the corporation in the State of Delaware at such
address is Corporation Service Company.

THIRD: The nature of the business and the purposes to be conducted
and promoted by the corporation, which shall be in addition to the authority of
the corporation to conduct any lawful business, to promote any lawful purpose,
and to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware, are as
follows:

Computer interactive media services, creation of web sites on the world
wide web for internet use, computer software development, systems
integration, database development, and consulting.

The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to,

<PAGE> 2

or inference from, the terms of any provision of this or any other Article of
this certificate of incorporation; provided, that the corporation shall not
conduct any business, promote any purpose, or exercise any power or privilege
within or without the State of Delaware which, under the laws thereof, the
corporation may not lawfully conduct, promote, or exercise.

FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is Twenty million (20,000,000). The par value of
each of such shares is $.0l dollars. All such shares are of one class and are
shares of Common Stock.

The Board of Directors is authorized to provide by resolution or
resolutions for the issuance of shares of Preferred stock and additional common
stock of the Corporation, in one or more series with such par value, voting
powers, full or limited, or without voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions as shall be stated and expressed in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors.

FIFTH: The name and the mailing address of the incorporator are as
follows:

NAME MAILING ADDRESS

Raul J. Fernandez 1749 Old Meadow Road, 6th Floor
McLean, Virginia 22102

SIXTH: The corporation is to have perpetual existence.

SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation
under Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as

<PAGE> 3

consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this corporation, as the case may be, and also on this corporation.

EIGHTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:

1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the Whole Board of
Directors shall be fixed by, or in the manner provided in, the By-Laws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have if there were no vacancies.
No election of directors need be by written ballot.

2. After the original or other By-Laws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of Section 109 of the General Corporation Law of the
State of Delaware, and after the corporation has received any payment
for any of its stock, the power to adopt, amend, or repeal the By-Laws
of the corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of Section 141 of the
General Corporation Law of the State of Delaware shall be set forth in an
initial By-Law or in a By-Law adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification shall
be set forth in this certificate of incorporation.

3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue more
than one class of stock, no outstanding share of any class of stock
which is denied voting power under the provisions of the certificate of
incorporation shall entitle the holder thereof to the right to vote at
any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of Section 242 of the General Corporation Law of the
State of Delaware shall otherwise require; provided,

<PAGE> 4

that no share of any such class which is otherwise denied voting power
shall entitle the holder thereof to vote upon the increase or decrease in
the number of authorized shares of said class.

NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.

TENTH: The corporation shall, to the fullest extent permitted by
the provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.

ELEVENTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of
this Article ELEVENTH.

The effective time of the certificate of incorporation of
the corporation, and time when the existence of the corporation shall commence,
shall be July 22, 1996.

SIGNED on July 22, 1996.

/s/ RAUL J. FERNANDEZ
---------------------------------
Raul J. Fernandez, Incorporator

<PAGE> 5

AMENDED CERTIFICATE OF INCORPORATION

PROXIMATION, INC.

Pursuant to the provision of Section 241 of the "General Corporation Law
of the State of Delaware", the undersigned, a natural person, for the purpose of
amending the Certificate of Incorporation of Proximation, Inc., hereby certifies
that:

The following amendments to the Certificate of Incorporation were adopted
by the sole incorporator on July 25, 1996.

The amendments delete all of Article First of the original Certificate of
Incorporation. The parts that are deleted read as follows:

FIRST: The name of the corporation (hereinafter called the
"corporation") is

PROXIMATION, INC.

The amendments amend Article First in their entirety so that Article
First now reads as follows:

FIRST: The name of the corporation (hereinafter called the
"corporation") is

PROXICOM, INC.

The amendments delete the first paragraph of Article Fourth of the
original Certificate of Incorporation. The paragraph that is deleted read as
follows:

FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is Twenty million (20,000,000). The par value of
each of such share is $.0l dollars. All such shares are of one class and are
shares of Common Stock.

The amendments add the following words to Article Fourth so that the
first paragraph of Article Fourth now reads as follows:

FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is Twenty-Five million (25,000,000) of this
total, twenty million (20,000,000) may be Common Stock and five million
(5,000,000) may be Preferred Stock. The par value of each of such share of
Common Stock is $.01

<PAGE> 6

dollars. The par value of each such share of Preferred Stock is $.01 dollars.

The amendments amend Article Tenth in their entirety so that Article
Tenth as amended now reads as follows:

TENTH: The corporation shall, to the fullest extent permitted by
the provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person; and it is further provided:

A. To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, is
or was a Director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
(an "Other Entity"), against judgments, fines, penalties, excise taxes, amounts
paid in settlement and costs, charges and expenses (including attorneys' fees
and disbursements). Persons who are not Directors or officers of the
Corporation may be similarly indemnified in respect of service to the
Corporation or to an Other Entity at the request of the Corporation to the
extent the Board at any time specifies that such persons are entitled to the
benefits of this Article Tenth.

B. The Corporation shall, from time to time, reimburse or
advance to any Director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that if required by the
Delaware General Corporation Law, such expenses incurred by or on behalf of any
Director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt

<PAGE> 7

by the Corporation of an undertaking, by or on behalf of such Director or
officer (or other person indemnified hereunder), to repay any such amount so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right of appeal that such Director, officer or other
person is not entitled to be indemnified for such expenses.

C. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article Tenth
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this certificate of Incorporation, the
By-laws of the Corporation (the "By-laws"), any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding
such office.

D. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article Tenth
shall continue as to a person who has ceased to be a Director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.

E. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of an Other Entity,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Article Tenth, the By-laws or under
Section 145 of the Delaware General Corporation Law or any other provision of
law.

F. The provisions of this Article Tenth shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Article Tenth is in effect and
any other person indemnified hereunder, on the other hand, pursuant to which
the Corporation and each such Director, officer, or other person intend to be
legally bound. No repeal or modification of this Article Tenth shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.

G. The right to indemnification and reimbursement or

<PAGE> 8

advancement of expenses provided by, or granted pursuant to, this Article
Tenth shall be enforceable by any person entitled to such indemnification
or reimbursement or advancement of expenses in any court of competent
jurisdiction. Such a person shall be indemnified for any expenses incurred
in connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.

H. Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Article Tenth may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time
of the occurrence of the event or events giving rise to the applicable
Proceeding, to the extent permitted by law, or on the basis of the applicable
law in effect at the time such indemnification or reimbursement or advancement
of expenses is sought. Such election shall be made, by a notice in writing to
the Corporation, at the time indemnification or reimbursement or advancement of
expenses is sought; provided, however, that if no such notice is given, the
right to indemnification or reimbursement or advancement of expenses shall be
determined by the law in effect at the time indemnification or reimbursement or
advancement of expenses is sought.

The undersigned further certifying that the corporation has
not received any payment for any of its stock and the amendments were duly
adopted by a majority of the original incorporators.

SIGNED on July 25, 1996

[SEAL] /s/ RAUL J. FERNANDEZ
------------------------------
RAUL J. FERNANDEZ
INCORPORATOR

STATE OF VIRGINIA

COUNTY OF Fairfax

This instrument was acknowledged before me on 25th day of July,
1996 by /s/ RAUL J. FERNANDEZ.

/s/ MELISSA BARNES
------------------------
NOTARY PUBLIC

My Commission Expires July 31, 1999

<PAGE> 9
CERTIFICATE OF MERGER
OF
PROXIMA, INC.
INTO
PROXICOM, INC.

The undersigned corporation

DOES HEREBY CERTIFY:

FIRST. That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:

NAME STATE OF INCORPORATION

PROXIMA, INC. MARYLAND
PROXICOM, INC. DELAWARE

SECOND. That an agreement of merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the requirements of
subsection (c) of section 252 of the General Corporation Law of the State of
Delaware.

THIRD. The name of the surviving corporation of the merger is
PROXICOM, INC., a Delaware corporation.

FOURTH. That the Certificate of Incorporation of PROXICOM, INC., a
Delaware corporation, shall be the certificate of incorporation of the
surviving corporation.

FIFTH. That the executed agreement of merger is on file at the
principal place of business of the surviving corporation. The address of said
principal place of business is 1749 Old Meadow Road, McLean, Virginia 22102.

SIXTH. That a copy of the agreement of merger will be furnished on
request and without cost to any stockholder of any constituent corporation.

SEVENTH. The authorized capital stock of each foreign corporation
which is a party to the merger is as follows:

<PAGE> 10

Corporation Class Number of Shares Par Value per
share or
Statement that
shares are
without par
value

PROXIMA, INC. Common/ 1,000 $1.00 per share
Sole Class

IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed
by Raul J. Fernandez, this 26th day of August, 1996.

/s/ RAUL J. FERNANDEZ
-------------------------
Raul J. Fernandez
President, Proxicom, Inc.

<PAGE> 11
AMENDED CERTIFICATE OF INCORPORATION

PROXICOM, INC.

Proxicom, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), for the purposes of amending its
Certificate of Incorporation, hereby certifies that the following amendments to
the Certificate of Incorporation were adopted by the Board of Directors and
stockholders of the Corporation on February 7, 1997, pursuant to the provisions
of section 242 of the General Corporation Law of the State of Delaware.

Article Eighth is amended by adding thereto paragraph 4, to read as follows:

4. The number of directors of the Corporation shall be such
number as shall be fixed from time to time by or pursuant to the Bylaws of the
Corporation. The directors shall be classified, with respect to the time for
which they severally hold office, into three classes (designated as Class I,
Class II and Class III), which shall be as nearly equal in number as possible.
Each initial director in Class I shall hold office for a term expiring at the
1998 annual meeting of stockholders, each initial director in Class II shall
hold office for a term expiring at the 1999 annual meeting of stockholders, and
each initial director in Class III shall hold office for a term expiring at the
2000 annual meeting of stockholders.

The following persons, having the following class designations,
shall serve as the initial classified board of directors of the
Corporation:

Class/Name

I -- Raul Fernandez, Christopher Capuano
II -- David Hodgson, Ramanan Raghavendran
III -- Jack Kemp, Mario Morino, John McKinley

Notwithstanding the foregoing, each director shall serve
until such director's successor is duly elected and qualified or until such
director's earlier death, resignation or removal. At each annual meeting of
stockholders, the successors to the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election and until their successors have been duly elected and qualified or
until any such director's earlier death, resignation or removal. Except as
otherwise provided by statute, this Amended Certificate of Incorporation or the
Bylaws of the Corporation, directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors.

<PAGE> 12

If the number of directors is changed pursuant to the Bylaws of the
Corporation, any increase or decrease shall be apportioned among the classes so
as to maintain the number of directors in each class as nearly equal as
possible, but in no case shall a decrease in the number of directors shorten
the term of an incumbent director.

IN WITNESS WHEREOF, the Corporation has caused this amendment to its
Certificate of Incorporation to be signed and acknowledged by its duly
authorized officer, this 12th day of February, 1997.

Dated: February 12, 1997 /s/ CHRISTOPHER CAPUANO
----------------------------
Christopher Capuano
Secretary

2
<PAGE> 13

CERTIFICATE OF AMENDMENT

AMENDED CERTIFICATE OF INCORPORATION

PROXICOM, INC.
It is hereby certified that:

FIRST: The name of the corporation is Proxicom, Inc. (the "Corporation"),
and the Corporation is organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "DGCL").

SECOND: The Board of Directors of the Corporation, for the purpose of
taking action without a meeting pursuant to Section 141(f) of the DGCL, duly
adopted by unanimous written consent, a resolution setting forth a proposed
amendment of the Amended Certificate of Incorporation of the Corporation,
declaring such amendment to be advisable and authorized and directed the
Corporation's officers to submit such amendment to the Corporation's
stockholders for approval in accordance with the DGCL.

The resolution setting forth the proposed amendment is as follows:

RESOLVED, that the Board of Directors of the Corporation hereby approves
and adopts the following amendment (the "Certificate Amendment") to
Article FOURTH of the Corporation's Amended Certificate of Incorporation,
so that the first paragraph of such Article FOURTH shall read in its
entirety:

"FOURTH: The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is thirty-two million
(32,000,000), of which twenty-five million (25,000,000) of such shares
shall be common stock, having a par value of $.01 per share ("Common
Stock") and seven million (7,000,000) of such shares shall be preferred
stock, having a par value of $.01 per share ("Preferred Stock")."

THIRD: The amendment to the Amended Certificate of Incorporation herein
has been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the DGCL.

<PAGE> 14

In WITNESS WHEREOF, the Corporation has caused this Certificate
of Amendment to be signed by Raul J. Fernandez, its President and Chief
Executive Officer, and attested by Christopher Capuano, its Vice President,
General Counsel and Corporate Secretary, this 29th day of January, 1999.

PROXICOM, INC.

By:/s/ RAUL J. FERNANDEZ
---------------------------
Raul J. Fernandez
President and Chief
Executive Officer

Attest:

By:/s/ CHRISTOPHER CAPUANO
----------------------------
Christopher Capuano
Vice President, General Counsel
and Corporate Secretary

<PAGE> 1
EXHIBIT 3.2

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

PROXICOM, INC.

ARTICLE 1. NAME

The name of this corporation is Proxicom, Inc. (the "Corporation").

ARTICLE 2. REGISTERED OFFICE AND AGENT

The registered office of the Corporation in the State of Delaware
shall be located at 1013 Centre Road, in the City of Wilmington, County of New
Castle 19805. The registered agent of the Corporation at such address shall be
Corporation Service Company.

ARTICLE 3. PURPOSE AND POWERS

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law"). The
Corporation shall have all power necessary or convenient to the conduct,
promotion or attainment of such acts and activities.

ARTICLE 4. CAPITAL STOCK

4.1. AUTHORIZED SHARES

The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is one hundred ten million
(110,000,000), of which one hundred million (100,000,000) of such shares shall
be Common Stock, having a par value of $.01 per share ("Common Stock"), and ten
million (10,000,000) of such shares shall be Preferred Stock, having a par value
of $.01 per share ("Preferred Stock").

4.2. COMMON STOCK

4.2.1. RELATIVE RIGHTS

The Common Stock shall be subject to all of the rights,
privileges, preferences and priorities of the Preferred Stock as set forth in
the certificate of designations filed

<PAGE> 2

to establish each series of Preferred Stock. Each share of Common Stock shall
have the same relative rights as and be identical in all respects to all the
other shares of Common Stock.

4.2.2. DIVIDENDS

Whenever there shall have been paid, or declared and set
aside for payment, to the holders of shares of any class of stock having
preference over the Common Stock as to the payment of dividends, the full
amount of dividends and of sinking fund or retirement payments, if any, to
which such holders are respectively entitled in preference to the Common
Stock, then dividends may be paid on the Common Stock and on any class or
series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends thereon, but only when
and as declared by the Board of Directors of the Corporation (the "Board").

4.2.3. DISSOLUTION, LIQUIDATION, WINDING UP

In the event of any dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
Common Stock, and holders of any class or series of stock entitled to
participate therewith, in whole or in part, as to the distribution of assets in
such event, shall become entitled to participate in the distribution of any
assets of the Corporation remaining after the Corporation shall have paid, or
provided for payment of, all debts and liabilities of the Corporation and after
the Corporation shall have paid, or set aside for payment, to the holders of
any class of stock having preference over the Common Stock in the event of
dissolution, liquidation or winding up the full preferential amounts (if any)
to which they are entitled.

4.2.4. VOTING RIGHTS

Each holder of shares of Common Stock shall be entitled
to attend all special and annual meetings of the stockholders of the
Corporation and, share for share and without regard to class, together with
the holders of all other classes of stock entitled to attend such meetings and
to vote (except any class or series of stock having special voting rights), to
cast one vote for each outstanding share of Common Stock so held upon any
matter or thing (including, without limitation, the election of one or more
directors) properly considered and acted upon by the stockholders.

4.3. PREFERRED STOCK

The Board of Directors is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Certificate of Incorporation, to provide, by resolution or resolutions from time
to time and by filing a certificate of designations pursuant to the Delaware
General Corporation Law, for the issuance of the shares of Preferred Stock in
series, to establish from time to time the number of shares to be included in
each such series, to fix the powers, designations, preferences and relative,
participating, optional or other

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<PAGE> 3

special rights of the shares of each such series and to fix the qualifications,
limitations or restrictions thereof.

4.4. SPECIAL MEETINGS

Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called (a) by the Board on its
own behalf or one or more officers of the Corporation as provided in the bylaws
or (b) by stockholders of the Corporation upon the written request of the
holders of at least 75% of the securities of the Corporation outstanding and
entitled to vote generally in the election of directors.

4.5. ACTION WITHOUT A MEETING

Any action required or permitted to be taken at a stockholders'
meeting may be taken without a meeting, without prior notice and without a vote,
if the action is taken by persons who would be entitled to vote at a meeting and
who hold shares having voting power equal to not less than the greater of (a)
75% of the voting power of all shares of each class or series entitled to vote
on such action or (b) the minimum number of votes of each class or series that
would be necessary to authorize or take the action at a meeting at which all
shares of each class or series entitled to vote were present and voted. The
action must be evidenced by one or more written consents describing the action
taken, signed by the stockholders entitled to take action without a meeting, and
delivered to the Corporation in the manner prescribed by the Delaware General
Corporation Law for inclusion in the minute book. No consent shall be effective
to take the corporate action specified unless the number of consents required to
take such action are delivered to the Corporation within sixty (60) days of the
delivery of the earliest-dated consent. Written notice of the action taken shall
be given in accordance with the Delaware General Corporation Law to all
stockholders who do not participate in taking the action who would have been
entitled to notice if such action had been taken at a meeting having a record
date on the date that written consents signed by a sufficient number of holders
to take the action were delivered to the Corporation.

ARTICLE 5. BOARD OF DIRECTORS

5.1. NUMBER; ELECTION

The number of directors of the Corporation shall be such number as
from time to time shall be fixed by, or in the manner provided in, the bylaws of
the Corporation; provided, however, that the number of directors which shall
constitute the whole Board shall not be fewer than five (5) nor more than
fifteen (15). The directorships (i.e., the particular seats on the Board) shall
be classified into three classes (designated as Class I, Class II and Class III)
as nearly equal in number as possible.

Notwithstanding the foregoing, each director shall hold office until
such director's successor is duly elected and qualified or until such director
dies, resigns or is removed. At each

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<PAGE> 4

annual meeting of stockholders, the successors to the class of directors whose
term expires at that meeting shall be elected to hold office for a term expiring
at the annual meeting of stockholders held in the third year following the year
of their election and until their successors have been duly elected and
qualified or until any such director dies, resigns or is removed. Except as
otherwise provided by statute, this Certificate of Incorporation or the Bylaws
of the Corporation, directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors. Unless and except to the extent that the
bylaws of the Corporation shall otherwise require, the election of directors of
the Corporation need not be by written ballot.

With respect to newly created or eliminated directorships resulting
from an increase or decrease, respectively, in the number of directors, the
Board shall determine and designate to which class of directorships each
director belongs, but in no case shall a decrease in the number of directors
shorten the term of an incumbent director.

5.2. MANAGEMENT OF BUSINESS AND AFFAIRS OF THE CORPORATION

The business and affairs of the Corporation shall be managed by or
under the direction of the Board. Except as otherwise provided in this
Certificate of Incorporation, each director of the Corporation shall be entitled
to one vote per director on all matters voted or acted upon by the Board.

5.3. VACANCIES; RESIGNATION; REMOVAL

Vacancies and newly created directorships resulting from any
increase in the number of directors constituting the whole Board may be filled
only by the affirmative vote of a majority of the directors then in office,
although fewer than a quorum, or by a sole remaining director. Whenever the
holders of any class or classes of stock or series thereof are entitled to elect
one or more directors by the provisions of this Certificate of Incorporation,
vacancies and newly created directorships of such class or classes or series may
be filled by the affirmative vote of a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected. Each director so chosen shall hold office until the next
election of directors of the class to which such director was appointed, and
until such director's successor is elected and qualified, or until the
director's earlier death, resignation or removal.

A director may resign at any time upon written notice to the
Corporation, and the resignation shall take effect at the time it specifies,
without any need for acceptance by the Board. In the event that one or more
directors resigns from the Board, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, with the vote thereon to take effect when
such resignation or resignations becomes effective. Directors may only be
removed for cause upon the affirmative vote of at least two-thirds of the entire
voting power of all the then-outstanding shares of stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.

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<PAGE> 5

5.4. LIMITATION OF LIABILITY

No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (b) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law relating to unlawful payment
of dividends or unlawful stock purchase or redemption of stock or (d) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article 5.4 shall be prospective only and shall
not adversely affect any right or protection of, or any limitation of the
liability of, a director of the Corporation existing at, or arising out of facts
or incidents occurring prior to, the effective date of such repeal or
modification.

ARTICLE 6. COMPROMISE OR ARRANGEMENTS

Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.

ARTICLE 7. AMENDMENT OF BYLAWS

In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board is expressly authorized and
empowered to adopt, amend and repeal the bylaws of the Corporation. The bylaws
of the Corporation may be adopted, amended or repealed by the stockholders of
the Corporation only upon the affirmative vote of at least two-thirds of the
entire voting power of all the then-outstanding shares of stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.

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<PAGE> 6

ARTICLE 8. RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION

The Corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of any nature conferred upon stockholders, directors or any other persons by and
pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the rights reserved in this Article 8.

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<PAGE> 1
EXHIBIT 3.3

BY-LAWS

PROXICOM, INC.

ADOPTED AUGUST 29, 1996

ARTICLE I
OFFICES

1. Registered or Statutory Office, and Agent or Clerk. The registered
or statutory office of the Corporation in the State of incorporation is 1013
Centre Road, City of Wilmington, Delaware 19805. The Registered Agent of the
Corporation at such address is Corporation Service Company.

2. Other Places of Business. - Branch or subordinate offices or
places of business may be established at any time by the Board of Directors at
any place or places where the corporation is qualified to do business.

ARTICLE II
SHAREHOLDERS

1. Annual Meeting. - The annual meeting of shareholders shall be held
upon not less than ten nor more than fifty days written notice of the time,
place an purposes of the meeting, at 12 o'clock p.m. on the 1st day of May of
each year at the principal

<PAGE> 2
office of the Corporation or at such other time and place as shall be specified
in the notice of meeting, in order to elect directors and transact such other
business as shall come before the meeting, including the election of any
officers as required by law. If that date is a legal holiday, the meeting shall
be held at the same hour on the next succeeding business day. Notice of the
meeting need not be given to anyone who attends the meeting or who signs a
Waiver of Notice either before or after the Meeting. Any authority exercised by
the Board may also be exercised by a Quorum of Shareholders at any Annual or
Special Meeting. Such action by Shareholders may be amended or repealed by the
Board unless the resolution of the Shareholders adopting such action reserves to
the Shareholders the right to amend or repeal it.

2. Special Meetings - A special meeting of shareholders may be
called for any purpose by the president or the Board of Directors or as
permitted by law. A special meeting shall be held upon not less than ten nor
more than fifty days written notice of the time, place and purposes of the
meeting. Notice of the meeting need not be given to anyone who attends the
meeting or who signs a Waiver of Notice either before or after the Meeting.

3. Action Without Meeting. - Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders,
or any action which may be taken at any annual or special meeting of
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the

<PAGE> 3

holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing. Action taken pursuant to this paragraph shall be subject to the
provisions of Section 228 of the General Corporation Law.

4. Quorum.- The presence at a meeting in person or by proxy of the
holders of shares entitled to cast a majority of all shares issued and
outstanding shall constitute a quorum.

5. Record Date. - The record date for all meetings of shareholders
shall be as fixed by the Board of Directors or as provided by Statute.

ARTICLE III
BOARD OF DIRECTORS

1. General Powers. - Except as otherwise provided in the Certificate
of Incorporation, the business and affairs of the Corporation shall be managed
by or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws the Board may exercise all powers and
perform all acts that are not required by these By-

<PAGE> 4

laws or the Certificate of Incorporation or by statute, to be exercised and
performed by the stockholders.

2. Number and Term of Office. - The Board of Directors shall
consist of one (1) or more members who may be changed from time to time by act
of the shareholders or the Board. Each director shall be elected by the
shareholders at each annual meeting and shall hold office until the next annual
meeting of shareholders and until that director's successor shall have been
elected and qualified. Directors shall, except as otherwise required by statute
or by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election. Election of Directors need not be by written ballot.

3. Regular Meetings. - A regular meeting of the Board shall be
held without notice immediately following and at the same place as the annual
shareholders' meeting for the purposes of electing officers and conducting such
other business as may come before the meeting. The Board, by resolution, may
provide for additional regular meetings which may be held without notice,
except to members not present at the time of the adoption of the resolution.

4. Special Meetings. - A special meeting of the Board may be
called at any time by the president or by a majority of directors for any
purpose. Such meeting shall be held upon not less than five (5) days
notice if given orally, (either by telephone or in person,) or by telecopier,
or upon not less than ten (10) days

<PAGE> 5

notice if given by depositing the notice in the United States mails, postage
prepaid. Such notice shall specify the time, place a purposes of the meeting.

5. Telephone Meetings. - Directors or members of any committee
designated by the Board may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Article III shall constitute
presence in person at such meeting.

6. Action Without Meeting. - the Board may act without a meeting
if, prior to such action, each member of the Board shall consent in writing
thereto. Such consent or consents shall be filed in the minute book.

7. Quorum. - A majority of the entire Board shall constitute a
quorum for the transaction of business.

8. Action by Majority Vote. - Except as otherwise expressly
required by statute, the Certificate of Incorporation or these Bylaws, the act
of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board.

9. Resignation. - Any Director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified in such resignation, the
acceptance of such resignation shall not be necessary to make it effective.

10. Vacancies in Board of Directors. - Vacancies in the

5
<PAGE> 6

Board, whether caused by removal, death, mental or physical incapacitation or
any other reason, including vacancies caused by an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, even though less than a quorum of the Board, or by a sole remaining
director.

ARTICLE IV

COMMITTEES OF THE BOARD

The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any committee to replace absent or disqualified members
at any meeting of such committee. If a member of a committee shall be absent
from any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member
of the Board to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in a resolution
of the Board passed as aforesaid, shall have and may exercise all the powers
and authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be impressed on
all papers that may require it, but no such committee shall have the power or
authority of the board in reference to amending the Certificate of
Incorporation, adopting an

<PAGE> 7

agreement of merger or consolidation under Section 251 or 252 of the General
Corporation Law, selling, leasing or exchanging all or substantially all of the
Corporation's property and assets, dissolving or revoking the dissolution of
the Corporation or amending the By-laws of the Corporation; and, unless the
resolution designating it expressly so provides, no such committee shall have
the power and authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law. Such committee or committees shall have such
name or names as may be determined form time to time by resolution adopted by
the Board. Unless otherwise specified in the resolution of the Board
designating a committee, at all meetings of such committee a majority of the
total number of members of the committee shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of the
committee present at any meeting at which there is a quorum shall be the act of
the committee. Each committee shall keep regular minutes of its meetings.
Unless the Board otherwise provides, each committee designated by the Board may
make, alter and repeal rules for the conduct of its business. In the absence of
such rules each committee shall conduct its business in the same manner as the
Board conducts its business pursuant to Article III of the By-laws.

ARTICLE V
WAIVERS OF NOTICE

Any notice required by these By-Laws, the certificate of

<PAGE> 8

incorporation or the law of the State of incorporation may be waived in writing
by any person entitled to notice. The waiver or waivers may be executed either
before, at or after the event with respect to which notice is waived. Each
director or shareholder attending a meeting without protesting the lack of
proper notice, prior to the conclusion of the meeting, shall be deemed
conclusively to have waived such notice.

ARTICLE VI
OFFICERS

1. Election. - At its regular meeting following the annual
meeting of shareholders the Board shall elect a president, a treasurer and a
secretary or clerk, except such officers as shall be elected by the
shareholders. It may elect such other officers, including one or more vice
presidents, as it shall deem necessary, One person may hold two or more
offices, but no person shall hold the offices of president and secretary or
clerk at the same time.

2. Term of Office. - Each officer of the Corporation shall hold
office until such officer's successor is chosen and qualifies or until such
officer's earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Such resignation shall take effect
at the date receipt of such notice or at such later time as in therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of an officer
shall be without prejudice to the

<PAGE> 9

contract rights of the Corporation, if any. Any officer elected or appointed by
the Board may be removed at any time, with or without cause, by vote of a
majority of the entire Board. Any vacancy occurring in any office of the
Corporation shall be filled by the Board. The removal of an officer without
cause shall be without prejudice to the officer's contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights.

3. Compensation. - The compensation of all officers of the
Corporation shall be fixed by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the officer
is also a Director.

4. Duties and Authority of President. - The president shall be
chief executive officer of the Corporation. Subject only to the authority of
the Board, he shall have general charge and supervision over, and
responsibility for, the business and affairs of the Corporation. Unless
otherwise directed by the Board, all other officers shall be subject to the
authority and supervision of the president. The president may enter into and
execute in the name of the Corporation contracts or other instruments in the
regular course of business or contracts or other instruments not in the regular
course of business which are authorized, either generally or specifically, by
the Board. He shall have the general powers and duties of management usually
vested in the office of president of a corporation.

5. Duties and Authority of Vice President. - The vice

<PAGE> 10

president shall perform such duties and have such authority as from time to
time may be delegated to him by the president or by the Board. In the event of
the absence, death, inability or refusal to act by the president, the vice
president shall perform the duties and be vested with the authority of the
president.

6. Duties and Authority of Treasurer. - The treasurer shall have
the custody of the funds and securities of the Corporation and shall keep or
cause to be kept regular books of account for the Corporation. The treasurer
shall perform such other duties and possess such other powers as are incident
to that office or as shall be assigned by the president or the Board.

7. Duties and Authority of Secretary or Clerk. - The secretary or
clerk shall cause notices of all meetings to be served as prescribed in these
By-Laws and shall keep or cause to be kept the minutes of all meetings of the
shareholders and the Board. The secretary or clerk shall perform such other
duties and possess such other powers as are incident to that office or as are
assigned by the president or the Board.

8. Removal of Officers. - The Board may remove any officer or
agent of the Corporation if such action, in the judgment of the Board, is in
the best interest of the Corporation. Appointment or election to a corporate
office shall not, of itself, establish or create contract rights.

9. Vacancies in Offices. - The Board, may fill all vacancies in
offices, regardless of the cause of such vacancies, for the remainder of the
terms of the offices.

<PAGE> 11

ARTICLE VII
AMENDMENTS TO AND EFFECT OF BY-LAWS
FISCAL YEAR

1. Force and Effect of By-Laws. - These By-Laws are subject to the
provisions of the law of the State of incorporation and the Corporation's
certificate of incorporation, as it may be amended from time to time. If any
provision in these By-Laws is inconsistent with a provision in the State
statutes or the certificate of incorporation, the provision of the State
statutes or the certificate of incorporation shall govern.

2. Wherever in these By-Laws references are made to more than one
incorporator, director or shareholder, they shall, if this is a sole
incorporator, director, shareholder corporation, be construed to mean the
solitary person; and all provisions dealing with the quantum of majorities or
quorums shall be deemed to mean the action by the one person constituting the
corporation.

3. Amendments to By-Laws. - These By-Laws may be altered, amended
or repealed by the shareholders or the Board. Any By-Law adopted, amended or
repealed by the shareholders may be amended or repealed by the Board, unless
the resolution of the Shareholders adopting such By-Law expressly reserves to
the Shareholders the right to amend or repeal it.

4. Fiscal Year. - The fiscal year of the Corporation shall be fixed
and shall be subject to change, by the Board of Directors.

<PAGE> 12

APPROVED:

BY:/s/ RAUL J. FERNANDEZ
-----------------------------
Raul J. Fernandez
President of the Board

8/29/96
----------------------------
Date

<PAGE> 13

AMENDMENT TO THE BY-LAWS

PROXICOM, INC.

Proxicom, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), for the purposes of amending its By-Laws
hereby certifies that the following amendments to the By-Laws were adopted by
the Board of Directors and stockholders of the Corporation on February 7, 1997,
pursuant to the provisions of section 109 of the General Corporation Law of the
State of Delaware:

Article III of the By-Laws is amended to replace section 2 in its entirety to
read as follows:

2 Number and Election. The number of directors which shall
constitute the whole board shall not be fewer than five (5) nor more than seven
(7). Within the limits specified above, the number of directors shall be
determined by resolution of the Board. Directors shall, except as otherwise
required by statute or by the Certificate of Incorporation or these Bylaws, be
elected by a plurality of the votes cast at a meeting of stockholders by the
holders of shares entitled to vote in the election. The directors shall be
divided into three (3) classes, and each director shall hold office for the
term for which such director is elected and until such director's successor is
elected and qualified or until such director's earlier death, resignation or
removal. Election of Directors need not be by written ballot.

2.1. Classes; Terms of Office. Unless otherwise provided in the
Certificate of Incorporation, the Board of Directors shall divide the directors
into three classes; and, when the number of directors is changed, shall
determine the class or classes to which the increased or decreased number of
directors shall be apportioned; provided, however, that no decrease in the
number of directors shall affect the term of any director then in office. At
each annual meeting of stockholders, directors elected to succeed those whose
terms are expiring shall be elected for a term of office expiring at the annual
meeting of stockholders held in the third year following their election and
until their respective successors are elected and qualified, or until such
director's earlier death, resignation or removal.

IN WITNESS WHEREOF, the Corporation has caused this amendment to its
By-Laws to be signed and acknowledged by its duly authorized officer, this 12th
day of February, 1997.

Dated: February 12, 1997

/s/ CHRISTOPHER CAPUANO
-------------------------
Christopher Capuano
Secretary

<PAGE> 1
EXHIBIT 3.4

AMENDED AND RESTATED

BYLAWS

PROXICOM, INC.

1. OFFICES

1.1. REGISTERED OFFICE

The registered office of the Corporation shall be in Wilmington,
Delaware, and the initial registered agent in charge thereof shall be
Corporation Service Company.

1.2. OTHER OFFICES

The Corporation may also have offices at such other places, both
within and without the State of Delaware, as the Board of Directors of the
Corporation (the "Board") may from time to time determine or as may be necessary
or useful in connection with the business of the Corporation.

2. MEETINGS OF STOCKHOLDERS

2.1. PLACE OF MEETINGS

All meetings of the stockholders shall be held at such place as may
be fixed from time to time by the Board, the Chair, the Chief Executive Officer
or the President.

2.2. ANNUAL MEETINGS

(a) The Corporation shall hold annual meetings of stockholders on
such date and at such time as shall be designated from time to time by the
Board, the Chair, the Chief Executive Officer or the President. At each annual
meeting, the stockholders shall elect by a plurality vote (as provided in
Section 2.9 hereof) directors to succeed those whose terms expire at the time of
the annual meeting. The nomination of persons for election to the Board and the
proposal of any other business to be transacted at an annual meeting may be made
only (i) by or at the direction of the Board or (ii) by any stockholder of
record who gives notice in accordance with the procedures set forth in paragraph
(b) of this Section 2.2 and who is a stockholder of record both on the date of
giving such notice and on the record date for the determination of stockholders
entitled to vote at such annual meeting; only persons thereby nominated shall be

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eligible to serve as directors and only business thereby proposed shall be
transacted at an annual meeting. The presiding officer of the annual meeting
shall determine whether a nomination or any proposal of business complies or
complied with this Section 2.2.

(b) For nominations and other business to be brought properly before
an annual meeting by a stockholder pursuant to clause (ii) of paragraph (a) of
this Section 2.2, the stockholder must deliver notice to the Secretary of the
Corporation at the principal executive offices of the Corporation in accordance
with this Section 2.2(b). The notice must be received by the Secretary not less
than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, the stockholder must so deliver the
notice not earlier than the 90th day prior to such annual meeting and not later
than the close of business on the later of the 60th day prior to such annual
meeting or the tenth day following the day on which public announcement of the
date of such meeting is first made; provided further, however, that in the event
that the number of directors to be elected to the Board is increased and there
is no public announcement naming all of the nominees for director or specifying
the size of the increased Board made by the Corporation at least 70 days prior
to the first anniversary of the preceding annual meeting, with respect to
nominees for any new position created by the increase, the stockholder must so
deliver the notice not later than the close of business on the tenth day
following the day on which such public announcement is first made. The
stockholder's notice must set forth: (i) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder (together with such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected), whether or not the Corporation is then subject to Section 14(a) and
such rules and regulations; (ii) as to any other business that the stockholder
proposes to transact at the meeting, a brief description of the business desired
to be brought before the meeting, the reasons for conducting the business at the
meeting and any material interest in the business of the stockholder and of the
beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, the name and address of the
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, the class and number of shares of the Corporation that are owned
beneficially and of record by such stockholder and such beneficial owner and a
representation that the stockholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting. For purposes of
this Section 2.2 and Section 2.3 hereof, a "public announcement" means
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service, in a document publicly filed with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act (or their successor provisions), or in a notice of meeting or proxy
statement mailed generally to the Corporation's stockholders. In giving notice
under this Section 2.2, a stockholder must also comply with state law and the
Exchange Act (and the rules and regulations thereunder). Nothing in this Section
2.2 shall be deemed to affect the rights of a stockholder to

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request inclusion of proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 (or its successor provision) under the Exchange Act.

2.3. SPECIAL MEETINGS

Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called only by the Board, the
Chair, the Chief Executive Officer or the President or by the stockholders as
set forth in the Corporation's Certificate of Incorporation (as amended and
restated from time to time, the "Certificate of Incorporation"). Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice relating to such meeting (or to the purposes for
which the meeting is called if such notice is waived or is not required as
provided in the General Corporation Law of the State of Delaware (the "Delaware
General Corporation Law") or these Bylaws). In the case of a special meeting of
stockholders called for the purpose of electing directors, nominations may be
made only (i) by or at the direction of the Board or (ii) by any stockholder of
record who delivers to the Secretary, no later than the tenth day following the
day on which public announcement of the special meeting is made, a notice that
complies with and is delivered in accordance with Section 2.2(b) above.

2.4. NOTICE OF MEETINGS

Written notice of any meeting of stockholders, stating the place,
date and hour of the meeting, and (if it is a special meeting) the purpose or
purposes for which the meeting is called, shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than 60 days before
the date of the meeting (except to the extent that such notice is waived or is
not required as provided in the Delaware General Corporation Law or these
Bylaws). Such notice shall be given in accordance with, and shall be deemed
effective as set forth in, Section 222 (or any successor section) of the
Delaware General Corporation Law.

2.5. WAIVERS OF NOTICE

Whenever the giving of any notice is required by statute, the
Certificate of Incorporation or these Bylaws, a waiver thereof, in writing and
delivered to the Corporation, signed by the person or persons entitled to said
notice, whether before or after the event as to which such notice is required,
shall be deemed equivalent to notice. Attendance of a stockholder at a meeting
shall constitute a waiver of notice (1) of such meeting, except when the
stockholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (2) (if it is a special meeting) of
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the stockholder
objects to considering the matter at the beginning of the meeting.

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2.6. LIST OF STOCKHOLDERS

After the record date for a meeting of stockholders has been fixed,
at least ten days before such meeting, the officer or other agent of the
Corporation who has charge of the stock ledger of the Corporation shall make a
list of all stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place in the city where the meeting is to be held, which
place is to be specified in the notice of the meeting, or at the place where the
meeting is to be held. Such list shall also, for the duration of the meeting, be
produced and kept open to the examination of any stockholder who is present at
the time and place of the meeting.

2.7. QUORUM AT MEETINGS

Stockholders may take action on a matter at a meeting only if a
quorum exists with respect to that matter. Except as otherwise provided by
statute or by the Certificate of Incorporation, a quorum shall exist if there
are present in person or represented by proxy the holders of a majority of the
shares entitled to vote at the meeting. Where a separate vote by a class or
classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. Once a share
is represented for any purpose at a meeting (other than solely to object (1) to
holding the meeting or transacting business at the meeting or (2) (if it is a
special meeting) to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice), it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for the
adjourned meeting. The holders of a majority of the voting shares represented at
a meeting, whether or not a quorum is present, may adjourn such meeting from
time to time.

2.8. VOTING AND PROXIES

Unless otherwise provided in the Delaware General Corporation Law or
in the Certificate of Incorporation, and subject to the other provisions of
these Bylaws, each stockholder shall be entitled to one vote on each matter, in
person or by proxy, for each share of the Corporation's capital stock that has
voting power and that is held by such stockholder. No proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed appointment of proxy shall be irrevocable if the
appointment form states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.

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2.9. REQUIRED VOTE

When a quorum is present at any meeting of stockholders, all matters
shall be determined, adopted and approved by the affirmative vote (which need
not be by ballot) of the holders of a majority of the shares present in person
or represented by proxy at the meeting and entitled to vote with respect to the
matter, unless the proposed action is one upon which, by express provision of
statutes or of the Certificate of Incorporation, a different vote is specified
and required, in which case such express provision shall govern and control with
respect to that vote on that matter. Where a separate vote by a class or classes
is required, the affirmative vote of the holders of a majority of the shares of
such class or classes present in person or represented by proxy at the meeting
shall be the act of such class. Notwithstanding the foregoing, directors shall
be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.

2.10. INSPECTORS

Prior to any meeting of stockholders, the Board, the Chair, the
Chief Executive Officer or the President shall appoint one or more inspectors to
act at such meeting and make a written report thereof and may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at the meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall ascertain the number of shares outstanding and the
voting power of each, determine the shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors and certify their determination of
the number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons to assist them in
the performance of their duties. The date and time of the opening and closing of
the polls for each matter upon which the stockholders will vote at a meeting
shall be announced at the meeting. No ballot, proxy or vote, nor any revocation
thereof or change thereto, shall be accepted by the inspectors after the closing
of the polls. In determining the validity and counting of proxies and ballots,
the inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a stockholder who submits a
proxy by telegram, cablegram or other electronic transmission from which it can
be determined that the proxy was authorized by the stockholder, ballots and the
regular books and records of the Corporation, and they may also consider other
reliable information for the limited purposes of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
that represent more votes than the holder of a proxy is authorized by the record
owner to cast or more votes than the stockholder holds of record. If the
inspectors consider other reliable information for such purpose, they shall, at
the time they make their certification, specify the precise information
considered by them, including the person or persons from whom they obtained the

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information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.

3. DIRECTORS

3.1. POWERS

The business and affairs of the Corporation shall be managed by or
under the direction of the Board, which may exercise all such powers of the
Corporation and do all such lawful acts and things, subject to any limitation
set forth in the Certificate of Incorporation or as otherwise may be provided in
the Delaware General Corporation Law.

3.2. NUMBER AND ELECTION

Within the limits set forth in the Certificate of Incorporation, the
number of directors shall be determined by resolution of the Board. Unless the
Certificate of Incorporation provides otherwise, the directorships (i.e. the
particular seats on the Board) shall be classified into three classes
(designated as Class I, Class II and Class III) as nearly equal in number as
possible.

The directors shall be elected at the annual meeting of the
stockholders in accordance with the Certificate of Incorporation. Vacancies on
the Board shall be filled in accordance with the Certificate of Incorporation.
Once elected or chosen pursuant to the Certificate of Incorporation, a director
shall hold office until the director's successor is elected and qualified or
until the director dies, resigns or is removed; provided, however, that if the
Board decreases the number of directors constituting the whole Board and
designates a particular directorship to be eliminated due to the decrease, a
director in the eliminated directorship shall cease to hold office after the
next election of directors, unless the director is nominated and elected to
another directorship on the Board.

3.3. MEETINGS

3.3.1. REGULAR MEETINGS

Regular meetings of the Board may be held without notice at
such time and at such place as shall from time to time be
determined by the Board.

3.3.2. SPECIAL MEETINGS

Special meetings of the Board may be called by the Chair,
Chief Executive Officer or President on one day's notice to director, either
personally or by telephone, express delivery service (so that the scheduled
delivery date of the notice is at least one day in advance of the meeting),
telegram or facsimile transmission, and on five days' notice by mail

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(effective upon deposit of such notice in the mail). The notice need not
describe the purpose of a special meeting.

3.3.3. PRESENCE AT MEETINGS

Members of the Board may participate in a meeting of the
Board by any communication by means of which all participating directors can
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.

3.3.4. ACTION WITHOUT MEETING

Any action required or permitted to be taken at any meeting
of the Board may be taken without a meeting if the action is taken by all
members of the Board. The action must be evidenced by one or more written
consents describing the action taken, signed by each director, and delivered to
the Corporation for inclusion in the minute book.

3.3.5. WAIVER OF NOTICE OF MEETING

A director may waive any notice required by statute, the
Certificate of Incorporation or these Bylaws before or after the date and time
(1) stated in the notice or (2) of the meeting. Except as set forth below, the
waiver must be in writing, signed by the director entitled to the notice, and
delivered to the Corporation for inclusion in the minute book. Notwithstanding
the foregoing, a director's attendance at or participation in a meeting waives
any required notice to the director of the meeting unless the director at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting and does not thereafter vote for or assent to action taken at the
meeting.

3.4. QUORUM AND VOTE AT MEETINGS

At all meetings of the Board, a quorum of the Board consists of a
majority of the total number of directors constituting the whole Board as
established pursuant to Section 3.2 of these Bylaws. The vote of a majority of
the directors present at any meeting at which there is a quorum shall be the
act of the Board, except as may be otherwise specifically provided by statute
or by the Certificate of Incorporation or by these Bylaws.

3.5. COMMITTEES OF DIRECTORS

The Board may designate one or more committees, each committee to
consist of one or more directors. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. If a member of a committee
is absent from any meeting, or disqualified from voting thereat, the remaining
member or members present and not disqualified from voting, whether or not such
member or members constitute a quorum, may, by unanimous vote, appoint another
member of the Board to act at the meeting in the place of such absent or
disqualified member.

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Any such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority in reference to approving or
adopting, or recommending to the stockholders, any action or matter expressly
required by the Delaware General Corporation Law to be submitted to stockholders
for approval or adopting, amending or repealing any Bylaw of the Corporation;
and unless the resolution designating the committee, these Bylaws or the
Certificate of Incorporation expressly so provides, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of stock
or to adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware General Corporation Law. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board. Each committee shall keep regular minutes of its meetings and report
the same to the Board, when required. Unless otherwise specified in the Board
resolution appointing the Committee, all provisions of the Delaware General
Corporation Law and these Bylaws relating to meetings, action without meetings,
notice (and waiver thereof) and quorum and voting requirements of the Board
apply, as well, to such committees and their members.

3.6. COMPENSATION OF DIRECTORS

The Board shall have the authority to fix the compensation of
directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.

4. OFFICERS

4.1. POSITIONS

The officers of the Corporation shall be a Chair, Chief Executive
Officer, President and Secretary, and such other officers as the Board (or an
officer authorized by the Board) from time to time may appoint, including a Vice
Chair, one or more Vice Presidents (any of whom may be designated Senior Vice
President or Executive Vice President), Assistant Secretaries, Treasurer and
Assistant Treasurers. Each such officer shall exercise such powers and perform
such duties as shall be set forth below and such other powers and duties as from
time to time may be specified by the Board or by any officer(s) authorized by
the Board to prescribe the duties of such other officers. Any number of offices
may be held by the same person. Each of the Chair, Vice Chair, Chief Executive
Officer, President and/or any Vice President may execute bonds, mortgages,
contracts and other instruments and documents under the seal of the Corporation,
if required, except where required or permitted by law to be otherwise executed
and except where the execution thereof shall be expressly delegated by the Board
to some other officer or agent of the Corporation.

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4.2. CHAIR

The Chair shall (when present and unless otherwise provided by
resolution of the Board or delegated by the Chair) preside at all meetings of
the Board and stockholders, and shall ensure that all orders and resolutions of
the Board and stockholders are carried into effect.

4.3. VICE CHAIR

In the absence of the Chair or in the event of the Chair's inability
or refusal to act, the Vice Chair shall perform the duties of the Chair, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the Chair.

4.4. CHIEF EXECUTIVE OFFICER

The Chief Executive Officer shall be the chief executive of the
Corporation and shall have full responsibility and authority for management of
the operations of the Corporation and shall have and perform such other duties
as may be prescribed by the stockholders, the Board or the Executive Committee
(if any).

4.5. PRESIDENT

The President shall report directly to the Chief Executive Officer
and shall have the duties, responsibilities and authorities as may be prescribed
by the Chief Executive Officer, the Board or the Executive Committee (if any).
In addition, in the absence of the Chief Executive Officer or in the event of
the Chief Executive Officer's inability or refusal to act, the president shall
perform the duties of the Chief Executive Officer, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the Chief
Executive Officer.

4.6. VICE PRESIDENT

In the absence of the President or in the event of the President's
inability or refusal to act, the Vice President (or in the event there be more
than one Vice President, the Vice Presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the President. Unless the order is
otherwise designated, an Executive Vice President shall come in order before any
Senior Vice President and any Vice President, and a Senior Vice President shall
come in order before any Vice President.

4.7. SECRETARY

The Secretary shall have responsibility for preparation of minutes
of meetings of the Board and of the stockholders and for authenticating records
of the Corporation. The

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Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board. The Secretary or an Assistant
Secretary may also attest all instruments signed by any other officer of the
Corporation.

4.8. ASSISTANT SECRETARY

The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board (or if there shall have been no
such determination, then in the order of their election), shall, in the absence
of the Secretary or in the event of the Secretary's inability or refusal to act,
perform the duties and exercise the powers of the Secretary.

4.9. TREASURER

The Treasurer, if one is appointed, shall have responsibility for
the custody of the corporate funds and securities and shall see to it that full
and accurate accounts of receipts and disbursements are kept in books belonging
to the Corporation. The Treasurer, if one is appointed, shall render to the
Chair, the Chief Executive Officer, the President and the Board, upon request,
an account of all financial transactions and of the financial condition of the
Corporation.

4.10. ASSISTANT TREASURER

The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board (or if there shall
have been no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of the Treasurer's inability or
refusal to act, perform the duties and exercise the powers of the Treasurer.

4.11. TERM OF OFFICE

The officers of the Corporation shall hold office until their
successors are chosen and qualify or until their earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. Any
officer elected or appointed by the Board may be removed at any time, with or
without cause, by the affirmative vote of a majority of the Board.

4.12. COMPENSATION

The compensation of officers of the Corporation shall be fixed by
the Board or by any officer(s) authorized by the Board to prescribe the
compensation of such other officers.

4.13. FIDELITY BONDS

The Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise.

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5. CAPITAL STOCK

5.1. CERTIFICATES OF STOCK; UNCERTIFICATED SHARES

The shares of the Corporation shall be represented by certificates,
provided that the Board may provide by resolution that some or all of any or all
classes or series of the Corporation's stock be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until the
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board, every holder of stock represented by
certificates, and upon request every holder of uncertificated shares, shall be
entitled to have a certificate (representing the number of shares registered in
certificate form) signed in the name of the Corporation by the Chair or Vice
Chair, Chief Executive Officer, President or any Vice President, and by the
Treasurer, Secretary or any Assistant Treasurer or Assistant Secretary of the
Corporation. Any or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar whose signature or facsimile
signature appears on a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.

5.2. LOST CERTIFICATES

The Board, Chair, Chief Executive Officer, President or Secretary
may direct a new certificate of stock to be issued in place of any certificate
theretofore issued by the Corporation and alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
that the certificate of stock has been lost, stolen or destroyed. When
authorizing such issuance of a new certificate, the Board or any such officer
may, as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or such owner's legal
representative, to advertise the same in such manner as the Board or such
officer shall require and/or to give the Corporation a bond or indemnity, in
such sum or on such terms and conditions as the Board or such officer may
direct, as indemnity against any claim that may be made against the Corporation
on account of the certificate alleged to have been lost, stolen or destroyed or
on account of the issuance of such new certificate or uncertificated shares.

5.3. RECORD DATE

5.3.1. ACTIONS BY STOCKHOLDERS

In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders, the Board may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record date
shall not be more than 60 days nor less than ten days before the date of such
meeting. If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be the close of

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business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting, unless the Board fixes a new record date for the adjourned
meeting.

5.3.2. PAYMENTS

In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.

5.4. STOCKHOLDERS OF RECORD

The Corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
to receive notifications, to vote as such owner and to exercise all the rights
and powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise may be provided by the Delaware General Corporation Law.

6. INDEMNIFICATION; INSURANCE

6.1. AUTHORIZATION OF INDEMNIFICATION

Each person who was or is a party or is threatened to be made a
party to or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
by or in the right of the Corporation or otherwise (a "proceeding"), by reason
of the fact that he or she is or was a director or officer of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee, partner (limited or general) or agent of another corporation or of a
partnership, joint venture, limited liability company, trust or other
enterprise, including service with respect to an employee benefit plan, shall be
(and shall be deemed to have a contractual right to be) indemnified and held
harmless by the Corporation (and any successor to the Corporation by merger or
otherwise) to the fullest extent authorized by, and subject to the conditions
and (except as provided herein) procedures set forth in the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but any such
amendment shall not be deemed to limit or prohibit the rights of indemnification
hereunder for past acts or omissions of any such person insofar as such
amendment limits or prohibits the indemnification rights that said law permitted

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<PAGE> 13

the Corporation to provide prior to such amendment), against all expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA taxes
or penalties and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by such person in connection therewith if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal proceeding, had no reasonable cause to believe such person's
conduct was unlawful; provided, however, that the Corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person (except for a suit or action pursuant to
Section 6.2 hereof) only if such proceeding (or part thereof) was authorized by
the Board. Persons who are not directors or officers of the Corporation and are
not so serving at the request of the Corporation may be similarly indemnified in
respect of such service to the extent authorized at any time by the Board. The
indemnification conferred in this Section 6.1 also shall include the right to be
paid by the Corporation (and any successor) the expenses (including attorneys'
fees) incurred in the defense of or other involvement in any such proceeding in
advance of its final disposition; provided, however, that, if and to the extent
the Delaware General Corporation Law requires, the payment of such expenses
(including attorneys' fees) incurred by a director or officer in advance of the
final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking by or on behalf of such director or officer to
repay all amounts so paid in advance if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this Section
6.1 or otherwise; and provided further, that such expenses incurred by other
employees and agents may be so paid in advance upon such terms and conditions,
if any, as the Board deems appropriate.

6.2. RIGHT OF CLAIMANT TO BRING ACTION AGAINST THE CORPORATION

If a claim under Section 6.1 is not paid in full by the Corporation
within 60 days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring an action against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
action. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in connection with any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct that make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed or is otherwise not entitled to indemnification under Section 6.1, but
the burden of proving such defense shall be on the Corporation. The failure of
the Corporation to have made a determination (in the manner provided under the
Delaware General Corporation Law) prior to or after the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law shall not be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.

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<PAGE> 14

6.3. NON-EXCLUSIVITY

The rights to indemnification and advance payment of expenses
provided by Section 6.1 hereof shall not be deemed exclusive of any other rights
to which those seeking indemnification and advance payment of expenses may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.

6.4. SURVIVAL OF INDEMNIFICATION

The rights to indemnification and advance payment of expenses
provided by Section 6.1 hereof shall continue as to a person who has ceased to
be a director, officer, employee, partner or agent and shall inure to the
benefit of the personal representatives, heirs, executors and administrators of
such person.

6.5. INSURANCE

The Corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, partner (limited or general) or agent of another
corporation or of a partnership, joint venture, limited liability company, trust
or other enterprise, against any liability asserted against such person or
incurred by such person in any such capacity, or arising out of such person's
status as such, and related expenses, whether or not the Corporation would have
the power to indemnify such person against such liability under the provisions
of the Delaware General Corporation Law.

7. GENERAL PROVISIONS

7.1. INSPECTION OF BOOKS AND RECORDS

Any stockholder, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office or at its principal place of business.

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<PAGE> 15

7.2. DIVIDENDS

The Board may declare dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation and
the laws of the State of Delaware.

7.3. RESERVES

The directors of the Corporation may set apart, out of the funds of
the Corporation available for dividends, a reserve or reserves for any proper
purpose and may abolish any such reserve.

7.4. EXECUTION OF INSTRUMENTS

All checks, drafts or other orders for the payment of money and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board may from time to time designate.

7.5. FISCAL YEAR

The fiscal year of the Corporation shall be fixed by resolution of
the Board.

7.6. SEAL

The corporate seal shall be in such form as the Board shall approve.
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or otherwise reproduced.

* * * *

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<PAGE> 1
EXHIBIT 10.6

PROXICOM, INC.

1996 STOCK OPTION PLAN

<PAGE> 2

PROXICOM, INC.

1996 STOCK OPTION PLAN

Proxicom, Inc., a Delaware corporation (the "Company"), sets forth herein
the terms of the 1996 Stock Option Plan (the "Plan") as follows:

1. PURPOSE

Under the Plan, Awards may be granted to Eligible Employees and Eligible
Nonemployees to purchase shares of the Company's capital stock. The Plan is
designed to enable the Company to attract, retain and motivate its Employees,
consultants and others by providing for or increasing the proprietary interests
of such persons in the Company.

2. DEFINITIONS

For purposes of interpreting the Plan and related documents (including
Agreements), the following definitions shall apply:

2.1. "AFFILIATE" means the Company and any company or other trade
or business that is controlled by or under common control with the Company,
determined in accordance with the principles of Section 414(b) and 414(c) of the
Code and the regulations thereunder, or is an affiliate of the Company within
the meaning of Rule 405 of Regulation C under the Securities Act.

2.2. "AGREEMENT" means the Stock Option Agreement under which the
Grantee accepts the Award terms and conditions and receives an Award pursuant to
the Plan.

2.3. "AWARD" means individually, collectively or in tandem, an
incentive award granted under the Plan, whether in the form of Options, SARs,
Restricted Stock Awards, or performance shares, or such other form and subject
to such terms as the Committee may determine.

2.4. "AWARD PRICE" means the purchase price for each share of
Common Stock subject to an Award.

2.5. "BOARD" means the Board of Directors of the Company.

2.6. "CODE" means the Internal Revenue Code of 1986, as amended.
Any section thereof referenced in the Plan or an Agreement shall include the
rules and regulations thereunder, and any successor provisions thereto.

2.7. "COMMITTEE" means the Compensation Committee of the Board,
which must consist of no fewer than two members of the Board who satisfy the
definition under Rule 16b-3 of the Exchange Act for "nonemployee director".

2.8. "COMMON STOCK" means common stock, par value $.01, issued by
the Company.

<PAGE> 3

2.9. "COMPANY" means Proxicom, Inc., a Delaware corporation, any
Affiliates and any other entity as determined by the Committee.

2.10. "EFFECTIVE DATE" means August 26, 1996, the date of adoption
of the Plan by the Board.

2.11. "ELIGIBLE EMPLOYEE" means any Employee of the Company who
the Committee selects to receive an Award.

2.12. "ELIGIBLE NONEMPLOYEE" means any former Employee, consultant
or advisor to the Company who the Committee selects to receive an Award.

2.13. "EMPLOYEE" means, for the purposes of the Plan, an
individual who is an employee of the Company.

2.14. "EMPLOYER" means the Company.

2.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
now in effect or as hereafter amended. Any section thereof referenced in the
Plan or an Agreement shall include the rules and regulations thereunder, and any
successor provisions thereto.

2.16. "FAIR MARKET VALUE" means the value of each share of Common
Stock subject to the Plan determined as follows: (a) if on the Grant Date or
other determination date the shares of Common Stock are listed on an established
national or regional stock exchange, are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or are publicly
traded on an established securities market, the Fair Market Value of the shares
of Common Stock shall be the closing price of the shares of Common Stock on such
exchange or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading day immediately preceding the Grant
Date or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such trading
day); or (b) if no sale of the shares of Common Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares of Common Stock are not listed on such an exchange,
quoted on such System or traded on such a market, Fair Market Value shall be
determined by the Board or Committee in good faith.

2.17. "GRANT DATE" means for a particular Award (i) the date as of
which the Committee approves the Award or (ii) any other date specified by the
Committee, if any.

2.18. "GRANTEE" means an individual to whom one or more Awards
have been granted.

2.19. "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock
option within the meaning of section 422 of the Code. Any Option that is not
specifically designated as an Incentive Stock Option shall under no
circumstances be considered an Incentive Stock Option.

2.20. "NONQUALIFIED STOCK OPTION" means any Option that does not
qualify under section 422 of the Code.

2.21. "OPTION" means an option granted by the Company to purchase
Common Stock pursuant to the provisions of the Plan, including ISOs,
Nonqualified Stock Options and Reload Options.

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<PAGE> 4

2.22. "OPTION PERIOD" means the period during which Options may be
exercised as defined in section 13.

2.23. "OPTION TERM" means the period defined under section 13
herein.

2.24. "PLAN" means the Proxicom, Inc. 1996 Stock Option Plan, as
amended.

2.25. "PUBLICLY TRADED" means that time when the shares of Common
Stock are listed on an established national or regional stock exchange, are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or are publicly traded on an established securities
market

2.26. "RELOAD OPTION" means the right to receive a further Option
for a number of shares of Common Stock surrendered by the Grantee upon exercise
of the original Option.

2.27. "RESTRICTED PERIOD" means the period of time from the date
of grant of Restricted Stock until the lapse of restrictions attached thereto
under the terms of the Agreement granting such Restricted Stock, pursuant to the
provisions of the Plan or by action of the Committee.

2.28. "RESTRICTED STOCK" shall mean an Award granted by the
Committee entitling the Grantee to acquire, at no cost or for a purchase price
determined by the Committee at the time of grant, shares of Common Stock which
are subject to restrictions in accordance with the provisions hereof.

2.29. "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.

2.30. "STOCK APPRECIATION RIGHT" or "SAR" means a grant entitling
the Grantee to receive an amount in cash or shares of Common Stock or a
combination thereof having a value equal to (or if the Committee shall so
determine at the time of a grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common Stock on the date of grant (or over the Award Price, if the
SAR was granted in tandem with an Option), multiplied by the number of shares
with respect to which the SAR shall have been exercised, with the Committee
having sole discretion to determine the form or forms of payment at the time of
grant of the SAR.

2.31. "STOCK AWARDS" means any Award which is in the form of
Restricted Stock and any outright grants of Common Stock approved by the
Committee pursuant to the Plan.

2.32. "STOCKHOLDER" means a holder of record of at least one share
of the voting stock of the Company.

2.33. "TERMINATION OF EMPLOYMENT" means that event when a person
is no longer employed by the Company or any Affiliate as an employee, advisor,
consultant or otherwise. The Committee may in its discretion determine (a)
whether any leave of absence constitutes a termination of employment for
purposes of the Plan; (b) the impact, if any, of any such leave of absence on
awards theretofore made under the Plan; and (c) when a change in a nonemployee's
association with the Company constitutes a termination of employment for
purposes of the Plan. Such determinations of the Committee shall be final,
binding and conclusive.

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<PAGE> 5

3. ADMINISTRATION

3.1 ADMINISTRATION OF THE PLAN

Prior to the time that the securities of the Company become Publicly Traded, the
Plan shall be administered by the Board (unless and until the Board appoints the
Committee and the members thereof to administer the Plan), in which case the
term "Committee" when used herein with respect to the administration of the Plan
shall be deemed to mean the Board. After the securities of the Company become
Publicly Traded, the Plan shall be administered by the Committee.

3.2 SCOPE OF AUTHORITY

The Committee shall have the full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award
granted or Agreement entered into hereunder, and all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan, any Award or Agreement entered into hereunder.
Actions of the Committee shall be taken by the vote of a majority of its
members; provided, however, that the Plan shall be administered so that Awards
granted under the Plan will qualify for the benefits provided by Rule 16b-3 (or
any successor rule) under the Exchange Act and section 162(m) of the Code, and
the regulations thereunder to the extent the Committee intends such grant to
quality under section 162(m). The interpretation and construction by the
Committee of any provision of the Plan or of any Award granted or Agreement
entered into hereunder shall be final and conclusive.

3.3 NO LIABILITY

No member of the Board or of the Committee shall be liable for any action or
determination made, or any failure to take or make an action or determination,
in good faith with respect to the Plan or any Option granted or Agreement
entered into hereunder.

4. AWARDS; COMMON STOCK

4.1 Awards

Awards granted under the Plan may be Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock, Stock Appreciation Rights, and performance shares,
all as more fully set forth herein. No Incentive Stock Option may be granted to
a person who is not an employee of the Company on the date of grant. Unless
otherwise specified in a particular grant, Awards granted under the Plan are
intended to qualify as performance-based compensation for the purposes of
section 162(m) of the Code.

4.2 COMMON STOCK

The stock that may be issued pursuant to Awards granted under the Plan shall be
Common Stock, which shares may be treasury shares or authorized but unissued
shares. The number of shares of Common Stock that may be issued pursuant to
Awards granted under the Plan shall not exceed in the aggregate 7,000,000 shares
of Common Stock, which number of shares is subject to adjustment and increase.
If any Award expires, terminates or is terminated for any reason prior to
exercise in full, the shares of Common Stock that were subject to the
unexercised portion of such Award shall be available for future Awards granted
under the Plan. When the exercise price for an Award under this Plan is paid
with previously outstanding shares or with shares as to which the Award is being
exercised, as permitted in section 13, only the number of shares of stock issued
net of the shares of stock tendered shall be deemed delivered

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<PAGE> 6

for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. Shares of stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or obligations to grant future
awards) under the plans or arrangements of another entity shall not reduce the
maximum number of shares of stock available for delivery under the Plan, to the
extent that such settlement, assumption or substitution as a result of the
Company or an Affiliate acquiring another entity (or an interest in another
entity).

5. ELIGIBILITY

Awards may be granted under the Plan to all current and former officers and
executive, administrative, technical or professional employees of the Company;
to current and former consultants of the Company; and to any other individual
whose participation in the Plan is determined to be in the best interests of the
Company by the Committee. An individual may hold more than one Award, subject to
such restrictions as are provided herein.

6. EFFECTIVE DATE AND PLAN TERM

6.1 EFFECTIVE DATE

The Plan is effective as of August 26, 1996, the date of adoption by the Board,
subject to Stockholders' approval of the Plan within one year of such Effective
Date by a majority of the votes cast at a duly held meeting of the Stockholders
of the Company at which a quorum representing a majority of all outstanding
Common Stock is present, either in person or by proxy, and voting on the matter,
or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Company and in a manner that
satisfies the requirements of section 162(m) of the Code; provided, however,
that upon approval of the Plan by the Stockholders of the Company, all Awards
granted under the Plan on or after the Effective Date shall be fully effective
as if the Stockholders of the Company had approved the Plan on the Effective
Date. If the Stockholders fail to approve the Plan within one year of such
Effective Date, any Awards granted hereunder shall be null, void and of no
effect.

6.2 TERM

The Plan shall terminate on the date ten (10) years after the Effective Date.

7. GRANT OF AWARDS

7.1 AWARDS

The Committee shall determine the type or types of Awards to be made to each
Grantee. Awards may be granted singly, in combination or in tandem subject to
restrictions set forth herein. Without limiting the foregoing, the Committee may
at any time amend the terms of outstanding Awards or issue new Awards in
exchange for the surrender and cancellation of outstanding Awards. The date on
which the Committee approves the Award shall be considered the date on which
such Award is granted, unless the Committee approves a separate grant date. The
terms and conditions of the Awards granted under this section shall be
determined from time to time by the Committee, as set forth in the Agreement,
and the conditions herein.

7.2 NONQUALIFIED OPTIONS

The Award Price for each share of Common Stock issuable pursuant a Nonqualified
Stock Option shall be set by the Committee, but may not be less than par value.

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<PAGE> 7

7.3 INCENTIVE STOCK OPTIONS

The Award Price for each share of Common Stock issuable pursuant to an Incentive
Stock Option may not be less than the Fair Market Value on the Grant Date.

7.4 INCENTIVE STOCK OPTIONS - SPECIAL RULES

Options granted in the form of ISOs shall be subject to the following
provisions:

(a) Grant. No Incentive Option shall be granted pursuant to
this plan more than ten (10) years after the Effective
Date.

(b) Annual Limit. An Option shall constitute an ISO only to the
extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the Common Stock with
respect to which ISOs are exercisable for the first time by
any Grantee during any calendar year under the Plan and all
other plans of the Grantee's employer Company and its
parent and Affiliates does not exceed $100,000. This
limitation shall be applied by taking Options into account
in the order in which such Options were granted.

(c) 10% Stockholder. If any Grantee to whom an ISO is to be
granted pursuant to the provisions of the Plan is, on the
date of grant, an individual described in section 422(b)(6)
of the Code, then the following special provisions shall be
applicable to the Option granted to such individual:

(i) the Award Price of shares subject to such ISO shall
not be less than 110% of the Fair Market Value of
Common Stock on the date of grant; and

(ii) the Option shall not have a term in excess of five
(5) years from the date of grant.

7.5 CHANGES IN LAW

The Committee may establish rules with respect to, and may grant to Eligible
Employees and Eligible Nonemployees, Options to comply with any amendment to the
Code made after the Effective Date.

7.6 RELOAD OPTIONS

Without in any way limiting the authority of the Committee to make Awards
hereunder, the Committee shall have the authority to grant Reload Options. Any
such Reload Option shall be subject to such other terms and conditions as the
Committee may determine. Notwithstanding the above, (i) the Committee shall have
the right, in its sole discretion, to withdraw a Reload Option to the extent
that the grant thereof will result in any adverse accounting consequences to the
Company and (ii) no additional Reload Options shall be granted upon the exercise
of a Reload Option.

8. AGREEMENTS

All Awards granted pursuant to the Plan shall be evidenced by written Agreements
in such form or forms as the Committee shall from time to time determine.
Agreements covering Awards need not contain

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<PAGE> 8

similar provisions; provided, however, that all such Agreements shall comply
with the terms of the Plan and all applicable laws and regulations. By accepting
an Award pursuant to the Plan, a Grantee thereby agrees that the Award shall be
subject to all of the terms and provisions of the Plan and the applicable
Agreement.

9. STOCK APPRECIATION RIGHTS

The Committee shall have the authority to grant SARs to Eligible Employees and
Eligible Nonemployees either alone or in connection with an Option. SARs granted
in connection with an Option shall be granted either at the time of grant of the
Option or by amendment to the Option. SARs granted in connection with an Option
shall be subject to the same terms and conditions as the related Option and
shall be exercisable only at such times and to such extent as the related Option
is exercisable. An SAR granted in connection with an Option may be exercised
only when the Fair Market Value of the Common Stock of the Company exceeds the
Award Price of the related Option. An SAR granted in connection with an Option
shall entitle the Grantee to surrender to the Company unexercised the related
Option, or any portion thereof and to receive from the Company cash and/or
shares of Common Stock equal to that number of shares of Common Stock having an
aggregate value equal to the excess of (i) the Fair Market Value of one share of
Common Stock on the day of the surrender of such Option over (ii) the Award
Price per share of Common Stock multiplied by (iii) the number of shares of
Common Stock that may be exercised under the Option, or surrendered; provided,
however, that no fractional shares shall be issued. An SAR granted singly shall
entitle the Grantee to receive the excess of (i) the Fair Market Value of a
share of Common Stock on the date of exercise over (ii) the Fair Market Value of
a share of Common Stock on the date of grant of the SAR, multiplied by (iii) the
number of SARs exercised. Payment of any fractional shares of Common Stock shall
be made in cash.

10. RESTRICTED STOCK

The Committee may in its sole discretion grant Restricted Stock to Eligible
Employees and Eligible Nonemployees, subject to the following provisions. At the
time a grant of Restricted Stock is made, the Committee shall establish a period
of time (the "Restricted Period") applicable to such Restricted Stock. Each
grant of Restricted Stock may be subject to a different Restricted Period. The
Committee may, in its sole discretion, at the time a grant of Restricted Stock
is made, prescribe restrictions in addition to or other than the expiration of
the Restricted Period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock. Such performance objectives shall be established in writing by
the Committee prior to the ninetieth day of the year in which the grant is made
and while the outcome is substantially uncertain. Performance objectives shall
be based on Common Stock price, market share, sales, earnings per share, return
on equity or costs.

Performance objectives may include positive results, maintaining the status quo
or limiting economic losses. The Committee also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock. Restricted Stock may not
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the Restricted Period or prior to the satisfaction of any other
restrictions prescribed by the Committee with respect to such Restricted Stock.

10.1 RESTRICTIONS

A Common Stock certificate representing the number of shares of Restricted Stock
granted shall be held in custody by the Company for the Grantee's account. The
Grantee shall have all rights and privileges of a Stockholder as to such
Restricted Stock, including the right to receive dividends and the right to vote
such shares, except that subject to the provisions below, the following
restrictions shall apply: (i) The

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<PAGE> 9

Grantee shall not be entitled to delivery of the certificate until the
expiration of the Restricted Period; (ii) none of the shares of Restricted Stock
may be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of during the Restricted Period; (iii) the Grantee shall, if requested by the
Company, execute and deliver to the Company, a Common Stock power endorsed in
blank. If a Grantee ceases to be an Employee of the Company prior to the
expiration of the Restricted Period applicable to such shares, shares of
Restricted Stock still subject to restrictions shall be forfeited unless
otherwise determined by the Committee, and all rights of the Grantee to such
shares shall terminate without further obligation on the part of the Company.

10.2 DELIVERY OF RESTRICTED SHARES

At the end of the Restricted Period, a Common Stock certificate for the number
of shares of Restricted Stock with respect to which the restrictions have lapsed
shall be delivered (less any amount in satisfaction of any withholding
obligation), free of all such restrictions, except applicable securities laws,
to the Grantee. The Company shall not be required to deliver any fractional
shares of Common Stock but shall pay, in lieu thereof, the Fair Market Value (as
of the date the restrictions lapse) of such fractional share to the Grantee.
Notwithstanding the foregoing, the Committee may authorize the delivery of the
Restricted Stock to a Grantee during the Restricted Period, in which event any
Common Stock certificates in respect of any shares of Restricted Stock thus
delivered to a Grantee during the Restricted Period applicable to such shares
shall bear an appropriate legend referring to the terms and conditions,
including the restrictions, applicable thereto.

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<PAGE> 10

11. PERFORMANCE SHARES

The Committee may in its sole discretion grant performance share awards to such
individuals and under such terms and conditions as the Committee shall
determine, subject to the provisions of the Plan. Such an award shall entitle a
Grantee to acquire shares of Common Stock of the Company, or to be paid the
value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of or
in connection with any other Award under the Plan. The Grantee of a performance
share award will have the rights of a shareholder only as to shares for which a
certificate has been issued pursuant to the award and not with respect to any
other shares subject to the award. Except as otherwise may be provided by the
Committee at any time prior to termination of employment, the rights of a
Grantee of a performance share award shall automatically terminate upon the
Grantee's Termination of Employment for any reason.

12. AWARD PRICE

The purchase price of each share of Common Stock subject to an Award shall be
fixed by the Committee and stated in each Agreement.

13. TERM, VESTING AND EXERCISE OF AWARDS

13.1 TERM

Each Award granted under the Plan shall terminate and all rights to purchase
Common Stock thereunder shall cease upon the expiration of ten (10) years from
the Grant Date, as otherwise provided herein, or on such date prior thereto as
may be fixed by the Committee and stated in the Agreement relating to such
Award; provided, however, that in the event the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to Common Stock ownership of
more than 10 percent), an Option granted to such Grantee which is intended to be
an Incentive Stock Option shall in no event be exercisable after the expiration
of five years from the Grant Date (collectively, the "Option Term").

13.2 VESTING

Unless otherwise expressly provided in an Agreement and approved by the
Committee, Options granted hereunder shall become vested and exercisable at the
following schedule if the Grantee is an Employee on the relevant anniversary
date and has not experienced a Termination of Employment prior to such
anniversary date: no more than 25% of the total number of shares optioned on the
first anniversary of the Grant Date; no more than 50% of the total number of
shares optioned on the second anniversary of the Grant Date; no more than 75% of
the total number of shares optioned on the third anniversary of the Grant Date;
and 100% of the total number of shares optioned on and after the fourth
anniversary of the Grant Date. All Awards that do not vest are forfeited.

13.3 EXERCISE BY GRANTEE

Only the Grantee receiving an Award (or, in the event of the Grantee's legal
incapacity or incompetency, the Grantee's guardian or legal representative, and
in the case of the Grantee's death, the Grantee's estate) may exercise the
Award.

13.4 LIMITATIONS ON EXERCISE AND SALE; FORFEITURE

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The Committee, subject to the terms and conditions of the Plan, may in its sole
discretion provide in an Agreement that an Option may not be exercised in whole
or in part for any period or periods of time during which such Option is
outstanding as the Committee shall determine (and as set forth in the Agreement
relating to such Option). Any such limitation on the exercise of an Option
contained in any Agreement may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time after the
date of grant of such Option. The Committee may also include such other terms
and conditions as it deems effect the purpose of the Plan and are in the best
interest of the Company.

13.5 METHOD OF EXERCISE

(a) Payment. An Award that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office addressed to the attention of the Committee (or such other person
identified in an Agreement), of written notice of exercise, which notice shall
specify the number of shares for which the Award is being exercised, and shall
be accompanied by payment in full of the Award Price of the shares of Common
Stock for which the Award is being exercised. Payment of the Award Price for the
shares of Common Stock purchased pursuant to the exercise of an Award shall be
made, as determined by the Committee and set forth in the Agreement pertaining
to an Award, (i) in cash or by certified check payable to the order of the
Company; (ii) to the extent the Company is not prohibited from purchasing or
acquiring shares of Common Stock, through the tender to the Company of shares of
Common Stock, which shares shall be valued, for purposes of determining the
extent to which the Award Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in sections 13.5(a)(i) and (ii) hereof, or such other method permitted
by the Committee; provided, however, that the Committee may in its discretion at
any time impose such limitations or prohibitions on the use of shares of Common
Stock to exercise Awards as it deems appropriate. If and while payment with
Common Stock is permitted for the exercise of an Award granted under this Plan
in accordance with the foregoing provision, the instrument evidencing the Award
may also provide that, in lieu of using previously outstanding shares therefore,
the Grantee may pay the Award Price by directing the Company to retain so many
of the underlying shares as have a market value on the date of exercise equal to
the Award Price, and any such exercise will cause the surrender and cancellation
of the Award to the extent of the shares so retained by the Company.

As soon as practical after receipt of the foregoing written notice of exercise,
full payment of the Award Price, and full payment of all amounts due to satisfy
any applicable tax withholding requirements (which the Grantee shall be required
to pay in cash, rather than by application of shares of Common Stock otherwise
deliverable upon exercise of the Award), the Company shall deliver to the
Grantee, in the Grantee's name, a certificate evidencing the number of shares of
Common Stock purchased upon exercise of the Award. An attempt to exercise any
Award granted hereunder other than as set forth above shall be invalid and of no
force and effect.

An Agreement may provide that on and after the date shares of Common Stock are
publicly traded on an established securities market, payment in full of the
Award Price need not accompany the written notice of exercise provided the
notice directs that the Common Stock certificate or certificates for the shares
for which the Award is exercised be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the Award and, at the
time such Common Stock certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Award Price.

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(b) Rights. Except as provided in section 10.1, an individual
holding or exercising an Award shall have none of the rights of a Stockholder
until the shares of Common Stock covered thereby are fully paid and issued to
such individual and, except as provided in section 21 hereof, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of such issuance.

13.6 FINANCIAL ASSISTANCE

The Company is vested with authority under this Plan to assist any Employee to
whom an Award is granted hereunder in the payment of the Award Price payable on
exercise of the Award, by lending part or all of the amount of such Award Price
to such Employee on such terms and at such rates of interest and upon such
security (or no security) as shall have been authorized by or under authority of
the Committee. The Company is under no obligation to provide such assistance,
however.

14. TRANSFERABILITY OF AWARDS; COMPANY'S RIGHT OF FIRST PURCHASE

14.1 TRANSFERABILITY

Unless otherwise expressly provided in an Agreement, no Award granted under the
Plan may be sold, transferred, pledged, assigned, hypothecated or otherwise
alienated, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined under the Code or
the Employee Retirement Income Security Act, as amended, or the rules
thereunder. The designation of a beneficiary with respect to an Award shall not
constitute a transfer for purposes of this section.

14.2 RIGHT OF FIRST PURCHASE

While and so long as the securities of the Company have not been Publicly Traded
for at least ninety (90) days, any Common Stock issued on exercise of any Award
granted under this Plan shall be subject to the Company's right of first
purchase. By virtue of that right, (a) such Common Stock may not be transferred
during the Grantee's lifetime to any person other than the Grantee's spouse,
brothers/sisters, parents or other ancestors, and children and other direct
descendants of that individual or of his or her spouse ("Immediate Family"); a
partnership whose members are the Grantee and/or members of the Grantee's
Immediate Family; or a trust for the benefit of the Grantee and/or members of
the Grantee's Immediate Family, unless such transfer occurs within fifteen (15)
days following the expiration of thirty (30) days after the Company has been
given a written notice which correctly identified the prospective transferee or
transferees and which offered the Company an opportunity to purchase the Common
Stock at its Fair Market Value in cash, and such offer was not accepted within
thirty (30) days after the Company's receipt of that notice; and (b) upon the
Grantee's death, the Company shall have the right to purchase all or some of
such Common Stock at its Fair Market Value within nine (9) months after the date
of death. This right of first purchase shall continue to apply to any such
Common Stock after the transfer during the Grantee's lifetime of that Common
Stock to a member of the Grantee's Immediate Family or to a family partnership
or trust as aforesaid, and after any transfer of that Stock with respect to
which the Company expressly waived its right of first purchase without also
waiving it as to any subsequent transfers thereof, but it shall not apply after
a transfer of that Common Stock with respect to which the Company was offered
but did not exercise or waive its right of first purchase or more than nine
months after the Grantee's death. The Company may assign all or any portion of
its right of first purchase to any one or more of its Stockholders, or to a
pension, retirement or savings plan for Employees of the Company, who may then
exercise the right so assigned. Stock certificates evidencing Common Stock
subject to this right of first purchase shall be appropriately legended to
reflect that right.

15. TERMINATION OF EMPLOYMENT

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In the case of Termination of Employment, unless otherwise provided in an
Agreement and other than upon death or Disability (as hereafter defined), Awards
otherwise exercisable on the date of the Termination of Employment will remain
exercisable for a period of three (3) months. If, on the date of the Termination
of Employment, the Grantee is not entitled to exercise the Grantee's entire
Award, the Common Stock covered by the unexercisable portion of the Award shall
revert to the Plan. If, after Termination of Employment, the Grantee does not
exercise the Award within the time prescribed, the Award shall terminate and the
Common Stock covered by such Award shall revert to the Plan. For purposes of the
Plan, a Termination of Employment with the Company or an Affiliate shall not be
deemed to occur if the Grantee is immediately thereafter employed with the
Company or any Affiliate.

16. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

16.1 DEATH

If a Grantee dies while employed by the Company or an Affiliate, the executors,
administrators, legatees or distributees of such Grantee's estate shall have the
right (subject to the general limitations on exercise set forth in section 13
hereof), at any time within one (1) year (unless otherwise provided in an
Agreement) after the date of such Grantee's death and prior to the end of the
Award Term, to exercise any Award held by such Grantee at the date of such
Grantee's death, to the extent such Award was otherwise exercisable immediately
prior to such Grantee's death.

16.2 DISABILITY

If a Grantee experiences a Termination of Employment with the Company or an
Affiliate by reason of a "permanent and total disability" within the meaning of
Section 22(e)(3) of the Code ("Disability") of such Grantee, then such Grantee
shall have the right (subject to the general limitations on exercise set forth
in section 13 hereof), at any time within one (1) year (unless otherwise
provided in an Agreement) after such Termination of Employment and prior to the
expiration of the Award Term, to exercise, in whole or in part, any Award held
by such Grantee at the date of such Termination of Employment, to the extent
such Award was exercisable immediately prior to such Termination of Employment.

17. USE OF PROCEEDS

The proceeds received by the Company from the sale of Common Stock pursuant to
Awards granted under the Plan shall constitute general funds of the Company.

18. SECURITIES LAWS

The Company shall not be required to sell or issue any Award or shares of Common
Stock under any Award if the sale or issuance of such Award or shares would
constitute a violation of any provisions of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to the Award upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Award.
Specifically in connection with the Securities Act, upon exercise of any Award,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Award, the Company shall

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<PAGE> 14

not be required to sell or issue such shares unless the Company has received
evidence satisfactory to the Company that the Grantee may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Company shall be final and conclusive.
The Company may, but shall in no event be obligated, to register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Award or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Award shall not be exercisable unless and until
the shares of Common Stock covered by such Award are registered or are subject
to an available exemption from registration, the exercise of such Award (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

19. EXCHANGE ACT: RULE 16B-3

19.1 GENERAL

The Plan is intended to comply with Rule 16b-3 (and any successor thereto)
("Rule 16b-3") under the Exchange Act. Any provision or action inconsistent with
Rule 16b-3 shall, to the extent permitted by law and determined to be advisable
by the Committee, be inoperative and void.

19.2 RESTRICTION ON TRANSFER OF COMMON STOCK

Unless otherwise permitted under an exemption under Rule 16b-3, no officer or
other "insider" of the Company subject to section 16 of the Exchange Act shall
be permitted to sell Common Stock (which such "insider" had received upon
exercise of an Award) during the six months immediately following the grant of
such Award.

20. AMENDMENT AND TERMINATION

The Board may, at any time and from time to time, amend, suspend or terminate
the Plan or an Agreement governing any Award that has not vested. Except as
permitted under this Plan, no amendment, suspension or termination of the Plan
or an Agreement shall, without the consent of the Grantee, alter or impair
rights or obligations under any vested Award.

21. EFFECT OF CHANGES IN CAPITALIZATION

21.1 CHANGES IN COMMON STOCK

If the shares of Common Stock are changed into or exchanged for a different
number or kind of shares or securities of the Company, whether through
reorganization, recapitalization, reclassification, stock dividend or other
distribution, split, reverse split, combination of interest, exchange of
interests, change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares of
Common Stock subject to the Plan and in the number, kind and per share exercise
price of shares of Common stock subject to unexercised Awards, or portions
thereof granted prior to any such change. In the event of any such adjustment in
an outstanding Award, the Grantee thereafter shall have the right to purchase
the number of shares of Common Stock under such Award at the per share price, as
so adjusted, which the Grantee could purchase at the total purchase price
applicable to the Award immediately prior to such adjustment.

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21.2 REORGANIZATION WITH COMPANY SURVIVING

Subject to section 20, if the Company shall be the surviving entity in any
reorganization, merger, consolidation or the like of the Company with one or
more other entities, any Award theretofore granted pursuant to the Plan shall
apply to the securities resulting immediately following such reorganization,
merger, consolidation or the like, with a corresponding proportionate adjustment
of the number of shares and Award Price per share so that the aggregate number
of shares and Award Price thereafter shall be the same as the aggregate share
number and Award Price immediately prior to such reorganization, merger,
consolidation or the like.

21.3 OTHER REORGANIZATIONS; SALE OF ASSETS OR COMMON STOCK

Unless otherwise provided in an Agreement, upon the dissolution or liquidation
of the Company, or upon a merger, consolidation or reorganization of the Company
with one or more other entities in which the Company is not the surviving
entity, or upon a sale of substantially all of the assets of the Company to
another entity, or upon any transaction (including, without limitation, a merger
or reorganization in which the Company is the surviving entity) approved by the
Board that results in any person or entity (other than persons who are holders
of Common Stock of the Company at the time the Plan is approved by the
Stockholders and other than an Affiliate) owning fifty (50) percent or more of
the combined voting power of all classes of Common Stock of the Company, the
Plan and all Awards outstanding hereunder shall terminate on the date of such
transaction, except to the extent provision is made in connection with such
transaction for the continuation of the Plan and/or the assumption of the Awards
theretofore granted, or for the substitution for such Awards of new awards
covering the Common Stock of a successor entity, or a parent or Affiliate
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Awards theretofore granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan, each Grantee shall have the right (subject to the
general limitations on exercise set forth in section 13 hereof and except as
otherwise specifically provided in the Agreement relating to such Award),
immediately prior to the occurrence of such termination and during such period
occurring prior to such termination as the Committee in its sole discretion
shall designate, to exercise such Award in whole or in part, to the extent such
Award was otherwise exercisable at the time such termination occurs. The
Committee shall send written notice of an event that will result in such a
termination to all Grantees not later than the time at which the Company gives
notice thereof to its stockholders. Notwithstanding anything herein to the
contrary, the Committee in its discretion may provide for the acceleration of
the vesting of any Award in the case of a merger, a significant sale of the
common stock or assets of the Company (as determined by the Committee).

21.4 ADJUSTMENTS

Adjustments under this Section 21 relating to Common Stock or securities of the
Company shall be made by the Committee, whose determination in that respect
shall be final and conclusive. No fractional shares of Common Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.

21.5 NO LIMITATIONS ON COMPANY

The grant of an Award pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.

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22. WITHHOLDING

The Company or an Affiliate may be obligated to withhold federal and local
income taxes and Social Security taxes to the extent that an Grantee realizes
income in connection with the exercise of an Award. The Company or a Affiliate
may withhold amounts needed to cover such taxes from payments otherwise due and
owing to an Grantee, and upon demand the Grantee will promptly pay to the
Company or a Affiliate having such obligation any additional amounts as may be
necessary to satisfy such withholding tax obligation. Such payment shall be made
in cash or cash equivalents. The Company may also withhold shares or amounts
payable to a Grantee pursuant to court order.

23. DISCLAIMER OF RIGHTS

The existence of this Plan does not, and no provision in the Plan or in any
Award granted or Agreement entered into pursuant to the Plan shall be construed
to, create an employment contract; confer upon any individual the right to
receive an Award; permit a Grantee to remain in the employ of the Company or
alter a Grantee's status as an at-will employee; or allow the Grantee to
interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. The obligation of the Company to pay any benefits pursuant to the Plan
shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.

24. NONEXCLUSIVITY

Neither the adoption of the Plan nor the submission of the Plan to the
Stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of Common Stock options otherwise
than under the Plan.

25. GOVERNING LAW

This Plan and all Agreements shall be executed and performed under, and all
Awards to be granted hereunder shall be provided under and governed by, the laws
of the Commonwealth of Virginia (but not including the choice of law rules
thereof). Any disputes concerning the Plan or an Agreement shall be brought
before the federal or state courts of the Commonwealth of Virginia.

26. BINDING EFFECT

Subject to all restrictions provided in this Plan and all applicable laws, this
Plan and all Agreements hereunder shall be binding on and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

27. DISMISSAL FOR CAUSE

Notwithstanding any other provision in this Plan or an Agreement, in the event
that a Grantee's employment is terminated by reason of a Dismissal for Cause,
the Award shall expire on the day immediately preceding the date of the
Termination of Employment. "Dismissal for Cause" means

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Termination of Employment for: (a) theft or embezzlement of property of the
Company; (b) fraud or other wrongdoing against the Company; (c) a conviction of
a crime of moral turpitude; (d) receipt of consideration or acceptance of
benefits from, or the participation in business activities with, persons doing
business with the Company in violation of the business ethics of the Company;
(e) malicious destruction of property of the Company; (f) improper disclosure of
confidential information of the Company; (g) actively engaging in or working for
a business in competition with the Company while employed by the Company; or (h)
such other reason that has a material adverse effect on the Company. The
Committee shall have the sole discretion to determine whether a Termination of
Employment has occurred by reason of Dismissal for Cause.

28. MISCELLANEOUS REQUIREMENTS

28.1 OTHER AWARD PROVISIONS

Awards granted under the Plan shall contain such other terms and provisions that
are not inconsistent with this Plan as the Committee may authorize in its
discretion, providing for (a) special vesting schedules governing the
exercisability of an Award; (b) provisions for acceleration of such vesting
schedules in certain events; (c) arrangements whereby the Company may fulfill
any tax obligations for Employees in connection with an Award; (d) provisions
imposing restrictions upon the transferability of stock acquired on exercise of
such Award, whether required by this Plan or applicable securities laws or
imposed for other reasons; and (e) provisions regarding the termination or
survival of any such Award upon the Grantee's death, retirement or other
termination of employment and the extent, if any, to which any such Award may be
exercised after such event. Any dispute concerning an Award must be brought in
the federal or state courts of Virginia. In interpreting any inconsistencies,
gaps or discrepancies between or among any documents, the Plan shall control
over an Agreement (unless there is an express specific exception in an Agreement
to the Plan), and an Agreement shall control over any letter or other notice or
document describing a grant of an Award.

28.2 CONSENTS

If the Committee shall at any time determine that any Consent (as hereafter
defined) is necessary or desirable as a condition of, or in connection with, the
granting of any Award under the Plan, the issuance or purchase of shares or
other rights thereunder, or the taking of any other action thereunder ("Plan
Action"), then such Plan Action shall not be taken, in whole or in part, unless
and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee. "Consent" with respect to any Plan Action means
(a) any and all listings, registrations or qualifications in respect thereof
upon any securities exchange or under any federal, state or local law, rule or
regulation; (b) any and all written agreements and representations by the
Grantee with respect to the disposition of shares of Common Stock, or with
respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration, or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made; and (c) any and all other
consents, clearances and approvals in respect of a Plan Action.

28.3 NOTICE

Any notice required to be given to the Company hereunder shall be in writing and
shall be addressed to Corporate Secretary, Proxicom, Inc. 11600 Sunrise Valley
Drive, Reston, Virginia 20191, or at such other address the Company may
hereafter designate to the Grantee. Any notice to be given to the Grantee
hereunder shall be addressed to the Grantee at the address set forth beneath
his/her signature hereto, or as such other address as the Grantee may hereafter
designate to the Company by notice as

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provided herein. A notice shall be deemed to have been duly given when
personally delivered or mailed by registered mail or certified mail to the party
entitled to receive it.

28.4 NOTICE OF SECTION 83(b) ELECTION AND DISQUALIFYING
DISPOSITION

If any Grantee shall, in connection with the acquisition of Common Stock make
the election permitted under section 83(b) of the Code (i.e., an election to
include in gross income in the year of transfer the amounts specified in section
83(b)), such Grantee shall notify the Company within ten (10) days of filing the
notice of election with the Internal Revenue Service. Further, Grantee must
notify the Company of any disposition of any Common Stock issued pursuant to the
exercise of such Award under the circumstances described in section 421(b) of
the Code (relating to certain disqualifying dispositions) within 10 days of such
disposition.

The Plan was duly adopted and approved by the Board on August 26, 1996 and was
duly adopted and approved by the Stockholders of the Company on August 26, 1996.

/s/ Christopher Capuano
-----------------------

Christopher Capuano
Proxicom, Inc.
General Counsel and Secretary

<PAGE> 1
EXHIBIT 10.7

PROXICOM, INC.

1997 STOCK OPTION PLAN

FOR

NONEMPLOYEE DIRECTORS

1. ESTABLISHMENT, PURPOSE, DURATION

(a) Establishment of the Plan. Proxicom, Inc. (the "Company") hereby
establishes this 1997 Stock Option Plan for Nonemployee Directors (the "Plan").
The Plan permits the grant of Nonqualified Stock Options, subject to the terms
set forth herein.

(b) Purpose of the Plan. The purpose of the Plan is to promote the
interests of the Company by linking the personal interests of Nonemployee
Directors to those of the Company stockholders and to attract and retain
Nonemployee Directors of the highest caliber.

(c) Duration of the Plan. The Plan shall continue in effect following
the Effective Date until all Common Stock subject to options granted under the
Plan have been purchased or acquired in accordance with the provisions of the
Plan or until the Board of Directors terminates the Plan, as provided herein.

2. DEFINITIONS

Capitalized terms used and not otherwise defined in the Plan shall have the
meanings set forth below:

(a) "Administrator" shall mean the Secretary, or such individual
designated by the Board.

(b) "Affiliate" means the Company and any company or other trade or
business that is controlled by or under common control with the Company,
(determined in accordance with the principles of Section 414(b) and 414(c) of
the Code and the regulations thereunder) or is an affiliate of the Company
within the meaning of Rule 405 of Regulation C under the Securities Act.

(c) "Beneficial Owner" has the meaning given such term in Rule 13d-3
under the Exchange Act, as amended from time to time.

(d) "Board" means the Board of Directors of the Company, as constituted
from time to time.

(e) "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

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(f) "Committee" means the Compensation Committee of the Board, which
must consist of no fewer than two members of the Board who satisfy the
definition under Rule 16b-3 of the Exchange Act for "nonemployee director".

(g) "Common Stock" means common stock, par value $.01 per share, issued
by the Company.

(h) "Company" means Proxicom, Inc. a Delaware corporation, and its
Affiliates.

(i) "Director" means any individual who is a member of the Board.

(j) "Disability" means a permanent and total disability within the
meaning of section 22(e)(3) of the Code.

(k) "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.

(l) "Fair Market Value" means the value of each share of Stock subject
to the Plan determined as follows: If on the Grant Date or other determination
date the Stock is listed on an established national or regional stock exchange,
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or is Publicly Traded on an established securities
market, the Fair Market Value of the Stock shall be the closing price of the
Stock on such exchange or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading day immediately
preceding the Grant Date or other determination date (or, if there is no such
reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such trading day), or, if no sale of the Stock is reported for such trading day,
on the next preceding day on which any sale shall have been reported. If the
Stock is not listed on such an exchange, quoted on such system or traded on such
a market, Fair Market Value shall be determined by the Board in good faith.

(m) "Grant Date" means the date on which an Option grant takes effect.

(n) "Nonemployee Director" means a director of the Company who is not
also an employee of the Company.

(o) "Nonqualified Stock Option" or "Option" means an option to purchase
Common Stock granted in accordance with section 6 herein.

(p) "Option Agreement" means an agreement between the Company and a
Nonemployee Director setting forth the terms and provisions applicable to an
Option granted to that Nonemployee Director under the Plan.

(q) "Option Price" means the price at which a share of Common Stock may
be purchased upon the exercise of an Option.

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(r) "Participant" means a Nonemployee Director who holds one or more
outstanding Options.

(s) "Publicly Traded" means that time when the shares of Common Stock
are listed on an established national or regional stock exchange, are admitted
to quotation on the National Association of Securities Dealers Automated
Quotation System, or are publicly traded on an established securities market

(t) "Secretary" shall mean the General Counsel and Secretary of the
Company.

(u) "Securities Act" means the Securities Act of 1933, as now in effect
or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.

3. ADMINISTRATION

(a) Administration. The Plan shall be administered by the Board. The
Board shall have all powers vested in it by the terms of the Plan, such powers
to include authority to prescribe the form of the agreement embodying awards of
stock options made under the Plan and the power to determine the restrictions,
if any, on the ability of participants to earn-out and to dispose of any stock
issued in connection with the exercise of any Options granted pursuant to the
Plan. The Board shall have the full power, discretion and authority to interpret
the Plan in a manner consistent with the provisions of the Plan; except that, in
no event shall the Board have the power to determine eligibility for
participation under the Plan or to determine the number, price, vesting period
or timing of Options to be granted under the Plan (all of which determination
are automatic under the terms of the Plan). The Board may authorize the
Committee and/or the Administrator to execute and deliver all documents to be
delivered by the Board pursuant to the Plan. No member of the Board shall be
liable for anything done or omitted to be done by such member or by any other
member of the Board in connection with the Plan, except for such member's own
willful misconduct or as expressly provided by statute.

(b) Decisions Binding. All determinations and decisions made by the
Board pursuant to the provisions of the Plan shall be final, conclusive and
binding on all Participants and their beneficiaries, the Company, its
stockholders and employees.

4. COMMON STOCK SUBJECT TO THE PLAN

(a) Number of Shares. Subject to adjustment in accordance with section
4(c), the total number of shares of Common Stock with respect to which Options
may be granted under the Plan is 350,000. The grant of an Option shall reduce
the Common Stock available for grant under the Plan by the number of shares of
Common Stock subject to that Option. The Common Stock subject to Options granted
under the Plan may be either authorized but unissued Common Stock or Common
Stock that has been or may be reacquired by the Company.

(b) Lapsed Options. If any Option granted under the Plan terminates,
expires or lapses for any reason without being exercised, all Common Stock
subject to that Option again shall be available for grant under the Plan.

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<PAGE> 4

(i) Changes in Common Stock. If the shares of Common Stock are
changed into or exchanged for a different number or kind of shares or securities
of the Company, whether through reorganization, recapitalization,
reclassification, stock dividend or other distribution, split, reverse split,
combination of interest, exchange of interests, change in corporate structure or
the like, an appropriate and proportionate adjustment shall be made in the
number and kind of shares of Common Stock subject to the Plan and in the number,
kind and per share exercise price of shares of Common stock subject to
unexercised Options, or portions thereof granted prior to any such change. In
the event of any such adjustment in an outstanding Option, the Participant
thereafter shall have the right to purchase the number of shares of Common Stock
under such Option at the per share price, as so adjusted, which the Participant
could purchase at the total purchase price applicable to the Option immediately
prior to such adjustment.

(ii) Reorganization With Company Surviving. If the Company
shall be the surviving entity in any reorganization, merger, consolidation or
the like of the Company with one or more other entities, any Option theretofore
granted pursuant to the Plan shall apply to the securities resulting immediately
following such reorganization, merger, consolidation or the like, with a
corresponding proportionate adjustment of the number of Common Stock and Option
Price per share so that the aggregate number of Common Stock and Option Price
thereafter shall be the same as the aggregate share number and Option Price
immediately prior to such reorganization, merger, consolidation or the like.

(iii) Other Reorganizations; Sale of Assets or Common Stock.
Unless otherwise provided in an Option Agreement, upon the dissolution or
liquidation of the Company, or upon a merger, consolidation or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of substantially all of the assets of the
Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
entity) approved by the Board that results in any person or entity (other than
persons who are holders of Common Stock of the Company at the time the Plan is
approved by the Stockholders and other than an Affiliate) owning fifty (50)
percent or more of the combined voting power of all classes of Common Stock of
the Company, the Plan and all Options outstanding hereunder shall terminate on
the date of such transaction, except to the extent provision is made in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new Options covering the Common Stock of a successor entity, or a
parent or Affiliate thereof, with appropriate adjustments as to the number and
kinds of Common Stock and exercise prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each Participant
shall have the right (subject to the general limitations on exercise set forth
in section 6 hereof and except as otherwise specifically provided in the
Agreement relating to such Option), immediately prior to the occurrence of such
termination and during such period occurring prior to such termination as the
Board in its sole discretion shall designate, to exercise such Option in whole
or in part whether or not such Option was otherwise exercisable at the time such
termination occurs. The Board shall send written notice of an event

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<PAGE> 5

that will result in such a termination to all Participants not later than the
time at which the Company gives notice thereof to its stockholders.

(d) Adjustments under this Section related to stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares of Common Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.

(e) The grant of an Option pursuant to the Plan shall not affect or
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

5. ELIGIBILITY AND PARTICIPATION

(a) Eligibility. Persons eligible to participate in the Plan are
limited to persons who are Nonemployee Directors on the date of each grant of
Options in accordance with section 6. The adoption of this Plan shall not be
deemed to give any Director any right to be granted an option except to the
extent, and upon such terms and conditions, as provided in the Plan or as may be
determined by the Board.

(b) Participation. Nonemployee directors shall become Participants upon
their receipt of grants of Options in accordance with section 6.

6. NONQUALIFIED STOCK OPTIONS

(a) Initial Grant of Options. Each person who is a Nonemployee Director
immediately following the establishment of the Plan shall be granted an Option
to purchase 35,000 shares of Common Stock at the Fair Market Value. Each person
who first become a Nonemployee Director after the establishment of the Plan
shall be granted an initial Option to purchase 35,000 shares of Common Stock,
effective as of the date such person first becomes a Nonemployee Director.

(b) Subsequent Grants of Options. Each Nonemployee Director who is then
serving as a member of the Board as of the adjournment of the third Annual
Meeting which occurs after the Nonemployee Director received a grant of an
Option pursuant to Section 6(a) or a prior grant of an Option pursuant to this
Section 6(b) shall automatically receive an Option for another 35,000 shares of
Common Stock.

(c) Limitation on Grant of Options. Except for the Options specified
in sections 6(a) and (b) herein, no Options shall be granted under the Plan.
Options granted under the Plan are not intended to be incentive stock options,
as defined in section 422 of the Code.

(d) Option Agreement. Each Option granted in accordance with section
6(a) and (b) shall be evidenced by an Option Agreement that shall specify the
Option Price, the duration of the Option, the number of shares of Common Stock
subject to the Option, the vesting schedule applicable to the Option, and such
other provisions as the Board shall determine. By accepting

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<PAGE> 6

any Option or other benefit under the Plan, each Participant and each person
claiming or through such person shall be conclusively deemed to have indicated
his/her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company or the Board.

(e) Option Price. The Option Price applicable to Common Stock subject
to an Option granted in accordance with sections 6(a) and (b) shall be the Fair
Market Value of a share of Common Stock on the date the grant of the Option is
effective; provided, however that if the Director's commencement of service is
as of the closing of the Company's initial public offering of Common Stock, the
Fair Market Value shall be the price at which the Common Stock was offered for
sale in such initial public offering.

(f) Duration of the Option. Each Option shall expire on the tenth
(10th) anniversary of the effective date of its grant, unless earlier terminated
in accordance with the Plan.

(g) Vesting. Except as otherwise provided in an Option Agreement,
Options granted hereunder shall become vested and exercisable on the following
schedule: 33% of the total number of shares optioned on and after the first
anniversary of the Grant Date; 66% of the total number of shares optioned on
and after the second anniversary of the Grant Date; and 100% of the total
number of shares optioned on and after the third anniversary of the Grant Date.
Unless earlier terminated pursuant to the provisions of the Plan or this
Agreement, the unexercised portion of the Option shall expire and cease to be
exercisable at 12:01 a.m. on the tenth anniversary of the Grant Date. All
Options that do not vest are forfeited.

(h) Termination. All nonvested options granted to a person shall
automatically be forfeited by such person if such person shall cease to be a
Director for reasons other than death and the former Participant shall be
entitled to no further right or benefit with respect to the Options. All vested
Options held by that former Participant shall remain exercisable until the date
those Options expire under the Plan. In the event the Nonemployee Director
ceases to be a Director by reason of death, the total number of shares of Common
Stock covered by the Option shall thereupon become exercisable. In the event of
the death of a Participant, all Options then held by the decedent that are
exercisable immediately following the death shall remain exercisable until the
first anniversary of the date of death or until the Options expire under the
Plan, whichever period is shorter, by the person who has acquired the
Participant's rights under the Option by will or by the laws of descent and
distribution.

(i) (i) Payment. An Option that is exercisable hereunder may be exercised by
delivery to the Company on any business day, at its principal office addressed
to the attention of the Administrator (or such other person identified in an
Agreement), of written notice of exercise, which notice shall specify the number
of shares for which the Option is being exercised, and shall be accompanied by
payment in full of the Option Price of the shares of Common Stock for which the
Option is being exercised. Payment of the Option Price for the shares of Common
Stock purchased pursuant to the exercise of an Option shall be made, as
determined by the Board and as set forth in the Agreement pertaining to an
Option, (x) in cash or by certified check payable to the order of the Company;
(y) to the extent the Company is not prohibited from purchasing or acquiring
shares of Common Stock, through the tender to the Company of shares of Common
Stock, which shares shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair Market Value on the
date of exercise; or (z) by a combination of the methods described in (x) and
(y) hereof, or such other method permitted

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<PAGE> 7

by the Board; provided, however, that the Board may in its discretion at any
time impose such limitations or prohibitions on the use of shares of Common
Stock to exercise Options as it deems appropriate.

An Agreement may provide that on and after the date shares of Common Stock are
Publicly Traded on an established securities market, payment in full of the
Option Price need not accompany the written notice of exercise provided the
notice directs that the Common Stock certificate or certificates for the shares
for which the Option is exercised be delivered to a licensed broker acceptable
to the Company as the agent for the individual exercising the Option and, at the
time such Common Stock certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Option Price.

(ii) Rights. Except as otherwise provided herein, an
individual holding or exercising an Option shall have none of the rights of a
Stockholder until the shares of Common Stock covered thereby are fully paid and
issued to such individual and, except as provided in section 4 hereof, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.

(j) Restrictions on Share Transferability. The Board shall impose such
restrictions on any Options and Common Stock acquired upon the exercise of any
Options under the Plan as it many deem advisable, including, without limitation,
restrictions under applicable federal securities laws, the requirements of the
New York Stock Exchange, and any blue sky or state securities laws applicable to
the Options and Shares; except that no such restriction shall be imposed if the
effect of the restriction would cause the Plan not to comply with the
requirements of 16b-3 of the Exchange Act.

(k) Nontransferability of Options. Except as provided in this section
6(k), during the lifetime of an Optionee, only the Optionee (or, in the event of
legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise an Option. Except as provided in this section 6(k),
no Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution. An Optionee
may transfer all or part of an Option to (i) any Immediate Family Member, (ii) a
trust or trusts for the exclusive benefit of any Immediate Family Member, (iii)
a partnership in which the Optionee is a partner (but only with the consent of
the Committee), or (iv) a partnership in which Immediate Family Members are the
only partners, provided that (x) there may be no consideration for any such
transfer, and (y) subsequent transfers of transferred Options are prohibited
except those in accordance with this section 6(k) or by will or the laws of
descent and distribution. Following transfer, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that for purposes of section 6(k) hereof the term
"Optionee" shall be deemed to refer the transferee. The events of termination in
section 6(h) hereof shall continue to be applied with respect to the original
Optionee, following which the Option shall be exercisable by the transferee only
to the extent, and for the periods specified in section 6(f). For purposes of
the Plan, the term "Immediate Family Member" shall include the spouse,
brothers/sisters, parents or other ancestors, and children and other direct
descendants of the Optionee.

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<PAGE> 8

(l) Right of First Purchase. While and so long as the securities of the
Company have not been Publicly Traded for at least ninety (90) days, any Common
Stock issued on exercise of any Option granted under this Plan shall be subject
to the Company's right of first purchase. By virtue of that right, (i) such
Common Stock may not be transferred during the Participant's lifetime to any
person other than an Immediate Family Member; a partnership whose members are
the Participant and/or Immediate Family Members; or a trust for the benefit of
the Participant and/or Immediate Family Members, unless such transfer occurs
within fifteen (15) days following the expiration of thirty (30) days after the
Company has been given a written notice which correctly identified the
prospective transferee or transferees and which offered the Company an
opportunity to purchase the Common Stock at its Fair Market Value in cash, and
such offer was not accepted within thirty (30) days after the Company's receipt
of that notice; and (ii) upon the Participant's death, the Company shall have
the right to purchase all or some of such Common Stock at its Fair Market Value
within nine (9) months after the date of death. This right of first purchase
shall continue to apply to any such Common Stock after the transfer during the
Participant's lifetime of that Common Stock to an Immediate Family Member or to
a family partnership or trust as aforesaid, and after any transfer of that Stock
with respect to which the Company expressly waived its right of first purchase
without also waiving it as to any subsequent transfers thereof, but it shall not
apply after a transfer of that Common Stock with respect to which the Company
was offered but did not exercise or waive its right of first purchase or more
than nine months after the Participant's death. The Company may assign all or
any portion of its right of first purchase to any one or more of its
Stockholders, or to a pension, retirement or savings plan for employees of the
Company, who may then exercise the right so assigned. Stock certificates
evidencing Common Stock subject to this right of first purchase shall be
appropriately legended to reflect that right.

7. ADDITONAL RIGHTS IN CERTAIN EVENTS

(a) Definitions. For the purposes of this section 7, the following
terms shall have the following meanings:

(i) "Person" shall be used as that terms is used in
section 13(d) and 14(d) of the Exchange Act.

(ii) "Beneficial Ownership" shall be determined as provided in
Rule 13d-3 of the Exchange Act.

(iii) A specified percentage of "Voting Power" of a company
shall mean such number of the Voting Shares as shall enable the holders thereof
to cast such percentage of all the votes which could be cast in an annual
election of directors (without consideration of the rights of any class of stock
other than the common stock of the company to elect directors by a separate
class vote); and "Voting Shares" shall mean all securities of a company
entitling the holders thereof to vote in an annual election of directors
(without consideration of the rights of any class of stock other than the common
stock of the company to elect directors by a separate class vote).

(iv) "Section 7 Event" shall mean, in the discretion of the
Committee, the date upon which any of the following events occurs: (y) the
Company acquires actual knowledge that any Person other than the Company, an
Affiliate or any employee benefit plan sponsored by

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<PAGE> 9

the Company or an Affiliate has acquired the Beneficial Ownership, directly or
indirectly, of securities of the Company entitling the Person to more than 50%
of the Voting Power of the Company; and (z) the stockholders of the Company
shall approve a merger, consolidation, share exchange, division or sale or other
disposition of assets of the Company as a result of which the stockholders of
the Company immediately prior to such transaction do not hold, directly or
indirectly, immediately following such transaction, a majority of the Voting
Power of (I) in the case of a merger or consolidation, the surviving or
resulting corporation, (II) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring corporation which,
immediately following the transaction, holds more than 50% of the consolidated
assets of the Company immediately prior to the transaction.

(b) Acceleration of Exercise. Notwithstanding anything to the contrary
in the Plan, in case any Section 7 Event occurs, all outstanding Options shall
become immediately and fully exercisable whether or not otherwise exercisable by
their terms.

8. SECURITIES LAWS

The Company shall not be required to sell or issue any Option or shares of
Common Stock under any Option if the sale or issuance of such Option or shares
would constitute a violation of any provisions of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to the Option upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Option.
Specifically in connection with the Securities Act, upon exercise of any Option,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Option, the Company shall
not be required to sell or issue such shares unless the Company has received
evidence satisfactory to the Company that the Participant may acquire such
shares pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Company shall be final and conclusive.
The Company may, but shall in no event be obligated, to register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option shall not be exercisable unless and until
the shares of Common Stock covered by such Option are registered or are subject
to an available exemption from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

9. ESTABLISHMENT, AMENDMENT, MODIFICATION AND TERMINATION

(a) Establishment. The Plan shall be effective as of the date of
adoption by the Board (the "Effective Date"), subject to stockholders' approval
of the Plan within one year of the Effective Date by a majority of the
stockholders entitled to vote, either in person or by proxy, or

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<PAGE> 10

by written consent in accordance with the applicable state law and the Company's
Certificate of Incorporation and By-Laws in a manner that satisfies the Exchange
Act; provided, however, that upon approval of the Plan by the stockholders, all
Options granted under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the Plan on the
Effective Date. If the stockholders fail to approve the Plan within one year of
the Effective Date, any Options granted hereunder shall be null and void.

(b) Amendment and Termination. The Board may, at any time and from time
to time, amend, suspend or terminate the Plan as to any Common Stock as to which
Options have not been granted. The Company also may retain the right in an
Option Agreement to cause a forfeiture of the Option, the Common Stock or gain
realized on Common Stock by a Participant for any reason the Company deems to be
in its best interest, which reason may include, but not be limited to, the
Participant taking actions in "competition with the Company," as defined in the
applicable Agreement. Except as permitted hereunder, no amendment, suspension or
termination of the Plan shall, without the consent of the Participant, alter or
impair rights or obligations under any Option theretofore granted under the
Plan.

10. WITHHOLDING

The Company or an Affiliate may be obligated to withhold federal and local
income taxes and Social Security taxes to the extent that a Participant realizes
income in connection with the exercise of an Option. The Company or a Affiliate
may withhold amounts needed to cover such taxes from payments otherwise due and
owing to a Participant, and upon demand the Participant will promptly pay to the
Company or a Affiliate having such obligation any additional amounts as may be
necessary to satisfy such withholding tax obligation. Such payment shall be made
in cash or cash equivalents. The Company may also withhold shares or amounts
payable to a Participant pursuant to court order.

11. DISCLAIMER OF RIGHTS

The existence of this Plan does not, and no provision in the Plan or in any
Option granted or Agreement entered into pursuant to the Plan shall be construed
to confer upon any individual the right to receive an Option or permit a
Participant to remain a member of the Board. The obligation of the Company to
pay any benefits pursuant to the Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein. The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Participant or
beneficiary under the terms of the Plan.

12. NONEXCLUSIVITY

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13. GOVERNING LAW

This Plan and all Agreements shall be executed and performed under, and all
Awards to be granted hereunder shall be provided under and governed by, the laws
of the state of Delaware (but not including the choice of law rules thereof).

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<PAGE> 12

14. INDEMNIFICATION

To the extent permitted by applicable law, the Administrator shall be
indemnified and held harmless by the Company against and from any and all loss,
cost, liability or expense that may be imposed upon or reasonably incurred by
the Administrator in connection with or resulting from any claim, action, suit
or proceeding to which the Administrator may be a party or in which the
Administrator may be involved by reason of any action taken or failure to act
under the Plan, and against and from any and all amounts paid by the
Administrator (with the Company's prior approval) in the settlement thereof, or
paid by the Administrator in satisfaction of a judgment in favor of the Company;
subject, however, to the conditions that upon institution of any claim, action
suit or proceeding against the Administrator, the Administrator shall give the
Company an opportunity in writing, at its own expense, to handle and defend the
same before the Administrator undertakes to handle and defend it on the
Administrator's own behalf. The foregoing right of indemnification shall not be
exclusive of any other right to which such person may be entitled as a matter of
law or otherwise, or any power the Company may have to indemnify the
Administrator or hold the Administrator harmless. The Administrator and each
officer and employee of the Company shall be fully justified in reasonably
relying or acting upon any information furnished in connection with the
Administration of the Plan by the Company or any employee of the Company. In no
event shall any person who is or shall have been the Administrator, or an
officer or employee of the Company, be liable for any determination or other
action taken or any omission to act in reliance upon any such information, or
for any action (including furnishing of information) taken or failure to act, if
in good faith.

15. MISCELLANEOUS PROVISIONS

(a) Other Award Provisions. Options granted under the Plan shall
contain such other terms and provisions that are not inconsistent with this Plan
as the Board may authorize, including but not limited to (i) vesting schedules
governing the exercisability of such Options; (ii) provisions for acceleration
of such vesting schedules in certain events; (iii) arrangements whereby the
Company may fulfill any tax withholding obligations it may have in connection
with the exercise of such Option; (iv) provisions imposing restrictions upon the
transferability of stock acquired on exercise of such Option, whether required
by this Plan or applicable securities laws or imposed for other reasons; and (v)
provisions regarding the termination or survival of any such Option upon the
Participant's death.

(b) Consents. If the Administrator shall at any time determine that any
Consent (as hereafter defined) is necessary or desirable as a condition of, or
in connection with, the granting of any Option under the Plan, the issuance or
purchase of shares or other rights thereunder, or the taking of any other action
thereunder ("Plan Action"), then such Plan Action shall not be taken, in whole
or in part, unless and until such Consent shall have been effected or obtained
to the full satisfaction of the Administrator. "Consent" with respect to any
Plan Action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation; (ii) any and all written agreements and
representations by the Participant with respect to the disposition of shares of
Common Stock, or with respect to any other matter, which the Administrator shall
deem necessary or desirable to comply with the terms of any such listing,
registration, or qualification or to obtain an exemption

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from the requirement that any such listing, qualification or registration be
made; and (iii) any and all other consents, clearances and approvals in respect
of a Plan Action.

(c) Notice Any notice required to be given to the Company hereunder
shall be in writing and shall be addressed to Secretary, Proxicom, Inc. 1749 Old
Meadow Road, McLean, Virginia 22102-4310, or at such other address the Company
may hereafter designate to the Option. A notice shall be deemed to have been
duly given when personally delivered or mailed by registered mail or certified
mail to the party entitled to receive it.

(d) Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

(e) Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively to whom any benefit under the Plan is to be paid in
the event of the Participant's death (or who may exercise the Participant's
rights hereunder that are exercisable following the Participant's death). Each
designation shall revoke all prior designations by the Participant, shall be in
a form prescribed by the Board, and shall be effective only when filed by the
Participant in writing with the Board or its designate during the Participant's
lifetime.

(f) No Right of Nomination. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Director for
reelection by the Company's stockholders.

(g) Successors. All obligations of the Company under the Plan with
respect to Options granted hereunder shall be binding on any successor of the
Company by merger, consolidation, or other acquisition of all or substantially
all of the business or assets of the Company.

The Plan was duly adopted and approved by the Board on February 7, 1997 and was
duly adopted and approved by the stockholders of the Company on February 7,
1997.

/s/ CHRISTOPHER CAPUANO
----------------------

Christopher Capuano
Proxicom, Inc.
General Counsel and Secretary

<PAGE> 1
EXHIBIT 10.8

PROXICOM, INC.

EMPLOYEE STOCK PURCHASE PLAN

1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an
opportunity to purchase Common Stock of the Company through
accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue
Code of 1986, as amended. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements
of that section of the Code.

2. Definitions.

1. "Board" shall mean the Board of Directors of the
Company, unless the Board assigns any decisions to
the Compensation Committee of the Board.

2. "Change in Control" shall mean:

i. The acquisition by any individual, entity or
group (within the meaning of Section 13(d)
(3) or 14(d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under
the Exchange Act) of more than 50% of either
(i) the then outstanding shares of common
stock of the Employer (the "Outstanding
Employer Common Stock") or (ii) the combined
voting power of the then outstanding voting
securities of the Employer entitled to vote
generally in the election of directors (the
"Outstanding Employer Voting Securities");
provided, however, that for purposes of this
subsection (a), the following acquisitions
shall not constitute a Change of Control: (i)
any acquisition by the Employer, (ii) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Employer or any corporation controlled by the
Employer or (iii) any acquisition by any
entity pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 13; or

ii. Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board"),
ceasing for any reason to constitute at least
a majority of the Board; provided, however,
that any individual becoming a director
subsequent to the date hereof whose election,
or nomination for election by the Employer's
shareholders, was approved by a vote of at
least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but excluding,
for this purpose, any such individual whose
initial assumption of office occurs as a
result of an actual or threatened

<PAGE> 2

election contest with respect to the election
or removal of directors or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or

iii. Consummation of a reorganization, merger or
consolidation or sale or other disposition of
all or substantially all of the assets of the
Employer (a "Business Combination"), in each
case, unless, following such Business
Combination, (i) all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Employer Common Stock and
Outstanding Employer Voting Securities
immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than 50% of, respectively,
the then outstanding shares of common stock
and the combined voting power of the then
outstanding voting securities entitled to
vote generally in the election of directors,
as the case may be, of the entity resulting
from such Business Combination (including,
without limitation, a corporation which as a
result of such transaction owns the Employer
or all or substantially all of the Employer's
assets either directly or through one or more
subsidiaries) in substantially the same
proportions as their ownership, immediately
prior to such Business Combination of the
Outstanding Employer Common Stock and
Outstanding Employer Voting Securities, as
the case may be, and (ii) no Person
(excluding any corporation resulting from
such Business Combination or any employee
benefit plan (or related trust) of the
Employer or such corporation resulting from
such Business Combination) beneficially owns,
directly or indirectly, 35% or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such Business Combination or the
combined voting power of the then outstanding
voting securities of such corporation except
to the extent that such ownership existed
prior to the Business Combination and (iii)
at least a majority of the members of the
board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of
the execution of the initial agreement, or of
the action of the Board, providing for such
Business Combination; or

iv. Approval by the shareholders of the Employer
of a complete liquidation or dissolution of
the Employer.

A "Change in Control Event" shall mean the
earlier of (i) a Change in Control or (ii)
the execution and delivery by the Employer of
a document evidencing an intent to engage in
a particular Change of Control that is
subsequently effected.

2
<PAGE> 3

3. "Code" shall mean the Internal Revenue Code of 1986,
as amended.

4. "Common Stock" shall mean the Common Stock of the
Company.

5. "Company" shall mean Proxicom, Inc., a Delaware
corporation, any Designated Subsidiary of the
Company, and any other entity designated by the
Board.

6. "Compensation" shall mean all base straight time
gross earnings, exclusive of payments for overtime,
shift premium, incentive compensation, incentive
payments, bonuses and other compensation.

7. "Designated Subsidiary" shall mean any Subsidiary
that has been designated by the Board from time to
time in its sole discretion as eligible to
participate in the Plan.

8. "Employee" shall mean any individual who is an
employee of the Company for tax purposes whose
customary employment with the Company is at least
twenty (20) hours per week and more than five (5)
months in any calendar year. For purposes of the
Plan, the employment relationship shall be treated
as continuing intact while the individual is on sick
leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days
and the individual's right to reemployment is not
guaranteed either by statute or by contract, the
employment relationship shall be deemed to have
terminated on the 91st day of such leave.

9. "Enrollment Date" shall mean the first day of each
Offering Period.

10. "Exercise Date" shall mean the last day of each
Offering Period.

11. "Fair Market Value" shall mean, as of any date, the
value of Common Stock determined as follows:

1. If the Common Stock is listed on any
established stock exchange or a national
market system, including, without limitation,
the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing
sales price for such stock (or the closing
bid, if no sales were reported) as quoted on
such exchange or system for the last market
trading day on the date of such
determination, as reported in The Wall Street
Journal or such other source as the Board
deems reliable, or;

2. If the Common Stock is regularly quoted by a
recognized securities

3
<PAGE> 4

dealer but selling prices are not reported,
its Fair Market Value shall be the mean of
the closing bid and asked prices for the
Common Stock on the date of such
determination, as reported in The Wall Street
Journal or such other source as the Board
deems reliable, or;

3. In the absence of an established market for
the Common Stock, the Fair Market Value
thereof shall be determined in good faith by
the Board.

12. "Offering Period" shall mean a period of
approximately six (6) months during which an option
granted pursuant to the Plan may be exercised,
commencing on the first Trading Day on or after
January 1 and terminating on the last Trading Day in
the period ending the following June 30, and
commencing on the first Trading Day on or after July
1 and terminating on the last Trading Day in the
period ending the following December 31; provided,
however, that the first Offering Period under the
Plan shall commence with the first Trading Day on or
after the date on which the Securities and Exchange
Commission declares the Company's Registration
Statement effective and ending on the last Trading
Day on or before the following December 31. The
duration of Offering Periods may be changed pursuant
to Section 4 of this Plan.

13. "Plan" shall mean this Employee Stock Purchase Plan,
as may be amended from time to time.

14. "Purchase Price" shall mean an amount equal to 85%
of the Fair Market Value of a share of Common Stock
on the Enrollment Date or on the Exercise Date,
whichever is lower; provided, however, that the
Purchase Price may be adjusted by the Board pursuant
to Section 20.

15. "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which
have not yet been exercised, and the number of
shares of Common Stock that have been authorized for
issuance under the Plan but not yet placed under
option.

16. "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting
shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a
Subsidiary.

17. "Trading Day" shall mean a day on which national
stock exchanges and the Nasdaq System are open for
trading.

3. Eligibility.

1. Any Employee who shall be employed by the Company on
a given

4
<PAGE> 5

Enrollment Date shall be eligible to participate in
the Plan.

2. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an
option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any
other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold
outstanding options to purchase such stock
possessing five percent (5%) or more of the total
combined voting power or value of all classes of the
capital stock of the Company or of any Subsidiary,
or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase
plans of the Company and its subsidiaries accrues at
a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair
market value of the shares at the time such option
is granted) for each calendar year in which such
option is outstanding at any time.

4. Offering Periods. The Plan shall be implemented by
consecutive Offering Periods with a new Offering Period
commencing on the first Trading Day on or after January 1
and July 1 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated
in accordance with Section 21 hereof; provided, however,
that the first Offering Period under the Plan shall
commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the
Company's Registration Statement effective and ending on
the last Trading Day on or before the following December
31. The Board shall have the power to change the duration
of Offering Periods (including the commencement dates
thereof) with respect to future offerings without
stockholder approval if such change is announced at least
five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.

5. Participation.

1. An eligible Employee may become a participant in the
Plan by completing a subscription agreement
authorizing payroll deductions and filing it with
the Company's payroll office prior to the applicable
Enrollment Date.

2. Payroll deductions for a participant shall commence
on the first payroll following the Enrollment Date
and shall end on the last payroll in the Offering
Period to which such authorization is applicable,
unless sooner terminated by the participant as
provided in Section 10 hereof.

6. Payroll Deductions.

1. At the time a participant files his or her
subscription agreement, he or she shall elect to
have payroll deductions made on each pay day during
the Offering Period in an amount not exceeding
fifteen percent (15%) of the Compensation that he or
she receives on each pay day during the Offering

5
<PAGE> 6

Period.

2. All payroll deductions made for a participant shall
be credited to his or her account under the Plan and
shall be withheld in whole percentages only. A
participant may not make any additional payments
into such account.

3. A participant may discontinue his or her
participation in the Plan as provided in Section 10
hereof, or may decrease the rate of his or her
payroll deductions during the Offering Period by
completing or filing with the Company a new
subscription agreement authorizing a decrease in
payroll deduction rate. Once decreased or
discontinued, a participant may not increase the
rate of participation or rejoin the Plan until the
next Offering Period. The Board may, in its
discretion, limit the number of participation rate
changes during any Offering Period. The change in
rate shall be effective with the first full payroll
period following five (5) business days after the
Company's receipt of the new subscription agreement
unless the Company elects to process a given change
in participation more quickly. A participant may
increase the rate of his or her payroll deductions
effective as of the next successive Offering Period.
A participant's subscription agreement shall remain
in effect for successive Offering Periods, unless
terminated as provided in Section 10 hereof.

4. Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the
Code and the Plan, a participant's payroll
deductions may be decreased to zero percent (0%) at
any time during an Offering Period. Payroll
deductions shall recommence at the rate provided in
such participant's subscription agreement at the
beginning of the first Offering Period that is
scheduled to end in the following calendar year,
unless terminated by the participant as provided in
Section 10 hereof.

5. At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's
Common Stock issued under the Plan is disposed of,
the participant must make adequate provision for the
Company's federal, state, or other tax withholding
obligations, if any, that arise upon the exercise of
the option or the disposition of the Common Stock.
At any time, the Company may, but shall not be
obligated to, withhold from the participant's
compensation the amount necessary for the Company to
meet applicable withholding obligations. In
addition, in the event that any Employee shall sell
or otherwise dispose of any common stock purchased
under this Plan before expiration of periods
described in Section 422(b)(1) of the Code, such
Employee shall be required to notify the Company
within thirty (30) days of such sale or disposition.

7. Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such
Offering Period shall be granted an option to purchase on
the Exercise Date of such Offering Period (at the
applicable Purchase

6
<PAGE> 7

Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll
deductions accumulated prior to such Exercise Date and
retained in the Participant's account as of the Exercise
Date by the applicable Purchase Price; provided that such
purchase shall be subject to the limitations set forth in
this Plan. Exercise of the option shall occur as provided
in Section 8 hereof, unless the participant has withdrawn
pursuant to Section 10 hereof. The Option shall expire on
the last day of the Offering Period.

8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option
for the purchase of shares shall be exercised automatically
on the Exercise Date, and the maximum number of full shares
subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated
payroll deductions in his or her account. No fractional
shares shall be purchased; any payroll deductions
accumulated in a participant's account that are not
sufficient to purchase a full share shall be retained in
the participant's account for the subsequent Offering
Period, subject to earlier withdrawal by the participant as
provided in Section 10 hereof. Any other monies left over
in a participant's account after the Exercise Date shall be
returned to the participant. During a participant's
lifetime, a participant's option to purchase shares
hereunder is exercisable only by him or her.

9. Custody. Shares purchased under the Plan will be held in
the custody of an agent (the "Agent") appointed by the
Board. The Agent may hold the shares purchased under the
Plan in stock certificates in nominee names and may
commingle shares held in its custody in a single account or
stock certificate without identification as to individual
participant. A participant may, at any time following his
or her purchase of shares under the Plan, by written notice
instruct the Agent to have all or part of such shares
reissued in the participant's own name and have the stock
certificate delivered to the participant. Any dividends
paid on shares held by the Company for a participant's
account will be transmitted to the participant. The Company
will deliver to each participant who purchases shares of
Common Stock under the Plan, as promptly as practicable by
mail or otherwise, all notices of meetings, proxy
statements, proxies and other materials distributed by the
Company to its stockholders. Any shares of Common Stock
held by the Agent for an employee's account will be voted
in accordance with the participants's duly delivered and
signed proxy instructions. There will be no charge to
participants in connection with such notices, proxies and
other materials.

10. Withdrawal.

1. Consistent with the rules established by the Board,
a participant may withdraw all, but not less than
all, of the payroll deductions credited to his or
her account and not yet used to exercise his or her
option under the Plan by giving written notice to
the Company. All of the participant's payroll
deductions credited to his or her

7
<PAGE> 8

account shall be paid to such participant promptly
after receipt of notice of withdrawal and such
participant's option for the Offering Period shall
be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made
for such Offering Period. If a participant withdraws
during an Offering Period, payroll deductions shall
not resume at the beginning of the succeeding
Offering Period unless the participant has delivered
to the Company a new subscription agreement.

2. A participant's withdrawal during an Offering Period
shall not have any effect upon his or her
eligibility to participate in any similar plan that
may hereafter be adopted by the Company or in
succeeding Offering Periods which commence after the
termination of the Offering Period during which the
participant withdraws.

11. Termination of Employment. Upon a participant's
ceasing to be an Employee for any reason, he or she shall
be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the
option shall be returned to such participant or, in the
case of his or her death, to the person or persons entitled
thereto under Section 15 hereof, and such participant's
option shall be automatically terminated.

12. Interest. No interest shall accrue on the payroll
deductions of a participant in the Plan.

13. Stock.

1. Subject to adjustment upon changes in capitalization
of the Company as provided in Section 19 hereof, the
maximum number of shares of the Company's Common
Stock that shall be made available for sale under
the Plan shall be one million (1,000,000) shares, or
such greater number of shares as is authorized. If,
on a given Exercise Date, the number of shares
with respect to which options are to be exercised
exceeds the number of shares then available under
the Plan, the Company shall make a pro rata
allocation of the shares remaining available for
purchase in as uniform a manner as shall be
practicable and as it shall determine to be
equitable.

2. The participant shall have no interest or voting
right in shares covered by his option until such
option has been exercised.

3. Shares to be delivered to a participant under the
Plan shall be registered in the name of the
participant or in the name of the participant and
his or her spouse.

14. Administration. The Plan shall be administered by the Board
or a committee of members of the Board appointed by the
Board. The Board or its committee shall

8
<PAGE> 9

have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to
determine eligibility and to adjudicate all disputed claims
filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to
the full extent permitted by law, be final and binding upon
all parties. Notwithstanding anything herein, the Plan will
be interpreted and administered with all applicable laws
and regulations.

15. Designation of Beneficiary.

1. A participant may file a written designation of a
beneficiary who is to receive any shares and cash,
if any, from the participant's account under the
Plan in the event of such participant's death
subsequent to an Exercise Date on which the option
is exercised but prior to delivery to such
participant of such shares and cash. In addition, a
participant may file a written designation of a
beneficiary who is to receive any cash from the
participant's account under the Plan in the event of
such participant's death prior to exercise of the
option. If a participant is married and the
designated beneficiary is not the spouse, spousal
consent shall be required for such designation to be
effective.

2. Such designation of beneficiary may be changed by
the participant at any time by written notice. In
the event of the death of a participant and in the
absence of a beneficiary validly designated under
the Plan who is living at the time of such
participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator
of the estate of the participant, or if no such
executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to
the spouse or to any one or more dependents or
relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then
to such other person as the Company may designate.

16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the
exercise of an option or the receipt of shares under the
Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 15
hereof) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an
election to withdraw funds during an Offering Period in
accordance with Section 10 hereof.

17. Use of Funds. All payroll deductions received or held by
the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.

18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be
given to participating Employees at least annually,

9
<PAGE> 10

which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.

19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.

1. Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the
Reserves, the maximum number of shares each
participant may purchase per Offering Period, as
well as the price per share and the number of
shares of Common Stock covered by each option under
the Plan which has not yet been exercised shall be
proportionately adjusted for any increase or
decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock
split, stock dividend, combination or
reclassification of the Common Stock, or any other
increase or decrease in the number of shares of
Common Stock effected without receipt of
consideration by the Company; provided, however,
that conversion of any convertible securities of
the Company shall not be deemed to have been
"effected without receipt of consideration". Such
adjustment shall be made by the Board, whose
determination in that respect shall be final,
binding and conclusive. Except as expressly
provided herein, no issuance by the Company of
shares of stock of any class, or securities
convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price
of shares of Common Stock subject to an option.

2. Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company,
the Offering Period then in progress shall be
shortened by setting a new Exercise Date (the "New
Exercise Date") and shall terminate immediately
prior to the consummation of such proposed
dissolution or liquidation, unless provided
otherwise by the Board. The New Exercise Date shall
be before the date of the Company's proposed
dissolution or liquidation. The Board shall notify
each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that
the Exercise Date for the participant's option has
been changed to the New Exercise Date and that the
participant's option shall be exercised
automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn during
the Offering Period as provided in Section 10
hereof.

3. Change in Control. In the event of a proposed Change
in Control of the Company, the Offering Period then
in progress shall be shortened by setting a new
Exercise Date (the "New Exercise Date"). The New
Exercise Date shall be before the date of the
Company's proposed Change in Control. The Board
shall notify each participant in writing, at least
ten (10) business days prior to the New Exercise
Date, where practicable, that

10
<PAGE> 11

the Exercise Date for the participant's option has
been changed to the New Exercise Date and that the
participant's option shall be exercised
automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn during
the Offering Period as provided in Section 10
hereof.

20. Amendment or Termination.

1. The Board of Directors of the Company may at any
time and for any reason terminate or amend the Plan.
Except as provided in Section 19 hereof, no such
termination can affect options previously granted,
provided that an Offering Period may be terminated
by the Board of Directors on any Exercise Date if
the Board determines that the termination of the
Offering Period or the Plan is in the best interests
of the Company and its stockholders. Except as
provided in Section 19 and Section 20 hereof, no
amendment may make any change in any option
theretofore granted that adversely affects the
rights of any participant. To the extent necessary
to comply with Section 423 of the Code (or any other
applicable law, regulation or stock exchange rule),
the Company shall obtain shareholder approval in
such a manner and to such a degree as required.

2. Without stockholder consent and without regard to
whether any participant rights may be considered to
have been "adversely affected," the Board (or its
committee) shall be entitled to change the Offering
Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S.
dollars, permit payroll withholding in excess of the
amount designated by a participant in order to
adjust for delays or mistakes in the Company's
processing of properly completed withholding
elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the
purchase of Common Stock for each participant
properly correspond with amounts withheld from the
participant's Compensation, and establish such other
limitations or procedures as the Board (or its
committee) determines in its sole discretion to be
advisable and that are consistent with the Plan.

3. In the event the Board determines that the ongoing
operation of the Plan may result in unfavorable
financial accounting consequences, the Board may, in
its discretion and to the extent necessary or
desirable, modify or amend the Plan to reduce or
eliminate such accounting consequence, including,
but not limited to:

1. altering the Purchase Price for any Offering
Period, including an Offering Period underway
at the time of the change in Purchase

11
<PAGE> 12

Price;

2. shortening any Offering Period so that the
Offering Period ends on a new Exercise Date,
including an Offering Period underway at the
time of the Board action; and

3. allocating shares.

Such modifications or amendments shall not require
stockholder approval or the consent of any Plan
participants.

21. Notices. All notices or other communications by a
participant to the Company under or in connection with the
Plan shall be deemed to have been duly given when received
in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt
thereof.

22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of
any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

As a condition to the exercise of an option, the Company
may require the person exercising such option to represent
and warrant at the time of any such exercise that the
shares are being purchased only for investment and without
any present intention to sell or distribute such shares if,
in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned
applicable provisions of law.

23. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors
or its approval by the stockholders of the Company. It
shall continue in effect indefinitely unless terminated
under Section 20 hereof.

<PAGE> 1
EXHIBIT 10.9

MORINO - 11600 SUNRISE VALLEY DRIVE
2/20/97
4111-4
(Rev. 8/13/98)

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

DEED OF LEASE

BETWEEN

11600 SUNRISE LIMITED PARTNERSHIP,
a Virginia limited partnership

as Landlord,

AND

PROXICOM, INC.,
a Delaware corporation

as Tenant

Dated: As of July 14, 1997

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

For Premises Located At

11600 Sunrise Valley Drive
Reston, Virginia

<PAGE> 2

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1: BASIC LEASE PROVISIONS..............................................................1
1.1 Premises.................................................................................1
1.2 Building.................................................................................1
1.3 Term.....................................................................................1
1.4 Commencement Date........................................................................1
1.5 Expiration Date..........................................................................1
1.6 Base Rent Upon Execution.................................................................1
1.7 Base Rent................................................................................2
1.8 Security Deposit.........................................................................2
1.9 Base Year for Operating Expenses.........................................................2
1.10 Base Year for Real Estate Taxes.........................................................2
1.11 Tenant's Proportionate Share of Operating Expenses......................................2
1.12 Tenant's Proportionate Share of Real Estate Taxes.......................................2
1.13 Parking Space Allocation................................................................2
1.14 Permitted Use...........................................................................3
1.15 Tenant's Trade Name.....................................................................3
1.16 Broker..................................................................................3
1.17 Landlord's Address for Payment of Rent..................................................3
1.18 Landlord's Address for Notice Purposes..................................................3
1.19 Tenant's Address........................................................................3

ARTICLE 2: DEFINITIONS.........................................................................4
2.1 Additional Rent..........................................................................4
2.2 Agents...................................................................................4
2.3 Alterations..............................................................................4
2.4 Calendar Year............................................................................4
2.5 Common Area..............................................................................4
2.6 Event of Bankruptcy......................................................................4
2.7 Event of Default.........................................................................4
2.8 Guarantor................................................................................4
2.9 Hazardous Materials......................................................................5
2.10 Herein, hereinafter, hereunder and hereof...............................................5
2.11 Interest Rate...........................................................................5
2.12 Force Majeure...........................................................................5
2.13 Land....................................................................................5
2.14 Lease Year..............................................................................5
2.15 Legal Requirements......................................................................5
2.16 Mortgage................................................................................5
2.17 Mortgagee...............................................................................5
2.18 ........................................................................................5
2.19 Operating Expenses......................................................................6
2.20 Parking Facilities......................................................................6
2.21 Real Estate Taxes.......................................................................6
2.22 Rent....................................................................................6
2.23 Rules and Regulations...................................................................6
2.24 Substantial Completion..................................................................6
2.25 Substantial Part........................................................................6
2.26 Tenant's Property.......................................................................6
2.27 Work Agreement..........................................................................6
</TABLE>

<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 3: THE PREMISES........................................................................7
3.1 Lease of Premises........................................................................7
3.2 Landlord's Reservations..................................................................7

ARTICLE 4: TERM................................................................................7
4.1 Lease Term...............................................................................7

ARTICLE 5: RENT................................................................................7
5.1 Base Rent................................................................................7
5.2 Payment of Base Rent.....................................................................8
5.3 Additional Rent..........................................................................8
5.4 Acceptance of Rent.......................................................................8

ARTICLE 6: SECURITY DEPOSIT....................................................................8
6.1 General..................................................................................8
6.2 Security in the Form of Cash.............................................................9
6.3 Security in the Form of an Irrevocable Letter of Credit..................................9

ARTICLE 7: OPERATING EXPENSES..................................................................9
7.1 Tenant's Proportionate Share of Operating Expenses.......................................9
7.2 Operating Expenses Defined...............................................................9
7.3 Exclusions from Operating Expenses......................................................11
7.4 Estimated Payments......................................................................13
7.5 Actual Operating Expenses...............................................................13
7.6 Tenant's Right to Audit.................................................................13

ARTICLE 8: TAXES..............................................................................14
8.1 Tenant's Proportionate Share of Real Estate Taxes.......................................14
8.2 Estimated and Actual Payments...........................................................15

ARTICLE 9: PARKING............................................................................15
9.1 Parking Spaces..........................................................................15
9.2 Changes to Parking Facilities...........................................................15
9.3 Reserved Parking........................................................................15

ARTICLE 10: USE................................................................................16
10.1 General................................................................................16
10.2 Tenant's Personal Property.............................................................16
10.3 Indoor Air Quality.....................................................................16

ARTICLE 11: ASSIGNMENT AND SUBLETTING..........................................................16
11.1 General................................................................................16
11.2 Restriction on Transfer................................................................16
11.3 Landlord's Options.....................................................................17
11.4 Additional Conditions; Excess Rent.....................................................17
11.5 Reasonable Disapproval.................................................................18
11.6 Release................................................................................18
11.7 Administrative and Attorneys' Fees.....................................................18
11.8 Material Inducement....................................................................19

ARTICLE 12: MAINTENANCE AND REPAIR.............................................................19
12.1 Landlord's Obligation..................................................................19
12.2 Tenant's Obligation....................................................................19
12.3 Landlord's Right to Maintain or Repair.................................................20
</TABLE>

<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 13: ALTERATIONS.......................................................................20
13.1 Initial Construction...................................................................20
13.2 Tenant's Alterations...................................................................20
13.3 Mechanics' Liens.......................................................................21
13.4 Landlord Alterations...................................................................21

ARTICLE 14: SIGNS.............................................................................21
14.1 General................................................................................21

ARTICLE 15: TENANT'S PROPERTY.................................................................22
15.1 Tenant's Equipment.....................................................................22
15.2 Removal of Tenant's Property...........................................................22

ARTICLE 16: RIGHT OF ENTRY....................................................................22
16.1 General................................................................................22

ARTICLE 17: INSURANCE.........................................................................23
17.1 Insurance Rating.......................................................................23
17.2 Liability Insurance....................................................................23
17.3 Insurance for Tenant's Property........................................................23
17.4 Additional Insurance...................................................................24
17.5 Requirements of Insurance Coverage.....................................................24
17.6 Waiver of Subrogation..................................................................24
17.7 Security...............................................................................24
17.8 Landlord's Insurance...................................................................24
17.9 Coverage...............................................................................25

ARTICLE 18: LANDLORD SERVICES AND UTILITIES...................................................25
18.1 Ordinary Services to the Premises......................................................25
18.2 After-Hours Services to the Premises...................................................26
18.3 Utility Charges........................................................................26

ARTICLE 19: LIABILITY OF LANDLORD.............................................................26
19.1 No Liability...........................................................................26
19.2 Indemnity..............................................................................27
19.3 Limitation on Recourse.................................................................27

ARTICLE 20: RULES AND REGULATIONS.............................................................27
20.1 General................................................................................27

ARTICLE 21: DAMAGE AND CONDEMNATION...........................................................28
21.1 Damage to the Premises.................................................................28
21.2 Condemnation...........................................................................28

ARTICLE 22: DEFAULT...........................................................................29
22.1 Events of Default......................................................................29
22.2 Landlord's Remedies....................................................................29
22.3 Tenant's Liability for Damages........................................................29
22.4 Liquidated Damages....................................................................30
22.5 Rights Upon Possession................................................................30
22.6 No Waiver.............................................................................31
22.7 Right of Landlord to Cure Tenant's Default.............................................31
22.8 Late Payment..........................................................................31
22.9 Landlord's Lien.......................................................................31
</TABLE>
<PAGE> 5

<TABLE>
<S> <C>
ARTICLE 23: BANKRUPTCY........................................................................32
23.1 Event of Bankruptcy...................................................................32
23.2 Remedies..............................................................................32

ARTICLE 24: MORTGAGES.........................................................................33
24.1 Subordination.........................................................................33
24.2 Mortgagee Protection..................................................................33
24.3 Financial Information.................................................................34
24.4 Attornment............................................................................34

ARTICLE 25: SURRENDER AND HOLDING OVER........................................................34
25.1 Surrender of the Premises..............................................................34
25.2 Holding Over...........................................................................35

ARTICLE 26: QUIET ENJOYMENT...................................................................35
26.1 General................................................................................35

ARTICLE 27: TENANT'S COVENANTS REGARDING HAZARDOUS MATERIALS..................................35
27.1 Definition.............................................................................35
27.2 General Prohibition...................................................................36
27.3 Notice................................................................................36
27.4 Landlord Covenant.....................................................................36
27.5 Survival..............................................................................36

ARTICLE 28: MISCELLANEOUS.....................................................................37
28.1 No Representations by Landlord........................................................37
28.2 No Partnership........................................................................37
28.3 Broker................................................................................37
28.4 Estoppel Certificate..................................................................37
28 5 Waiver of Jury Trial..................................................................38
28.6 Notices...............................................................................38
28.7 Invalidity of Particular Provisions...................................................38
28.8 Gender and Number.....................................................................38
28.9 Benefit and Burden....................................................................38
28.10 Entire Agreement.....................................................................38
28.11 Authority............................................................................39
28.12 Attorneys' Fees......................................................................39
28.13 Governing Law........................................................................39
28.14 Time of the Essence..................................................................39
28.15 Force Majeure........................................................................39
28.16 Headings.............................................................................39
28.17 Memorandum of Lease..................................................................40
28.18 Effectiveness........................................................................40
28.19 Exhibits and Riders..................................................................40
28.20 Tenant Access........................................................................40
28.21 Roof Rights..........................................................................40
</TABLE>

<PAGE> 6

LIST OF EXHIBITS

Exhibit A Plan Showing Premises [NOT TO SCALE]

Exhibit B Work Agreement

Exhibit C Rules and Regulations

Exhibit D Declaration of Commencement Date

Exhibit E Form of Subordination, Non-Disturbance and Attornment Agreement

Exhibit F Form of Tenant Estoppel Certificate

The Exhibits to this Lease are not included with this Registration Statement on
Form S-1. The Registrant will provide these Exhibits upon the request of the
Securities and Exchange Commission.

<PAGE> 7

DEED OF LEASE

THIS DEED OF LEASE ("Lease") is made as of 14th day of July, 1997 (for
reference purposes only, "Date of Lease"), by and between 11600 Sunrise Limited
Partnership, a Virginia limited partnership ("Landlord"), and Proxicom, Inc., a
Delaware corporation ("Tenant").

WHEREAS, the parties hereto mutually agree that this Lease shall serve to
amend and restate in its entirety, that certain deed of lease dated February 25,
1997 between the parties with respect to the terms and conditions of occupancy
by Tenant of certain space located within the Building (as defined herein)
("Prior Lease"). Therefore, the parties further agree that upon full execution
of this Lease, the Prior Lease shall be amended and restated in its entirety and
that the terms and conditions of this Lease solely shall govern and control the
relationship of the parties, consistent with the terms of Section 28.10 herein.

Landlord and Tenant, intending legally to be bound, hereby covenant and
agree as set forth below.

ARTICLE 1: BASIC LEASE PROVISIONS

The following are the basic terms of this Lease which shall have the
meanings indicated:

1.1 Premises. The Premises is deemed to be (i) approximately 63,350
square feet of rentable area located on the first and second floors of the
Building as outlined on Exhibit A attached hereto and made a part hereof as
measured in accordance with the Standard Method for Measuring Floor Area in
Office Buildings (as published by the Building Owners and Managers Association
International ("BOMA"), Approved June 7, 1996). The measurement of the Premises
shall be certified by Landlord's architect.

1.2 Building. The Building will contain 153,000 +/- square feet of
rentable area upon completion of construction which is currently underway by
Landlord. The Building shall include all alterations, additions, improvements,
restorations or replacements now or hereafter made thereto, including the Common
Area, with an address of 11600 Sunrise Valley Drive, Reston, Virginia 20191. The
area of the Building shall be measured and certified as outlined above in
Section 1.1.

1.3 Term. Five (5) years.

1.4 Commencement Date. July 14, 1997, subject to adjustment as set forth
in Article 4.

1.5 Expiration Date. July 13, 2002, subject to adjustment as set forth in
Article 4.

1.6 Base Rent Upon Execution. - NONE -

1.7 Base Rent. $1,187,906.20* for the first Lease Year payable in equal
monthly installments of $98,992.18. The Base Rent shall be increased annually
beginning on January 1, 1998 by an amount equal to three percent (3%) of the
previous Lease Year Base Rent commencing on January 1 of each subsequent Lease
Year in accordance with the following schedule:

<PAGE> 8

Lease Year Annual Base Rent Monthly Installment
---------- ---------------- -------------------
<S> <C> <C>
July 14, 1997 - December 31, 1997 $ 308,891.09 (see Note 1)
January 1, 1998 - December 31, 1998 $ 928,080.49 (see Note 1)
January 1, 1999 - December 31, 1999 $ 1,276,954.49 $106,412.87
January 1, 2000 - December 31, 2000 $ 1,315,263.12 $109,605.26
January 1, 2001 - December 31, 2001 $ 1,354,721.02 $112,893.42
January 1, 2002 - July 13, 2002 $ 741,644.81 $116,280.22 (see Note 2)
</TABLE>

Note 1: Monthly installments of Base Rent are increasing amounts due to
the staged delivery of space comprising the Premises.

Note 2: 2002 is a partial Lease Year.

1.8 Security Deposit. $131,250.00 in the form of (Check one ) ______ cash
X letter of credit.
- -----

1.9 Base Year for Operating Expenses. The Base Year for calculation of
Operating Expenses shall be Calendar Year 1998.

1.10 Base Year for Real Estate Taxes. The period of January 1, 1998
through and including December 31, 1998.

1.11 Tenant's Proportionate Share of Operating Expenses. To be determined
based upon the final calculation of rentable area in the Building and Premises
pursuant to Sections 1.1 and 1.2 above.

1.12 Tenant's Proportionate Share of Real Estate Taxes. To be determined
based upon the final calculation of rentable area in the Building and Premises
pursuant to Sections 1.1 and 1.2 above.

1.13 Parking Space Allocation. Tenant shall be entitled to free surface
parking for its employees, guests, customers and invitees in accordance with
applicable Fairfax County, Virginia requirements at a ratio not to exceed four
(4) parking spaces per 1,000 rentable square feet of the Premises and otherwise
pursuant to Article 9 of this Lease. Furthermore, Tenant shall be entitled to up
to thirty-nine (39) reserved spaces for a monthly fee as outlined in Section 9.3
as part of (and not in addition to) Tenant's Parking Space Allocation, so long
as Tenant strictly adheres to the terms of Section 9.3 hereof and to the other
terms of this Lease.

1.14 Permitted Use. General office use and certain related uses,
including without limitation, lunch room, computer server room and computer
laboratory, and other uses which are ancillary and reasonably related to general
office use and for no other purpose.

1.15 Tenant's Trade Name. Proxicom, Inc.

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1.16 Broker.

Landlord's: - NONE -

Tenant's: Grubb & Ellis of Metropolitan Washington, D.C.

1.17 Landlord's Address for Payment of Rent.

c/o Morino Enterprises, Inc.
1801 Robert Fulton Drive, Suite 550
Reston, Virginia 20191
Attn: Mr. Timothy H. Meyers

1.18 Landlord's Address for Notice Purposes.

c/o Morino Enterprises, Inc.
1801 Robert Fulton Drive, Suite 550
Reston, Virginia 20191
Attn: Mr. Timothy H. Meyers

With a copy to:

Watt, Tieder, Hoffar & Fitzgerald, L.L.P.
7929 Westpark Drive, Suite 400
McLean, Virginia 22102
Attn: John G. Lavoie, Esquire

1.19 Tenant's Address.

At the Premises
Attn: General Counsel

With a copy to:

Hogan & Hartson L.L.P.
8300 Greensboro Drive, Suite 1100
McLean, Virginia 22102
Attn: Dennis K. Moyer, Esquire

ARTICLE 2: DEFINITIONS

In addition to the terms defined in Article 1 above, the following
defined terms are used in this Lease and shall have the meanings indicated.

2.1 Additional Rent. As defined in Section 5.3.

2.2 Agents. Officers, partners, directors, trustees, employees, Agents,
licensees, customers, contractors, invitees, affiliates, sublessees and
assignees.

2.3 Alterations. Alterations, decorations, additions or improvements of
any kind or nature to the Premises or the Building, whether structural or
non-structural, interior, exterior or otherwise.

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<PAGE> 10

2.4 Calendar Year. A period of twelve (12) months commencing on each
January 1 during the Term, except that the first Calendar Year shall be that
period from and including the Commencement Date through December 31 of that same
year, and the last Calendar Year shall be that period from and including the
last January 1 of the Term through the earlier of the Expiration Date or date of
Lease termination.

2.5 Common Area. All areas, improvements, facilities and equipment from
time to time designated by Landlord for the common use or benefit of Tenant,
other tenants of the Building and their Agents, including, without limitation,
entrances and exits, landscaped areas, exterior lighting, loading areas,
pedestrian walkways, roadways, sidewalks, atriums, courtyards, concourses,
stairs, ramps, washrooms, maintenance and utility rooms, locker rooms, fitness
rooms, gymnasium, common seating and common gathering areas, closets, exterior
utility lines, hallways, lobbies, elevators and their housing and rooms, common
window areas, common walls, common ceilings, common trash areas and Parking
Facilities.

2.6 Event of Bankruptcy. As defined in Article 23.

2.7 Event of Default. As defined in Article 22.

2.8 Guarantor. [Intentionally Deleted.]

2.9 Hazardous Materials. As defined in Article 27.

2.10 Herein, hereinafter, hereunder and hereof. Under this Lease,
including, without limitation, all Exhibits and any Riders.

2.11 Interest Rate. Per annum interest rate listed as the base rate on
corporate loans at large U.S. money center commercial banks as published from
time to time under "Money Rates" in The Wall Street Journal plus three percent
(3%), but in no event greater than the maximum rate permitted by law. In the
event The Wall Street Journal ceases to publish such rates, Landlord shall
choose at Landlord's sole discretion a similar publication which publishes such
rates.

2.12 Force Majeure. As defined in Section 28.15.

2.13 Land. That piece or parcel of land upon which the Building is
situated and all rights, easements and appurtenances thereunto belonging or
pertaining, or such portion thereof as shall be allocated by Landlord to the
Building.

2.14 Lease Year. Each consecutive twelve (12) month period elapsing after
(i) the Commencement Date if the Commencement Date occurs on the first day of a
month, or (ii) the first day of the month following the Commencement Date if the
Commencement Date does not occur on the first day of a month.

2.15 Legal Requirements. All laws, statutes, ordinances, orders, rules,
ordinances, regulations and requirements (including but not limited to any and
all energy conservation requirements applicable to the Building and customary
industry indoor air quality standards and practices) of all federal, state and
municipal governments, and the appropriate agencies, officers, departments,
boards and commissions thereof whether now or hereafter in force which relate or
are applicable to the Land, Premises or the Building or any part thereof.

2.16 Mortgage. Any mortgage, deed of trust, security interest or title
retention interest affecting the Building or the Land, including a leasehold or
subleasehold mortgage, and any and all renewals, modifications, consolidations
of any such interest.

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<PAGE> 11

2.17 Mortgagee. The holder of any note or obligation secured by a
Mortgage including, without limitation, lessors under ground leases,
sale-leasebacks and lease-leasebacks.

2.18 Normal Business Hours

Between 7 a.m. and 7 p.m., Monday through Friday, and between 8 a.m. and
5 p.m. on Saturday, except for the following legal holidays: Martin Luther King,
Jr. Day, President's Day, Memorial Day, Labor Day, Independence Day, Veteran's
Day, Thanksgiving Day, Christmas Day and New Year's Day (or the day designated
by the Federal Government for the observance of such legal holidays).

2.19 Operating Expenses. As defined in Section 7.2.

2.20 Parking Facilities. All parking areas now or hereafter made
available by Landlord for use by tenants, including, without limitation, surface
parking, parking decks, parking garages and/or parking areas under, adjacent to
or within the Building, whether reserved, exclusive, non-exclusive or otherwise.

2.21 Real Estate Taxes. As defined in Section 8.1.

2.22 Rent. Base Rent and Additional Rent.

2.23 Rules and Regulations. The rules and regulations set forth in
Exhibit C attached hereto and made a part hereof, as the same may be amended or
supplemented from time to time.

2.24 Substantial Completion. As defined in the Work Agreement attached
hereto and made a part hereof as Exhibit B.

2.25 Substantial Part. More than fifty percent (50%) of the rentable
square feet of the Premises or the Building, as the case may be.

2.26 Tenant's Property. Any and all personal property, furniture,
business trade fixtures, inventory and equipment located in the Premises and
owned by Tenant together with all leasehold and tenant improvements and
Alterations (specifically excluding all wiring, cabling or conduit of any type
or kind whatsoever) installed in or performed by Tenant or its Agents or on
behalf of Tenant or by Landlord on behalf of Tenant pursuant to the Work
Agreement (as hereinafter defined) or the terms of this Lease but expressly
excluding those items of standard base building work insured by Landlord and
provided at Landlord's sole cost and expense as more fully described in the Work
Agreement.

2.27 Work Agreement. As set forth in Exhibit B attached hereto and made a
part hereof.

ARTICLE 3: THE PREMISES

3.1 Lease of Premises. In consideration of the agreements contained
herein, Landlord hereby conveys, bargains, grants and leases a leasehold
interest in the Premises to Tenant, and Tenant hereby leases a leasehold
interest in the Premises from Landlord, for the Term and upon the terms and
conditions hereinafter provided. As an appurtenance to the Premises, Tenant
shall have the non-exclusive right, together with other tenants of the Building
and their Agents, to use the Common Area. Landlord shall retain absolute
dominion and control over the Common Area and shall operate and maintain the
Common Area in such manner as Landlord, in its sole discretion, shall determine;
provided, however, such exclusive right shall not materially, continually and
adversely interfere with Tenant's use of the Premises for the Permitted Use. The
Premises are leased subject to, and Tenant agrees not to violate, all present
and future covenants, conditions and

-5-
<PAGE> 12

restrictions of record which affect the Building and of which Tenant has been
given actual notice by Landlord. The Premises shall not include an easement for
light, air or view. The parties hereto mutually acknowledge that the Landlord
will be in the process of pursuing and completing an ongoing renovation of and
construction to the Building and Premises during the Term of this Lease and that
some inconvenience, interruption and disruption may be occasioned thereby.
However, Landlord and its contractors shall endeavor in good faith and use
commercially reasonable efforts to minimize any unwarranted or excessive
inconvenience, interruption or disruption to Tenant's business.

3.2 Landlord's Reservations. In addition to the other rights of Landlord
under this Lease, Landlord reserves the right (i) to change the street address
and/or name of the Building, (ii) to install, erect, use, maintain and repair
mains, pipes, conduits and other such facilities to serve the Building's tenants
in and through the Premises, (iii) to grant to anyone the exclusive right to
conduct any particular business or undertaking in the Building, (iv) to
establish a condominium regime for the Building, the Land and/or the Common Area
and to include the Premises therein, (v) to control the use of the roof and
exterior walls of the Building for any purpose, subject to Tenant's rights under
Section 28.21 below, and (vi) perform such other acts and make such other
additions to, expansion of or changes with respect to the Common Area and
Building as Landlord may, in the exercise of sound business judgment, deem to be
appropriate. Landlord may exercise any or all of the foregoing rights without
being deemed to be guilty of an eviction, actual or constructive, or a
disturbance or interruption of the business of Tenant or Tenant's use or
occupancy of the Premises, provided such actions do not materially, continually
and adversely interfere with Tenant's use of the Premises for the Permitted Use.

ARTICLE 4: TERM

4.1 Lease Term. The Term shall commence on the Commencement Date and
expire at midnight on the Expiration Date. Pursuant to Sections 6.1 and 8 of the
Work Agreement, the parties recognize and agree that Tenant shall take occupancy
of the Premises in phases and that certain portions of the Premises will not be
occupied by Tenant until after the Commencement Date. If requested by Landlord,
Tenant shall within fifteen (15) days of such request sign a declaration
acknowledging the Commencement Date and the Expiration Date as to all or any
applicable portion of the Premises in the form attached hereto and made a part
hereof as Exhibit D.

ARTICLE 5: RENT

5.1 Base Rent. Tenant shall pay to Landlord the Base Rent as specified in
Section 1.7.

5.2 Payment of Base Rent. Base Rent for each Lease Year shall be payable
in equal monthly installments, in advance, without demand, notice, deduction,
offset or counterclaim, on or before the first day of each and every calendar
month during the Term; provided, however, that at the time Tenant executes this
Lease it shall pay to Landlord the advance Base Rent described in Section 1.6
herein. If the Commencement Date occurs on a date other than on the first day of
a calendar month, Base Rent shall be prorated from such date until the first day
of the following month. Tenant shall pay the Base Rent and all Additional Rent,
by good check or in lawful currency of the United States of America, to Landlord
at the address set forth in Section 1.17 herein, or to such other address or in
such other manner as Landlord from time to time specifies by written notice to
Tenant. Any payment made by Tenant to Landlord on account of Base Rent may be
credited by Landlord to the payment of any late charges then due and payable and
to any Base Rent or Additional Rent then past due before being credited to Base
Rent currently due.

5.3 Additional Rent. All sums payable by Tenant under this Lease, other
than Base Rent, shall be deemed "Additional Rent," and, unless otherwise set
forth herein, shall be payable in the same manner as set forth above for Base
Rent. Whenever the word "rent" or "Rent" is used in

-6-
<PAGE> 13

this Lease it shall be deemed to include Additional Rent unless the context
specifically or clearly implies that only the Base Rent is referenced. All
remedies available to Landlord pursuant to the terms of this Lease for
non-payment of Base Rent shall be applicable for non-payment of Additional Rent.

5.4 Acceptance of Rent. If Landlord shall direct Tenant to pay Base Rent
or Additional Rent to a "lockbox" or other depository whereby checks issued in
payment of Base Rent or Additional Rent (or both, as the case may be) are
initially cashed or deposited by a person or entity other than Landlord (albeit
on Landlord's authority), then, for any and all purposes under this Lease: (i)
Landlord shall not be deemed to have accepted such payment until ten (10) days
after the date on which Landlord shall have actually received such funds, and
(ii) Landlord shall be deemed to have accepted such payment if (and only if)
within said ten (10) day period. Landlord shall not have refunded (or attempted
to refund) such payment to Tenant. Nothing contained in the immediately
preceding sentence shall be construed to place Tenant in default of Tenant's
obligation to pay Rent if and for so long as Tenant shall timely pay the Rent
required pursuant to this Lease in the manner designated by Landlord.

ARTICLE 6: SECURITY DEPOSIT

6.1 General. Within five (5) business days after the date of this Lease,
Tenant shall deposit in the form of cash or an irrevocable letter of credit the
Security Deposit with Landlord, which irrevocable letter of credit shall be held
by Landlord, without obligation for interest, as security, for the performance
of Tenant's obligations and covenants under this Lease. It is expressly
understood and agreed that such deposit is not an advance rental deposit or a
measure of Landlord's damages in case of an Event of Default. Landlord shall
endeavor in good faith and use its reasonable efforts to conduct a "Post
Move-Out Inspection" of the Premises within ten (10) business days after the
Expiration Date or earlier termination of this Lease, and Tenant shall be
notified of the date for and have the right to be present at such Post Move-Out
Inspection.

6.2 Security in the Form of Cash. If an Event of Default shall occur or
if Tenant fails to surrender the Premises in the condition required by this
Lease, Landlord shall have the right (but not the obligation), and without
prejudice to any other remedy which Landlord may have on account thereof, to
apply all or any portion of the Security Deposit to cure such default or to
remedy the condition of the Premises. If Landlord so applies the Security
Deposit or any portion thereof before the Expiration Date or earlier termination
of this Lease, Tenant shall deposit with Landlord, upon demand, the amount
necessary to restore the Security Deposit to its original amount. If Landlord
shall sell or transfer its interest in the Building, Landlord shall have the
right to transfer the Security Deposit to such purchaser or transferee, in which
event Tenant shall look solely to the new landlord for the return of the
Security Deposit, and, upon an express written assumption of Landlord's
obligations hereunder by such transferee, Landlord thereupon shall be released
from all liability to Tenant for the return of the Security Deposit. Although
the Security Deposit shall be deemed the property of Landlord, any remaining
balance of the Security Deposit shall be returned to Tenant within thirty (30)
days after the Post Move-Out Inspection and the fulfillment of all of Tenant's
obligations under this Lease.

6.3 Security in the Form of an Irrevocable Letter of Credit. The
irrevocable letter of credit shall be in both form and substance and from a
credit institution acceptable to Landlord and must be maintained throughout the
Term by Tenant. If an Event of Default occurs hereunder, Landlord shall have the
unilateral right (but not the obligation) and without prejudice to any other
remedy which Landlord may have on account thereof to redeem all or any portion
of such letter of credit to cure such Event of Default by making demand on the
credit institution issuing the letter of credit. In the event any portion of
such letter of credit has been redeemed by Landlord, Tenant shall be required to
restore such letter of credit to its full amount as provided herein. If Landlord
shall sell or transfer its interest in the Building, Landlord shall have the
right to obligate Tenant to amend

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<PAGE> 14

said letter of credit so that it is payable to such purchaser or transferee, in
which event Tenant shall look solely to such purchaser or transferee for the
return of the letter of credit, and, upon an express written assumption of
Landlord's obligations hereunder by such transferee, Landlord thereupon shall be
released from all liability to Tenant for the return of the Security Deposit.
Landlord shall return such letter of credit to Tenant within thirty (30) days
after the Post Move-Out Inspection and the fulfillment of all of Tenant's
obligations under this Lease.

ARTICLE 7: OPERATING EXPENSES

7.1 Tenant's Proportionate Share of Operating Expenses. Tenant shall pay
to Landlord throughout the Term, as Additional Rent, Tenant's Proportionate
Share of the amount by which the Operating Expenses during each Calendar Year
exceed the Operating Expenses during the Base Year for Operating Expenses. In
the event that the Commencement Date or the Expiration Date are other than the
first day of a Calendar Year then Tenant's Proportionate Share of the Operating
Expenses shall be adjusted to reflect the actual period of occupancy during the
Calendar Year. In the event that the Building and/or Common Area is expanded or
changed, Landlord shall be permitted to equitably adjust Tenant's pro rata share
accordingly and shall provide written notice thereof to Tenant in such event.

7.2 Operating Expenses Defined.

(a) As used herein, the term "Operating Expenses" shall mean all
expenses, disbursements and costs of every kind and nature which Landlord incurs
because of or in connection with the ownership, maintenance, management, repair,
alteration, replacement and operation of the Building (which expressly includes
the Land, the Parking Facilities and the Common Area) including, without
limitation, the following:

(1) Wages and salaries of all employees at the level of building
manager and below, including without limitation an on-site management agent and
staff, whether employed by Landlord or the Building's management company and all
costs related to or associated with such employees or the carrying out of their
duties, including uniforms and their cleaning, taxes, auto allowances and
insurance and benefits (including, without limitation, contributions to pension
and/or profit sharing plans and vacation or other paid absences):

(2) All supplies and materials, including janitorial and lighting
supplies;

(3) All utilities, including, without limitation, electricity,
telephone (including, without limitation, all costs and expenses of telephone
service for the sprinkler alarm system, if any), water, sewer, power, gas,
heating, lighting and air conditioning for the Building, except to the extent
such utilities are charged directly to or paid directly by, a tenant of the
Building;

(4) All insurance (including any deductibles) purchased by Landlord
or the Building's management company relating to the Building and any equipment
or other property contained therein or located thereon including, without
limitation, casualty, liability, rental loss, sprinkler and water damage
insurance;

(5) All repairs to the Building and all mechanical components and
equipment therein (excluding repairs paid for by the proceeds of insurance or by
Tenant or other third parties other than as a part of the Operating Expenses and
excluding structural repairs), including interior, exterior or non-structural,
and regardless of whether foreseen or unforeseen;

(6) All maintenance of the Building and all mechanical components and
equipment therein including, without limitation, painting, ice and snow removal,
landscaping, groundskeeping and the patching, painting and resurfacing of
driveways and parking lots;

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(7) A management fee payable to Landlord and/or the company or
companies managing the Building including, but not limited to, a separate fee
for the Parking Facilities, if any, at a rate which does not exceed the fair
market rate for the Reston, Virginia market;

(8) All maintenance, operation and service agreements for the
Building, and any equipment related thereto, including, without limitation,
service and/or maintenance agreements for the sprinkler system in the Building,
if any (excluding those paid for by Tenant or any third parties other than as a
part of Operating Expenses);

(9) Any additional services not provided to the Building at the
Commencement Date but thereafter provided by Landlord after the Base Year of
Operating Expenses as Landlord shall deem necessary or desirable, to the extent
generally provided to all tenants of the Building;

(10) All condominium fees, dues and related charges and all
assessments, whether general, special or otherwise, levied against Landlord or
the Building pursuant to any property agreements, easement agreements or any
declaration or other instrument affecting the Building or any part or component
thereof (i.e., maintenance of a shared pond, etc.);

(11) All computer rentals for energy management or security
monitoring systems, if any;

(12) Any capital improvements made to the Building after the
Commencement Date (other than those made for the addition of rentable square
footage to the Building or for the sole benefit of a Building tenant pursuant to
its lease), the cost of which shall be amortized on a straight-line basis over
the useful life of such items but only to the extent that such capital
improvement (i) actually results in any reduction of Operating Expenses; (ii) is
necessary or advisable to comply with Legal Requirements, or (iii) is necessary
or advisable to comply with insurance requirements of Landlord's insurer or
Mortgagee;

(13) Any payments made by the Landlord under any easement or license
agreement, declaration, restrictive covenant or instrument pertaining to the
payment of sharing of costs among property owners;

(14) Reasonable and prudent reserves for replacements, repairs and
contingencies consistent with good management practices and commensurate with
comparable buildings in the Tysons/Dulles corridor;

(15) The reasonable and actual cost of providing security service
and/or concierge service to the Building, as the Landlord may determine; and

(16) All costs associated with common area data connections, cable
feeds and repair and maintenance of common area wiring plant.

(b) Operating Expenses shall specifically include an activity fee
("Activity Fee") which shall not be subject to nor included in the Base Year for
Operating Expenses, but shall at all times be a separate charge directly
allocated to all tenants of the Building in accordance with each such tenant's
Proportionate Share of Operating Expenses. Such Activity Fee shall be charged
for Landlord's actual and reasonable costs and expenses incurred in providing
unique additional programs, lectures, activities and gatherings of a
professional, educational, technological and social nature in common for the
tenants of the Building ("Activities"). Landlord shall be under no obligation to
provide such Activities. Landlord shall reasonably cooperate with all tenants of
the Building in order to formulate, publicize and announce such Activities in
order to maximize the

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benefit and attendance at such Activities for all tenants in the Building. The
administration of the payment by Tenant of its proportionate share of the
Activity Fee shall be consistent in all respects with the terms of Sections 7.4
and 7.5, below.

(c) If during any Calendar Year (including the Base Year for
Operating Expenses), the average occupancy rate for the Building is less than
ninety-five percent (95%) or Landlord is not supplying services to 95% of the
rentable area of the Building at any time during any such Calendar Year,
Operating Expenses for such Calendar Year shall be deemed to include all
additional costs and expenses of ownership, maintenance, management and
operation of the Building which Landlord determines that it would have paid or
incurred during any such Calendar Year if such average occupancy rate for the
Building had been 95% and had Landlord been supplying services to 95% of the
rentable square feet of the Building throughout such Calendar Year. If any
amounts comprising Operating Expenses are incurred not just with respect to the
office area of the Building, but also with respect to the retail area of the
Building, if any, then Landlord shall endeavor in good faith and use its
reasonable efforts to allocate such amounts between the office and retail areas
of the Building. Such allocation shall be made on a fair and equitable basis,
based on the usage of or benefits received from the service, utility or item in
question. Notwithstanding the foregoing, in no event shall Landlord recover
greater than 100% of the actual Operating Expenses incurred by Landlord.

7.3 Exclusions from Operating Expenses.

(a) Notwithstanding the provisions of Section 7.2 above, Operating
Expenses shall not include either any of the limitations, qualifications or
exclusions stated in Section 7.2 or any of the following:

(1) Legal fees, space planners' fees, real estate brokers'
leasing commissions and advertising expenses incurred in connection with the
original or future leasing of space in the Building;

(2) Costs and expenses of alterations or improvements of the
Premises or the leasehold premises of other individual tenants in the Building;

(3) Costs of correcting defects in, or inadequacy of, the design
or construction of the Building or the materials used in the construction of the
Building or the equipment or appurtenances thereto to the extent covered by
warranties and recovered by Landlord;

(4) Depreciation, interest and principal payments on mortgages
and other financing costs, if any, other than amortization of and the interest
factor attributable to permitted capital improvements;

(5) Costs and expenses associated with the operation of the
business of the person or entity which constitutes Landlord as the same are
distinguished from the costs of operation of the Building, including accounting
and legal matters, costs of defending any lawsuits with any Mortgagee (except to
the extent the actions of Tenant or any other tenant may be in issue), costs of
selling or financing any of Landlord's interest in the Building and outside fees
paid in connection with disputes with other tenants;

(6) Costs and expenses directly resulting from the gross
negligence or willful misconduct of Landlord or its Agents to the extent
provable by Tenant;

(7) Real Estate Taxes;

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<PAGE> 17

(8) Costs incurred in connection with disputes with tenants,
other occupants, or prospective tenants, or costs and expenses incurred in
connection with negotiations or disputes with employees, management Agents,
purchasers or mortgagees of the Building;

(9) Costs relating to another tenant's or occupant's space which
(A) were incurred in rendering any service or benefit to such tenant that
Landlord was not required, or were for a service in excess of the service that
the Landlord was required to provide Tenant hereunder or (B) were otherwise in
excess of the Building standard services then being provided by Landlord to all
tenants or other occupants in the Building, whether or not such other tenant or
occupant is actually charged therefor by Landlord;

(10) Costs, fines, interest, penalties, legal fees or costs of
litigation incurred due to the late payments of taxes, utility bills and other
costs incurred by Landlord's failure to make such payments when due;

(11) Costs or expenses of utilities directly metered to tenants
of the Building and payable separately by such tenants;

(12) Costs incurred to correct violations by Landlord of any law,
rule, order or regulation which was in effect as of the Commencement Date;

(13) Costs incurred for any item to the extent reimbursed by a
manufacturer's, materialman's, vendor's or contractor's warranty (a "Warranty");

(14) The cost of any "tap fees" or sewer or water connection fees
for the Building payable in connection with the initial construction, renovation
or expansion of the Building;

(15) Taxes such as capital gains, corporation, unincorporated
business, profit, excess profit, inheritance, transfer, recordation, estate,
gift or license fees, or any taxes, fees or charges imposed, assessed, levied or
charges which are directly associated with construction of the Building;

(16) To the extent that Landlord actually receives monetary
proceeds from such casualty, destruction or condemnation, costs of repairs,
restoration, replacements or other work occasioned by (A) fire, windstorm or
other casualty (whether such destruction be total or partial) and (B) the
exercise by governmental authorities of the right of eminent domain (whether
such taking be total or partial);

(17) Costs incurred in connection with the sale, financing,
refinancing, mortgaging, selling or change of ownership of the Building.

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<PAGE> 18

7.4 Estimated Payments. Landlord shall submit to Tenant, before the
beginning of each Calendar Year, a statement of Landlord's estimate of the
Operating Expenses payable by Tenant during such Calendar Year. In addition to
the Base Rent, Tenant shall pay to Landlord on or before the first day of each
month during such Calendar Year an amount equal to one-twelfth (1/12) of the
estimated Operating Expenses payable by Tenant for such Calendar Year as set
forth in Landlord's statement. If Landlord fails to give Tenant notice of its
estimated payments due under this Section for any Calendar Year, then Tenant
shall continue making monthly estimated payments in accordance with the estimate
for the previous Calendar Year until a new estimate is provided by Landlord. If
Landlord determines that, because of unexpected increases in Operating Expenses
or other reasons, Landlord's estimate of the Operating Expenses was too low,
then Landlord shall have the right to give a new statement of the estimated
Operating Expenses due from Tenant for such Calendar Year or the balance thereof
and Tenant shall thereafter pay monthly estimated payments based on such new
statement.

7.5 Actual Operating Expenses. Within ninety (90) days after the end of
each Calendar Year, Landlord shall submit a statement to Tenant showing the
actual Operating Expenses for such Calendar Year and Tenant's Proportionate
Share of the amount by which such Operating Expenses exceed the Operating
Expenses during the Base Year. If for any Calendar Year, Tenant's estimated
monthly payments exceed Tenant's Proportionate Share of the amount by which the
actual Operating Expenses for such Calendar Year exceed the Operating Expenses
during the Base Year, then Landlord shall give Tenant a credit in the amount of
the over-payment toward Tenant s next monthly payments of estimated Operating
Expenses. If for any Calendar Year Tenant's estimated monthly payments are less
than Tenant's Proportionate Share of the amount by which the actual Operating
Expenses for such Calendar Year exceed the Operating Expenses during the Base
Year, then Tenant shall pay the total amount of such deficiency to Landlord
within thirty (30) days after receipt of the statement from Landlord. Landlord's
and Tenant's obligations with respect to any overpayment or underpayment of
Operating Expenses shall survive the expiration or earlier termination of this
Lease.

7.6 Tenant's Right to Audit. Tenant shall pay to Landlord all amounts
payable pursuant to Sections 7.4 and 7.5 herein without off-set or deduction
within the time periods provided for in each respective Section notwithstanding
that Tenant may object to Landlord's statement rendered pursuant thereto. In the
event Tenant shall dispute the amount set forth in Landlord's statement as
described in Section 7.5 herein, Tenant shall have the right, not later than
sixty (60) days following receipt of such statement, to cause Landlord's books
and records with respect to the preceding Calendar Year to be audited by an
independent Certified Public Accounting firm from one of the "Big Six" (i.e.,
Arthur Andersen & Co. or similar firm) which is mutually acceptable to Landlord
and Tenant, and who shall not be compensated on a contingency basis. Such audit
shall occur upon not less than twenty (20) days prior written notice to
Landlord, at Landlord's place of business or the actual location of Landlord's
books and records if different from Landlord's place of business, during
Landlord's normal business hours. The amounts payable under this Section by
Landlord to Tenant or by Tenant to Landlord, as the case may be, shall be
appropriately adjusted on the basis of such audit and all such sums paid to
Landlord by Tenant or credited against Additional Rent otherwise due by Tenant
promptly upon the conclusion of such audit. If such audit discloses a liability
for further refund by Landlord to Tenant in excess of six percent (6%) of the
payments previously made by Tenant for such Calendar Year, the actual
out-of-pocket cost of such audit incurred by Tenant shall be borne by Landlord
and paid within thirty (30) days of demand from Tenant; otherwise, the cost of
such audit shall be borne by Tenant. If such audit discloses a liability for
further refund by Landlord to Tenant of one percent (1%) or less or a liability
for further payment by Tenant, then in that event the actual out-of-pocket cost
to respond to the audit incurred by Landlord not to exceed $2,500 shall be borne
by Tenant and paid within thirty (30) days of demand from Landlord. Landlord and
Tenant shall each fully cooperate and instruct their respective staffs to fully
cooperate with such independent audit. The findings of the Big-Six firm shall be
conclusive and binding on the parties hereto as it relates to the statement at
issue. If Tenant shall not request an audit in

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<PAGE> 19

accordance with the provisions of this Section within sixty (60) days of receipt
of Landlord's reconciliation statement of actual Operating Expenses, such
statement shall be conclusive and binding upon Landlord and Tenant.

ARTICLE 8: TAXES

8.1 Tenant's Proportionate Share of Real Estate Taxes.

(a) Tenant shall pay to Landlord throughout the Term, as Additional
Rent, Tenant's Proportionate Share of the amount by which the Real Estate Taxes
during each Calendar Year exceed the Real Estate Taxes for the Base Year for
Real Estate Taxes. In the event the Commencement Date or the Expiration Date are
other than the first day of a Calendar Year, the Tenant's Proportionate Share of
the Real Estate Taxes shall be adjusted to reflect the actual period of
occupancy during the Calendar Year. In the event that the Building and/or Common
Area is expanded or changed, Landlord shall be permitted to equitably adjust
Tenant's pro rata share accordingly and shall provide written notice thereof to
Tenant in such event.

(b) As used herein, the term "Real Estate Taxes" shall mean all taxes
and assessments, general or special, ordinary or extraordinary, foreseen or
unforeseen, assessed, levied or imposed by any governmental authority upon the
Building (which expressly includes the Land, the Parking Facilities and the
Common Area) and upon the fixtures, machinery, equipment or systems in, upon or
used in connection with any of the foregoing, and the rental, revenue or
receipts derived therefrom, under the current or any future taxation or
assessment system or modification of, supplement to, or substitute for such
system. Real Estate Taxes also shall include special assessments which are in
the nature of or in substitution for real estate taxes, including, without
limitation, road improvement assessments, special use area assessments, school
district assessment, vault space rentals and any business, professional and
occupational license tax payable by Landlord in connection with the Building. If
at any time the method of taxation prevailing at the Date of Lease shall be
altered so that in lieu of, as a substitute for or in addition to the whole or
any part of the taxes now levied or assessed, there shall be levied or assessed
a tax of whatever nature, then the same shall be included as Real Estate Taxes
hereunder. Further, for the purposes of this Article, Real Estate Taxes shall
include the reasonable expenses (including, without limitation, attorneys' fees)
incurred by Landlord in challenging or obtaining or attempting to obtain a
reduction of such Real Estate Taxes, regardless of the outcome of such
challenge. Notwithstanding the foregoing, Landlord shall have no obligation to
challenge Real Estate Taxes. If as a result of any such challenge, a tax refund
is made to Landlord, then the amount of such refund less the expenses of the
challenge shall be deducted from the monthly estimated payments for Real Estate
Taxes due in the Lease Year such refund is received. Notwithstanding the
foregoing, Real Estate Taxes shall expressly exclude taxes of a nature described
at Section 7.3(a)(15) above.

8.2 Estimated and Actual Payments. Landlord shall charge Tenant for its
Proportionate Share of Real Estate Taxes and Tenant shall pay such charges in
accordance with the procedures established under Sections 7.4 and 7.5 for
payment of Operating Expenses, subject to final reconciliation and audit in
accordance with the procedures established under Section 7.6 for Operating
Expenses.

ARTICLE 9: PARKING

9.1 Parking Spaces. During the Term, Tenant shall be entitled to free
non-exclusive surface parking in accordance with the terms of this Article 9 and
the Parking Space Allocation.

9.2 Changes to Parking Facilities. Landlord shall have the right, from
time to time, without Tenant's consent, to change, alter, add to, temporarily
close or otherwise affect the Parking Facilities in such manner as Landlord, in
its sole discretion, deems appropriate including, without

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<PAGE> 20

limitation, the right to designate reserved spaces available only for use by one
or more tenants for a monthly rental fee at Landlord's prevailing rate (however,
in such event, those parking spaces shall still be deemed Common Area for the
purpose of the definition of Operating Expenses), provided that, except in
emergency situations or situations beyond Landlord's control, Landlord shall use
commercially reasonable efforts to provide alternative Parking Facilities.
Furthermore, Landlord may elect to control and restrict parking at the Building
through the use of parking stickers, passes or similar methods, to be reasonably
determined by Landlord, including, but not limited to the employment of parking
attendants, gated parking or otherwise in order to ensure that each tenant of
the Building abides by the parking requirements of Landlord and pursuant to any
lease requirements. Landlord may at any time change, alter or amend such
administration and regulation of the Parking Facilities at the Building for the
benefit of the Building's operation. Any and all such costs or expenses
associated with Landlord's efforts to control, restrict and administer parking
issues at the Building shall be specifically considered as an Operating Expense
under this Lease.

9.3 Reserved Parking. Furthermore, in the event that Landlord grants or
designates reserved parking spaces within the covered access controlled area of
the Parking Facilities during the Term hereof and subject to the terms of this
Article 9, Tenant shall be entitled to receive a mutually agreeable number of
such reserved parking spaces for a monthly rental fee payable by Tenant as
Additional Rent hereunder, at Landlord's prevailing rate in the Parking
Facilities. The Landlord's prevailing rate shall be $40.00 per space per month
as of the Date of Lease which is subject to adjustment by Landlord from time to
time thereafter. Landlord shall be under no obligation to do so, but in the
event Landlord has additional reserved spaces that become available in the
Parking Facilities throughout the Term, Landlord shall attempt to offer Tenant
and other tenants of the Building additional reserved parking spaces on a
prorata basis at Landlord's then-prevailing rate, and in such case Tenant's
Additional Rent shall be adjusted accordingly. Notwithstanding any terms of this
Article 9 to the contrary, (i) Landlord shall never be prevented or precluded
from providing all eligible tenants of the Building (other than Tenant) a
minimum number of reserved parking spaces allocable to each rentable suite in
the Building at all times during the Lease Term, and (ii) Landlord shall not be
prohibited from granting or providing a reasonable number of such reserved
parking spaces to Landlord or Landlord's Affiliates or employees in addition to
or in excess of those provided to Tenant or other tenants of the Building.

ARTICLE 10: USE

10.1 General. Tenant shall occupy the Premises solely for the Permitted
Use under Tenant's Trade Name. The Premises shall not be used for any other
purpose without the prior written consent of Landlord. Tenant shall comply, at
Tenant's expense, with all Legal Requirements to the extent applicable to the
Premises. Tenant shall not use or occupy the Premises or allow the Premises to
be used in violation of any recorded covenants, conditions and restrictions
affecting the Premises or the Building or of any Legal Requirements, or of any
certificate of occupancy issued for the Premises or Building or in any manner
that is dangerous or that shall constitute waste, unreasonable annoyance or a
nuisance to Landlord or the other tenants of the Building.

10.2 Tenant's Personal Property. Tenant shall pay before delinquency any
business, rent or other tax or fee that is now or hereafter assessed or imposed
upon Tenant's use or occupancy of the Premises, the conduct of Tenant's business
in the Premises or Tenant's Property. If any such tax or fee is enacted or
altered so that such tax or fee is imposed upon Landlord or so that Landlord is
responsible for collection or payment thereof, then Tenant shall pay the amount
of such tax or fee as Additional Rent.

10.3 Indoor Air Quality. Tenant shall not permit any person to smoke
tobacco in any part of the Building, Land, or Common Area, except in those
areas, if any, that are clearly designated by the Landlord as smoking areas.
Tenant shall not use, store or handle or permit the usage, storing or

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<PAGE> 21

handling of any materials in levels that exceed those established for indoor air
quality pursuant to applicable Legal Requirements.

ARTICLE 11: ASSIGNMENT AND SUBLETTING

11.1 General. Except as otherwise expressly provided in this Article 11,
no Transfer (as hereinafter defined) shall be permitted without Landlord's prior
written consent which consent Landlord may withhold in its sole and absolute
discretion.

11.2 Restriction on Transfer. Subject to the provisions of Sections 11.3,
11.4 and 11.5, Tenant shall not, without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed,
assign, or otherwise transfer or convey this Lease or any interest herein or
sublet the Premises or any part thereof or enter into any licenses or
concessions or permit the use and occupancy of the Premises by any party other
than Tenant or transfer the Premises or any part thereof by operation of law or
other voluntary or involuntary transfer (any such assignment, sublease or any of
the other foregoing shall sometimes be hereinafter referred to as a "Transfer").
Tenant shall not mortgage or encumber this Lease or any interest herein without
the prior written consent of Landlord, which consent may be withheld at
Landlord's absolute discretion, and any such mortgage or encumbrance shall be
deemed a "Transfer." Any Transfer without Landlord's Consent shall constitute an
Event of Default by Tenant under this Lease, without the benefit of any
additional notice or cure period specified in Section 22.2(ii) herein, and in
addition to all of Landlord's other remedies at law, in equity or under this
Lease, such Transfer shall be voidable at Landlord's election. In addition, this
Lease shall not, nor shall any interest of Tenant herein be assignable by
operation of law without the written consent of Landlord. For purposes of this
Article 11, if Tenant is a corporation, partnership or other entity, any
transfer, assignment, encumbrance or hypothecation of fifty percent (50%) or
more (individually or in the aggregate) of any stock or other ownership interest
in such entity, and/or any transfer, assignment, hypothecation or encumbrance of
any controlling ownership or voting interest in such entity, or any merger of
consolidation in which the Tenant is involved, shall be deemed an assignment of
this Lease and shall be subject to all of the restrictions and provisions
contained in this Article 11. Notwithstanding the foregoing, (a) the immediately
preceding sentence shall not apply to any transfers of stock of Tenant if Tenant
is a publicly-held corporation and such stock is transferred publicly over a
recognized security exchange or over-the-counter market and (b) (i) the
assignment or subletting of the Premises to a parent, subsidiary or affiliate of
Tenant (collectively, "Affiliate"), whether by merger, succession or
consolidation, or a joint venture or partnership in which Tenant, or its
Affiliate, is a general partner and (ii) a sale, merger or initial public
offering of stock in Tenant, shall not constitute a Transfer requiring
Landlord's prior approval under the terms of this Lease or otherwise.

11.3 Landlord's Options. If at any time or from time to time during the
Term, Tenant desires to effect a Transfer which requires Landlord's prior
approval, Tenant shall deliver to Landlord written notice ("Transfer Notice")
setting forth the terms and provisions of the proposed Transfer and the identity
of the proposed assignee, sublessee or other transferee (sometimes referred to
hereinafter as a "Transferee"). Tenant shall also deliver to Landlord with the
Transfer Notice, a current financial statement and financial statements for the
preceding two (2) years of the Transferee which have been certified or audited
by a reputable independent accounting firm acceptable to Landlord, and such
other information concerning the business background and financial condition of
the proposed Transferee as Landlord may reasonably request. Landlord shall have
the option, exercisable by written notice delivered to Tenant within fifteen
(15) days after Landlord's receipt of the Transfer Notice, such financial
statements and other information, either to approve or disapprove such Transfer,
which approval shall not be unreasonably withheld, conditioned or delayed.

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11.4 Additional Conditions; Excess Rent. If Landlord approves the
proposed Transfer pursuant to Section 11.3 above, Tenant may enter into the
proposed Transfer with such proposed Transferee subject to the following further
conditions:

(a) the Transfer shall be on substantially the same terms set
forth in the Transfer Notice delivered to Landlord (if the
terms have changed in any material respect, Tenant must
submit a revised Transfer Notice to Landlord and Landlord
shall hate another fifteen (15) days after receipt thereof
to make the election in Section 11.3 above);

(b) no Transfer shall be valid and no Transferee shall take
possession of the Premises until an executed counterpart of
the assignment, sublease or other instrument effecting the
Transfer has been delivered to Landlord pursuant to which,
in the case of an assignment only, the Transferee shall
expressly assume all of Tenant's obligations under this
Lease;

(d) an amount equal to fifty percent (50%) of the difference
between (1) all sums paid to Tenant or its agent by or on
behalf of such Transferee under the assignment or sublease
less the "sublet or assignment costs" (i.e. actual out of
pocket concessions, leasing commissions, renovation
allowances, etc.), and (2) the Rent then in effect and paid
by Tenant under the Lease and attributable to the portion
of the Premises so assigned or sublet shall be paid to
Landlord within ten (10) days after receipt thereof by
Tenant as Additional Rent under this Lease, without
affecting or reducing any other obligations of Tenant
hereunder.

11.5 Reasonable Disapproval. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer pursuant to Section 11.3 shall
be deemed reasonably withheld if based upon any or all of the following factors:
(i) the proposed Transfer would result in more than two subleases of portions of
the Premises being in effect at any one time during the Term (other than
subleases which do not require the prior approval of Landlord); (ii) the net
effective rent payable by the Transferee (adjusted on a rentable square foot
basis) is less than the net effective rent then being quoted by Landlord for new
leases in the Building for comparable size space for a comparable period of
time; (iii) the proposed Transferee is an existing tenant of the Building or is
negotiating with Landlord; (iv) the proposed Transferee is a governmental
entity; (v) the portion of the Premises to be sublet or assigned is irregular in
shape with inadequate means of ingress and egress; (vi) the use of the Premises
by the Transferee (A) is not permitted by the use provisions in Article 10
hereof, or (B) violates any exclusive use granted by Landlord to another tenant
in the Building (to the extent such exclusive is disclosed to Tenant); (vii) the
Transfer would result in significant increase in the use of the parking areas or
Common Areas by the Transferee's employees or visitor, and/or significantly
increase the demand upon utilities and services to be provided by Landlord to
the Premises; (viii) the Transferee does not have the financial capability to
fulfill the obligations imposed by the Transfer; (ix) the Transferee is not in
Landlord's reasonable opinion of reputable or good character or consistent with
Landlord's desired tenant mix; or (x) the Transferee is a real estate developer
or landlord or is acting directly or indirectly on behalf of a real estate
developer or landlord.

11.6 Release. No Transfer shall release Tenant of Tenant's obligations
under this Lease or alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. Landlord may
require that any Transferee remit directly to Landlord on a monthly basis, all
monies due Tenant by said Transferee. However, the acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of
any

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provision hereof. Consent by Landlord to one Transfer shall not be deemed
consent to any subsequent Transfer. If an Event of Default occurs by any
Transferee of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such Transferee or successor. Landlord may
consent to subsequent assignments of the Lease or sublettings or amendments or
modifications to the Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions shall not relieve Tenant of liability under this Lease.

11.7 Administrative and Attorneys' Fees. If Tenant requests the consent
of Landlord to any Transfer, then Tenant shall, upon demand, pay Landlord any
consultants', engineers' and reasonable attorneys fees incurred by Landlord in
connection with such request for consent up to a maximum of $500.00. Acceptance
of reimbursement of Landlord's attorneys' and paralegal fees shall in no event
obligate Landlord to consent to any proposed Transfer.

11.8 Material Inducement. Tenant understands, acknowledges and agrees
that Landlord's right to receive any excess consideration paid by a Transferee
in connection with an approved Transfer as provided in Section 11.4(d) above, is
a material inducement for Landlord's agreement to lease the Premises to Tenant
upon the terms and conditions herein set forth.

ARTICLE 12: MAINTENANCE AND REPAIR

12.1 Landlord's Obligation. Subject to the last two sentences of Section
3.1 hereof and subject to the terms of the Work Agreement, Landlord warrants
that all common Building systems will be in good working order as of the
Commencement Date, and shall be responsible for maintaining, repairing and
replacing elevator pistons, HVAC systems, plumbing, roof and roof system,
parking structure, electrical system and the structural integrity of the
Building, all subject to appropriate Operating Expense increase pass-throughs as
otherwise permitted in this Lease. As long as no Event of Default has occurred
and is continuing, and except for repairs which Tenant is required to make
pursuant to Section 12.2, Landlord shall keep and maintain in good repair and
working order the Building, including the Common Area and the equipment within
and serving the Premises and the Building (excluding Tenant's Property) that are
required for the normal maintenance and operation of the Premises and the
Building. The cost of such maintenance and repairs to the Building and said
equipment shall be included in the Operating Expenses and paid by Tenant as
provided in Article 7 herein. Tenant shall immediately give Landlord written
notice of any defect or need for repairs. After such notice, Landlord shall have
a reasonable opportunity to repair or cure such defect. Landlord's liability
with respect to any defects, repairs or maintenance for which Landlord is
responsible under any of the provisions of this Lease shall be limited to the
cost of such repairs or maintenance or the curing of such defect.

12.2 Tenant's Obligation. Tenant shall, at its own expense, maintain the
Premises and all of Tenant's Property in good, clean and safe condition,
promptly making all necessary repairs and replacements. Tenant shall repair at
its expense, any and all damage caused by Tenant or Tenant's Agents to the
Building, Common Area, the Premises and Tenant's Property, including equipment
within and serving the Building, ordinary wear and tear excepted. Such
maintenance and repairs shall be performed with due diligence, lien-free and in
a first-class workmanlike manner, by such contractor(s) selected by Tenant and
approved by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, Tenant shall bear the
cost of, but shall not itself perform any such repairs which would (i) affect
the Building's structure or mechanical or electrical systems, or (ii) which
would be visible from the exterior of the Building or from any interior Common
Area of the Building. Where Landlord performs such repairs, Tenant shall
promptly pay to Landlord upon demand all costs incurred in connection therewith;
together with interest thereon at the Interest Rate if payment is not remitted
within thirty (30) days after written demand therefor. Without the prior written
consent of the Landlord which shall not be

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unreasonably withheld, conditioned or delayed, but subject to the provisions of
Section 28.21 hereof, Tenant shall not have access to the roof of the Building
for any purpose whatsoever.

12.3 Landlord's Right to Maintain or Repair. If, within ten (10) days
following notice to Tenant, Tenant fails to commence to repair or replace any
damage to the Building, Common Area, Premises or Tenant's Property which is
Tenant's obligation to perform, and diligently pursue timely completion of such
repair and replacement, Landlord may, at its option, perform Tenant's
obligations and Tenant shall promptly pay Landlord all costs incurred in
connection therewith plus interest thereon at the Interest Rate from the due
date until paid.

ARTICLE 13: ALTERATIONS

13.1 Initial Construction. Landlord and Tenant agree that the
construction of the Tenant Work (as defined in the Work Agreement) and other
initial construction with respect to the Premises shall be performed in
accordance with the Work Agreement attached hereto as Exhibit B and made a part
hereof.

13.2 Tenant's Alterations. Tenant shall not make or perform, or permit
the making or performance of, any alterations, installations, improvements,
additions or other physical changes in or about the Premises (specifically
including the installation of wiring, cabling or conduit of any type or kind
whatsoever), other than routine decorating or hanging of artwork, (referred to
collectively as "Alterations") without Landlord's prior consent. Within thirty
(30) days after Landlord receives Tenant's request for approval of an
Alteration, together with the plans and the identity of the contractors to
perform the Alterations, Landlord shall give Tenant a notice of its approval or
disapproval of Tenant's request. Notwithstanding the foregoing provisions of
this Section or Landlord's consent to any Alterations, all Alterations shall be
made and performed in conformity with and subject to the following provisions:
(i) except as otherwise provided in Section 13.1, all alterations shall be made
and performed at Tenant's sole cost and expense and at such time and in such
manner as Landlord may reasonably designate; (ii) Alterations shall be made only
by contractors or mechanics reasonably approved by Landlord; (iii) no
Alterations shall materially and adversely affect any part of the Building or
materially and adversely affect any service required to be furnished by Landlord
to Tenant or to any other tenant or occupant of the Building; (iv) all business
machines and mechanical equipment shall be placed and maintained by Tenant in
settings sufficient in Landlord's reasonable judgment to absorb and prevent
vibration, noise and annoyance to other tenants or occupants of the Building;
(v) Tenant shall (a) submit to Landlord reasonably detailed plans and
specifications for each proposed Alteration and (b) not commence any such
Alteration without first obtaining Landlord's approval of such plans and
specifications, which approval will not be unreasonably withheld, conditioned or
delayed; (vii) notwithstanding Landlord's approval of plans and specifications
for any Alterations, all Alterations shall be made and performed in full
compliance with all Legal Requirements and in accordance with the Rules and
Regulations; (viii) all materials and equipment to be incorporated in the
Premises as a result of all Alterations shall be of reasonably good quality and
the Alterations shall be performed in good and workmanlike manner; and (ix)
Tenant shall require any contractor performing Alterations to carry and maintain
at all times during the performance of the work, at no expense to Landlord, (A)
a policy of comprehensive public liability insurance, including contractor's
liability coverage, contractual liability coverage, completed operations
coverage, contractor's protective liability coverage and a broad form property
damage endorsement, naming Landlord and (at Landlord's request) any Mortgagee of
the Building and any management agent as additional insured(s), with such policy
to afford protection to the limit of not less than Two Million and 00/100
Dollars ($2,000,000.00) with respect to bodily injury or death to any number of
persons in any one accident and to the limit of not less than One Million and
00/100 Dollars ($1,000,000.00) to damage to the property of any one owner from
one occurrence, and (B) workmen's compensation or similar insurance in the form
and amounts required by the laws of the Commonwealth of Virginia.

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<PAGE> 25

13.3 Mechanics' Liens. Notice is hereby given that Landlord shall not be
liable for any labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's, materialman's or other lien for any such labor
or materials shall attach to or affect the reversion or other estate or interest
of Landlord in and whenever and as often as any mechanic's lien or materialman's
lien shall have been filed against the Premises or the Building based upon any
act or interest of Tenant or of anyone claiming through Tenant, or if any lien
or security interest with respect thereto shall have been filed affecting any
materials, machinery or fixtures used in the construction, repair or operation
thereof or annexed thereto by Tenant or its successors in interest, including
but not limited to the Tenant's Property, Tenant shall cause such lien to be
removed or satisfied by bonding, deposit or otherwise payment in full within
thirty (30) days after written notice from Landlord. In the event Tenant fails
to remove or satisfy said lien or encumbrance within said 30-day period,
Landlord, in addition to any other remedy under this Lease, may pay the amount
secured by such lien or security interest or discharge the same by deposit and
the amount so paid or deposited shall be collectible as Additional Rent plus
interest thereon at the Interest Rate until paid.

13.4 Landlord Alterations. Landlord shall have no obligation to make any
Alterations in or to the Premises, the Building, the Common Area or the Land
except as specifically provided in the Work Agreement. Landlord hereby reserves
the right, from time to time, to make Alterations to the Building, change the
Building dimensions, erect additional stories thereon and attach other buildings
and structures thereto, and to erect such scaffolding and other aids to
construction as Landlord deems appropriate, and no such Alterations, changes,
construction or erection shall constitute an eviction, constructive or
otherwise, or permit Tenant any abatement of Rent or claim so long as they do
not materially, continually and adversely interfere with Tenant's use of the
Premises for the Permitted Use.

ARTICLE 14: SIGNS

14.1 General. Subject and subordinate to any signage indicating the name
and or address of the Building and subject to the limitations of all Legal
Requirements, Tenant shall be permitted, at its sole cost and expense, to erect
a sign(s) displaying Tenant's trade name in a size, type and location(s) to be
mutually agreed upon by Landlord and Tenant. Otherwise, no sign, advertisement
or notice shall be inscribed, painted, affixed, placed or otherwise displayed by
Tenant on any part of the Land or the outside or the inside (including, without
limitation, the windows) of the Building or the Premises. Landlord shall, at its
expense, provide one (1) building standard door sign and one (1) directory strip
on the Building directory to be located in the main lobby. If any prohibited
sign, advertisement or notice is nevertheless exhibited by Tenant, Landlord
shall have the right to remove the same, and Tenant shall pay any and all
expenses incurred by Landlord in such removal upon demand, together with
interest thereon at the Interest Rate, until paid. Landlord shall have the right
to prohibit any sign, advertisement, notice or statement to the public by Tenant
which, in Landlord's opinion, tends to impair the reputation of the Building or
its desirability as a first class office building.

ARTICLE 15: TENANT'S PROPERTY

15.1 Tenant's Equipment. Tenant shall not install or operate in the
Premises (i) any electrically operated equipment or other machinery, other than
normal and customary general office equipment that does not require wiring,
cooling or other service in excess of Building standards and other than Tenant's
computer server equipment (including, without limitation, any equipment required
to provide the Building's computer network), (ii) any equipment of any kind or
nature whatsoever which will require any changes, replacements or additions to,
or changes in the use of, any water, heating, plumbing, air conditioning or
electrical system of the Premises or the Building, or (iii) any equipment which
causes the floor load to exceed the load limits set by Landlord for the
Building. Landlord's consent to such installation or operation may be withheld
in Landlord's sole and absolute discretion and if such consent is given shall be
conditioned upon, among other things,

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<PAGE> 26

the payment by Tenant of additional compensation for any excess consumption of
utilities and any additional power, wiring, cooling or other service (as
determined in the sole discretion of Landlord) that may result from such
equipment. In order to ensure that Building standards are not exceeded and to
avert a possible adverse effect upon the Building electrical service, Tenant
shall give prior notice to Landlord whenever Tenant wants to connect to the
Building electrical distribution system any electrically operated equipment
other than lamps, personal computer terminals and other similar normal and
customary small general office equipment. Machines and equipment which cause
noise or vibration that may be transmitted to the structure of the Building or
to any space therein so as to be objectionable to Landlord or any other Building
tenant shall, to the extent permitted by Landlord, be installed and maintained
by Tenant, at its expense, on vibration eliminators or other devices sufficient
to eliminate such noise and vibration. Neither Tenant nor its Agents, shall at
any time enter, adjust, tamper with, touch or otherwise in any manner affect the
building systems or facilities of the Building.

15.2 Removal of Tenant's Property. Except to the extent Tenant requests
and Landlord designated otherwise at the time of installation, all or any part
of the Tenant's Property (excluding any items of Tenant's personal property,
furniture, business trade fixtures, inventory and equipment which subject to
Section 22.9 herein shall be removed by Tenant at the expiration or earlier
termination of this Lease or be subject to the terms of Section 29.5 herein),
whether made with or without the consent of Landlord, shall, at the election of
Landlord, either be removed by Tenant at its expense before the expiration of
the Term (and Tenant shall restore the Premises to its prior condition
reasonable wear and tear excepted) or shall remain upon the Premises and be
surrendered therewith at the Expiration Date or earlier termination of this
Lease as the property of Landlord without disturbance, molestation or injury and
in good operating condition. Any and all damage or injury to the Premises or the
Building caused by the moving or removal of the Tenant's Property into or out of
the Premises, or due to the same being on the Premises, shall be repaired by
Landlord, at the expense of Tenant and paid to Landlord upon demand plus
interest thereon at the Interest Rate until paid. Tenant shall promptly remove
from the Common Area any of Tenant's Property there deposited.

ARTICLE 16: RIGHT OF ENTRY

16.1 General. Tenant shall permit Landlord or its Agents, at any time and
without notice, to enter the Premises, without charge therefor to Landlord and
without diminution of Rent, (i) to examine, inspect and protect the Premises and
the Building and (ii) to make such repairs or perform such maintenance or
oversight which in the sole judgment of Landlord may be deemed necessary or
desirable. Furthermore, Tenant shall permit Landlord or its Agents, at any time
and with reasonable prior notice, to enter the Premises, without charge therefor
to Landlord and without diminution of Rent, (i) to exhibit the Premises to
prospective purchasers of the Building or to present or future Mortgagees, (ii)
to exhibit the same to prospective tenants during the last twelve (12) months of
the Term and to erect on the Premises a suitable sign indicating the Premises
are available or (iii) to make such alterations which in the sole judgment of
Landlord may be deemed necessary or desirable.

ARTICLE 17: INSURANCE

17.1 Insurance Rating. Tenant shall not conduct or permit any activity,
or place any equipment or material, in or about the Premises, the Building or
the Common Area which will invalidate or increase the rate of fire or other
insurance on the Building or insurance benefiting any other tenant of the
Building; and if any increase in the rate of insurance is stated by any
insurance company or by the applicable insurance rating bureau to be due to any
activity, equipment or material of Tenant in or about the Premises, the
Building, or the Common Area, such statement shall be conclusive evidence that
the increase in such rate is due to the same and, as a result thereof, Tenant
shall pay such increase to Landlord upon demand plus interest thereon at the
Interest Rate

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<PAGE> 27

until paid. If any insurance coverage carried by Landlord pursuant to this
Article 17 or otherwise with respect to the Building or Land shall be canceled
or reduced (or cancellation or reduction thereof shall be threatened) by reason
of the use or occupancy of the Premises by Tenant or by anyone permitted by
Tenant to be upon the Premises, and if Tenant fails to remedy such condition
within the grace period provided in Section 22.1 (ii) herein, Landlord shall
have all remedies provided in this Lease, at law or in equity, including,
without limitation, the right (but not the obligation) to enter upon the
Premises and attempt to remedy such condition at Tenant's sole cost and expense
which will be Additional Rent when incurred by Landlord payable upon demand plus
interest thereon at the Interest Rate until paid.

17.2 Liability Insurance. Tenant shall, at its sole cost and expense,
procure and maintain throughout the Term a commercial general liability policy
insuring against claims, demands or actions for bodily injury, death, personal
injury, and loss or damage to property arising out of or in connection with: (i)
the Premises and Tenant's Property; (ii) the condition of the Premises; (iii)
Tenant's operations in, maintenance and use of the Premises, Building and Common
Area, and (iv) Tenant's liability assumed under this Lease. Such insurance shall
afford protection to the limit of not less than $2,000,000 with respect to
bodily injury or death to any one individual, to the limit of not less than
$3,000,000 with respect to bodily injury or death to any number of individuals
in any one accident and to the limit of $1,000,000 with respect to damage to the
property of any one owner from one occurrence and shall be primary over any
insurance carried by Landlord. Endorsements shall be obtained for
cross-liability and contractual liability.

17.3 Insurance for Tenant's Property. Tenant shall, at its sole cost and
expense, procure and maintain throughout the Term a property insurance policy
(written on an "All Risk" basis) insuring all of Tenant's Property for not less
than the full replacement cost of said property. All proceeds of such insurance
shall be used to repair or replace Tenant's Property. If this Lease is
terminated as the result of a casualty in accordance with Article 21 herein, the
proceeds of said insurance attributable to the repair and for replacement of any
leasehold improvements, tenant improvements or Alterations performed by or on
behalf of Tenant or by Landlord pursuant to the terms of the Work Agreement or
this Lease shall be the property of the Landlord and paid to Landlord upon
demand together with interest thereon at the Interest Rate until paid.

17.4 Additional Insurance.

(a) Tenant shall, at its sole cost and expense, procure and maintain
business interruption insurance in an amount not less than the Base Rent due
hereunder for the first Lease Year, which amount shall be revised from time to
time upon the reasonable request of the Landlord or its Mortgagee.

(b) Tenant shall, at all times during the term hereof, maintain in
effect workers' compensation insurance as required by applicable Legal
Requirements.

17.5 Requirements of Insurance Coverage. All such insurance required to
be carried by Tenant herein shall be with an insurance company licensed to do
business in the Commonwealth of Virginia and rated not lower than A-XII in the
A.M. Best Rating Guide. Such insurance (i) shall contain an endorsement that
such policy shall remain in full force and effect notwithstanding that the
insured has released its right of action against any party before the occurrence
of a loss; (ii) shall name Landlord and, at Landlord's request, any Mortgagee or
ground lessor, as additional insured(s); (iii) shall provide that the policy
shall not be canceled, failed to be renewed or materially amended without at
least thirty (30) days' prior written notice to Landlord and, at Landlord's
request, any Mortgagee, and (iv) shall be issued as primary policies and not
contributing with and not in excess of coverage which the Landlord may carry. On
or before the Commencement Date and, thereafter, not less than thirty (30) days
before the expiration date of the insurance policy, a certified copy of the
policy (including any renewal or replacement policy), together with evidence
satisfactory to Landlord

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<PAGE> 28

of the payment of all premiums for such policy, shall be delivered to Landlord
and, at Landlord's request, to any Mortgagee. Tenant's insurance policies shall
not include deductibles in excess of Five Thousand and 00/100 Dollars
($5,000.00).

17.6 Waiver of Subrogation. Each party hereby releases the other party
hereto from liability for any loss or damage to any building, structure or
tangible personal property, or any resulting loss of income, or losses under
worker's compensation laws and benefits, notwithstanding that such loss, damage
or liability may arise out of the negligent or intentionally tortious act or
omission of the other party or its Agents, if such loss or damage is covered by
insurance benefiting the party suffering such loss or damage or was required to
be covered by insurance pursuant to this Lease. Each party hereto shall require
its insurer(s) to include in its insurance policies a waiver of subrogation
clause (providing that such waiver of right of recovery against the other party
shall not impair the effectiveness of such policy or the insured's ability to
recover thereunder), and shall promptly notify the other in writing if such
clause cannot be included in any such policy; if such waiver of subrogation
clause shall not be available, then the foregoing waiver of right of recovery
shall be void.

17.7 Security. Landlord shall engage the services of a professional
controlled access system for the Building and it is understood that such
engagement shall in no way increase Landlord's liability for occurrences and/or
consequences which such a system is designed to detect or avert and that Tenant
shall look solely to its insurer as set out above for claims for damages or
injury to any person or property.

17.8 Landlord's Insurance. Landlord shall procure and maintain throughout
the Term fire and extended coverage insurance on the Building and public
liability insurance in such coverage and amounts as reasonably determined by
Landlord in its prudent management of the Building, as necessary to satisfy the
requirements of Landlord's Mortgagee, if any and as would reasonably be
maintained by landlords of similar buildings in Reston, Virginia. At Landlord's
option, such insurance may be carried under any blanket or umbrella policies
which Landlord has in force for other buildings and projects. Landlord may, but
shall not be obligated to carry any other form or forms of insurance as Landlord
or the mortgagees or ground lessors of Landlord may reasonably determined is
advisable. The proceeds payable under all fire and other hazard insurance
policies maintained by Landlord on the Building shall belong to and be the
property of Landlord, and Tenant shall not have any interest in such proceeds.
The coverage afforded by such fire and extended coverage casualty insurance
shall be equal in amount to the replacement cost of the Building from time to
time hereunder.

17.9 Coverage. Landlord makes no representation to Tenant that the limits
or forms of coverage specified above or approved by Landlord are adequate to
insure Tenant's Property or Tenant's obligations or assumption of contractual
liability under this Lease, and the limits of any insurance carried by Tenant
shall not limit its duties and obligations under this Lease.

ARTICLE 18: LANDLORD SERVICES AND UTILITIES

18.1 Ordinary Services to the Premises. As long as no Event of Default
has occurred and is continuing and subject to Legal Requirements and Force
Majeure events, Landlord shall furnish to the Premises throughout the Term (i)
electricity appropriate for the Permitted Use, (ii) heating and air conditioning
appropriate for the Permitted Use during Normal Business Hours, (iii) reasonable
janitorial service, (iv) regular trash removal from the Premises, (v) hot and
cold water from points of supply, (vi) adequate supplies for restrooms located
in the Common Area, (vii) recycling services and the administration of
applicable recycling programs, as required by law, and (viii) elevator service,
provided that Landlord shall have the right to remove such elevators from
service as may be required for moving, freight or for servicing maintaining the
elevators or the Building or for security reasons, all such services to be
provided in scope, quality and frequency similar to those services

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being customarily provided by landlords in comparable office buildings in the
Reston, Virginia area. The cost of all services provided by Landlord hereunder
shall be included within Operating Expenses, unless charged directly (and not as
a part of Operating Expenses) to Tenant or another tenant of the Building. The
foregoing services shall be furnished by Landlord and reimbursed by Tenant as
part of Operating Expenses; provided, however, that, except as expressly set
forth herein, Landlord shall be under no responsibility or liability for
failure, defect or interruption in such services caused by Force Majeure,
breakage, accident, strikes, repairs or for any other cause or causes beyond the
control of Landlord, nor in any event for any indirect or consequential damages;
and failure or omission on the part of Landlord to furnish such service shall
not be construed as an eviction of Tenant, nor work an abatement of Rent, nor
render Landlord liable in damages, nor release Tenant from prompt fulfillment of
any of the covenants under this Lease. Landlord may comply with voluntary
controls or guidelines promulgated pursuant to any Legal Requirements relating
to the use or conservation of energy, water, gas, light, or electricity or the
reduction of automobile or other emissions without creating any liability of
Landlord to Tenant under this Lease. Landlord shall not be responsible if the
normal operation of the Building air-conditioning system shall fail to provide
conditioned air within comfortable temperatures levels (as agreed upon by
Landlord and Tenant from time to time, in writing) (A) in any portions of the
Premises which have a connected electrical load for all purposes (including
lighting and power) or which have a human occupancy in excess of the average
electrical load and human occupancy factors for which the Building
air-conditioning system is designed, (B) because of Alterations made by or on
behalf of Tenant, (C) in any portions of the Premises exposed to direct sunlight
in which Tenant fails to keep the window treatments closed, or (D) because of
the failure by Tenant or its Agents to use the HVAC system in the manner in
which it was designed to be used. Tenant agrees to observe and comply with all
reasonable rules from time to time prescribed by Landlord for the proper
functioning and protection of the HVAC systems in the Building.

18.2 After-Hours Services to the Premises. If Tenant requires or requests
that the services to be furnished by Landlord (except Building standard
electricity and elevator service) be provided during periods in addition to the
periods set forth in Section 2.18, then Tenant shall notify Landlord in advance,
prior to 5 p.m., Monday-Friday (such notice to be tendered on days exclusive of
the legal holidays specified in Section 2.18 hereof) and Tenant shall pay upon
demand Landlord's actual additional expenses resulting therefrom. Landlord may
from time to time during the Term, set a reasonable per hour charge for
after-hours service which shall reflect Landlord's actual cost of providing such
after-hours service.

18.3 Utility Charges. All telephone, electricity, gas, heat and other
utility service furnished to the Premises shall be paid for directly by Tenant
except to the extent the cost of same is included within, and paid for by Tenant
as part of, Operating Expenses. Landlord reserves the right separately to meter
or monitor the utility services provided to the Premises. The cost of any such
meter shall be born by the Landlord. Tenant shall reimburse Landlord for the
cost of any excess utility usage in the Premises. Excess usage shall mean the
excess of the estimated usage in the Premises (on a rentable square foot basis)
during any billing period over one hundred twenty-five percent (125%) of the
building standard usage (which shall mean one hundred and twenty-five percent
(125%) of the average per square foot usage of all office tenants in the
Building during normal business hours excluding the Tenant or any other tenants
notified by Landlord of excessive utility consumption) during the same period as
reasonably calculated by Landlord. Tenant shall pay for the excess consumption
of electricity at the then-current price per kilowatt hour and price per unit of
demand charged Landlord by the utility company plus Landlord's actual cost and a
cost for depreciation equal to one-half ( 1/2) of the original cost of the
equipment used to provide such excess service.

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ARTICLE 19: LIABILITY OF LANDLORD

19.1 No Liability. Except where due to Landlord or its Agents' gross
negligence or willful misconduct, Landlord and its Agents shall not be liable to
Tenant or its Agents for, and Tenant, for itself and its Agents, does hereby
release Landlord and its Agents from liability for, any liability, damage,
compensation or claim arising from (i) the necessity of repairing any portion of
the Premises or the Building or the Common Area or any structural defects
thereto, (ii) any interruption in the use of the Premises or the Common Area for
any reason including any interruption or suspension of utility service, (iii)
fire or other casualty or personal or property injury, damage or loss resulting
from the use or operation (by Landlord, Tenant, or any other person whomsoever)
of the Premises or the Building or the Common Area, (iv) the termination of this
Lease, (v) robbery, assault, theft or other crime, or (vi) any leakage in the
Premises or the Building from water, rain, snow or casualty, or any other cause
whatsoever. No such occurrence shall give rise to diminution or abatement of
Rent or constructive eviction. Notwithstanding the foregoing, any goods,
automobiles, property or personal effects stored or placed by Tenant or its
Agents in or about the Premises, the Building or the Common Area shall be at the
sole risk of Tenant; Tenant hereby expressly waives its right to recover against
Landlord and its Agents therefor, except where due to Landlord's or its Agent's
gross negligence or willful misconduct. Tenant hereby waives any claim it might
have against Landlord or its Agents for any consequential damages or business
losses sustained by Tenant arising out of the loss or damage to any person or
property of Tenant, or any interruption in the use of the Premises or the Common
Area for any reason. Tenant acknowledges its obligation to insure against such
losses and damages. Tenant shall not have the right to offset or deduct any
amount allegedly owed to Tenant pursuant to any claim against Landlord from any
rent or other sum payable to Landlord. Tenant's sole remedy for recovering upon
such claim shall be to institute an independent action against Landlord.

19.2 Indemnity.

(a) Tenant shall indemnify, defend, protect and hold Landlord and
its Agents harmless from and against any and all damage, claim, liability, cost
or expense (including, without limitation, reasonable attorneys' or other
professionals' fees) of every kind and nature (including, without limitation,
those arising from any injury or damage to any person, property or business)
incurred by or claimed against Landlord or its Agents directly or indirectly, as
a result of, arising from or in connection with (i) Tenant's or its Agents' use,
occupancy, repair or maintenance of the Premises, the Building or the Common
Area; (ii) Tenant's breach of any provision of this Lease; or (iii) any act,
omission or gross negligence of Tenant or its Agents.

(b) Tenant shall not be liable for, and Landlord shall indemnify and
save harmless Tenant from and against all fines, damages, suits, claims,
demands, losses and actions (including reasonable attorneys' fees) for any
injury to person (including death) or damage to or loss of property on or about
the Common Areas of the Building caused by the gross negligence or willful
misconduct of Landlord, its employees, Agents or contractors. Tenant shall not
be liable to Landlord or responsible to Landlord for any loss or damage to any
property or death or injury to any person occasioned by theft, fire, act of God,
public enemy, criminal conduct of third parties, injunction, riot, strike,
insurrection, war, court order, by other tenants of the Building or any other
matter beyond the reasonable control of Tenant, except the gross negligence or
willful misconduct of Tenant, its Agents, employees, invitees and contractors.

19.3 Limitation on Recourse. Notwithstanding anything contained in this
Lease to the contrary, the Obligations of Landlord under this Lease (including
any actual or alleged breach or default by Landlord) do not constitute personal
obligations of the individual partners, directors, officers, shareholders,
trustees, advisors or Agents of Landlord or Landlord's partners, and Tenant
shall not seek recourse against the individual partners, directors, officers or
shareholders, trustees, advisors or Agents of Landlord or Landlord's partners,
or any of their personal assets for satisfaction

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<PAGE> 31

of any liability with respect to this Lease. In addition, in consideration of
the benefits accruing hereunder to Tenant and notwithstanding anything contained
in this Lease to the contrary, Tenant hereby covenants and agrees for itself and
all of its successors and assigns that the liability of Landlord for its
obligations under this Lease (including any liability as a result of any actual
or alleged failure, breach or default hereunder by Landlord), shall be limited
solely to, and Tenant's and its successors' and assigns' sole and exclusive
remedy shall be against Landlord's interest in the Building and Land and
proceeds therefrom, and no other assets of Landlord. In the event that the
original Landlord hereunder, or any successor owner of the Building, shall sell
or convey the Building, all liabilities and obligations on the part of the
original Landlord, or such successor owner, under this Lease occurring
thereafter shall terminate as of the day of such sale, and thereupon all such
liabilities and obligations shall be binding on the new owner, so long as the
new owner shall expressly assume in writing all of Landlord's obligations under
this Lease.

ARTICLE 20: RULES AND REGULATIONS

20.1 General. Tenant and its Agents shall at all times abide by and
observe the Rules and Regulations and any amendments thereto that may be
promulgated from time to time by Landlord for the operation and maintenance of
the Building and the Common Area and the Rules and Regulations shall be deemed
to be covenants of the Lease to be performed and/or observed by Tenant. Nothing
contained in this Lease shall be construed to impose upon Landlord any duty or
obligation to enforce the Rules and Regulations, or the terms or provisions
contained in any other lease, against any other tenant of the Building. Landlord
shall not be liable to Tenant for any violation by any party of the Rules and
Regulations or the terms of any other Building lease. If there is any
inconsistency between this Lease and the Rules and Regulations, this Lease shall
govern. Landlord reserves the right to amend and modify the Rules and
Regulations as it deems necessary upon reasonable prior written notice to
Tenant.

ARTICLE 21: DAMAGE AND CONDEMNATION

21.1 Damage to the Premises. If the Premises shall be damaged by fire or
other cause without the fault or negligence of Tenant or its Agents, Landlord
shall diligently and as soon as practicable after such damage occurs (taking
into account the time necessary to effect a satisfactory settlement with any
insurance company involved and any delays beyond the direct control of Landlord)
repair such damage to the Premises (excluding the Tenant's Property) at the
expense of Landlord; provided, however, that Landlord's obligation to repair
such damage shall not exceed the proceeds of insurance available to Landlord
(reduced by any proceeds retained pursuant to the rights of Mortgagee).
Notwithstanding the foregoing, (i) if the Premises or the Building is damaged by
fire or other cause to such an extent that, in Landlord's reasonable judgment,
the damage cannot be substantially repaired within three hundred sixty five
(365) days after the date of such damage then Landlord within sixty (60) days
from the date of such damage shall inform Tenant in writing of Landlord's
election as to whether Landlord intends to rebuild, replace or repair such
damage. Thereafter, either Landlord or Tenant may within sixty (60) days from
the date of Tenant's receipt of Landlord's prior written election terminate this
Lease by written notice to the other (such termination to be effective on the
one hundred twenty first (121st) day after the date of such damage or an earlier
date to be mutually agreed upon in writing by the parties hereto). If the
Premises are damaged during the last Lease Year, then Landlord or Tenant within
thirty (30) days from the date of such damage may terminate this Lease by
written notice to the other. If either Landlord or Tenant terminates this Lease,
the Rent shall be apportioned and paid to the date of such termination. If
neither Landlord nor Tenant so elects to terminate this Lease but the damage
required to be repaired by Landlord is not repaired within three hundred sixty
five (365) days from the date of such damage, Tenant, within thirty (30) days
from the expiration of such three hundred sixty five (365) day period may
terminate this Lease by written notice to Landlord. During the period that
Tenant is deprived of the use of the damaged portion of the Premises, and
provided such damage is not the consequence of the fault or negligence of Tenant
or its Agents, Base Rent and

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Tenant's Proportionate Share shall be reduced by the ratio that the rentable
square footage of the Premises damaged bears to the total rentable square
footage of the Premises before such damage. Furthermore, to the extent that
Landlord actually receives the proceeds of any rent loss insurance for the
applicable period of casualty and repair, Tenant shall receive an equal amount
of credit/offset against its Rent obligations otherwise due under this Lease.
Notwithstanding anything herein to the contrary, Landlord shall not be required
to rebuild, replace or repair of the Tenant's Property. In the event that
neither party terminates this Lease as aforesaid, Tenant shall be required to
repair or replace the Tenant's Property.

21.2 Condemnation. If the whole or a Substantial Part of the Premises or
the Building shall be taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
(including, without limitation, sale under threat of such a taking), or if the
Premises are rendered untenantable for Tenant's Permitted Use, then the Term
shall cease and terminate as of the date when title vests in such governmental
or quasi-governmental authority, and Rent shall be prorated to the date when
title vests in such governmental or quasi-governmental authority. If less than a
Substantial Part of the Premises is taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
(including, without limitation, sale under threat of such a taking), Base Rent
and Tenant's Proportionate Share shall be reduced by the ratio that the portion
so taken bears to the rentable square footage of the Premises before such
taking, effective as of the date when title vests in such governmental or
quasi-governmental authority, and this Lease shall otherwise continue in full
force and effect. Tenant shall have no claim against Landlord (or otherwise) as
a result of such taking, and Tenant hereby agrees to make no claim against the
condemning authority for any portion of the amount that may be awarded as
compensation or damages as a result of such taking; provided, however, that
Tenant may, to the extent allowed by law, claim an award for moving expenses and
for the taking of any of Tenant's Property (other than its leasehold interest in
the Premises) which does not, under the terms of this Lease, become the property
of Landlord at the termination hereof, as long as such claim is separate and
distinct from any claim of Landlord and does not diminish Landlord's award.
Tenant hereby assigns to Landlord any right and interest it may have in any
award for its leasehold interest in the Premises.

ARTICLE 22: DEFAULT

22.1 Events of Default. Each of the following shall constitute an Event
of Default: (i) Tenant fails to pay Rent within five (5) days after written
notice from Landlord; provided that no such notice shall be required if at least
two such notices shall have been given during the same Lease Year; (ii) Tenant
fails to observe or perform any other term, condition or covenant herein binding
upon or obligating Tenant within ten (10) days after written notice from
Landlord or, so long as Tenant has commenced a cure and is diligently pursing
same within such initial ten (10) day period, such additional period as is
necessary to effect such cure, not to exceed thirty (30) days in the aggregate,
(iii) Tenant abandons or vacates the Premises for more than forty-five (14)
days; (iv) Tenant makes or consents to a general assignment for the benefit of
creditors or a common law composition of creditors, or a receiver of the
Premises or all or substantially all of Tenant's or Guarantor's (if applicable)
assets is appointed; (v) a Transfer in violation of Article 11 herein; or (vi)
the failure by Tenant to timely perform any of those covenants described in
Section 17.1 of this Lease.

22.2 Landlord's Remedies. Upon the occurrence of an Event of Default,
Landlord, at its option, without further notice or demand to Tenant, may in
addition to all other rights and remedies provided in this Lease, at law or in
equity:

(a) Terminate this Lease and Tenant's right of possession of the
Premises. If Landlord elects to terminate the Lease, every obligation of the
parties shall cease as of the date of such termination, except for those
obligations of the Tenant that survive the expiration or earlier

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termination of the Lease and as provided in Section 22.3. In such event Landlord
shall be obligated to attempt to relet the Premises, or any part thereof, for
the account of Tenant, for such rent and term and upon such other conditions as
are acceptable to Landlord in its sole and absolute discretion. For purposes of
such reletting, Landlord is authorized to redecorate, repair, alter and improve
the Premises to the extent necessary in Landlord's sole discretion; and

(b) Re-enter and repossess the Premises and remove all persons and
effects therefrom, by summary proceeding, ejectment or other legal action or by
using such force as may be necessary. Landlord shall have no liability by reason
of any such re-entry, repossession or removal.

22.3 Tenant's Liability for Damages. If Landlord terminates this Lease
and the Tenant's right to possession pursuant to Section 22.2, Tenant shall
remain liable (in addition to accrued liabilities) to the extent legally
permissible for (i) the sum of (A) all Base Rent and Additional Rent provided
for in this Lease until the date this Lease would have expired had such
termination not occurred, and (B) any and all costs, expenses and damages
incurred by Landlord in terminating the Lease, reentering the Premises,
repossessing the same, making good any default of Tenant, painting, altering or
dividing the Premises, combining the same with any adjacent space for any new
tenants, putting the same in proper repair, reletting the same (including any
and all rental concessions to new tenants, repairs, Alterations, attorneys fees
and disbursements and brokerage fees and commissions), and any and all expenses
which Landlord may incur during the occupancy of any new tenant (other than
expenses of a type that are Landlord's responsibility under the terms of this
Lease); less (ii) the proceeds of any reletting. Tenant agrees to pay to
Landlord the difference between items (i) and (ii) above with respect to each
month during the Term, at the end of such month. Any suit brought by Landlord to
enforce collection of such difference for any one month shall not prejudice
Landlord's right to enforce the collection of any difference for any subsequent
month. In addition to the foregoing, Tenant shall pay to Landlord such sums as
the court which has jurisdiction there over may adjudge reasonable as attorneys'
fees with respect to any successful lawsuit or action instituted by Landlord to
enforce the provisions of this Lease. Landlord shall use commercially reasonable
efforts to relet the whole or any part of the Premises for the whole of the
unexpired Term, or longer, or from time to time for shorter periods, for any
rental then obtainable, giving such concessions of rent and making such special
repairs, Alterations, decorations and paintings for any new tenant as Landlord,
in its sole but good faith discretion, may deem advisable. Landlord shall be
under no obligation to lease all or any portion of the Premises before any other
space in the Building is fully leased by Landlord and that if at the time of any
reletting of the Premises there exists other reasonably comparable space in the
Building available for leasing, then the Premises shall be deemed the last space
rented, even though the Premises may be relet prior to the date such other
reasonable comparable space is leased. Tenant's liability as aforesaid shall
survive the institution of summary proceedings and the issuance of any warrant
thereunder. Upon the occurrence of an Event of Default, Landlord may recover
from Tenant the value and/or cost of all concessions to Tenant under this Lease
to the extent that the same is not/are not reflected in the Rent otherwise due
hereunder.

22.4 Liquidated Damages. If Landlord terminates this Lease pursuant to
Section 22.2, Landlord shall have the right, at any time, at its option, to
require Tenant to pay to Landlord, on demand, as liquidated and agreed final
damages in lieu of Tenant's liability under Section 22.3 (other than for
Tenant's liability for concessions, attorneys' and brokerage fees), an amount
equal to the difference, discounted to the date of such demand at an annual rate
of interest equal to the then-current yield on actively traded U.S. Treasury
bonds with 10-year maturities, as published in the Federal Reserve Statistical
Release for the week prior to the date of such termination, between (i) the Base
Rent and Additional Rent, computed on the basis to the then-current annual rate
of Base Rent and Additional Rent and all fixed and determinable increases in
Base Rent, which would have been payable from the date of such demand to the
date when this Lease would have expired, if it had not be terminated, and (ii)
the then fair rental value of the Premises for the same period as determined by
the Landlord. Upon payment of such liquidated and agreed final damages, Tenant

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shall be released from all further liability under this Lease with respect to
the period after the date of such demand except for those obligations of the
Tenant that survive the expiration or earlier termination of the Lease. If,
after the Event of Default giving rise to the termination of this Lease, but
before presentation of proof of such liquidated damages, the Premises, or any
part thereof, shall be relet by Landlord for a term of one year or more, the
amount of rent reserved upon such reletting shall be deemed to be the fair
rental value for the part of the Premises so relet during the term of such
reletting.

22.5 Rights Upon Possession. If Landlord takes possession pursuant to
this Article, Landlord may, at its option, enter into the Premises, remove
Tenant's Alterations, signs, personal property, equipment and other evidences of
tenancy, and store them at Tenant's risk and expense or dispose of them as
Landlord may see fit, and take and hold possession of the Premises.

22.6 No Waiver. If Landlord shall institute proceedings against Tenant
and a compromise or settlement thereof shall be made, the same shall not
constitute a waiver of any other covenant, condition or agreement herein
contained, nor of any of Landlord's rights hereunder. No waiver by Landlord of
any breach shall operate as a waiver of such covenant, condition or agreement,
or operate as a waiver of such covenant, condition or agreement itself, or of
any subsequent breach thereof. No payment of Rent by Tenant or acceptance of
Rent by Landlord shall operate as a waiver of any breach or default by Tenant
under this Lease. No payment by Tenant or receipt by Landlord of a lesser amount
than the monthly installment of Rent herein stipulated shall be deemed to be
other than a payment on account of the earliest unpaid Rent, nor shall any
endorsement or statement on any check or communication accompanying a check for
the payment of Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Rent or to pursue any other remedy provided in this Lease.
No re-entry by Landlord, and no acceptance by Landlord to keys from Tenant,
shall be considered an acceptance to a surrender to the Lease.

22.7 Right of Landlord to Cure Tenant's Default. If an Event of Default
shall occur, then Landlord may (but shall not be obligated to) make such payment
or do such act to cure the Event of Default, and charge the amount of the
expense thereof, together with interest thereon at the Interest Rate, to Tenant.
Such payment shall be due and payable upon demand; however, the making of such
payment or the taking of such action by Landlord shall not be deemed to cure the
Event of Default or to stop Landlord from the pursuit of any remedy to which
Landlord would otherwise be entitled. Any such payment made by Landlord on
Tenant's behalf shall bear interest until paid at the Interest Rate.

22.8 Late Payment. If Tenant fails to pay any Rent within five (5) days
after such Rent becomes due and payable, Tenant shall pay to Landlord a late
charge of five percent (5%) of the amount of such overdue Rent. In addition, any
such late Rent payment shall bear interest from the date such Rent became due
and payable to the date of payment thereof by Tenant at the Interest Rate. Such
late charge and interest shall be due and payable within two (2) days after
written demand from Landlord.

22.9 Landlord's Lien. As security for the performance of Tenant's
obligations, Tenant grants to Landlord a lien upon and a security interest in
Tenant's Property both existing or hereafter acquired. Such lien shall be in
addition to Landlord's rights of distraint, if any. Within twenty (20) days
after request, Tenant shall execute, acknowledge and deliver to Landlord a
financing statement and any other document submitted to Tenant in form
reasonably acceptable to Tenant evidencing or establishing such lien and
security interest. During any period that an Event of Default exists hereunder,
Tenant shall not sell, transfer or remove from the Premises all or any portion
of Tenant's Property except to repair, exchange, or replace such items of
Tenant's Property comprised of personal property, furniture, and business trade
fixtures and equipment; provided such repair, exchange, or replacement of such
designated items is of equal or greater value. Landlord hereby agrees that its

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lien upon Tenant's Property comprised of personal property, furniture, and
business trade fixtures and equipment shall be automatically subordinated to any
purchase money security interest or to the lien of any institutional lender of
Tenant, if required by such lender. In confirmation of such subordination upon
the reasonable request of Tenant, Landlord shall at Tenant's expense, execute a
commercially reasonable and customary subordination instrument in form
acceptable to Landlord in its sole and absolute discretion.

ARTICLE 23: BANKRUPTCY

23.1 Event of Bankruptcy. An "Event of Bankruptcy" is: the occurrence,
with respect to Tenant, of any of the following: (i) Tenant's becoming
insolvent, as that term is defined in Title 11 of the United States Code (the
"Bankruptcy Code"), or under the insolvency laws of any state (the "Insolvency
Laws"); (ii) appointment of a receiver or custodian for any property of Tenant,
or the institution of a foreclosure or attachment action upon any property of
Tenant; (iii) filing of a voluntary petition by Tenant under the provisions of
the Bankruptcy Code or Insolvency Laws; (iv) filing of an involuntary petition
against Tenant as the subject debtor under the Bankruptcy Code or insolvency
Laws, which either (A) is not dismissed within sixty (60) days after filing, or
(B) results in the issuance of an order for relief against the debtor; or (v)
Tenant's making or consenting to an assignment for the benefit of creditors or a
composition of creditors.

23.2 Remedies. Upon occurrence of an Event of Bankruptcy, Landlord shall
have all rights and remedies available pursuant to Article 22; provided,
however, that while a case (the "Case") in which Tenant is the subject debtor
under the Bankruptcy Code is pending, Landlord's right to terminate this Lease
shall be subject, to the extent required by the Bankruptcy Code, to any rights
of Tenant or its trustee in bankruptcy (collectively, "Trustee") to assume or
assign this Lease pursuant to the Bankruptcy Code. Trustee shall not have the
right to assume or assign this Lease unless Trustee promptly: (i) cures all
defaults under this Lease; (ii) compensates Landlord for damages incurred as a
result of such defaults; (iii) provides adequate assurance of future performance
on the part of Tenant or Tenant's assignee; (iv) complies with the other
requirements of this Article; and (v) complies with all other requirements of
the Bankruptcy Code. If Trustee fails to assume or assign this Lease in
accordance with the requirements of the Bankruptcy Code within sixty (60) days
after entry or an order for relief then Trustee shall be deemed to have rejected
this Lease. Adequate assurance of future performance shall require that the
following minimum criteria be met: (A) Tenant's gross receipts in the ordinary
course of business during the thirty (30) days preceding the Case must be
greater than ten (10) times the next monthly installment of the Base Rent and
additional rent; (B) both the average and median of Tenant's monthly gross
receipts in the ordinary course of business during the seven (7) months
preceding the Case must be greater than ten (10) times the next monthly
installment of the Base Rent and additional rent: (C) Trustee must pay its
estimated pro-rata share of the cost of all services performed or provided by
Landlord (whether directly or through Agents or contractors and whether or not
previously included as part of the Base Rent) in advance of the performance or
provision of such services; (D) Trustee must agree that Tenant's business shall
be conducted in a first-class manner, and that no liquidating sale, auction or
other non-first-class business operation shall be conducted in the Premises; (E)
Trustee must agree that the use of the Premises as stated in this Lease shall
remain unchanged and that no prohibited use shall be permitted; (F) Trustee must
agree that the assumption or assignment of this Lease shall not violate or
affect the rights of other tenants in the Building and the complex or area in
which the Building is located; (G) Trustee must pay at the time the next monthly
installment of the Base Rent is due, in addition to such installment, an amount
equal to the monthly installments of the Base Rent and additional rent due for
the next six (6) months thereafter, such amount to be held as a security
deposit; (H) Trustee must agree to pay, at any time Landlord draws on such
security deposit, the amount necessary to restore such security deposit to its
original amount; and (i) all assurances of future performance specified in the
Bankruptcy Code must be provided. If Trustee shall propose to

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assume and assign this Lease to any person who shall have made a bona fide offer
to accept an assignment of this Lease on terms acceptable to Trustee, then
notice of such proposed assignment shall be given to Landlord by Trustee no
later than twenty (20) days after receipt by Trustee of such offer, but in any
event no later than ten (10) days prior to the date that Trustee shall make
application to the court of competent jurisdiction for approval to assume this
Lease and enter into such assignment, and Landlord shall thereupon have the
option, to be exercised by notice to Trustee given at any time prior to the date
of such application, to accept an assignment of this Lease upon the same terms
and conditions and for the same consideration, if any, as the offer made by such
person, less any brokerage commissions which may be payable out of the
consideration to be paid by such person for the assignment of this Lease.

ARTICLE 24: MORTGAGES

24.1 Subordination.

(a) This Lease and Tenant's interest hereunder shall have priority over,
and be senior to, the lien of any Mortgage made by Landlord after the date of
this Lease. However, if at any time or from time to time during the Term, a
Mortgagee or prospective Mortgagee requests that this Lease be subject and
subordinate to its Mortgage, and if Landlord consents to such subordination,
this Lease and Tenant's interest hereunder shall be subject and subordinate to
the lien of such Mortgage and to all renewals, modifications, replacements,
consolidations and extensions thereof and to any and all advances made
thereunder and the interest thereon. Tenant agrees that, within ten (10) days
after receipt of a written request therefor from Landlord, it will, from time to
time, execute and deliver any instrument or other document required by any such
Mortgagee to subordinate this Lease and its interest in the Premises to the lien
of such Mortgage. If, at any time or from time to time during the Term, a
Mortgagee of a Mortgage made prior to the date of this Lease shall request that
this Lease have priority over the lien of such Mortgage, and if Landlord
consents thereto, this Lease shall have priority over the lien of such Mortgage
and all renewals, modifications, replacements, consolidations and extensions
thereof and all advances made thereunder and the interest thereon, and Tenant
shall, within ten (10) days after receipt of a request therefor from Landlord,
execute, acknowledge and deliver any and all documents and instruments
confirming the priority of this Lease. In any event, however, if this Lease
shall have priority over the lien of a first Mortgage, this Lease shall not
become subject or subordinate to the lien of any subordinate Mortgage, and
Tenant shall not execute any subordination documents or instruments for any
subordinate Mortgagee, without the written consent of the first Mortgagee.

(b) This Lease and Tenant's interest hereunder shall be subject and
subordinate to each and every ground or underlying lease hereafter made of the
Building or the land on which it is located, or both, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Tenant
agrees that, within ten (10) days after receipt of request therefor from
Landlord, it will, from time to time, execute, acknowledge and deliver any
instrument or other document required by any such lessor to subordinate this
Lease and its interest in the Premises to such ground or underlying lease.

(c) Notwithstanding the foregoing, Tenant's obligations under this
Article 24 are expressly subject to a fully executed non-disturbance agreement
substantially in accordance with the form attached hereto as Exhibit E.

24.2 Mortgagee Protection. Tenant agrees to give any Mortgagee by
certified mail, return receipt requested, a copy of any notice of default served
upon Landlord, provided that before such notice Tenant has been notified in
writing of the address of such Mortgagee. Tenant further agrees that if Landlord
shall have failed to cure such default within the time provided for in this
Lease, then the Mortgagee shall have an additional thirty (30) days within which
to cure such default; provided, however, that if such default cannot be
reasonably cured within that time, then such Mortgagee shall

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have such additional time as may be necessary to cure such default so long as
Mortgagee has commenced and is diligently pursuing the remedies necessary to
cure such default (including, without limitation, the commencement of
foreclosure proceedings, if necessary), in which event Tenant shall not exercise
any remedies for default while such remedies are being so diligently pursued. In
the event of the sale of the Land or the Building, by foreclosure or deed in
lieu thereof, the Mortgagee or purchaser at such sale shall be responsible for
the return of the Security Deposit only to the extent that such Mortgagee or
purchaser actually received the Security Deposit.

24.3 Financial Information. Tenant shall, prior to execution and
throughout the Term, upon request from time to time, provide such financial
information and documentation about itself to Landlord or Mortgagee as may be
reasonably requested.

24.4 Attornment. In the event of (i) a transfer of Landlord's interest in
the Premises, (ii) the termination of any ground or underlying lease of the
Building or the land on which it is constructed, or both, or (iii) the purchase
of the Building or Landlord's interest therein in a foreclosure sale or by deed
in lieu of foreclosure under any Mortgage or pursuant to a power of sale
contained in any Mortgage, then in any of such events Tenant shall, at the
request of Landlord or Landlord's successor in interest, attorn to and recognize
the transferee or purchaser of Landlord's interest or the lessor under the
terminated ground or underlying lease, as the case may be, as Landlord under
this Lease for the balance then remaining of the Term, and thereafter this Lease
shall continue as a direct lease between such lessor, transferee or purchaser,
as "Landlord," and Tenant, as "Tenant," except that such lessor, transferee or
purchaser shall not be liable for any act or omission of Landlord prior to such
lease termination or prior to its succession to title, nor be subject to any
offset, defense or counterclaim accruing prior to such lease termination or
prior to such succession to title, nor be bound by any payment of Base Rent or
Additional Rent prior to such lease termination or prior to such succession to
title for more than one month in advance. Tenant shall, upon request by Landlord
or the transferee or purchaser of Landlord's interest or the lessor under the
termination ground or underlying lease, as the case may be, execute and deliver
an instrument or instruments confirming the foregoing provisions of this
Section. Tenant hereby waives the provisions of any present or future law or
regulation which gives or purports to give Tenant any right to terminate or
otherwise adversely affect this Lease, or the obligations of Tenant hereunder,
upon or as a result of the termination of any such ground or underlying lease or
the completion of any such foreclosure and sale.

ARTICLE 25: SURRENDER AND HOLDING OVER

25.1 Surrender of the Premises. Tenant shall peaceably surrender the
Premises to Landlord on the Expiration Date or earlier termination of this
Lease, in broom-clean condition and in as good condition as when Tenant took
possession, including, without limitation, the repair of any damage to the
Premises caused by the removal of any of Tenant's Property except for reasonable
wear and tear and loss by fire or other casualty not caused by Tenant or its
Agents. The parties hereto recognize and agree that any and all wiring, cabling
or conduit of any type or kind which was installed by or for Tenant at the
direction or expense of Landlord shall be and remain the property of Landlord
and shall not be removed or damaged by Tenant in any way. If Tenant does remove
or damage such items Tenant shall be solely responsible for the cost and expense
of repairing or replacing the same and such damage or removal shall constitute
an Event of Default under this Lease. Any installation of additional wiring,
cabling or conduit by or for Tenant must be approved in writing by Landlord and
overseen by Landlord or Landlord's Agents and shall, at no cost or expense to
Landlord, become the property of Landlord at Landlord's discretion. All costs
and expenses for removal of unapproved, installed wiring shall be borne solely
and exclusively by Tenant. If, for any reason, Tenant fails to surrender the
Premises on the expiration or earlier termination of this Lease with such
removal and repair obligations completed, then, in addition to the provisions of
Section 25.2 herein and Landlord's rights and remedies under Article 22 and the
other provisions of this Lease, Tenant shall indemnify, defend (by counsel
reasonably approved in writing by Landlord)

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and hold Landlord harmless from and against any and all claims, judgments,
suits, causes of action, damages, losses, liabilities and expenses (including
attorneys' fees and court costs) resulting from such failure to surrender,
including, without limitation, any claim made by any succeeding tenant based
thereon. The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.

25.2 Holding Over. In the event that Tenant shall not immediately
surrender the Premises to Landlord on the Expiration Date or earlier termination
of this Lease, Tenant shall be deemed to be a month to month tenant upon all of
the terms and provisions of this Lease, except the monthly Base Rent shall be
equal to one hundred and fifty percent (150%) of the Base Rent and Additional
Rent applicable to the Premises immediately prior to the date of such expiration
or earlier termination. Acceptance by Landlord of rent after such expiration or
earlier termination shall not constitute a consent to a hold over hereunder or
result in an extension of this Lease. Tenant shall pay an entire month's Rent
calculated in accordance with this Section 25.2 for any portion of a month it
holds over and remains in possession of the Premises pursuant to this Section.

ARTICLE 26: QUIET ENJOYMENT

26.1 General. Landlord covenants that if Tenant shall pay Rent and
perform all of the terms and conditions of this Lease to be performed by Tenant,
Tenant shall during the Term peaceably and quietly occupy and enjoy possession
of the Premises without molestation or hindrance by Landlord or any party
claiming through or under Landlord, subject to this Lease and any Mortgage to
which this Lease is subordinate and easements, conditions and restrictions of
record affecting the Land.

ARTICLE 27: TENANT'S COVENANTS REGARDING HAZARDOUS MATERIALS

27.1 Definition. As used in this Lease, the term "Hazardous Material"
means any flammable items, explosives, radioactive materials, hazardous or toxic
substances, material or waste or related materials, including any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "infectious wastes," "hazardous materials", or "toxic substances" now
or subsequently regulated under as defined in any Legal Requirements including,
without limitation, oil, petroleum-based products, paints, solvents, lead,
cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and other
chemical products, asbestos, PCBs and similar compounds, and including any
different products and materials which are subsequently found to have adverse
effects on the environment or the health and safety of persons.

-32-
<PAGE> 39

27.2 General Prohibition. Tenant shall not cause or permit any Hazardous
Material to be generated, produced, brought upon, used, stored, treated,
discharged, released, spilled or disposed of on, in, under or about the
Premises, the Building or the Land by Tenant or its Agents, other than those
routinely used in cleaning and maintenance of the Premises, consistent with
general office use in normal quantities and containers, and in accordance with
all manufacturers' instructions and all Legal Requirements. Tenant shall
indemnify, defend and hold Landlord harmless from and against any and all
actions (including, without limitation, remedial or enforcement actions of any
kind, administrative or judicial proceedings, and orders or judgments arising
out of or resulting therefrom), costs, claims, damages (including, without
limitation, punitive damages), expenses (including, without limitation,
attorneys', consultants' and experts' fees, court costs and amounts paid in
settlement of any claims or actions), fines, forfeitures or other civil,
administrative or criminal penalties, injunctive or other relief (whether or not
based upon personal or bodily injury, property damage, or contamination of, or
adverse effects upon, the environment, water tables or natural resources),
liabilities or losses arising from a breach of this prohibition by Tenant or its
Agents.

27.3 Notice. In the event that Hazardous Materials are discovered upon,
in, or under the Premises, the Building or the Land, and applicable Legal
Requirements require the removal of such Hazardous Materials, Tenant shall be
responsible for removing those Hazardous Materials arising out of or related to
the use or occupancy of the Premises by Tenant or its Agents. Notwithstanding
the foregoing, Tenant shall not take any remedial action in or about the
Premises, the Building or the Land without first notifying Landlord of Tenant's
intention to do so and affording Landlord the opportunity to protect Landlord's
interest with respect thereto. Tenant immediately shall notify Landlord in
writing of (i) any spill, release, discharge or disposal of any Hazardous
Material in, on or under the Premises, the Building, the Land or any portion
thereof; (ii) any enforcement, cleanup, removal or other governmental or
regulatory action instituted, contemplated, or threatened (if Tenant has notice
thereof) pursuant to any Legal Requirements; (iii) any claim made or threatened
by any person against Tenant, the Premises, the Building or the Land relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
or claimed to result from any Hazardous Materials; and (iv) any reports made to
any governmental agency or entity arising out of or in connection with any
Hazardous Materials in, on, under or about or removed from the Premises, the
Building or the Land, including any complaints, notices, warnings, reports or
asserted violations in connection therewith. Tenant also shall supply to
Landlord as promptly as possible, and in any event within five (5) business days
after Tenant first receives or sends the same, copies of all claims, reports,
complaints, notices, warnings or assert relating in any way to the Premises, the
Building, the Land or Tenant's use or occupancy thereof.

27.4 Landlord Covenant. Landlord covenants and agrees that (other than
with respect to all materials, components and processes necessary and incidental
to the demolition, renovation and construction required to the Land, Building.
Premises and Common Area during the Term hereof) Landlord has not knowingly or
willfully placed and it shall not knowingly or willfully place any Hazardous
Materials in the Building, the Land or the Common Areas, other than those
routinely used in the cleaning, operation, management and maintenance in normal
quantities and containers and in accordance with all manufacturers' instructions
and all Legal Requirements.

27.5 Survival. The respective rights and obligations of Landlord and
Tenant under this Article 27 shall survive the expiration or earlier termination
of this Lease.

ARTICLE 28: MISCELLANEOUS

28.1 No Representations by Landlord. Tenant acknowledges that neither
Landlord or its Agents nor any broker has made any representation or promise
with respect to the Premises, the Building, the Land or the Common Area, except
as herein expressly set forth, and no rights, privileges, easements or licenses
are acquired by Tenant except as herein expressly set forth.

-33-
<PAGE> 40

28.2 No Partnership. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Landlord and
Tenant, or to create any other relationship between Landlord and Tenant other
than that of landlord and tenant.

28.3 Broker. Landlord recognizes Broker as the sole broker procuring this
Lease and shall pay Broker a commission therefor pursuant to a separate
agreement between Broker and Landlord. Landlord and Tenant each represents and
warrants to the other that it has not employed any broker, agent or tinder other
than Broker relating to this Lease. Landlord shall indemnify and hold Tenant
harmless, and Tenant shall indemnify and hold Landlord harmless, from and
against any claim for brokerage or other commission arising from or out of any
breach of the indemnitor's representation and warranty.

28.4 Estoppel Certificate. Tenant shall, without charge, at any time and
from time to time, within five (5) business days after request therefor by
Landlord, Mortgagee, any purchaser of the Land or the Building or any other
interested person, execute, acknowledge and deliver to such requesting party a
written estoppel certificate substantially in the form of Exhibit F attached
hereto and/or as otherwise certifying, as of the date of such estoppel
certificate, the following: (i) that this Lease is unmodified and in full force
and effect (or if modified, that the Lease is in full force and effect as
modified and setting forth such modifications); (ii) that the Term has commenced
(and setting forth the Commencement Date and Expiration Date); (iii) that Tenant
is presently occupying the Premises; (iv) the amounts of Base Rent and
Additional Rent currently due and payable by Tenant; (v) that any Alterations
required by the Lease to have been made by Landlord have been made to the
satisfaction of Tenant; (vi) that there are no existing set-offs, charges,
liens, claims or defenses against the enforcement of any right hereunder,
including, without limitation, Base Rent or Additional Rent (or, if alleged,
specifying the same in detail); (vii) that no Base Rent (except the first
installment thereof) has been paid more than thirty (30) days in advance of its
due date; (viii) that Tenant has no knowledge of any then uncured default by
Landlord of its obligations under this Lease (or, if Tenant has such knowledge,
specifying the same in detail); (ix) that Tenant is in compliance with the terms
of this Lease and is not in default; (x) that the address to which notices to
Tenant should be sent is as set forth in the Lease (or, if not, specifying the
correct address); and (xi) any other factual certifications reasonably requested
by Landlord. Any such estoppel certificate delivered pursuant to this Subsection
28.4 may be relied upon by any mortgagee, beneficiary, purchaser or prospective
purchaser of any portion of the Land, as well as their assignees. In addition,
within ten (10) business days after request by Landlord, Tenant shall deliver to
Landlord audited financial statements of Tenant for its most recently ended
fiscal year and interim unaudited financial statements for its most recently
ended quarter.

28 5 Waiver of Jury Trial. LANDLORD AND TENANT HEREBY KNOWINGLY' AND
INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
THAT LANDLORD OR TENANT MAY HEREINAFTER INSTITUTE AGAINST EACH OTHER WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN ANY WAY RELATED TO THIS LEASE OR THE
PREMISES. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY
SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE
CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. LANDLORD AND TENANT WAIVE
ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE
JURISDICTION IN WHICH THE BUILDING IS LOCATED AND WAIVE ANY RIGHT UNDER THE
DOCTRINE OF FORUM NON CONVENIENS OR OTHERWISE TO TRANSFER ANY SUCH ACTION FILED
IN ANY SUCH COURT TO ANY OTHER COURT. TENANT HEREBY WAIVES ANY RIGHT TO PLEAD
ANY COUNTERCLAIM, OFFSET OR AFFIRMATIVE DEFENSE IN ANY ACTION OR PROCEEDINGS
BROUGHT BY LANDLORD AGAINST TENANT. THE AFORESAID WAIVER SHALL NOT BE CONSTRUED,
HOWEVER, AS A WAIVER OF TENANT'S RIGHT TO ASSERT ANY CLAIM IN A SEPARATE ACTION
BROUGHT BY TENANT AGAINST LANDLORD.

-34-
<PAGE> 41

TENANT AGREES TO PAY ALL RENT WITHOUT ABATEMENT, OFFSET OR REDUCTION OF ANY KIND
WHATSOEVER.

28.6 Notices. No notice, request, consent, approval, waiver or other
communication which may be or is required or permitted to be given under this
Lease shall be effective unless the same is in writing, properly addressed, and
is delivered in person or sent by overnight courier service or registered or
certified mail, return receipt requested, first-class postage prepaid, (i) if to
Landlord, at Landlord's Address, or (ii) if to Tenant, at Tenant's Address, or
at any other address that may be given by one party to the other by notice
pursuant to this subsection. Such notices shall be deemed to have been given
effective upon receipt or refusal of receipt.

28.7 Invalidity of Particular Provisions. If any provisions of this Lease
or the application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the full extent permitted by law.

28.8 Gender and Number. All terms and words used in this Lease,
regardless of the number or gender in which they are used, shall be deemed to
include any other number or gender as the context may require.

28.9 Benefit and Burden. Subject to the provisions of Article 11 and
except as otherwise expressly provided, the provisions of this Lease shall be
binding upon, and shall inure to the benefit of, the parties hereto and each of
their respective representatives, heirs, successors and assigns. Landlord may
freely and fully assign its interest hereunder.

28.10 Entire Agreement. This Lease (which includes the Exhibits attached
hereto) contains and embodies the entire agreement of the parties hereto, and no
representations, inducements or agreements, oral or otherwise between the
parties not contained in this Lease shall be of any force or effect. This Lease
(other than the Rules and Regulations, which may be changed from time to time as
provided herein) may not be modified, changed or terminated in whole or in part
in any manner other than by an agreement in writing duly signed by Landlord and
Tenant.

28.11 Authority.

(i) If Tenant signs as a corporation, the person executing this
Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly
formed and validly existing corporation, in good standing, qualified to do
business in the Commonwealth of Virginia, that the corporation has full power
and authority to enter into this Lease and that he or she is authorized to
execute this Lease on behalf of the corporation.

(ii) If Tenant signs as a partnership, the person executing this
Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly
formed, validly existing partnership qualified to do business in the
Commonwealth of Virginia, that the partnership has full power and authority to
enter into this Lease, and that he or she is authorized to execute this Lease on
behalf of the partnership.

28.12 Attorneys' Fees. If, as a result of any default of Landlord or
Tenant in its performance of any of the provisions of this Lease, the other
party uses the services of an attorney in order to secure compliance with such
provisions or recover damages therefor, or to terminate this Lease or evict
Tenant, the non-prevailing party shall reimburse the prevailing party upon
demand for any and all reasonable attorney's fees and expenses so incurred by
the prevailing party.

-35-
<PAGE> 42

28.13 Governing Law. This Lease is governed by the laws of the
Commonwealth of Virginia. It is the intention of the parties hereto that this
Lease shall be construed and enforced in accordance with the laws of the
Commonwealth of Virginia.

28.14 Time of the Essence. Time is of the essence as to the terms of this
Lease.

28.15 Force Majeure. Except for Tenant's obligations to pay Rent under
this Lease, neither Landlord nor Tenant shall be required to perform any of its
obligations under this Lease, nor shall such party be liable for loss or damage
for failure to do so, nor shall the other party thereby be released from any of
its obligations under this Lease, where such failure by the non-performing party
arises from or through acts of God, strikes, lockouts, labor difficulties,
explosions, sabotage, accidents, riots, civil commotions, acts of war, results
of any warfare or warlike conditions in this or any foreign country, fire or
casualty, legal requirements, energy shortage or other causes beyond the
reasonable control of the non-performing party, unless such loss or damage
results from the willful misconduct or gross negligence of the non-performing
party.

28.16 Headings. Captions and headings are for convenience of reference
only.

28.17 Memorandum of Lease. Tenant shall, at the request and sole expense
of Landlord, execute and deliver a memorandum of lease in recordable form.
Tenant shall not record such a memorandum or this Lease without Landlord's
consent.

28.18 Effectiveness. The submission to Tenant of an unsigned copy of this
document, including drafts and correspondence submitted to Tenant by any person
on Landlord's behalf, shall not constitute an offer or option to lease. This
Lease shall become effective and binding only upon execution and delivery by
both Landlord and Tenant.

28.19 Exhibits and Riders. All Exhibits and Riders attached to this Lease
are hereby incorporated in this Lease as though set forth at length herein.

28.20 Tenant Access. Tenant shall have access to the Building 24 hours
per day, 365 days per year.

28.21 Roof Rights. Landlord hereby grants Tenant the right to install,
maintain and replace from time to time a satellite dish or smaller antennae
device not exceeding 4 feet in diameter (hereinafter "Satellite Dish" on the
roof of the Building, subject to the following: (i) applicable Legal
Requirements; (ii) the right of Landlord to determine the location and placement
of the Satellite Dish; (iii) the right of Landlord to supervise any roof
penetrations; and (iv) compliance with the conditions of any roof bond, warranty
or guarantee maintained by Landlord on the Building. Tenant shall be responsible
for the repair of any damage to any portion of the Building or the Premises
caused by Tenant's installation, use or removal of the Satellite Dish. The
Satellite Dish shall remain the exclusive property of the Tenant, and Tenant
shall remove same at the expiration of the Lease. Tenant shall protect, defend,
indemnify and hold harmless Landlord from and against any and all losses,
claims, damages, liabilities, costs or expenses of every kind and nature
(including without limitation reasonable attorneys' fees) imposed upon or
incurred by or asserted against Landlord arising out of Tenant's installation,
maintenance, use or removal of the Satellite Dish.

-36-
<PAGE> 43

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.

ATTEST/WITNESS: LANDLORD:

11600 SUNRISE LIMITED PARTNERSHIP, a
Virginia limited partnership

By: MEI II, Inc., a Virginia corporation, its
general partner

/s/ Diane Gubser By:/s/ Tim H. Meyers [SEAL]
- ----------------------- ---------------------------------
Name:Diane Gubser Name:Tim H. Meyers
------------------ -------------------------------------
Title: Pres
-----------------------------------

ATTEST/WITNESS: TENANT:

PROXICOM, INC., a Delaware corporation

/s/ Kenneth Tarpey By: /s/ Christopher Capuano [SEAL]
- ----------------------- ---------------------------------
Name: Kenneth Tarpey Name: Christopher Capuano
----------------- -------------------------------------
Title VP
-------------------------------------

-37-

<PAGE> 44
FIRST AMENDMENT TO LEASE

This First Amendment to Lease ("First Amendment") is made as of the
15th day of July, 1997, ("Effective Date") by and between 11600 SUNRISE LIMITED
PARTNERSHIP, a Virginia limited partnership ("Landlord"), and PROXICOM, INC., a
Delaware corporation ("Tenant").

RECITALS:

R-1. Pursuant to that certain Lease, dated as of the 14th day of July,
1997 ("Lease"), Landlord leased to Tenant approximately 63,350 square feet of
rentable area ("Premises") located in the building known as 11600 Sunrise Valley
Drive, Reston, Virginia ("Building"), as more particularly described in said
Lease.

R-2. Landlord and Tenant desire to modify the terms of the Lease to
clarify the size of the Demised Premises and to extend the Term of the Lease
pursuant to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the mutual receipt and legal sufficiency of which are hereby acknowledged, it is
hereby agreed as follows:

1. Recitals. The foregoing recitals are incorporated herein by this
reference as if fully set forth at this point in the text of this First
Amendment.

2. Integration. The recitals and following terms and conditions shall
constitute part of the Lease and be incorporated therein by reference.

3. Size of the Premises. Section 1.1 of the Lease is hereby amended and
clarified to confirm that the parties have verified and hereby mutually agree
the size of the Premises is 63,355 square feet for all purposes of the Lease.

4. Term. Section 1.3 of the Lease is hereby deleted in its entirety and
replaced with the following: "Eight (8) years, five (5) months and seventeen
(17) days."

5. Expiration Date. Section 1.5 of the Lease is hereby deleted in its
entirety and replaced with the following: "December 31, 2005."

<PAGE> 45

6. Base Rent. Section 1.7 of the Lease is hereby deleted in its entirety
and replaced with the following:

<TABLE>
<CAPTION>
Monthly
-------
Period Base Rent Rent/SF Installment
------ --------- ------- -----------
<S> <C> <C> <C>
7/14/97 to 12/31/97 (1) $ 306,001.02 $17.50 (See Note 1)
1/1/98 to 6/30/98 (1) $ 367,025.68 $17.50 (See Note 1)
7/1/98 to 12/31/98 (1), (2) $ 447,665.63 $17.50 (See Note 1)
1/1/99 to 6/30/99 (3) $ 665,227.50 $21.00 $110,871.25
7/1/99 to 12/31/99 $ 665,227.50 $21.00 $110,871.25
1/1/00 to 6/30/00 $ 685,184.33 $21.63 $114,197.39
7/1/00 to 12/31/00 $ 685,184.33 $21.63 $114,197.39
1/1/01 to 6/30/01 $ 705,739.85 $22.28 $117,623.31
17/1/01 to 12/31/01 $ 705,739.85 $22.28 $117,623.31
1/1/02 to 6/30/02 $ 726,912.05 $22.95 $121,152.01
7/1/02 to 12/31/02 (4) $ 726,912.05 $22.95 $121,152.01
1/1/03 to 6/30/03 $ 748,719.41 $23.64 $124,786.57
7/1/03 to 12/31/03 $ 748,719.41 $23.64 $124,786.57
1/1/04 to 6/30/04 $ 771,180.99 $24.34 $128,530.17
7/1/04 to 12/31/04 $ 771,180.99 $24.34 $128,530.17
1/1/05 to 6/30/05 $ 794,316.42 $25.08 $132,386.07
7/1/05 to 12/31/05 $ 794,316.42 $25.08 $132,386.07
TOTAL BASE RENT $7,639.460.70

</TABLE>

Note 1: Monthly installments of Base Rent are increasing amounts due to the
staged delivery of space comprising the Premises.

Note 2: $17.50/sf continues to completion of Building lobby and Common Area
not billed until 1/1/99.

Note 3: Complete Premises of 63,355 sf (BOMA) billed at revised Base Rent of
$21/sf and Lease extended to 12/31/05.

Note 4: Previously negotiated Base Rent is increased by $0.60/sf on 7/1/02
which was to adjust the rent for the extended term through 12/31/05.

7. Terms of Lease Ratified and Confirmed. Landlord and Tenant hereby
acknowledge that all of the terms, covenants and conditions of the Lease, as
hereby modified, amended or supplemented, are hereby ratified and confirmed and
shall continue to be and remain in full force and effect throughout the
remainder of the term of the Lease.

8. No Further Modification. Except as expressly provided in this First
Amendment, the Lease remains in full force and effect and is not otherwise
modified or amended.

9. Binding Effect. It is understood and agreed that this First Amendment
shall not be binding upon Landlord until both Tenant and Landlord shall have
executed and delivered the same.

10. Successors and Assigns. This First Amendment shall inure to the
benefit of and bind the successors and (subject to the provisions of the Lease)
the assigns of the respective parties.

-2-
<PAGE> 46

11. Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed thereto in the Lease.
Whenever there is a conflict between this First Amendment and the Lease, the
provisions of this First Amendment shall take precedence and the Lease shall be
construed accordingly.

IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the day and year first written above.

ATTEST/WITNESS: LANDLORD:

11600 SUNRISE LIMITED PARTNERSHIP,
a Virginia limited partnership

By: MEI II, Inc., a Virginia
corporation, its general
partner

/s/ Diane Gubser By: /s/ T. H. Meyers [SEAL]
- ---------------------------- ---------------------------
Name: Diane Gubser Name: Tim H. Meyers
----------------------- ---------------------------------
Title: President
--------------------------------

ATTEST/WITNESS: TENANT:

PROXICOM, INC., a Delaware
corporation

/s/ Judith O. Stoker By: /s/ C. Capuano [SEAL]
- ---------------------------- ---------------------------------
Name: Judith O. Stoker Name: C. Capuano
----------------------- ---------------------------------------
Title: VP
--------------------------------------

-3-

<PAGE> 1
EXHIBIT 10.11

THIRD AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

among

PROXICOM, INC.,

GENERAL ATLANTIC PARTNERS 34, L.P.,

GENERAL ATLANTIC PARTNERS 52, L.P.,

GAP COINVESTMENT PARTNERS, L.P.,

GAP COINVESTMENT PARTNERS II, L.P.,

RAUL FERNANDEZ,

THE MARIO M. MORINO TRUST,

FBR VENTURE CAPITAL MANAGERS INC.,

GENERAL ELECTRIC CAPITAL CORPORATION,

GE CAPITAL EQUITY INVESTMENTS, INC.,

BRENDA WONG,

SCOTT MCDONALD,

VINCENT HOENIGMAN,

JACK KEMP,

THEODORE J. LEONSIS,

JOHN MCKINLEY,

THE WASHINGTON POST COMPANY
<PAGE> 2
AND

THE AD HOC STOCKHOLDERS

Dated: March ____, 1999

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. General; Securities Subject to this Agreement . . . . . . . . . . . . . 10
(a) Grant of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Holders of Registrable Securities . . . . . . . . . . . . . . . . . 10
3. Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Request for Demand Registration . . . . . . . . . . . . . . . . . . 10
(b) Incidental or . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Effective Demand Registration . . . . . . . . . . . . . . . . . . . 12
(d) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Underwriting Procedures . . . . . . . . . . . . . . . . . . . . . . 12
(f) Selection of Underwriters . . . . . . . . . . . . . . . . . . . . . 13
4. Incidental or . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Request for Incidental Registration . . . . . . . . . . . . . . . . 13
(b) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C>
5. Holdback Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Restrictions on Public Sale by Designated Holders . . . . . . . . . 14
(b) Restrictions on Public Sale by the Company . . . . . . . . . . . . . 14
6. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Obligations of the Company . . . . . . . . . . . . . . . . . . . . . 15
(b) Seller Information . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Notice to Discontinue . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . 18
7. Indemnification; Contribution . . . . . . . . . . . . . . . . . . . . . 19
(a) Indemnification by the Company . . . . . . . . . . . . . . . . . . . 19
(b) Indemnification by Designated Holders . . . . . . . . . . . . . . . 19
(c) Conduct of Indemnification Proceedings . . . . . . . . . . . . . . . 20
(d) Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Recapitalizations, Exchanges, etc. . . . . . . . . . . . . . . . . . 21
(b) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . 22
(c) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Successors and Assigns; Third Party Beneficiaries . . . . . . . . . . 27
(g) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(h) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>

<PAGE> 4
<TABLE>
<S> <C>
(j) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(k) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(l) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 28
(m) Appointment of Ad Hoc Stockholders' Representative . . . . . . . . . 28
(n) Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>

<PAGE> 5
THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

THIS THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated
March 26, 1999 (this "AGREEMENT"), among Proxicom, Inc., a Delaware
corporation (the "COMPANY"), General Atlantic Partners 34, L.P., a Delaware
limited partnership ("GAP LP"), General Atlantic Partners 52, L.P., a Delaware
limited partnership ("GAP 52"), GAP Coinvestment Partners, L.P., a New York
limited partnership ("GAP COINVESTMENT I"), GAP Coinvestment Partners II, L.P.,
a Delaware limited partnership ("GAP COINVESTMENT II"), Raul Fernandez
("FERNANDEZ"), The Mario M. Morino Trust ("MORINO TRUST"), FBR Venture Capital
Managers Inc., a Delaware corporation ("FBR"), General Electric Capital
Corporation, a New York corporation ("GE CAPITAL"), GE Capital Equity
Investments, Inc., a Delaware corporation ("GE CAPITAL EQUITY"), Brenda Wong,
Scott McDonald and Vincent Hoenigman (the "IBIS STOCKHOLDERS"), and Jack Kemp
("KEMP"), Theodore J. Leonsis ("LEONSIS"), John McKinley ("MCKINLEY"), and The
Washington Post Company, a Delaware corporation ("WPC", and together with Kemp,
Leonsis, and McKinley, the "NEW STOCKHOLDERS") and the individuals listed on
Exhibit A hereto (the "AD HOC STOCKHOLDERS").

WHEREAS, this Agreement is made in connection with the Preferred Stock
and Warrant Purchase Agreement, dated August 30, 1996 (the "STOCK AND WARRANT
PURCHASE AGREEMENT"), among the Company, GAP LP and GAP Coinvestment I,
pursuant to which the Company has agreed to, among other things, issue and sell
to (i) GAP LP, and GAP LP has agreed to purchase from the Company, (x) an
aggregate of 1,389,218 shares, par value $.01 per share, of Series A
Convertible Preferred Stock of the Company (the "SERIES A PREFERRED STOCK") and
(y) a warrant (the "GAP LP WARRANT") to purchase, subject to the terms and
conditions thereof, an aggregate of 861,834 shares of Series A Preferred Stock
and (ii) GAP Coinvestment I, and GAP Coinvestment I has agreed to purchase from
the Company, (x) an aggregate of 240,751 shares of Series A Preferred Stock and
(y) a warrant (the "GAPCO WARRANT" and, together with the GAP LP Warrant, the
"WARRANTS") to purchase, subject to the terms and conditions thereof, an
aggregate of 149,544 shares of Series A Preferred Stock.

WHEREAS, this Agreement is made in connection with the Preferred Stock
Purchase Agreement, dated February 20, 1997, among the Company, GAP LP, GAP

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Coinvestment I, Morino Trust and FBR, pursuant to which the Company has agreed
to, among other things, issue and sell (i) GAP LP, and GAP LP has agreed to
purchase from the Company, an aggregate of 81,535 shares, par value $.01 per
share, of Series B Convertible Preferred Stock of the Company (the "SERIES B
PREFERRED STOCK"), (ii) GAP Coinvestment I and GAP Coinvestment I has agreed to
purchase from the Company an aggregate of 14,388 shares of Series B Preferred
Stock, (iii) Morino Trust, and Morino Trust has agreed to purchase from the
Company an aggregate of 239,808 shares of Series B Preferred Stock and (iv)
FBR, and FBR has agreed to purchase from the Company an aggregate of 23,981
shares of Series B Preferred Stock.

WHEREAS, this Agreement is made in connection with the Preferred Stock
Purchase Agreement, dated November 24, 1997, between the Company and GE
Capital, pursuant to which the Company has agreed to, among other things, issue
and sell GE Capital, and GE Capital has agreed to purchase from the Company,
419,302 shares, par value $.01 per share, of Series C Convertible Preferred
Stock of the Company (the "SERIES C PREFERRED STOCK").

WHEREAS, this Agreement is made in connection with the Agreement and
Plan of Merger by and among the Company, Proxicom Merger Sub, Inc., IBIS
Consulting, Inc. and the IBIS Stockholders, dated as of August 21, 1998 (the
"MERGER AGREEMENT"), pursuant to which the Company has agreed to, among other
things, issue a total of 4,988,297 shares of Common Stock to the IBIS
Stockholders.

WHEREAS, this Agreement is made in connection with the Stock Purchase
Agreement, dated as of February 1, 1999 (the "COMMON STOCK PURCHASE
AGREEMENT"), between the Company, certain selling stockholders named therein,
and the Purchasers named therein, pursuant to which, among other things,
certain selling stockholders named in the Common Stock Purchase Agreement agree
to sell and transfer to the Purchasers, and the Purchasers agree to purchase
from such selling stockholders, an aggregate of 758,667 shares of Common Stock
of the Company.

WHEREAS, this Agreement is made in connection with the Preferred Stock
Purchase Agreement, dated as February 1, 1999 (the "SERIES D STOCK PURCHASE
AGREEMENT"), between the Company and the Purchasers named therein, pursuant to
which, among other

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things, the Company agrees to issue and sell to the Purchasers, and the
Purchasers agree to purchase from the Company, an aggregate of 1,218,333
shares, par value $.01 per share, of Series D Convertible Preferred Stock of
the Company (the "SERIES D PREFERRED STOCK"; and, together with the Series A
Preferred Stock, the Series B Stock, and the Series C Stock, the "PREFERRED
STOCK").

WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one (1) share of Common Stock (as hereinafter defined).

WHEREAS, this Agreement is made in connection with the Agreement and
Plan of Merger by and among the Company, Proxicom Merger Sub II, Inc., ad hoc
Interactive, Inc. ("AD HOC"), and the Principal Stockholders named therein,
dated as of March 22, 1999 (the "AD HOC MERGER AGREEMENT"), pursuant to which
the Company has agreed to, among other things, issue a total of 831,716 shares
of Common Stock to the Ad Hoc Stockholders.

WHEREAS, the Company, GAP LP, GAP Coinvestment I, Fernandez, Morino
Trust and FBR are parties to the Stockholders Agreement (as hereinafter
defined), pursuant to which the parties thereto have agreed to, among other
things, certain first offer, preemptive and corporate governance rights and
obligations.

WHEREAS, the Company, GAP LP, GAP Coinvestment I, Fernandez, Morino
Trust, FBR and GE Capital are parties to Amendment No. 1 to the Stockholders
Agreement ("AMENDMENT NO. 1"), pursuant to which, among other things, GE
Capital became a party to the Stockholders Agreement.

WHEREAS, the Company, GAP LP, GAP Coinvestment I, Fernandez, Morino
Trust, FBR, GE Capital and the IBIS Stockholders are parties to Amendment No. 2
to the Stockholders Agreement ("AMENDMENT NO. 2"), pursuant to which, among
other things, the IBIS Stockholders became a party to the Stockholders
Agreement (as amended by the Amendment No. 1).

WHEREAS, the Company, GAP LP, GAP Coinvestment I, GAP 52, GAP
Coinvestment II, Fernandez, Morino Trust, FBR, GE Capital, GE Capital Equity,
the IBIS Stockholders, and the New Stockholders are parties to Amendment No. 3
to the Stockholders

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Agreement ("AMENDMENT NO. 3"), pursuant to which, among other things, the New
Stockholders, GAP 52, GAP Coinvestment II and GE Capital Equity became a party
to the Stockholders Agreement.

WHEREAS, concurrently with the execution hereof, the Company, GAP LP,
GAP Coinvestment I, GAP 52, GAP Coinvestment II, Fernandez, Morino Trust, FBR,
GE Capital, GE Capital Equity, the IBIS Stockholders, the New Stockholders and
the Ad Hoc Stockholders are entering into Amendment No. 4 to the Stockholders
Agreement ("AMENDMENT NO. 4"), pursuant to which, among other things, the Ad
Hoc Stockholders shall become party to the Stockholders Agreement.

WHEREAS, as a condition precedent to the obligations of Ad Hoc and the
Principal Stockholders of Ad Hoc to consummate the merger pursuant to the Ad
Hoc Merger Agreement, the Company has agreed to amend and restate in its
entirety the Second Amended and Restated Registration Rights Agreement (as
hereinafter defined) by entering into this Agreement pursuant to which the
Company has agreed to grant registration rights with respect to the Registrable
Securities (as hereinafter defined) as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:

1. Definitions. As used in this Agreement the following terms have
the meanings indicated:

"Affiliate" shall mean, with respect to any Person, any other
Person who controls, is controlled by or is under common control with such
Person. In addition, the following shall be deemed to be Affiliates of GAP LP
and GAP 52: (a) GAP LLC, the members of GAP LLC, the limited partners of GAP
LP and the limited partners of GAP 52; (b) any Affiliate of GAP LLC, the
members of GAP LLC, the limited partners of GAP LP and the limited partners of
GAP 52; and (c) any limited liability company or partnership a majority of
whose members or partners, as the case may be, are members of GAP LLC. In
addition, GAP LP, GAP 52, GAP Coinvestment I and GAP Coinvestment II shall be
deemed to be Affiliates of one another.

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"Ad Hoc" has the meaning assigned to such term in the recital to
this Agreement.

"Ad Hoc Merger Agreement" has the meaning assigned to such term in
the recital to this Agreement.

"Ad Hoc Stockholders" has the meaning assigned to such term in the
recital to this Agreement.

"Ad Hoc Stockholders' Representative" shall mean Saul Aaron Singer,
or any successor thereto who is appointed by the Ad Hoc Stockholders holding at
least a majority of the Registrable Securities held by the Ad Hoc Stockholders.

"Amendment No. 1" has the meaning assigned to such term in the
recital to this Agreement.

"Amendment No. 2" has the meaning assigned to such term in the
recital to this Agreement.

"Amendment No. 3" has the meaning assigned to such term in the
recital to this Agreement.

"Amendment No. 4" has the meaning assigned to such term in the
recital to this Agreement.

"Approved Underwriter" has the meaning set forth in Section 3(f) of
this Agreement.

"Common Stock" means the Common Stock, par value $.01 per share, of
the Company or any other equity securities of the Company into which such
securities are converted, reclassified, reconstituted or exchanged.

"Common Stock Purchase Agreement" has the meaning assigned to such
term in the recital to this Agreement.

"Company" has the meaning assigned to such term in the recital to
this

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Agreement.

"Company Underwriter" has the meaning set forth in Section 4(a) of
this Agreement.

"Demand Registration" has the meaning set forth in Section 3(a) of
this Agreement.

"Designated Holder" means each of the Fernandez Stockholders, the
Morino Stockholders, the General Atlantic Stockholders, the FBR Stockholders,
the GE Capital Stockholders, the IBIS Stockholders, the Kemp Stockholders, the
Leonsis Stockholders, the McKinley Stockholders, the WPC Stockholders and the
Ad Hoc Stockholders and any transferee of any of them to whom Registrable
Securities have been transferred in accordance with the provisions of the
Stockholders Agreement (as hereinafter defined) and Section 9(f) of this
Agreement, other than a transferee to whom such securities have been
transferred pursuant to a registration statement under the Securities Act or
Rule 144 or Regulation S under the Securities Act.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

"FBR" has the meaning assigned to such term in the recital to this
Agreement.

"FBR Stockholders" means FBR and any Permitted Transferee (as
defined in the Stockholders Agreement) thereof to which Registrable Securities
are transferred in accordance with Section 2.2 of the Stockholders Agreement.

"Fernandez" has the meaning assigned to such term in the recital to
this Agreement.

"Fernandez Stockholders" means Fernandez and any Permitted
Transferee (as defined in the Stockholders Agreement) thereof to which
Registrable Securities are transferred in accordance with Section 2.2 of the
Stockholders Agreement.

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"GAP 52" has the meaning assigned to such term in the recital to
this Agreement.

"GAP Coinvestment I" has the meaning assigned to such term in the
recital to this Agreement.

"GAP Coinvestment II" has the meaning assigned to such term in the
recital to this Agreement.

"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP, and any successor to such
entity.

"GAP LP" has the meaning assigned to such term in the recital to
this Agreement.

"GAP LP Warrant" has the meaning assigned to such term in the
recital to this Agreement.

"GAPCO Warrant" has the meaning assigned to such term in the
recital to this Agreement.

"GE Capital" has the meaning assigned to such term in the recital
to this Agreement.

"GE Capital Equity" has the meaning assigned to such term in the
recital to this Agreement.

"GE Capital Stockholders" means GE Capital, GE Capital Equity and
any Affiliate thereof to which Registrable Securities are transferred in
accordance with Section 2.2 of the Stockholders Agreement.

"General Atlantic Stockholders" means GAP LP, GAP 52, GAP
Coinvestment I, GAP Coinvestment II and any Affiliate thereof to which
Registrable Securities

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are transferred in accordance with Section 2.2 of the Stockholders Agreement.

"Holders' Counsel" has the meaning set forth in Section 6(a)(i) of
this Agreement.

"IBIS Stockholders" means the IBIS Stockholders as such term is
defined in the recital to this Agreement and any Permitted Transferee (as
defined in the Stockholders Agreement) thereof to which Registrable Securities
are transferred in accordance with Section 2.2 of the Stockholders Agreement.

"Incidental Registration" has the meaning set forth in Section 4(a)
of this Agreement.

"Indemnified Party" has the meaning set forth in Section 7(c) of
this Agreement.

"Indemnifying Party" has the meaning set forth in Section 7(c) of
this Agreement.

"Initial Public Offering" means a firm commitment underwritten
initial public offering pursuant to an effective Registration Statement filed
under the Securities Act covering the offer and sale of shares of Common Stock
for the account of the Company at a price per share of Common Stock not less
than $6.60 and resulting in aggregate net proceeds (after expenses and
underwriting commissions and discounts) to the Company of at least $10,000,000.

"Initiating Holder" has the meaning set forth in Section 3(a) of
this Agreement.

"Inspector" has the meaning set forth in Section 6(a)(viii) of this
Agreement.

"IPO Effectiveness Date" means the date upon which the Company
commences its Initial Public Offering.

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"Kemp" has the meaning assigned to such term in the recital to this
Agreement.

"Kemp Stockholders" means Kemp and any Permitted Transferee (as
defined in the Stockholders Agreement) thereof to which Registrable Securities
are transferred in accordance with Section 2.2 of the Stockholders Agreement.

"Leonsis" has the meaning assigned to such term in the recital to
this Agreement.

"Leonsis Stockholders" means Leonsis and any Permitted Transferee
(as defined in the Stockholders Agreement) thereof to which Registrable
Securities are transferred in accordance with Section 2.2 of the Stockholders
Agreement.

"McKinley" has the meaning assigned to such term in the recital to
this Agreement.

"McKinley Stockholders" means McKinley and any Permitted Transferee
(as defined in the Stockholders Agreement) thereof to which Registrable
Securities are transferred in accordance with Section 2.2 of the Stockholders
Agreement.

"Morino Trust" has the meaning assigned to such term in the recital
to this Agreement.

"Morino Stockholders" means Morino Trust and any Permitted
Transferee (as defined in the Stockholders Agreement) thereof to which
Registrable Securities are transferred in accordance with Section 2.2 of the
Stockholders Agreement.

"NASD" has the meaning set forth in Section 6(a)(xiv) of this
Agreement.

"New Stockholders" means the New Stockholders as such term is
defined in the recital to this Agreement and any Permitted Transferee (as
defined in the Stockholders Agreement) thereof to which Registrable Securities
are transferred in accordance

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with Section 2.2 of the Stockholders Agreement.

"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, limited liability company, government (or
an agency or political subdivision thereof) or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.

"Purchasers" means GAP LP, GAP Coinvestment I, Morino Trust, GE
Capital and the New Stockholders.

"Preferred Stock" has the meaning assigned to such term in the
recital to this Agreement.

"Records" has the meaning set forth in Section 6(a)(viii) of this
Agreement.

"Registrable Securities" means each of the following: (a) any and
all shares of Common Stock owned by the Designated Holders or issued or
issuable upon conversion of shares of Preferred Stock or exercise of the
Warrants, including, without limitation, any additional shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or warrants exercisable for shares of Common Stock or Series A
Preferred Stock or Series B Preferred Stock or Series C Preferred Stock or
Series D Preferred Stock acquired by any of the Designated Holders after the
date hereof, (b) any other shares of Common Stock acquired or owned by any of
the Designated Holders prior to the IPO Effectiveness Date, or acquired or
owned by any of the Designated Holders after the IPO Effectiveness Date if such
Designated Holder is an Affiliate of the Company and (c) any shares of Common
Stock issued or issuable to any of the Designated Holders with respect to
shares of Common Stock, shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise
and shares of Common Stock issuable upon conversion, exercise or exchange
thereof.

"Registration Expense Cap" has the meaning set forth in Section
3(d) of

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this Agreement.

"Registration Expenses" has the meaning set forth in Section 6(d)
of this Agreement.

"Registration Statement" means a registration statement filed
pursuant to the Securities Act.

"SEC" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.

"Second Amended and Restated Registrations Rights Agreement" means
the Second Amended and Restated Registration Rights Agreement dated February 1,
1999, among the Company, GAP LP, GAP 52, GAP Coinvestment I, GAP Coinvestment
II, Fernandez, Morino Trust, FBR, GE Capital, GE Capital Equity, the IBIS
Stockholders and the New Stockholders.

"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

"Series A Preferred Stock" has the meaning assigned to such term in
the recital to this Agreement.

"Series B Preferred Stock" has the meaning assigned to such term in
the recital to this Agreement.

"Series C Preferred Stock" has the meaning assigned to such term in
the recital to this Agreement.

"Series D Preferred Stock" has the meaning assigned to such term in
the recital to this Agreement.

"Series D Stock Purchase Agreement" has the meaning assigned to
such term in the recital to this Agreement.

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"Stockholders Agreement" means, collectively, the Amended and
Restated Stockholders Agreement, dated February 20, 1997, among the Company,
GAP LP, GAP Coinvestment I, Fernandez, Morino Trust and FBR, as amended by
Amendment No. 1, Amendment No. 2, Amendment No. 3 and Amendment No. 4.

"WPC" has the meaning assigned to such term in the recital to this
Agreement.

"WPC Stockholders" means WPC and any Permitted Transferee (as
defined in the Stockholders Agreement) thereof to which Registrable Securities
are transferred in accordance with Section 2.2 of the Stockholders Agreement.

"Warrants" has the meaning assigned to such term in the recital to
this Agreement.

2. General; Securities Subject to this Agreement.

(a) Grant of Rights. The Company hereby grants registration
rights to the Fernandez Stockholders, the Morino Stockholders, the General
Atlantic Stockholders, the FBR Stockholders, the GE Capital Stockholders, the
IBIS Stockholders, the New Stockholders and the Ad Hoc Stockholders upon the
terms and conditions set forth in this Agreement.

(b) Registrable Securities. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities when (i) a
registration statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective registration statement, (ii)
the entire amount of Registrable Securities proposed to be sold in a single
sale, in the opinion of counsel satisfactory to the Company and the Designated
Holder thereof, each in their reasonable judgment, may be distributed to the
public without any limitation as to volume for such sale pursuant to Rule 144
(or any successor provision then in effect) under the Securities Act or (iii)
the Registrable Securities are proposed to be sold or distributed by a Person
not entitled to the registration rights granted by this Agreement.

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(c) Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns of record
Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
whether or not such acquisition or conversion has actually been effected. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company may
act upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities. Registrable Securities
issuable upon exercise of an option or upon conversion of another security
shall be deemed outstanding for the purposes of this Agreement.

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3. Demand Registration.

(a) Request for Demand Registration. At any time after the IPO
Effectiveness Date, one or more of the General Atlantic Stockholders as a
group, acting through GAP LLC or its written designee (the "INITIATING
HOLDER(S)"), may make a written request to the Company to register, under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
S-8 or any successor thereto) and under the securities or "blue sky" laws of
any jurisdiction designated by such holder or holders (a "DEMAND
REGISTRATION"), the number of Registrable Securities stated in such request;
provided, however, that the Company shall not be obligated to effect more than
one (1) Demand Registration pursuant to this Section 3. If at the time of any
request to register Registrable Securities pursuant to this Section 3(a), the
Company is engaged in, or has fixed plans to engage in within ninety (90) days
of the time of such request, a registered public offering or is engaged in any
other activity which, in the good faith determination of the Board of Directors
of the Company, would be materially adversely affected by the requested
registration to the material detriment of the Company, then the Company may at
its option direct that such request be delayed for a reasonable period not in
excess of (i) one hundred eighty (180) days from the effective date of such
offering or (ii) ninety (90) days from the date of completion of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any one-year period. In
addition, the Company shall not be required to effect any registration within
sixty (60) days after the effective date of any other Registration Statement of
the Company. Each request for a Demand Registration by the Initiating
Holder(s) shall state the amount of the Registrable Securities proposed to be
sold and the intended method of disposition thereof. Upon a request for a
Demand Registration, the Company shall promptly take such steps as are
necessary or appropriate to prepare for the registration of the Registrable
Securities to be registered.

(b) Incidental or "Piggy-Back" Rights with Respect to a Demand
Registration. Each of the Designated Holders (other than the Initiating
Holders) may offer such Designated Holder's Registrable Securities under any
Demand Registration pursuant to this Section 3. Within ten (10) days after the
receipt from an Initiating Holder of a request for a Demand Registration, the
Company shall (i) give written notice thereof to all of the Designated Holders
(other than the Initiating Holder) and (ii) subject to Section 3(e), include in
such registration all of the Registrable Securities held by such Designated
Holders from whom

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the Company has received a written request for inclusion therein within ten
(10) days of the receipt by such Designated Holders of such written notice
referred to clause (i) above. Each such request by such Designated Holders
shall specify the number of Registrable Securities proposed to be registered
and the intended method of disposition thereof. The failure of any Designated
Holder to respond within such 10-day period referred to in clause (ii) above
shall be deemed to be a waiver of such Designated Holder's rights under this
Section 3, provided that any Designated Holder may waive such Designated
Holder's rights under this Section 3 prior to the expiration of such 10-day
period by giving written notice to the Company, with a copy to the Initiating
Holder. The Ad Hoc Stockholders acknowledge and agree that the Company shall
be permitted to satisfy the Company's notice requirement pursuant to clause (i)
above with respect to the Ad Hoc Stockholders by providing such written notice
to the Ad Hoc Stockholders' Representative only (and not all of the Ad Hoc
Stockholders). Any request by an Ad Hoc Stockholder to have his or her
Registrable Securities included in a Demand Registration pursuant to this
Section 3(b) shall be submitted to the Ad Hoc Stockholders' Representative, and
the Ad Hoc Stockholders' Representative shall submit all such requests to the
Company prior to the expiration of the 10-day period referred to in clause (ii)
above. In addition to and without limiting the provisions of Section 3(e)
hereof, the Company shall have no obligation to include in any Demand
Registration pursuant to this Section 3(b), any Registrable Securities of the
Ad Hoc Stockholders, unless prior to the expiration of the 10-day period
referred to in clause (ii) above, the Company shall have received from the Ad
Hoc Stockholders' Representative a written request or requests to include in
such registration at least 60% of the Registrable Securities owned in the
aggregate by all of the Ad Hoc Stockholders.

(c) Effective Demand Registration. The Company shall use its best
efforts to cause any such Demand Registration to become and remain effective
not later than ninety (90) days after it receives a request under Section 3(a)
hereof. A registration shall not constitute a Demand Registration until it has
become effective and remains continuously effective for the lesser of (i) the
period during which all Registrable Securities registered in the Demand
Registration are sold and (ii) 120 days; provided, however, that a registration
shall not constitute a Demand Registration if (x) after such Demand
Registration has become effective, such registration or the related offer, sale
or distribution of Registrable Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court for any reason not attributable to the Initiating

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Holders and such interference is not thereafter eliminated or (y) the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such Demand Registration are not satisfied or waived,
other than by reason of a failure by the Initiating Holders.

(d) Expenses. In any registration initiated as a Demand
Registration pursuant to Section 3(a), the Company shall pay 50% of all
Registration Expenses (other than underwriting discounts and commissions) in
connection therewith (the "REGISTRATION EXPENSE CAP"), whether or not such
Demand Registration becomes effective.

(e) Underwriting Procedures. If the Initiating Holders holding a
majority of the Registrable Securities held by all of the Initiating Holders to
which the requested Demand Registration relates so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of a firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter (as
hereinafter defined) selected in accordance with Section 3(f). In connection
with any Demand Registration under this Section 3 involving an underwriting,
none of the Registrable Securities held by any Designated Holder making a
request for inclusion of such Registrable Securities pursuant to Section 3(b)
hereof shall be included in such underwriting unless such Designated Holder
accepts the terms of the underwriting as agreed upon by the Company, the
Initiating Holders and the Approved Underwriter, and then only in such quantity
as will not, in the opinion of the Approved Underwriter, jeopardize the success
of such offering by the Initiating Holders. If the Approved Underwriter
advises the Company in writing that in its opinion the aggregate amount of such
Registrable Securities requested to be included in such offering is
sufficiently large to have a material adverse effect on the success of such
offering, then the Company shall include in such registration only the
aggregate amount of Registrable Securities that in the opinion of the Approved
Underwriter may be sold without any such material adverse effect and shall
reduce, first as to the Designated Holders who requested to participate in such
registration pursuant to Section 3(b) hereof) as a group, if any (other than
the Initiating Holders and the GE Capital Stockholders); and second as to the
Initiating Holders and the GE Capital Stockholders as a group, pro rata within
each group based on the number of Registrable Securities included in the
request for Demand Registration.

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(f) Selection of Underwriters. If any Demand Registration of
Registrable Securities is in the form of an underwritten offering, the
Initiating Holders holding a majority of the Registrable Securities held by all
such Initiating Holders shall select and obtain an investment banking firm of
national reputation to act as the managing underwriter of the offering (the
"APPROVED UNDERWRITER"); provided, however, that the Approved Underwriter
shall, in any case, be acceptable to the Company in its reasonable judgment.

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<PAGE> 22
4. Incidental or "Piggy-Back" Registration.

(a) Request for Incidental Registration. At any time after the
IPO Effectiveness Date, if the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering by the Company
for its own account (other than a registration statement on Form S-4 or S-8 or
any successor thereto), then the Company shall give written notice of such
proposed filing to each of the Designated Holders of Registrable Securities at
least twenty (20) days before the anticipated filing date, and such notice
shall describe the proposed registration and distribution and offer such
Designated Holders the opportunity to register the number of Registrable
Securities as each such holder may request (an "INCIDENTAL REGISTRATION"). The
Ad Hoc Stockholders acknowledge and agree that the Company shall be permitted
to satisfy such notice requirement with respect to the Ad Hoc Stockholders by
providing such written notice to the Ad Hoc Stockholders' Representative only
(and not all of the Ad Hoc Stockholders). The Company shall, and shall use its
best efforts (within ten (10) days of the notice provided for in the preceding
sentence) to cause the managing underwriter or underwriters of a proposed
underwritten offering (the "COMPANY UNDERWRITER") to permit each of the
Designated Holders who have requested in writing to participate in the
Incidental Registration to include such Designated Holder's Registrable
Securities in such offering on the same terms and conditions as the securities
of the Company included therein. Any request by an Ad Hoc Stockholder to have
his or her Registrable Securities included in such Incidental Registration
shall be submitted to the Ad Hoc Stockholders' Representative, and the Ad Hoc
Stockholders' Representative shall submit all such requests to the Company.
The Company shall have no obligation to include in any Incidental Registration
pursuant to this Section 4(a), any Registrable Securities of the Ad Hoc
Stockholders, unless the Company shall have received from the Ad Hoc
Stockholders' Representative written requests to include in such registration
at least 60% of the Registrable Securities owned in the aggregate by all of the
Ad Hoc Stockholders. In connection with any Incidental Registration under this
Section 4(a) involving an underwriting, the Company shall not be required to
include any Registrable Securities in such underwriting unless the holders
thereof accept the terms of the underwriting as agreed upon between the Company
and the Company Underwriter, and then only in such quantity as will not, in the
opinion of the Company Underwriter, jeopardize the success of the offering by
the Company. If in the written opinion of the Company Underwriter the
registration of all or part of the Registrable Securities which the Designated
Holders have requested to be included would materially

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<PAGE> 23
adversely affect such offering, then the Company shall be required to include
in such Incidental Registration, to the extent of the amount that the Company
Underwriter believes may be sold without causing such adverse effect, first,
all of the securities to be offered for the account of the Company; second, the
Registrable Securities to be offered for the account of the Designated Holders
pursuant to this Section 4, pro rata based on the amount recommended by the
Company Underwriter; and third, any other securities requested to be included
in such underwriting.

(b) Expenses. The Company shall bear all Registration Expenses
(other than underwriting discounts and commissions) in connection with any
Incidental Registration pursuant to this Section 4, whether or not such
Incidental Registration becomes effective; provided, however, that each
Designated Holder participating in such registration shall bear the costs and
expenses (including disbursements) of its own legal counsel.

5. Holdback Agreements.

(a) Restrictions on Public Sale by Designated Holders. Each of
the Designated Holders agrees not to effect any public sale or distribution of
any Registrable Securities being registered or of any securities convertible
into or exchangeable or exercisable for such Registrable Securities, including
a public sale pursuant to Rule 144 under the Securities Act, during the ninety
(90) day period beginning on the effective date of such registration statement
(except as part of such registration), (i) in the case of a non-underwritten
public offering, if and to the extent requested by the Initiating Holders (in
the event of a Demand Registration pursuant to Section 3) or the Company (in
the event of an Incidental Registration pursuant to Section 4(a)), as the case
may be, or (ii) in the case of an underwritten public offering, if and to the
extent requested by the Approved Underwriter (in the event of a Demand
Registration pursuant to Section 3) or the Company Underwriter (in the event of
an Incidental Registration pursuant to Section 4(a)), as the case may be.

(b) Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its securities,
or any securities convertible into or exchangeable or exercisable for such
securities (except pursuant to registrations on Form S-4 or S-8 or any
successor thereto), during the period beginning on the effective date of any
registration statement in which the Designated Holders of Registrable

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<PAGE> 24
Securities are participating and ending on the earlier of (i) the date on which
all Registrable Securities registered on such registration statement are sold
and (ii) 90 days after the effective date of such registration statement.

6. Registration Procedures.

(a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 or Section 4 of
this Agreement, the Company shall use its best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
intended method of distribution thereof as quickly as practicable, and in
connection with any such request, the Company shall, as expeditiously as
possible:

(i) use its best efforts to prepare and file with the SEC a
registration statement on any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Registrable Securities in accordance with the
intended method of distribution thereof, and use its best efforts to cause such
registration statement to become effective; provided, however, that (x) before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall provide counsel selected by the Designated Holders
holding a majority of the Registrable Securities being registered in such
registration ("HOLDERS' COUNSEL") and any other Inspector (as hereinafter
defined) with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (y) the
Company shall notify the Holders' Counsel and each seller of Registrable
Securities of any stop order issued or threatened by the SEC and take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;

(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the lesser of (x) twelve (12) months and (y) such shorter period
which will terminate when all Registrable Securities covered by such
registration statement have been sold, and comply with the provisions of the

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<PAGE> 25
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;

(iii) as soon as reasonably possible, furnish to each
seller of Registrable Securities, prior to filing a registration statement,
copies of such registration statement as is proposed to be filed, and
thereafter such number of copies of such registration statement, each amendment
and supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as each such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
such seller;

(iv) use its reasonable best efforts to register or
qualify such Registrable Securities under such other securities or "blue sky"
laws of such jurisdictions as any seller of Registrable Securities may request,
and to continue such qualification in effect in such jurisdiction for as long
as permissible pursuant to the laws of such jurisdiction, or for as long as any
such seller requests or until all of such Registrable Securities are sold,
whichever is shortest, and do any and all other acts and things which may be
reasonably necessary or advisable to enable any such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided, however, that the Company shall not be required to (x)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 6(a)(iv), (y) subject
itself to taxation in any such jurisdiction or (z) consent to general service
of process in any such jurisdiction;

(v) use its reasonable best efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the seller or
sellers of Registrable Securities to consummate the disposition of such
Registrable Securities;

(vi) notify each seller of Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration statement
contains an untrue statement of a material fact or omits

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<PAGE> 26
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, and the Company shall promptly prepare a supplement or
amendment to such prospectus and furnish to each seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, after delivery to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made;

(vii) enter into and perform customary agreements
(including an underwriting agreement in customary form with the Approved
Underwriter or Company Underwriter, if any, selected as provided in Section 3
or Section 4, as the case may be) and take such other actions as are prudent
and reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities;

(viii) make available for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition pursuant to such registration statement, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller or any managing
underwriter (each, an "INSPECTOR" and collectively, the "INSPECTORS"), all
financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (x)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the registration statement, (y) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or (z) the information in such Records was known to the Inspectors
on a non-confidential basis prior to its disclosure by the Company or has been
made generally available to the public. Each seller of Registrable Securities
agrees that it shall, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action

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<PAGE> 27
to prevent disclosure of the Records deemed confidential;

(ix) if such sale is pursuant to an underwritten offering,
use its best efforts to obtain a "cold comfort" letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by "cold comfort" letters as Holders' Counsel or
the managing underwriter reasonably request;

(x) use its reasonable best efforts to furnish, at the request
of any seller of Registrable Securities on the date such securities are
delivered to the underwriters for sale pursuant to such registration or, if
such securities are not being sold through underwriters, on the date the
registration statement with respect to such securities becomes effective, an
opinion, dated such date, of counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and to the seller
making such request, covering such legal matters with respect to the
registration in respect of which such opinion is being given as such seller may
reasonably request and are customarily included in such opinions;

(xi) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable but no later than fifteen
(15) months after the effective date of the registration statement, an earnings
statement covering a period of twelve (12) months beginning after the effective
date of the registration statement, in a manner which satisfies the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;

(xii) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed, provided that the applicable listing requirements are satisfied;

(xiii) keep Holders' Counsel advised in writing as to the
initiation and progress of any registration under Section 3 or Section 4
hereunder;

(xiv) cooperate with each seller of Registrable Securities
and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National

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<PAGE> 28
Association of Securities Dealers, Inc. (the "NASD"); and

(xv) use reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities contemplated
hereby.

The Ad Hoc Stockholders acknowledge and agree that the Company shall
be permitted to satisfy the Company's notice and delivery requirements pursuant
to this Section 6(a) with respect to the Ad Hoc Stockholders by providing
notices and documents to the Ad Hoc Stockholders' Representative only (and not
all of the Ad Hoc Stockholders). All requests to the Company by the Ad Hoc
Stockholders pursuant to this Section 6(a) shall be made to the Ad Hoc
Stockholders' Representative, and the Ad Hoc Stockholders' Representative shall
promptly forward all such requests to the Company. The Company shall have no
obligation to satisfy any request of the Ad Hoc Stockholders made pursuant to
this Section 6(a), unless such request is made by the Ad Hoc Stockholders'
Representative on behalf of Ad Hoc Stockholders holding at least 60% of the
Registrable Securities owned in the aggregate by all of the Ad Hoc
Stockholders.

(b) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding the seller and the
distribution of such securities as the Company may from time to time reasonably
request in writing.

(c) Notice to Discontinue. Each Designated Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(a)(vi), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Designated Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(a)(vi) and, if so
directed by the Company, such Designated Holder shall deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such Designated Holder's possession, of the prospectus covering such
Registrable Securities which is current at the time of receipt of such notice.
If the Company shall give any such notice, the Company shall extend the period
during which such registration statement shall be maintained effective pursuant
to this Agreement (including, without limitation, the period referred to in

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<PAGE> 29
Section 6(a)(ii)) by the number of days during the period from and including
the date of the giving of such notice pursuant to Section 6(a)(vi) to and
including the date when the Designated Holder shall have received the copies of
the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 6(a)(vi).

(d) Registration Expenses. Subject to the Registration Expense
Cap in the case of a Demand Registration pursuant to Section 3 and subject to
Section 4(b) in the case of an Incidental Registration, the Company shall pay
all expenses arising from or incident to the performance of, or compliance
with, this Agreement, including, without limitation, (i) SEC, stock exchange
and NASD registration and filing fees, (ii) all fees and expenses incurred in
complying with securities or "blue sky" laws (including reasonable fees,
charges and disbursements of counsel in connection with "blue sky"
qualifications of the Registrable Securities), (iii) all printing, messenger
and delivery expenses, (iv) the fees, charges and disbursements of counsel to
the Company and of its independent public accountants and any other accounting
fees, charges and expenses incurred by the Company (including, without
limitation, any expenses arising from any special audits incident to or
required by any registration or qualification) and any legal fees, charges and
expenses incurred by the Company and, in the case of a Demand Registration, the
Initiating Holders and (v) any liability insurance or other premiums for
insurance obtained in connection with any Demand Registration or Incidental
Registration pursuant to the terms of this Agreement, regardless of whether
such registration statement is declared effective. All of the expenses
described in this Section 6(d) are referred to herein as "REGISTRATION
EXPENSES".

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<PAGE> 30
7. Indemnification; Contribution.

(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Designated Holder, its officers, directors, trustees, partners, employees,
advisors and agents and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) such Designated Holder from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue, or allegedly
untrue, statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or notification or offering circular (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information concerning such Designated
Holder furnished in writing to the Company by such Designated Holder expressly
for use therein. The Company shall also provide customary indemnities to any
underwriters of the Registrable Securities, their officers, directors and
employees and each Person who controls such underwriters (within the meaning of
the Securities Act and the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Designated Holders of Registrable
Securities.

(b) Indemnification by Designated Holders. In connection with any
registration statement in which a Designated Holder is participating pursuant
to Section 3 or Section 4 hereof, each such Designated Holder shall furnish to
the Company in writing such information with respect to such Designated Holder
as the Company may reasonably request or as may be required by law for use in
connection with any such registration statement or prospectus and each
Designated Holder agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, any underwriter retained by the Company and
their respective directors, officers, employees and each Person who controls
the Company or such underwriter (within the meaning of the Securities Act and
the Exchange Act) to the same extent as the foregoing indemnity from the
Company to the Designated Holders, but only with respect to any such
information with respect to such Designated Holder furnished in writing to the
Company by such Designated Holder expressly for use therein.

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<PAGE> 31
(c) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder (the "INDEMNIFIED PARTY") agrees to give prompt
written notice to the indemnifying party (the "INDEMNIFYING PARTY") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or
contribution pursuant to this Agreement; provided, however, that the failure so
to notify the Indemnifying Party shall not relieve the Indemnifying Party of
any liability that it may have to the Indemnified Party hereunder. If notice
of commencement of any such action is given to the Indemnifying Party as above
provided, the Indemnifying Party shall be entitled to participate in and, to
the extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investigation) shall be paid by the Indemnified
Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the
Indemnifying Party fails to assume the defense of such action with counsel
satisfactory to the Indemnified Party in its reasonable judgment or (iii) the
named parties to any such action (including any impleaded parties) have been
advised by such counsel that either (x) representation of such Indemnified
Party and the Indemnifying Party by the same counsel would be inappropriate
under applicable standards of professional conduct or (y) there may be one or
more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party. In either of such cases, the
Indemnifying Party shall not have the right to assume the defense of such
action on behalf of such Indemnified Party. No Indemnifying Party shall be
liable for any settlement entered into without its written consent, which
consent shall not be unreasonably withheld.

(d) Contribution. If the indemnification provided for in this
Section 7 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable

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<PAGE> 32
considerations. The relative faults of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Sections 7(a), 7(b) and 7(c), any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person.

8. Rule 144. The Company covenants that it shall file (a) any reports
required to be filed by it under the Exchange Act and (b) take such further
action as each Designated Holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rules 144
and 144A under the Securities Act), all to the extent required from time to
time to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted
by the SEC. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement
as to whether it has complied with such requirements. The Ad Hoc Stockholders
acknowledge and agree that the Company shall have no obligations under this
Section 8 to any Ad Hoc Stockholder for any request submitted to the Company
pursuant to this Section 8 unless such request is submitted by the Ad Hoc
Stockholders' Representative on behalf of Ad Hoc Stockholders holding at least
60% of the Registrable Securities owned in the aggregate by all of the Ad Hoc
Stockholders.

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<PAGE> 33
9. Miscellaneous.

(a) Recapitalizations, Exchanges, etc.. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to (i)
the shares of Common Stock and (ii) any and all equity securities of the
Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in conversion of, in exchange for or in substitution of, the shares of Common
Stock and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after
the date hereof. The Company shall cause any successor or assign (whether by
merger, consolidation or otherwise) to enter into a new registration rights
agreement with the Designated Holders on terms substantially similar to this
Agreement as a condition of any such transaction.

(b) No Inconsistent Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Designated Holders in this Agreement or grant any
additional registration rights to any Person or with respect to any securities
which are not Registrable Securities which are prior in right to or
inconsistent with the rights granted in this Agreement.

(c) Remedies. The Designated Holders, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
shall be entitled to specific performance of their rights under this Agreement;
provided, however, that the Ad Hoc Stockholders shall not be entitled to
exercise any such right of specific performance unless such right is exercised
by the Ad Hoc Stockholders' Representative on behalf of Ad Hoc Stockholders
holding at least 60% of the Registrable Securities owned in the aggregate by
all of the Ad Hoc Stockholders. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive in any action
for specific performance the defense that a remedy at law would be adequate.

(d) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless consented to in writing by (i) the Company, (ii) the Fernandez
Stockholders holding Registrable Securities

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<PAGE> 34
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the Fernandez
Stockholders, (iii) the General Atlantic Stockholders holding Registrable
Securities representing (after giving effect to any adjustments) at least 60%
of the aggregate number of Registrable Securities owned by all of the General
Atlantic Stockholders, (iv) the Morino Stockholders holding Registrable
Securities representing (after giving effect to any adjustments) at least 60%
of the aggregate number of Registrable Securities owned by all of the Morino
Stockholders, (v) the FBR Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the FBR
Stockholders, (vi) the GE Capital Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the GE Capital
Stockholders, (vii) the IBIS Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the IBIS
Stockholders, (viii) the Kemp Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the Kemp
Stockholders, (ix) the Leonsis Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the Leonsis
Stockholders, (x) the McKinley Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the McKinley
Stockholders, (xi) the WPC Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the WPC
Stockholders, and (xii) the Ad Hoc Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number Registrable Securities owned by all of the Ad Hoc
Stockholders. Any such written consent shall be binding upon the Company and
all of the Designated Holders.

(e) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be made
by registered or certified first-class mail, return receipt requested,
telecopier, courier service, overnight mail or personal delivery:

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<PAGE> 35
(i) if to the Company:

Proxicom, Inc.
1749 Old Meadow Road
McLean, Virginia 22102-4310
Telecopy: (703) 566-4797
Attention: Christopher Capuano, Esq.
General Counsel

with a copy to:

Hogan & Hartson
555 13th Street, N.W.
Washington, D.C. 20004-1109
Telecopy: (202) 637-5910
Attention: Jacquelyn E. Grillon, Esq.

(ii) if to the Fernandez Stockholders:

c/o Proxicom, Inc.
1749 Old Meadow Road
McLean, Virginia 22102-4310
Telecopy: (703) 506-4797
Attention: Christopher Capuano, Esq.
General Counsel

with a copy to:

Hogan & Hartson
555 13th Street, N.W.
Washington, D.C. 20004-1109
Telecopy: (202) 637-5910
Attention: Jacquelyn E. Grillon, Esq.

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<PAGE> 36
and

Comiskey & Hunt
1501 Farm Credit Drive
Suite 4400
McLean, Virginia 22102-5000
Telecopy: (703) 790-7867
Attention: Stephen W. Comiskey, Esq.

(iii) if to GAP LP, GAP 52, GAP Coinvestment
I or GAP Coinvestment II:

c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attention: Mr. David C. Hodgson

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esq.

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<PAGE> 37
(iv) if to Morino Trust:

The Mario M. Morino Trust
c/o Morino Institute
1801 Robert Fulton Drive
Suite 550
Reston, Virginia 20191
Telecopy: (703) 620-4102
Attention: Mario M. Morino, Trustee

with a copy to:

Comiskey & Hunt
1501 Farm Credit Drive
Suite 4400
McLean, Virginia 22102-5000
Telecopy: (703) 790-7867
Attention: Stephen W. Comiskey, Esq.

(v) if to FBR:

c/o FBR Venture Capital Managers Inc.
1001 19th Street
North Arlington, Virginia 22209
Telecopy: (703) 312-9601
Attention: Suzanne Richardson

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<PAGE> 38
(vi) if to GE Capital or GE Capital Equity:

GE Capital Equity Capital Group, Inc.
120 Long Ridge Road
Stamford, Connecticut 06927
Telecopy: (203) 357-3400
Attention: General Counsel
Legal Department

(vii) if to the IBIS Stockholders:

Brenda Wong
Scott McDonald
Vincent Hoenigman
c/o IBIS Consulting, Inc.
One Ecker Street
Suite 100
San Francisco, California 94104
Telecopy: (415) 820-2401

with a copy to:

Preston Gates & Ellis LLP
One Maritime Plaza
San Francisco, California 94111
Telecopy: (415) 788-8819
Attention: Lawrence B. Low

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<PAGE> 39
(viii) if to the Kemp Stockholders:

Jack Kemp
Empower America
1776 I Street, N.W.
Suite 890
Washington, DC 20006

(ix) if to the Leonsis Stockholders:

Theodore J. Leonsis
America Online
22000 AOL Way
Dulles, Virginia 20166-9323

with a copy to:

Holland & Knight
Suite 400
2100 Pennsylvania, N.W.
Washington, DC 20037-3202
Telecopy: (202) 955-5564
Attention: T. Wayne Gray, Esq.

(x) if to the McKinley Stockholders:

John McKinley
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281

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<PAGE> 40
(xi) if the WPC Stockholders:

The Washington Post Company
1150 15th Street, N.W.
Washington, D.C. 20007
Attention: Mr. Jay Morse

(xii) if to the Ad Hoc Stockholders:

c/o Saul Aaron Singer
Ad Hoc Stockholders' Representative
ad hoc Interactive, Inc.
Libertyship Building
80 Libertyship Way, Suite 1
Sausalito, California 94965
Telecopy: (415) 332-0180

with a copy to:

Howard, Rice, Nemerovski, Canady, Falk & Rabkin
3 Embarcadero Center
7th Floor
San Francisco, California 94111
Telecopy: (415) 217-5910
Attention: Howard Lasky, Esq.

(xiii) if to any other Designated Holder, at its address as
it appears on the record books of the Company.

All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by
courier or overnight mail, if delivered by commercial courier service or
overnight mail; five (5) Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is mechanically

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<PAGE> 41
acknowledged, if telecopied.

(f) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto. The Demand Registration rights of the
General Atlantic Stockholders contained in Section 3 hereof and the other
rights of each of the General Atlantic Stockholders with respect thereto shall
be, with respect to any Registrable Security, (i) automatically transferred
among the General Atlantic Stockholders and (ii) in all other cases,
transferred only with the consent of the Company. The incidental or
"piggy-back" registration rights of the Designated Holders contained in
Sections 3(b) and 4 hereof and the other rights of each of the Designated
Holders with respect thereto shall be, with respect to any Registrable
Security, automatically transferred by such Designated Holder to any Person who
is the transferee of such Registrable Security. All of the obligations of the
Company hereunder shall survive any such transfer. No Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the rights granted hereunder.

(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

(j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all of the rights and privileges of the Designated Holders shall be

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<PAGE> 42
enforceable to the fullest extent permitted by law.

(k) Entire Agreement. This Agreement, the other Transaction
Documents (as defined in the Series D Stock Purchase Agreement) and, as between
the Company and the IBIS Stockholders, the Merger Agreement, and, as between
the Company and the Ad Hoc Stockholders, the Ad Hoc Merger Agreement, are
intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, representations, warranties or undertakings,
other than those set forth or referred to herein or therein. This Agreement,
the other Transaction Documents and, as between the Company and the IBIS
Stockholders, the Merger Agreement, and, as between the Company and the Ad Hoc
Stockholders, the Ad Hoc Merger Agreement, supersede all prior agreements and
understandings between the parties with respect to such subject matter,
including, without limitation, the Second Amended and Restated Registration
Rights Agreement.

(l) Further Assurances. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

(m) Appointment of Ad Hoc Stockholders' Representative. Each Ad
Hoc Stockholder hereby appoints Saul Aaron Singer as attorney-in-fact with full
power and authority to act for and on behalf of any or all of the Ad Hoc
Stockholders (with full power of substitution in the premises), in connection
with the provisions of this Agreement as they relate to the Ad Hoc Stockholders
generally and such other matters as are reasonably necessary for the
consummation of the transactions contemplated hereby including, without
limitation, (i) to execute, deliver and receive on behalf of the Ad Hoc
Stockholders any notice, document or agreement contemplated by or necessary or
desirable in connection with this Agreement, (ii) to execute and deliver on
behalf of the Ad Hoc Stockholders any amendments, modifications, supplements,
waivers and consents obtained pursuant to and in accordance with Section 9(d)
of this Agreement, and (iii) to take such further actions including
coordinating and administering matters related to the rights and obligations of
the Ad Hoc Stockholders pursuant to this Agreement. The Ad Hoc Stockholders'
Representative is willing to act in the capacity of the representative of the
Ad Hoc Stockholders hereunder, and hereby accepts such appointment

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<PAGE> 43
and agrees to act in accordance with the terms and conditions of this
Agreement. The Company and the Designated Holders shall be entitled to rely on
such appointment and treat the Ad Hoc Stockholders' Representative as the duly
appointed attorney-in-fact of each Ad Hoc Stockholder.

(n) Limitation of Liability. The Ad Hoc Stockholders'
Representative shall have no liability to the Ad Hoc Stockholders with respect
to any action taken by him or her under this Agreement, except with respect to
the Ad Hoc Stockholders' Representative's gross negligence or willful
misconduct. The Ad Hoc Stockholders' Representative may act in reliance upon
the advice of counsel in reference to any matter in connection with this
Agreement and shall not incur any liability to the Ad Hoc Stockholders or any
one of them, for any action taken in good faith in accordance with such advice.

-39-
<PAGE> 44

IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.

PROXICOM, INC.

By: /s/ Raul Fernandez
-------------------------------------------
Name: Raul Fernandez
Title: President and Chief Executive Officer

/s/ Raul Fernandez
----------------------------------------------
Raul Fernandez

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-40-
<PAGE> 45

GENERAL ATLANTIC PARTNERS 34, L.P.

By: GENERAL ATLANTIC PARTNERS, LLC,
Its General Partner

By: /s/ David Hodgson
----------------------------------------
Name: David Hodgson
--------------------------------------
Title: A Managing Member

GENERAL ATLANTIC PARTNERS 52, L.P.

By: GENERAL ATLANTIC PARTNERS, LLC, Its General
Partner

By: /s/ David Hodgson
----------------------------------------
Name: David Hodgson
--------------------------------------
Title: A Managing Member

-41-
<PAGE> 46

GAP COINVESTMENT PARTNERS, L.P.

By: /s/ David Hodgson
---------------------------------------
Name: David Hodgson
-------------------------------------
Title: A General Partner

GAP COINVESTMENT PARTNERS II, L.P.

By: /s/ David Hodgson
---------------------------------------
Name: David Hodgson
-------------------------------------
Title: A General Partner

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-42-
<PAGE> 47

THE MARIO M. MORINO TRUST

By: /s/ Mario M. Morino
--------------------------------------
Name: Mario M. Morino
Title: Trustee

FBR VENTURE CAPITAL MANAGERS INC.

By: /s/ (signature illegible)
--------------------------------------
Name:
------------------------------------

Title:
-----------------------------------

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ (signature illegible)
--------------------------------------
Name:
------------------------------------

-43-
<PAGE> 48

Title:
----------------------------------

GE CAPITAL EQUITY INVESTMENTS, INC.

By: /s/ (signature illegible)
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-44-
<PAGE> 49

/s/ Brenda Wong
----------------------------------------
Brenda Wong

/s/ Scott McDonald
----------------------------------------
Scott McDonald

/s/ Vincent Hoenigman
----------------------------------------
Vincent Hoenigman

/s/ Jack Kemp
----------------------------------------
Jack Kemp

/s/ Theodore J. Leonsis
----------------------------------------
Theodore J. Leonsis

/s/ John McKinley
----------------------------------------
John McKinley

-45-
<PAGE> 50

THE WASHINGTON POST COMPANY

By: /s/ (signature illegible)
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-46-
<PAGE> 51

THE AD HOC STOCKHOLDERS:
-----------------------

/s/ SAUL AARON SINGER
-------------------------------------
SAUL AARON SINGER

/s/ MEGAN WHEELER
-------------------------------------
MEGAN WHEELER

/s/ DAVID GANG
-------------------------------------
DAVID GANG

/s/ SHAWN MCKEE
-------------------------------------
SHAWN MCKEE

/s/ ROB TSUYUKI
-------------------------------------
ROB TSUYUKI

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<PAGE> 52

/s/ LAURA MITCHELL
--------------------------------------
LAURA MITCHELL

/s/ DAPHNE HUMES
--------------------------------------
DAPHNE HUMES

/s/ CHRIS KELLY
--------------------------------------
CHRIS KELLY

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-48-
<PAGE> 53

/s/ SCOTT HARTWIG
-------------------------------------
SCOTT HARTWIG

/s/ JASON SAFFA
-------------------------------------
JASON SAFFA

/s/ SHERYL CHAPMAN
-------------------------------------
SHERYL CHAPMAN

/s/ ANDREW NEWELL
-------------------------------------
ANDREW NEWELL

/s/ JORGE GIRALDO
-------------------------------------
JORGE GIRALDO

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<PAGE> 54

/s/ STEVEN HEARD
-----------------------------------
STEVEN HEARD

/s/ TOM MABE
-----------------------------------
TOM MABE

/s/ JESSICA MABE
-----------------------------------
JESSICA MABE

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

-50-
<PAGE> 55

/s/ TRAVIS KOTZEBUE
-----------------------------------
TRAVIS KOTZEBUE

/s/ THY THAN
-----------------------------------
THY THAN

/s/ ROBY GILBERT
-----------------------------------
ROBY GILBERT

[END OF SIGNATURE PAGES]

-51-
<PAGE> 56

EXHIBIT A

AD HOC STOCKHOLDERS

Aaron Singer
Megan Wheeler
David Gang
Shawn McKee
Rob Tsuyuki
Laura Mitchell
Daphne Humes
Chris Kelly
Scott Hartwig
Jason Saffa
Sheryl Chapman
Andrew Newell
Jorge Giraldo
Steven Heard
Tom Mabe
Jessica Mabe
Travis Kotzebue
Thy Than
Roby Gilbert

-52-

<PAGE> 1
EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Square Earth, Inc. Delaware

IBIS Consulting, Inc. California

Proxicom (Barbados), Inc. Barbados

ProxiCom GmbH Germany

ad hoc Interactive, Inc. California
</TABLE>

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 5, 1999, except
as to the pooling of interests with ad hoc Interactive, Inc. which is as of
March 26, 1999, relating to the consolidated and supplemental financial
statements of Proxicom, Inc., which appear in such Prospectus. We consent to
the references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that
PricewaterhouseCoopers LLP has not prepared or certified such "Selected
Consolidated Financial Data."

PricewaterhouseCoopers LLP
McLean, Virginia
March 26, 1999