FIRST AMERICAN FINANCIAL CORP
S-4, 1998-05-07
TITLE INSURANCE
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            As filed with the Securities and Exchange Commission on May 7, 1998

                                               Registration No. 333-____________
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM S-4
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                    THE FIRST AMERICAN FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

CALIFORNIA                                  6361                      95-1068610
(State or Other Jurisdiction of (Primary Standard Industrial    (I.R.S. Employer
Incorporation of Organization)     Classification Code No.)  Identification No.)

                              114 EAST FIFTH STREET
                        SANTA ANA, CALIFORNIA 92701-4642
                                 (800) 854-3643
    (Address, Including Zip Code, and Telephone Number, Including Area Code,
                  of Registrant's Principal Executive Offices)
<TABLE>
<CAPTION>
     <S>                                                  <C>                                      <C>
                                                                                       (COPIES TO)
               MARK R ARNESEN, ESQ.                            NEIL W. RUST, ESQ.                    BARBARA L. BORDEN, ESQ.
                     SECRETARY                                  WHITE & CASE LLP                        COOLEY GODWARD LLP
     THE FIRST AMERICAN FINANCIAL CORPORATION                 633 WEST FIFTH STREET                    4365 EXECUTIVE DRIVE
               114 EAST FIFTH STREET                      LOS ANGELES, CALIFORNIA 90071            SAN DIEGO, CALIFORNIA 92121
            SANTA ANA, CALIFORNIA 92701                          (213) 620-7700                           (619) 550-6000
                  (714) 558-3211
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)
</TABLE>

     Approximate  date of  commencement  of proposed  sale to the  public:  with
respect to the offering  being made by the  Registrant,  as soon as  practicable
after this Registration Statement becomes effective and certain other conditions
under the Merger  Agreement  are met or waived and with  respect to the offering
being made by the  Selling  Shareholders  pursuant  to Rule 415, on a delayed or
continuous basis after the Registration Statement becomes effective.

     If the  securities  being  registered  on this  Form are being  offered  in
connection  with the formation of a holding company and there is compliance with
General Instruction G, check the following box.(  )

     If this Form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering.(  )Registration No._____

     If this Form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.(  )Registration No._____


                                 ______________
<PAGE>


                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

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

                                                                     PROPOSED             PROPOSED
  TITLE OF EACH CLASS OF SECURITIES             AMOUNT                MAXIMUM             MAXIMUM                  AMOUNT OF
           TO BE REGISTERED                     TO BE             AGGREGATE PRICE        AGGREGATE               REGISTRATION
                                            REGISTERED(1)           PER UNIT(2)      OFFERING PRICE(3)              FEE(4)
======================================= ======================= ==================== =================== ===========================
<S>                                         <C>                    <C>               <C>                         <C>
    Common shares, $1.00 par value          838,095 shares            $74.063           $62,071,830               $2,339.04
======================================= ======================= ==================== =================== ===========================
<FN>
(1)  Based upon the maximum number of Common shares of the  Registrant  issuable
     in the Merger described herein.

(2)  The  proposed  maximum  offering  price  per unit is based on the last sale
     price of the  Registrant's  Common shares on May __, 1998.  There can be no
     assurance as to the actual price of Common shares of the  Registrant  prior
     to, at or following the effective time of the Merger.

(3)  Represents the maximum  aggregate value of the  Registrant's  Common shares
     issuable to security  holders of Data Tree  Corporation in connection  with
     the Merger.

(4)  Estimated  solely for the purpose of calculating  the  registration  fee in
     accordance  with  Rule  457(f)(2)  under  the  Securities  Act of 1933,  as
     amended.  The book value of the securities to be received by the Registrant
     as of March 31, 1998 was $7,928,955.
</FN>
</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.

                                 ______________



<PAGE>



                              DATA TREE CORPORATION
                         550 WEST "C" STREET, SUITE 2040
                           SAN DIEGO, CALIFORNIA 92101

Dear Data Tree Shareholder:

     You are cordially  invited to attend a Special Meeting of the  Shareholders
of Data Tree Corporation,  a California corporation ("Data Tree"), which will be
held at 9:00 a.m.  California  Time on  ______,  1998 (the  "Data  Tree  Special
Meeting") at the  corporate  offices of Data Tree at 550 West "C" Street,  Suite
2040, San Diego, California 92101.

     At the Data Tree  Special  Meeting,  you will be asked to consider and vote
upon a proposal (the "Merger Proposal") to approve the principal terms of (i) an
Agreement  and Plan of Merger dated as of March 27, 1998 by and among Data Tree,
Harish  Chopra,  the Chief  Executive  Officer of Data Tree,  The First American
Financial  Corporation,  a  California  corporation  (the  "Company")  and Image
Acquisition Corp., a California  corporation and wholly-owned  subsidiary of the
Company  ("IAC"),  whereby Data Tree will be merged with IAC (the  "Merger") and
Data  Tree  will  continue  as the  surviving  corporation  and a  wholly  owned
subsidiary  of the Company and (ii) the related  Agreement of Merger to be filed
with the office of the  Secretary of State of the State of  California to effect
the  Merger.  As a result of the Merger,  the Company  will issue that number of
shares of Common  Stock of the Company  equal in value to  $43,113,373  less the
amount  by which  aggregate  fees  and  expenses  of  counsel,  accountants  and
financial  advisors  to Data Tree and  personal  counsel  to Mr.  Chopra  exceed
$1,000,000  (the net amount  referred to herein as the  "Purchase  Price").  The
exact number of shares of Company Common Stock to be issued to the  shareholders
of Data  Tree  (the  "Merger  Shares")  will not be fixed  until  the end of the
trading day  immediately  preceding the day of the Data Tree Special  Meeting as
such number is determined  by dividing the Purchase  Price by the average of the
last reported  sales prices of one share of the  Company's  Common Stock for the
twenty consecutive trading days ending on the trading day immediately  preceding
the Data Tree Special Meeting; provided,  however, that in no circumstances will
the total Merger  Shares be more than 838,095  shares of Company  Common  Stock.
Assuming  an  average  price of $___ for one share of the  Company's  Stock (the
closing  price of a share of  Company  Stock as  reported  on the New York Stock
Exchange  on May __,  1998) and a total  Purchase  Price of  $43,013,373  (which
assumes  $100,000 of aggregate  expenses in excess of $1,000,000)  the Data Tree
shareholders  would  be  entitled  to  receive  in the  aggregate  approximately
____________  shares of the  Company's  Common  Stock.  Each  share of Data Tree
Common  Stock  (other  than  Dissenting  Shares,  as  defined  in  the  attached
Prospectus/Proxy Statement) outstanding immediately prior to the consummation of
the Merger will be converted  into the right to receive that fraction of a share
of the Company's  Common Stock,  equal to the Merger Shares divided by the total
number of shares of Data Tree Common Stock outstanding  immediately prior to the
consummation  of the  Merger.  Each Data Tree  shareholder  will  receive in the
Merger a whole number of shares of the Company's Common Stock, plus cash in lieu
of a fractional share.

     The Merger Proposal is described more fully in the  accompanying  Notice of
Special  Meeting  of the  Shareholders  of  Data  Tree  and The  First  American
Financial Corporation  Prospectus and Data Tree Corporation Proxy Statement (the
"Prospectus/Proxy Statement").

         Among other  things,  as a condition to the closing of the Merger,  the
Merger Proposal must be approved by the vote of 100% of the shareholders of Data
Tree. If the requisite approval of the shareholders of Data Tree is received and
all other  conditions  to the Merger  are  satisfied  or  waived,  the Merger is
anticipated to close by ______, 1998.

     Holders of Data Tree Common Stock may, by complying  with Chapter 13 of the
California  General  Corporation Law, be entitled to dissenters'  rights and the
receipt of cash payment for their shares as set forth therein.

     YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY  APPROVED THE MERGER  AGREEMENT AND
THE MERGER AND  BELIEVES  THAT THE MERGER IS FAIR TO, AND IN THE BEST  INTERESTS
OF, DATA TREE AND ITS SHAREHOLDERS.  THE BOARD OF DIRECTORS  RECOMMENDS THAT YOU
VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.

     You  are  urged  to  review  carefully  the  information  contained  in the
accompanying Prospectus/Proxy Statement, including in particular the information
under  the  captions  "Risk  Factors"  and  "The  Merger  -  Background  Of  The
Acquisition;  Reasons  for the  Merger"  prior to voting on the  Merger  and the
Merger Agreement.

     Whether or not you expect to attend the Data Tree Special  Meeting,  please
complete,  sign, date and return the enclosed proxy card in the  postage-prepaid
envelope to assure that your shares will be represented at the Data Tree Special
Meeting.  You may revoke your proxy at any time before it has been voted, and if
you attend the Data Tree Special Meeting you may vote in person even if you have
previously returned your proxy card.

     Regardless  of the number of shares you own, your vote for the approval and
adoption of the Merger  Agreement is  important.  Your prompt  attention to this
matter is appreciated.

                                Very truly yours,

                                /s/ Harish K. Chopra

                                Harish K. Chopra
                                President and Chairman of the Board of Directors



<PAGE>


                              DATA TREE CORPORATION
                         550 WEST "C" STREET, SUITE 2040
                           SAN DIEGO, CALIFORNIA 92101


                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                          TO BE HELD ON _______ __,1998

Dear Data Tree Shareholder:

     PLEASE TAKE NOTICE that a Special Meeting of  Shareholders  (the "Data Tree
Special  Meeting") of Data Tree  Corporation,  a California  corporation  ("Data
Tree"),  will be held on _______ __, 1998,  commencing at 9:00 a.m.,  California
Time, at 550 West "C" Street,  Suite 2040, San Diego,  California  92101 for the
following purpose:

     To consider and vote upon a proposal (the "Merger Proposal") to approve the
principal  terms of (i) the  Agreement  and Plan of Merger dated as of March 27,
1998  (the  "Merger  Agreement"),  by and among  The  First  American  Financial
Corporation, a California corporation  (the "Company"), Image Acquisition Corp.,
a California  corporation and  wholly-owned  subsidiary of the Company  ("IAC"),
Data  Tree and  Harish  Chopra,  the  President  and  Chairman  of the  Board of
Directors  of Data Tree,  pursuant to which,  among other  things,  (a) IAC will
merge  with and into  Data  Tree,  with Data Tree  continuing  as the  surviving
corporation and becoming a wholly-owned subsidiary of the Company (the "Merger")
and (b) each  issued and  outstanding  share of Data Tree Common  Stock,  no par
value,  will be  converted  into the right to receive a  fraction  of a share of
Common  Stock of the  Company,  $1.00 par value per share,  such  fraction to be
determined in accordance with the Merger  Agreement on the day prior to the Data
Tree Special  Meeting and (ii) the related  Agreement of Merger to be filed with
the office of the  Secretary of State of the State of  California  to effect the
Merger.  Each Data Tree shareholder will receive in the Merger a whole number of
shares of the Common  Stock of the  Company,  plus cash in lieu of a  fractional
share.

     As a result of the Merger,  the Company will issue that number of shares of
Common  Stock of the Company  equal in value to  $43,113,373  less the amount by
which aggregate fees and expenses of counsel, accountants and financial advisors
to Data Tree and  personal  counsel to Mr.  Chopra  exceed  $1,000,000  (the net
amount referred to herein as the "Purchase  Price").  The exact number of shares
of  Company  Common  Stock to be  issued to the  shareholders  of Data Tree (the
"Merger  Shares") will not be fixed until the end of the trading day immediately
preceding the day of the Data Tree Special  Meeting as such number is determined
by dividing the Purchase  Price by the average of the last reported sales prices
of one share of the Company's  Common Stock for the twenty  consecutive  trading
days ending on the  trading  day  immediately  preceding  the Data Tree  Special
Meeting;  provided,  however,  that in no  circumstances  will the total  Merger
Shares be more than 838,095 shares of Company Common Stock.  Assuming an average
price of $___ for the  Company's  Stock (the closing price of a share of Company
Stock as  reported on the New York Stock  Exchange on May __,  1998) and a total
Purchase Price of $43,013,373  (which assumes $100,000 of aggregate  expenses in
excess of $1,000,000) the Data Tree shareholders would be entitled to receive in
the aggregate  approximately  ____________  shares of Stock.  Each share of Data
Tree Common  Stock  (other than  Dissenting  Shares,  as defined in the attached
Prospectus/Proxy Statement) outstanding immediately prior to the consummation of
the Merger will be converted  into the right to receive that fraction of a share
of the Company's  Common Stock,  equal to the Merger Shares divided by the total
number of shares of Data Tree Common Stock outstanding  immediately prior to the
consummation of the Merger.

     The Merger  Proposal and other related  matters are described more fully in
the attached Prospectus of The First American Financial Corporation and the Data
Tree  Corporation  Proxy  Statement (the  "Prospectus/Proxy  Statement") and the
Annexes  thereto.  A copy of the Merger  Agreement is attached as Annex A to the
Prospectus/Proxy  Statement  and a copy of the  Agreement  of Merger to be filed
with the office of the  Secretary of State of the State of  California to effect
the Merger is attached as Annex B to the Prospectus/Proxy Statement.

     The Board of  Directors  of Data Tree has  fixed the close of  business  on
____, 1998 as the record date for the determination of shareholders of Data Tree
entitled  to  notice  of and to vote at the Data Tree  Special  Meeting  and any
adjournments  or  postponements  thereof.  Only  holders  of record of Data Tree
Common  Stock on the record date are  entitled to vote at the Data Tree  Special
Meeting.

     Among other things, as a condition to the closing of the Merger, the Merger
Proposal must be approved by the vote of 100% of the  shareholders of Data Tree.
If the requisite  approval of the  shareholders of Data Tree is received and all
other  conditions  to  the  Merger  are  satisfied  or  waived,  the  Merger  is
anticipated to close by ______, 1998.

     Holders of Data Tree Common Stock may, by complying  with Chapter 13 of the
California  General  Corporation  Law (the "CGCL"),  be entitled to  dissenters'
rights and the receipt of cash payment for their shares as set forth therein.  A
copy of Chapter 13 of the CGCL is attached  as Annex C to this  Prospectus/Proxy
Statement.

     Your vote is important  no matter how many shares you hold.  You can ensure
that your  shares are voted at the  meeting by signing  and dating the  enclosed
proxy and returning it in the envelope provided.  Sending in a signed proxy card
will not affect  your right to attend the  meeting  and vote in person.  You may
revoke your proxy at any time before it is voted by giving written notice to the
Secretary of Data Tree at Data Tree's corporate  offices at 550 West "C" Street,
Suite 2040, San Diego,  California 92101, by signing and returning a later dated
proxy or by voting in person at the Data Tree Special Meeting.



<PAGE>


     WHETHER OR NOT YOU EXPECT TO ATTEND THE DATA TREE SPECIAL MEETING,  WE URGE
YOU TO SIGN AND DATE THE  ENCLOSED  PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED.


                                              By Order of the Board of Directors

                                              /s/ Michael D. Reynolds
                                              Michael D. Reynolds
                                              Secretary

San Diego, California
________, 1998


<PAGE>



                       SUBJECT TO COMPLETION, MAY 6, 1998




               THE FIRST AMERICAN FINANCIAL CORPORATION PROSPECTUS
                      DATA TREE CORPORATION PROXY STATEMENT


     The First American  Financial  Corporation,  a California  corporation (the
"Company"),  has filed a Registration  Statement on Form S-4 (the  "Registration
Statement")  with the  Securities  and Exchange  Commission  (the  "Commission")
pursuant to the  Securities  Act of 1933,  as amended  (the  "Securities  Act"),
covering up to 838,095 of its Common shares,  $1.00 par value (all Common shares
of the Company,  including the 838,095  Common  shares  referenced  herein,  the
"Stock"),  to be issued in connection with the proposed merger (the "Merger") of
Image Acquisition Corp., a California corporation and wholly-owned subsidiary of
the  Company  ("IAC"),  with  and  into  Data  Tree  Corporation,  a  California
corporation ("Data Tree"),  pursuant to the terms set forth in the Agreement and
Plan of Merger,  dated as of March 27,  1998 (the  "Merger  Agreement"),  by and
among the Company,  IAC, Data Tree and Harish Chopra, an individual  residing in
Rancho Santa Fe, California ("Chopra").

     This  Prospectus/Proxy  Statement is being furnished to the shareholders of
Data Tree on behalf of the Data Tree board of directors  (the "Data Tree Board")
for use at the Data Tree  Special  Meeting to be held at 9:00  a.m.,  California
Time,  on  ______,  1998 at the  corporate  offices of Data Tree at 550 West "C"
Street,  Suite  2040,  San  Diego,  California,   and  at  any  adjournments  of
postponements  thereof. The Data Tree Special Meeting is being called to solicit
the  approval by the  shareholders  of Data Tree of the  principal  terms of the
Merger  Agreement and the related  Agreement of Merger,  the proposed Merger and
the transactions contemplated thereby (the "Merger Proposal").

     Pursuant to the Merger Agreement, upon the consummation of the Merger, Data
Tree will become a  wholly-owned  subsidiary  of the Company and Data Tree Stock
(as defined  below) will be  converted  into the right to receive  shares of the
Stock and cash in lieu of fractional shares of Stock. As used herein, "Data Tree
Stock" means all issued and  outstanding  common shares of Data Tree. The Merger
Agreement  contemplates  that to acquire  the Data Tree Stock the  Company  will
issue  Stock  in an  amount  equal  in  value  to  the  difference  between  (x)
$43,113,373   and  (y)  such  reasonable  fees  and  expenses  of  the  counsel,
accountants and financial  advisors of Data Tree and personal  counsel to Chopra
which exceed in the aggregate  $1,000,000  (the net amount referred to herein as
the  "Purchase  Price").  Dissenting  Shareholders  (as defined  below) will not
receive  shares of Stock and the value of shares of Stock  issued in the  Merger
will be  decreased by the value of the Stock that would have been issued to such
Dissenting Shareholder had such shareholder not dissented.  It is a condition to
the Merger that there be no Dissenting Shareholders.  The exact number of shares
of Stock to be issued by the Company  pursuant to the Merger shall be determined
by dividing the Purchase  Price by the average of the last reported  sales price
on the New York Stock Exchange of one share of Stock for the twenty  consecutive
Trading Days (as defined below) ending on the Trading Day  immediately  prior to
the date that the Data Tree  shareholders  meet to vote on the Merger (the "Data
Tree Special  Meeting").  As used herein,  a "Trading Day" is a day on which the
New York Stock  Exchange is open for at least  one-half  of its normal  business
hours. As of May 4, 1998 there were  7,039,830  shares of Data Tree Stock issued
and outstanding  and warrants to acquire 110,136 shares of Data Tree Stock.  See
"The Merger Agreement - Conversion of Securities."

     This Prospectus/Proxy Statement ("Prospectus/Proxy  Statement") constitutes
(a) the  Prospectus of the Company filed as part of the  Registration  Statement
and (b) the Proxy  Statement  of Data  Tree  relating  to the Data Tree  Special
Meeting called to vote on the approval and adoption of the Merger Agreement.

     All information herein with respect to Data Tree has been furnished by Data
Tree, all information herein with respect to Chopra has been furnished by Chopra
and all  information  herein  with  respect  to the  Company  and  IAC has  been
furnished by the Company. This Prospectus/Proxy  Statement is first being mailed
to shareholders of Data Tree on or about May __, 1998.

     Shares of Stock  issued  to Data  Tree  "affiliates,"  as used  within  the
meaning  of Rule 145  promulgated  under the  Securities  Act  pursuant  to this
Prospectus/Proxy  Statement  may be  reoffered  pursuant  hereto by such holders
thereof (the "Selling  Shareholders")  from time to time in  transactions on the
open market, in negotiated transactions,  through the writing of options on such
shares of Stock or through a combination  of such methods of sale, at negotiated
prices, fixed prices which may be changed,  market prices prevailing at the time
of sale or prices  relating  to such  prevailing  market  prices.  See  "Selling
Shareholders."

     The Stock is traded on the New York Stock  Exchange under the symbol "FAF."
On May __,  1998,  the last sales price of the Stock as reported on the New York
Stock Exchange was $__.__.

     Holders  of Data Tree  Stock  may,  by  complying  with  Chapter  13 of the
California  General  Corporation  Law (the "CGCL"),  be entitled to  dissenters'
rights and the receipt of cash payment for their shares as set forth therein.  A
copy of Chapter 13 of the CGCL is attached  as Annex C to this  Prospectus/Proxy
Statement. See "The Data Tree Special Meeting - Dissenters' Rights."

     SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED  CAREFULLY BY DATA TREE SHAREHOLDERS  BEFORE VOTING IN
FAVOR OF THE MERGER.

     THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED BY THE SECURITIES
AND  EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION  NOR  HAS  THE
SECURITIES AND EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION  PASSED
UPON  THE  ACCURACY  OR  ADEQUACY  OF  THIS  PROSPECTUS/PROXY   STATEMENT.   ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

          THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS MAY __, 1998.



<PAGE>



     NO  PERSON  HAS  BEEN  AUTHORIZED  TO GIVE ANY  INFORMATION  OR TO MAKE ANY
REPRESENTATION  OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THESE MATTERS,
AND, IF GIVEN OR MADE,  SUCH  INFORMATION OR  REPRESENTATION  MUST NOT BE RELIED
UPON  AS  HAVING   BEEN   AUTHORIZED   BY  THE   COMPANY  OR  DATA  TREE.   THIS
PROSPECTUS/PROXY   STATEMENT  DOES  NOT  CONSTITUTE  AN  OFFER  TO  SELL,  OR  A
SOLICITATION  OF AN OFFER TO BUY,  ANY  SECURITY  OTHER THAN THE SHARES OF STOCK
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY OF THE STOCK OFFERED HEREBY BY ANY PERSON IN ANY  JURISDICTION
IN  WHICH  IT IS  UNLAWFUL  FOR ANY  SUCH  PERSON  TO  MAKE  SUCH  AN  OFFER  OR
SOLICITATION.  THE DELIVERY OF THIS PROSPECTUS/PROXY  STATEMENT AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION  CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THE DATE OF THE DOCUMENT
CONTAINING SUCH INCORPORATED INFORMATION, AS THE CASE MAY BE.

     Titlescape(R)and IDEA(TM)are trademarks of Data Tree. This Prospectus/Proxy
Statement may also include  trademarks and trade names which are the property of
their respective owners.


<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S>                                                                                                    <C>            
Available Information..................................................................................inside cover
Incorporation of Documents by Reference................................................................inside cover
Forward Looking Statements.............................................................................inside cover
Summary...........................................................................................................1
Risk Factors.....................................................................................................18
The Data Tree Special Meeting....................................................................................20
Beneficial Security Ownership of Certain Owners and Management of Data Tree......................................24
The Merger ......................................................................................................25
The Merger Agreement.............................................................................................33
Use of Proceeds..................................................................................................45
Selling Shareholders.............................................................................................45
Plan of Distribution.............................................................................................47
The First American Financial Corporation.........................................................................49
Image Acquisition Corp...........................................................................................53
Data Tree Corporation............................................................................................53
Management's Discussion and Analysis and Results of Operations of Data Tree......................................57
Comparison of Rights of Holders of Data Tree Stock and Company Stock.............................................62
Tax Matters......................................................................................................67
Description of the Stock.........................................................................................70
Legal Matters....................................................................................................73
Experts..........................................................................................................73
Index to Data Tree's Financial Statements........................................................................73
Financial Statements - Data Tree Corporation....................................................................F-1
Annex A - Agreement and Plan of Merger..........................................................................A-1
Annex B - Agreement of Merger...................................................................................B-1
Annex C - Chapter 13 of the CGCL................................................................................C-1
</TABLE>



<PAGE>



                              AVAILABLE INFORMATION

     The Company is subject to the informational  requirements of the Securities
Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  and in  accordance
therewith  files  reports,  proxy  statements  and  other  information  with the
Commission.  Such  reports and other  information  filed by the Company with the
Commission pursuant to the informational requirements of the Exchange Act can be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission at Room 1024, 450 Fifth Street,  N.W.,  Judiciary Plaza,  Washington,
D.C. 20549; and at the following  Regional  Offices of the Commission:  New York
Regional Office, Seven World Trade Center, 13th Floor, Suite 1300, New York, New
York 10048;  and Chicago  Regional  Office,  Citicorp  Center,  500 West Madison
Street, 14th Floor, Suite 1400,  Chicago,  Illinois  60661-2511.  Copies of such
material can be obtained at prescribed rates from the Public  Reference  Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,  Washington,  D.C.
20549.  The  Commission  also  maintains  a Web site  (http://www.sec.gov)  that
contains reports,  proxy statements and other information regarding the Company.
In addition,  such reports,  proxy statements and other  information can also be
inspected at the offices of the New York Stock Exchange,  Inc., 20 Broad Street,
New York,  New York  10005,  on which the  shares  of Stock of the  Company  are
listed.

     Data Tree is not subject to the informational  requirements of the Exchange
Act and, as a result, does not file reports,  proxy or information statements or
other information with the Commission.

     This   Prospectus/Proxy   Statement  constitutes  part  of  a  Registration
Statement on Form S-4 (the  "Registration  Statement") filed by the Company with
the  Commission  under the  Securities  Act.  In  accordance  with the rules and
regulations of the Commission,  this Prospectus/Proxy Statement does not contain
all of the information contained in the Registration  Statement and the exhibits
and schedules thereto.  For further  information  concerning the Company and the
Stock offered hereby, reference is hereby made to the Registration Statement and
the  exhibits  and  schedules  filed  therewith  which  may be  obtained  at the
Commission's   offices  whose  addresses  are  listed  above.  The  Registration
Statement has been filed  electronically and may be obtained at the Commission's
Web site listed above. Any statements contained herein concerning the provisions
of any document are not necessarily complete,  and, in each instance,  reference
is made to the copy of such  document  filed as an exhibit  to the  Registration
Statement  or  otherwise  filed  with the  Commission.  Each such  statement  is
qualified in its entirety by such reference.

                     INCORPORATION OF DOCUMENTS BY REFERENCE

     The Company hereby states that the documents  listed in (1), (2), (3), (4),
(5),   (6),   (7)  and  (8)  below  are   incorporated   by  reference  in  this
Prospectus/Proxy  Statement,  and all  documents  filed by the Company  with the
Commission  pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
subsequent  to the  date of this  Prospectus/Proxy  Statement  and  prior to the
termination   of  any   offering   or   resale  of   securities   made  by  this
Prospectus/Proxy  Statement,  shall be deemed to be incorporated by reference in
this Prospectus/Proxy Statement and to be part hereof from the date of filing of
such  documents.  Any  statement  contained  herein,  or in a document  all or a
portion  of which is  incorporated  or deemed to be  incorporated  by  reference
herein,  shall be deemed to be  modified  or  superseded  for  purposes  of this
Prospectus/Proxy Statement to the extent that a statement contained herein or in
any  other  subsequently  filed  document  which  also  is  or is  deemed  to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded  shall not be deemed,  except as so modified
or superseded, to constitute a part of this Prospectus/Proxy Statement.

     (1)  The  Company's  Annual  Report on Form 10-K for the fiscal  year ended
          December 31, 1997;

     (2)  The Company's Report on Form 8-K dated January 23, 1998;

     (3)  The Company's Report on Form 8-K dated January 27, 1998;

     (4)  The Company's Report on Form 8-K dated March 18, 1998;

     (5)  The Company's Report on Form 8-K dated March 31, 1998;

     (6)  The Company's Report on Form 8-K dated April 7, 1998;

     (7)  The description of the Stock  contained in the Company's  Registration
          Statement on Form 8-A registering  its Common shares,  par value $1.00
          per share, under Section 12(b) of the Exchange Act, dated November 23,
          1993; and

     (8)  The  description  of  certain  Rights  to  Purchase  Series  A  Junior
          Participating  Preferred  Shares  which  may be  transferred  with the
          Company's  Common  shares,  which  description  is  contained  in  the
          Company's  Registration  Statement on Form 8-A, under Section 12(b) of
          the Exchange Act, dated November 7, 1997.

     THIS PROSPECTUS/PROXY  STATEMENT  INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED  HEREIN OR DELIVERED  HEREWITH.  THESE DOCUMENTS ARE AVAILABLE
WITHOUT  CHARGE  TO ANY  PERSON  TO  WHOM  THIS  PROSPECTUS/PROXY  STATEMENT  IS
DELIVERED  UPON WRITTEN OR ORAL REQUEST OF MARK R ARNESEN,  VICE  PRESIDENT  AND
SECRETARY,  THE FIRST  AMERICAN  FINANCIAL  CORPORATION,  114 EAST FIFTH STREET,
SANTA ANA, CALIFORNIA  92701-4642;  TELEPHONE NUMBER (714) 558-3211. IN ORDER TO
ENSURE TIMELY  DELIVERY OF THE DOCUMENTS,  ANY REQUEST SHOULD BE MADE BY MAY __,
1998.

                           FORWARD-LOOKING STATEMENTS

     Except  for  historical  information  contained  in  this  Prospectus/Proxy
Statement and in the documents  incorporated in this Prospectus/Proxy  Statement
by reference,  the matters discussed herein and therein contain  forward-looking
statements that involve risks and uncertainties  that could cause actual results
to differ  materially  from those suggested in the  forward-looking  statements,
including,  without  limitation,  the effect of  economic  conditions,  interest
rates,  market demand,  competition  and other risks detailed  herein and in the
Company's other filings with the Commission.



<PAGE>



                                     SUMMARY

     The following is a summary of certain  information  contained  elsewhere in
this  Prospectus/Proxy  Statement.  Reference  is made to,  and this  summary is
qualified in its entirety by, the more  detailed  information  contained in this
Prospectus/Proxy  Statement and the Annexes  hereto.  Unless  otherwise  defined
herein,  capitalized  terms used in this  summary have the  respective  meanings
ascribed  to  them  elsewhere  in this  Prospectus/Proxy  Statement.  Data  Tree
shareholders are urged to read this  Prospectus/Proxy  Statement and the Annexes
in their entirety.

THE COMPANIES

     THE FIRST AMERICAN FINANCIAL CORPORATION.

     The  Company  was  organized  in  1894  as  Orange  County  Title  Company,
succeeding to the business of two title abstract  companies  founded in 1889 and
operating in Orange County,  California.  In 1924, the Company commenced issuing
title insurance policies.  In 1986, the Company began a diversification  program
by acquiring and developing  financial service businesses closely related to the
real  estate  transfer  and  closing  process.   The  Company  is  a  California
corporation.

     The  Company,  through  its  subsidiaries,  is engaged in the  business  of
providing  real  estate-related  financial  and  information  services  to  real
property  buyers and  mortgage  lenders.  The  Company's  products  and services
include  title  insurance,  tax  monitoring,  credit  reporting,  property  data
services,  flood certification,  field inspection services,  appraisal services,
mortgage loan servicing systems, mortgage document preparation and home warranty
services.  The Company  also  provides  investment,  trust and thrift  services.
Although  industry-wide  data for 1997 is not currently  available,  the Company
believes that First American Title Insurance Company  ("FATICO") was the largest
title insurer in the United States,  based on premiums  written,  and its wholly
owned  subsidiary,  First  American  Real  Estate  Information  Services,  Inc.,
("FAREISI")  was the  nation's  largest  provider of flood zone  determinations,
based on the number of flood zone  determinations  issued,  the nation's largest
mortgage credit reporting service, based on the number of credit reports issued,
and the nation's second largest  provider of tax monitoring  services,  based on
the number of loans under  service.  The Company also believes that its majority
owned subsidiary,  First American Home Buyers Protection Corporation, was one of
the largest  providers of home  warranties  in the United  States,  based on the
number of home protection  contracts under service. The title insurance and real
estate information segments operate through networks of offices nationwide.  The
Company,  through FATICO and its  subsidiaries,  transacts the business of title
insurance  through a network  of more than 300  branch  offices  and over  4,000
independent agents. The Company also offers its title services in Australia, the
Bahama Islands,  Bermuda,  Canada,  Guam,  Mexico,  Puerto Rico, the U.S. Virgin
Islands and the United Kingdom.  Home warranty services are available in certain
counties of Arizona, California,  Nevada, North Carolina, South Carolina, Texas,
Utah and  Washington.  The  trust,  banking  and  thrift  businesses  operate in
Southern California only. See "The First American Financial Corporation."

     The Company's executive offices are located at 114 East Fifth Street, Santa
Ana,  California  92701,  and its  telephone  number  at that  address  is (714)
558-3211.

     IMAGE ACQUISITION CORP.

     IAC was  incorporated  in  California  in  March  1998 for the  purpose  of
effecting  the  acquisition  of Data Tree via the  Merger.  IAC has no  material
assets  and has not  engaged in any  activities  except in  connection  with the
proposed  acquisition of Data Tree.  IAC's principal  offices are located at 114
East Fifth Street, Santa Ana, California 92701, and its telephone number at that
address is (714) 558-3211. See "Image Acquisition Corp."

     DATA TREE CORPORATION.

     Data Tree, a California close  corporation,  was founded in 1987 by Chopra.
Today,  Data  Tree is a  leading  provider  of  document  imaging  and  database
management  systems and  services  to the title  insurance  industry  and county
recorders and other government agencies.  Data Tree believes it maintains one of
the largest  proprietary  image  databases of recorded  documents  with over 400
million  images.  It offers its  proprietary  products  and  services  through a
network of nine data centers in five states. Title customers access its database
via a PC-based image workstation.

     Data Tree primarily offers two products: Titlescape(R)and IDEA(TM)(Indexing
Document Extraction Application). Titlescape(R) is a subscription-based, Windows
compliant software package that combines access to on-line historical  databases
with  integration  software  that  enables  customers  to  combine  their  title
processing  applications  into one  system,  either  on one  desktop  PC or on a
complete  network of PCs.  IDEA(TM) is a turnkey  imaging, indexing and document
management system designed for county recorders and other governmental agencies.
The system simplifies and expedites the maintenance of documents by allowing the
user to convert paper documents and other input media into electronic images and
then manage the storage, retrieval and routing of these images.

     Data Tree's  executive  offices  are located at 550 West "C" Street,  Suite
2040, San Diego,  California  92101, and its telephone number at that address is
(619) 231-3300.

THE MERGER

     Upon consummation of the Merger pursuant to the Merger Agreement,  IAC will
be merged with and into Data Tree,  with Data Tree  continuing  as the surviving
corporation (the "Surviving Corporation") and becoming a wholly-owned subsidiary
of the  Company.  Each share of Data Tree Stock,  other than  Dissenting  Shares
(defined  below),  which is issued and  outstanding  at the  Effective  Time (as
defined below) will be converted into the right to receive a fraction of a share
of Stock,  which  fraction will be determined  after both the  occurrence of the
Data Tree Special Meeting and the final determination of the fees of advisors to
Data  Tree and  Chopra.  See  "The  Merger  Agreement  - Manner  and  Basis  for
Converting Shares."

     It is  anticipated  that the Merger  will become  effective  as promptly as
practicable  after the approval of the Data Tree  shareholders has been obtained
and all other  conditions  to the Merger have been  satisfied or waived.  If the
Effective Time does not occur within one month of the closing of the Merger, the
parties  to the  Merger  Agreement  have  the  right  to  terminate  the  Merger
Agreement.

DATE AND PLACE OF THE MEETINGS

     The Data Tree Special  Meeting will be held on ______ __, 1998 at 9:00 a.m.
California  Time, at the corporate  offices of Data Tree located at 550 West "C"
Street,  Suite 2040,  San Diego,  California  92101.  See "The Data Tree Special
Meeting."

RECORD DATE

     Only holders of record on the close of business on _________  __, 1998 (the
"Record Date") of issued and outstanding  shares of Data Tree Stock are entitled
to notice of and to vote to approve the Merger  Proposal.  As of  ______________
__, 1998 there were 27 shareholders of record and 7,039,830  shares of Data Tree
Stock issued and outstanding.  See "The Data Tree Special Meeting - Record Date;
Quorum."

PURPOSE OF THE MEETING

     The purpose of the Data Tree  Special  Meeting is to consider and vote upon
the  Merger  Proposal.  See "The Data  Tree  Special  Meeting  -  Matters  to Be
Considered at the Meeting."

MERGER APPROVAL

     Under  California  law,  approval  of  the  Merger  Proposal  requires  the
affirmative vote of holders of two-thirds of the outstanding shares of Data Tree
Stock entitled to vote; however, the Merger Agreement requires that no Data Tree
shareholders entitled to vote dissent from the Merger.  Therefore,  the terms of
the Merger  Agreement  effectively  require the affirmative  vote of 100% of the
outstanding shares of Data Tree Stock to approve the Merger Proposal.  A vote of
the Company's  shareholders is not required to approve the Merger.  The approval
of the sole  shareholder  of IAC is  required.  Such  approval  has already been
obtained.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

     As of May 1, 1998,  certain directors and executive officers of Data Tree,
and their  affiliates  held or may be deemed to have held 975,000 shares of Data
Tree Stock  directly or  beneficially,  representing  13.85% of the  outstanding
shares of Data Tree Stock.

     As of May 1, 1998,  certain  directors  and  executive  officers  of the
Company,  and their  affiliates  held or may be  deemed  to have held  1,239,941
shares of Stock directly or beneficially,  representing 6.9% of the outstanding
shares of the Company.

     Two  employees of Data Tree,  Michael D.  Reynolds and William P. Dow, will
receive certain  benefits as a result of the Merger,  including a bonus equal to
20% of their  respective  salaries.  Certain other employees will also receive a
cash bonus between $10,000 and $25,000 each as a result of the Merger.  See "The
Merger - Interests of Directors, Officers and Employees in the Merger."

     Chopra,  the Chief Executive  Officer, a director and a shareholder of Data
Tree,  will  also  receive  certain  benefits  as a result of the  Merger.  Upon
consummation  of the Merger,  he will become  subject to a five-year  employment
agreement with the successor to the Surviving  Corporation  which will pay him a
salary  equal  to  $250,000  and a bonus  equal  to 2% of the  adjusted  pre-tax
earnings of the successor to the Surviving Corporation. An entity established by
Chopra  will also  receive a 20%  interest  in the  successor  to the  Surviving
Corporation in exchange for an $11,000,000  secured  promissory  note with a two
and one-half  year term and a  seven-year  noncompetition  agreement.  This same
entity will enter into a supply  agreement  with the  successor to the Surviving
Corporation  pursuant  to which  that  entity  will  receive  during the two and
one-half year term of the agreement in excess of $11,000,000.  See "The Merger -
Interests of Directors, Officers and Employees in the Merger."

     Carl Strunk, a director and shareholder of Data Tree, is the Executive Vice
President,  Finance of Fidelity National Financial, Inc. ("Fidelity") and a Vice
President of Cal West Service Corporation,  a major shareholder of Data Tree and
a wholly-owned subsidiary of Fidelity.

REGULATORY REQUIREMENTS

     The   consummation   of  the  Merger  is  subject  to  certain   regulatory
requirements,  including  expiration of the applicable  waiting period under the
Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976  (the  "HSR  Act").  The
Company's and Data Tree's request for early termination of the applicable 30-day
waiting period has been granted. See "The Merger - Regulatory Requirements."

DISSENTERS' RIGHTS

     It is a condition  precedent to the consummation of the Merger that no Data
Tree  shareholder  dissents  from the  Merger.  However,  in the event that this
condition is waived,  holders of Data Tree Stock who do not vote in favor of the
Merger may, under certain circumstances and by following the procedures outlined
in the CGCL,  exercise  dissenters'  rights and receive cash for their shares of
Data Tree  Stock in an amount  equal to the fair value of the Data Tree Stock as
determined pursuant to such procedure. Should a Data Tree shareholder attempt to
exercise  dissenters'  rights and fail to make a proper  demand  for  payment or
otherwise  loses his or her status as a dissenting  shareholder,  such Data Tree
shareholder  shall be entitled to receive the same number of shares of Stock and
cash payment in lieu of any fractional  share that he or she would have received
in the Merger if he or she had not attempted to exercise dissenters' rights. See
"The Data Tree Special Meeting - Dissenters' Rights."

EFFECT OF THE MERGER

     Upon consummation of the Merger, pursuant to the Merger Agreement:  (i) IAC
will be merged  with and into Data Tree,  Data Tree will  become  the  surviving
corporation and,  consequently,  a wholly-owned  subsidiary of the Company, (ii)
each  issued and  outstanding  share of Data Tree Stock,  other than  Dissenting
Shares,  will be converted into the right to receive that fraction of a share of
Stock equal to the Purchase  Price divided by the total number of shares of Data
Tree Stock issued and outstanding  immediately  prior to the consummation of the
Merger.  Each  share of Data Tree Stock  will be so  converted  by virtue of the
Merger and  without  any action on the part of the  holder  thereof.  Fractional
shares of the Stock will not be issued in connection with the Merger;  Data Tree
shareholders  entitled to receive a  fractional  share of Stock will be paid the
value of such fractional share of Stock in cash.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

     It is  intended  that the Merger be a tax-free  reorganization,  so that no
gain or loss  would be  recognized  by the  Company,  Data Tree or the Data Tree
shareholders, except with respect to cash received by the Data Tree shareholders
in lieu of fractional shares or for dissenters' shares. It is a condition to the
Merger  that Data Tree shall  have  received  an  opinion of its  counsel to the
effect that the Merger will  constitute a  reorganization  within the meaning of
Section  368(a) of the  Internal  Revenue  Code and that no gain or loss will be
recognized by Data Tree or Data Tree's  shareholders  as a result of the Merger.
See "Tax Matters."

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

     The selected  historical  consolidated  financial data of the Company as of
and for the years ended  December  31, 1995  through 1997 have been derived from
their  respective   historical  financial  statements  and  should  be  read  in
conjunction  with such  financial  statements  and notes thereto of the separate
companies,  which are included elsewhere in this  Prospectus/Proxy  Statement or
incorporated herein. The selected historical financial  information with respect
to the Company's  statements of income for each of the two years ended  December
31, 1993 and 1994 and with respect to the Company's  balance  sheets at December
31, 1993, 1994 and 1995 are derived from the audited financial statements of the
Company which are not included in this Prospectus/Proxy Statement.

     The selected historical financial data set forth below with respect to Data
Tree's  statement of income for the six months ended March 31, 1997 and 1998 and
with  respect  to its  balance  sheet at March 31,  1998,  is  derived  from the
unaudited  financial  statements  of  Data  Tree,  included  elsewhere  in  this
Prospectus/Proxy  Statement.  The selected historical financial  information set
forth  below with  respect to Data Tree's  statements  of income for each of the
three  years ended  September  30, 1995  through  1997 and with  respect to Data
Tree's  balance  sheets at  September  30,  1997 and 1996 are  derived  from the
financial statements of Data Tree, which have been audited by Ernst & Young LLP,
independent auditors, included elsewhere in this Prospectus/Proxy Statement. The
selected historical financial information with respect to Data Tree's statements
of income for each of the two years ended  September  30, 1993 and 1994 and with
respect to Data Tree's balance  sheets at September 30, 1993,  1994 and 1995 are
derived  from the  audited  financial  statements  of Data  Tree  which  are not
included in this Prospectus/Proxy Statement.

     In  the  opinion  of  Data  Tree's  management,   the  unaudited  financial
statements include all adjustments consisting only of normal recurring accruals,
that Data Tree  considers  necessary for a fair  presentation  of the results of
operations  and  financial  position  of  Data  Tree  for  each  of the  periods
presented.  Operating  results for Data Tree for the six months  ended March 31,
1998 are not necessarily  indicative of the results that may be expected for the
year ending September 30, 1998.

     The financial  statement data set forth below should be read in conjunction
with,  and are  qualified  in their  entirety  by  reference  to, the  financial
statements and notes related thereto included elsewhere in this Prospectus/Proxy
Statement  and "Data Tree's  Management's  Discussion  and Analysis of Financial
Condition and Results of Operations."

             Company Selected Historical Consolidated Financial Data

     The  summary  below  should  be  read  in  connection  with  the  financial
information  included in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 1997 which is incorporated by reference herein.

<TABLE>
<CAPTION>

                                                     Year Ended December 31,
                              ------------------------------------------------------------------------
                                  1993          1994          1995           1996          1997
                                  ----          ----          ----           ----          ----
                                             (Dollars in thousands, except per share data)
<S>                             <C>           <C>            <C>           <C>            <C> 
INCOME STATEMENT DATA:                    

Revenues:
  Operating revenues            $1,379,781    $1,356,946     $1,227,185    $1,571,168     $1,860,205

  Investment and other
  income                           $18,645       $19,447        $23,031       $26,398        $27,256
                                ----------    ----------     ----------    ----------     ----------
                                $1,398,426    $1,376,393     $1,250,216    $1,597,566     $1,887,461
                                ----------    ----------     ----------    ----------     ----------
Expenses:
  Salaries and other
  personnel costs                 $397,902      $423,328       $431,984      $531,250       $647,750

  Premiums retained by
  agents                          $504,375      $533,598       $413,444      $516,593       $563,137

  Other operating expenses        $222,934      $232,532       $257,823      $322,709       $411,319

  Provision for title
  losses and other claims         $125,588      $110,230        $90,387       $86,487        $90,323

  Depreciation and
  amortization                     $16,333       $19,796        $20,790       $27,242        $38,149

  Interest                          $4,419        $6,267         $6,242        $4,796         $9,994

  Minority interest                 $5,267        $2,944         $2,132        $2,624         $3,676
                                ----------    ----------     ----------    ----------     ----------
                                $1,276,818    $1,328,695     $1,222,802    $1,491,701     $1,764,348
                                ----------    ----------     ----------    ----------     ----------

Income before premium and
income taxes                      $121,608       $47,698        $27,414     $105,865        $123,113

Premium taxes                      $17,617       $15,453        $13,627      $16,676         $16,904
                                ----------    ----------     ----------    ----------     ----------
Income before income taxes        $103,991       $32,245        $13,787      $89,189        $106,209

Income taxes                       $41,900       $13,300         $6,200      $35,600         $41,500
                                ----------    ----------     ----------    ----------     ----------
Income before cumulative
effect  of a change in
accounting for income taxes        $62,091       $18,945         $7,587      $53,589         $64,709

Cumulative effect of a
change in accounting for
income taxes                        $4,200            --             --           --              --
                                ----------    ----------     ----------    ----------     ----------
Net income                         $66,291       $18,945         $7,587      $53,589         $64,709
                                ==========    ==========     ==========    ==========     ==========


EARNINGS PER SHARE DATA:*

Basic                                $3.89         $1.10          $0.44        $3.12           $3.73

Diluted                              $3.89         $1.10          $0.44        $3.09           $3.64
                                     =====         =====          =====        =====           =====


BALANCE SHEET DATA:

Cash and invested assets          $359,127      $368,999       $340,089     $364,620        $411,014

Total assets                      $786,448      $828,649       $873,778     $979,794      $1,168,144

Notes and contracts payable        $85,022       $89,600        $77,206      $71,257         $41,973

Guaranteed preferred
beneficial interest in the
Company's junior
subordinated deferrable
interest debentures                     --            --             --           --        $100,000

Total stockholders' equity        $283,718      $292,110       $302,767     $352,465        $411,412

OTHER DATA:

Loss ratio                            9.1%          8.1%           7.4%         5.5%            4.9%

Ratio of debt to total             
capitalization**                     21.5%         22.1%          19.1%        16.0%            7.3%

Cash dividends per share             $0.34         $0.40          $0.40        $0.46           $0.51

<FN>
*    Based upon the weighted average number of common shares outstanding.
**   Capitalization   includes  minority   interests  and  junior   subordinated
     deferrable interest debentures.
</FN>
</TABLE>

                  Data Tree Selected Historical Financial Data

     The  summary  below  should  be  read  in  connection  with  the  financial
information beginning on page F-1 of this Prospectus/Proxy Statement.

<TABLE>
<CAPTION>

                                               Year Ended September 30,                              Six Months Ended
                                                                                                         March 31,
                      --------------------------------------------------------------------------------------------------------
                          1993           1994          1995            1996             1997        1997         1998
                          ----           ----          ----            ----             ----        ----         ----
<S>                      <C>           <C>            <C>              <C>             <C>          <C>          <C>
STATEMENTS OF
INCOME DATA:

Net Sales                $1,930,647    $3,487,032     $4,564,818       $7,470,333      $8,375,982   $3,819,998      $4,626,394

Gross Profit             $1,342,346    $2,685,532     $3,303,234       $5,486,108      $6,080,872   $2,815,273      $3,151,763

Income from
Operations                 $765,471      $824,029     $1,254,708       $2,771,283      $3,257,530   $1,522,724      $1,248,721

Net Income                 $413,505      $335,510       $529,251       $1,371,913      $1,770,482     $752,135        $637,427

EARNINGS PER SHARE
DATA:*                        $0.08         $0.07          $0.10            $0.21           $0.25        $0.11           $0.09


                                                    September 30,                                          March 31, 
                          -----------------------------------------------------------------------------------------------
                          1993           1994          1995            1996             1997                 1998
                          ----           ----          ----            ----             ----                 ----   

BALANCE SHEET DATA:

Cash and cash
equivalents                $727,067      $199,730       $478,098         $641,848      $1,746,777          $497,052

Total assets             $4,059,547    $7,625,342    $11,178,507      $14,762,259     $21,257,627       $21,125,377

Notes payable, less
current portion          $1,500,000    $4,500,000     $6,369,426       $6,895,373      $7,400,000        $6,250,000

Total shareholders'
equity                   $1,000,622    $1,335,932     $1,865,183       $3,937,096      $7,291,528        $7,928,955

<FN>
*    Calculated  based  on the  number  of  shares  reported  to be  issued  and
     outstanding on the Data Tree Balance Sheet (5,125,000 in 1993; 5,125,000 in
     1994;  5,125,000 in 1995;  6,406,250 in 1996;  7,039,830 in 1997; 7,039,830
     for the six months ended March 31, 1998 and 1997).
</FN>
</TABLE>


                        Company, Experian and Data Tree
              Unaudited Pro Forma Selected Combined Financial Data

     The following pro forma  combined  financial data gives effect to the joint
venture  with  Experian  Information   Solutions,   Inc.  ("Experian")  and  the
acquisition  of Data  Tree.  See "The First  American  Financial  Corporation  -
Business  Segments." The pro forma combined  financial data includes the effects
of the joint venture with Experian because immediately following consummation of
the Merger,  the Data Tree business will be combined with the Digistar  business
already owned as part of the joint venture  between the Company and Experian and
certain  balances on these  statements  would be  different  if Experian was not
included.  The business  combination  with Experian and the  acquisition of Data
Tree have been accounted for by the purchase  method and reflect  adjustments as
if the transaction  occurred on January 1, 1997, for income  statement  purposes
and December 31, 1997, for balance sheet purposes.

     The pro forma  selected  financial data is not intended to be indicative of
the financial  condition or results of operations  that would have been reported
if the transactions had occurred on the dates specified.  The pro forma combined
income  statement  does not reflect cost  savings  related to economies of scale
that the  Company's  management  believes  will be  realized  as a result of the
transactions.  The pro forma combined  balance sheet includes all allocations of
the Purchase Price to certain  acquired  assets and  liabilities  based on their
fair values. Final allocation of the Purchase Price is subject to valuations and
other studies that are not yet complete.


<PAGE>


Pro Forma Combined Balance Sheet:
($ in thousands)

<TABLE>
<CAPTION>

                                              DECEMBER 31,        DECEMBER 31,      SEPTEMBER 30,
                                                 1997                1997               1997          PRO FORMA        PRO FORMA
                                            FIRST AMERICAN         EXPERIAN           DATA TREE      ADJUSTMENTS       COMBINED
                                            --------------        -----------       -------------    -----------       ---------
<S>                                         <C>                   <C>               <C>              <C>               <C>        
ASSETS

Cash and cash equivalents                        $181,531                $697          $1,747               -          $183,975
 
Accounts and accrued income receivable           $128,017             $15,362          $1,342               -          $144,721

Investments

   Deposits with savings and loan
   associations and banks                         $29,029                   -               -               -           $29,029

   Debt securities                               $151,503                   -               -               -          $151,503

   Equity securities                              $13,904                   -               -               -           $13,904

   Other long-term investments                    $35,047                   -               -               -           $35,047
                                               ----------                                                             ----------
                                                 $229,483                   -               -               -          $229,483

Loans receivable                                  $63,378                   -               -               -           $63,378

Property and equipment, net                      $200,377             $22,773          $3,587   (1)(2) $9,360          $236,097

Title plants and other indexes                   $100,626                             $13,765   (1)(2)$71,331          $185,722

Assets acquired in connection with
claim settlements                                 $21,119                    -             -                -           $21,119

Deferred income taxes                             $31,563                    -       ($2,568)               -           $28,995

Goodwill and other intangibles                   $132,361                    -             -                -          $132,361

Deferred policy acquisition costs                 $25,016                    -             -                -           $25,016

Other assets                                      $54,673              $1,449            $817               -           $56,939
                                               ----------             -------         -------                        ----------
                                               $1,168,144             $40,281         $18,690         $80,691        $1,307,806
                                               ==========             =======         =======         =======        ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Demand deposits                                   $62,475                   -              -                -           $62,475

Accounts payable and accrued
liabilities:

   Accounts payable                               $12,220              $2,878           $490                            $15,588

   Salaries and other personnel costs             $55,973              $2,035              -                -           $58,008

   Pension costs                                  $39,431                   -              -                -           $39,431

   Other                                          $60,509              $8,349         $1,090                -           $69,948
                                               ----------             -------        -------                         ----------
                                                 $168,133             $13,262         $1,580                -          $182,975
Deferred revenue                                 $104,124              $6,312              -                -          $110,436
Reserve for known and incurred but
not reported claims                              $250,826                   -              -                -          $250,826
Income taxes payable                               $3,987                   -           $218                -            $4,205
Notes and contracts payable                       $41,973              $1,107         $9,600                -           $52,680
Minority interests in consolidated
subsidiaries                                      $25,214                   -              -    (1)(2)$32,134           $57,348
Guaranteed preferred beneficial
interests in Company's junior
subordinated deferrable interest
debenture                                        $100,000                  -              -                 -          $100,000

Stockholders' equity:
   Common Stock                                   $17,374                  -          $2,421     (2) ($1,779)           $18,016
   Additional paid-in capital                     $43,953                  -               -     (2) $42,358            $86,311
   Retained earnings                             $344,645             $19,600         $4,871   (1)(2) $7,978          $ 377,094
                                                                                                    
   Net unrealized gain on securities               $5,440                                                                $5,440
                                               ----------             -------        -------         -------         ----------
                                                 $411,412             $19,600         $7,292         $48,557           $486,861
                                               ----------             -------        -------         -------         ----------
                                               $1,168,144             $40,281        $18,690         $80,691         $1,307,806
                                           
    ==========             =======        =======         =======         ==========
<FN>
_____________________ 
(1)  A pro forma  adjustment  has been made to reflect  the joint  venture  with
     Experian  reflecting  the  allocation  of the  Purchase  Price  to  certain
     acquired  assets  and  recognition  of  the  minority  interest   liability
     associated  with  the  transaction.  The pro  forma  adjusting  entry is as
     follows (in thousands):

                                                  Debit       Credit
                                                 -------     --------
              Retained Earnings                  $19,600    
              Title Plant                        $40,000
              Property and Equipment, net        $ 3,525
                  Minority Interest Liability                 $30,676
                  Retained Earnings                           $32,449

(2)  A pro forma adjustment has been made to reflect (i) the issuance of 641,791
     shares  of  Stock  (which  assumes  that  the  Purchase  Price  will  equal
     $43,000,000  and that the average of the last  reported  sales price on one
     share of the Stock for the  twenty  consecutive  Trading  Days prior to the
     Data Tree Special  Meeting is $67.00) to acquire  7,039,830  shares of Data
     Tree Stock and (ii) the 20% interest R. Squared Limited,  an entity created
     by Chopra,  will receive in NEWCO (as defined  below),  to which the assets
     and liabilities of Data Tree will be transferred after the Merger.  The pro
     forma adjusting entry is as follows (in thousands):

                                                  Debit       Credit
                                                 -------     --------

              Title Plant                        $31,331
              Property and Equipment, net        $ 5,835
              Common Stock                       $ 2,421      $   642
              Retained Earnings                  $ 4,871
                  Paid-in Capital                             $42,358
                  Minority Interest Liability                 $ 1,458
</FN>
</TABLE>

Pro Forma Combined Income Statement
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                          12 MONTHS ENDED      12 MONTHS ENDED     12 MONTHS ENDED
                                         DECEMBER 31, 1997    DECEMBER 31, 1997   SEPTEMBER 30, 1997   PRO FORMA     PRO FORMA
                                          FIRST AMERICAN          EXPERIAN            DATA TREE       ADJUSTMENTS    COMBINED
                                         -----------------    -----------------   ------------------  -----------    ---------
<S>                                      <C>                  <C>                 <C>                 <C>            <C>
Revenues

   Operating Revenues                          $1,860,205            $92,687            $8,376                        $1,961,268

   Investment and other income                    $27,256                $61               $88                           $27,405
                                               ----------            -------            ------                        ----------
                                               $1,887,461            $92,748            $8,464                        $1,988,673
                                               ----------            -------            ------                        ----------
Expenses

   Salaries and other personnel costs            $647,750             $6,411            $2,031                          $656,192

   Premiums retained by agents                   $563,137                                                               $563,137

   Other operating expenses                      $411,319            $79,872            $2,400                          $493,591

   Provision for title losses and
   other claims                                   $90,323                                                                $90,323

   Depreciation and amortization                  $38,149             $5,791              $696      (1) $2,340           $46,976

   Interest                                        $9,994                $30              $386                           $10,410

   Minority interest                               $3,676                                           (2)$12,711           $16,387
                                               ----------            -------            ------         -------        ----------
                                               $1,764,348            $92,104            $5,513         $15,051        $1,877,016
                                               ----------            -------            ------         -------        ----------

Income before premium and income taxes           $123,113               $644            $2,951        ($15,051)         $111,657
                                             
Premium taxes                                     $16,904                                                                $16,904
                                               ----------            -------            ------         -------        ----------
Income before income taxes                       $106,209               $644            $2,951        ($15,051)          $94,753

Income taxes                                      $41,500                               $1,180      (3)($5,945)          $36,735
                                               ----------            -------            ------         -------        ----------

Net income                                        $64,709               $644            $1,771         ($9,106)           $58,018
                                               ==========            =======            ======         =======        ==========

Pro forma earnings per share:

   Basic                                           $3.73                                                                   $3.22
                                                   =====                                                                   =====
   Diluted                                         $3.64                                                                   $3.15
                                                   =====                                                                   =====
Pro forma weighted average shares:

   Basic                                      17,362,000                                                              18,004,000
                                              ==========                                                              ==========
   Diluted                                    17,785,000                                                              18,427,000
                                              ==========                                                              ==========
<FN>
____________________________
(1)  Pro forma  adjustments  have been  made to the pro  forma  combined  income
     statement to reflect the joint  venture  arrangement  with Experian and the
     Merger as if both transactions had occurred as of January 1, 1997. This pro
     forma  adjustment  includes  recognition  of  amortization  of  capitalized
     software  related to the  Experian  joint  venture  and the Merger  over an
     estimated useful life of 4 years.
(2)  Pro forma  adjustments  have been  made to the pro  forma  combined  income
     statement to reflect the joint  venture  arrangement  with Experian and the
     Merger as if both transactions had occurred as of January 1, 1997. This pro
     forma adjustment  includes minority interest expense of $12,073,000 related
     to the Experian joint venture and $638,000 related to the Merger.
(3)  Pro forma  adjustments  have been  made to the pro  forma  combined  income
     statement to reflect the joint venture arrangement with Experian and Merger
     as if both  transactions had occurred as of January 1, 1997. This pro forma
     adjustment includes the related tax effects of the Merger.
</FN>
</TABLE>


COMPARATIVE PER SHARE DATA

     The following  table sets forth certain  historical and pro forma per share
data of the Company and Data Tree. This data should be read in conjunction  with
the selected historical financial data and the separate historical  consolidated
financial statements of the Company and Data Tree and the notes thereto included
elsewhere in this Prospectus/Proxy Statement or incorporated herein.

<PAGE>


<TABLE>
<CAPTION>

<S>                                                                   <C>    <C>
                                                                       1997  (1)
                                                                       ----

NET INCOME PER SHARE:
     Company Basic                                                    $3.73
     Company Diluted                                                  $3.64
     Company Pro Forma Basic (Data Tree only)                         $3.62
     Company Pro Forma Diluted (Data Tree only)                       $3.54
     Company Pro Forma Basic (including Data Tree and Experian)       $3.22
     Company Pro Forma Diluted (including Data Tree and Experian)     $3.15
     Data Tree                                                        $0.25  (2)
     Data Tree Equivalent Pro Forma                                   $0.32  (6)
     Data Tree Equivalent Pro Forma (including Experian)              $0.29  (6)

CASH DIVIDENDS DECLARED PER SHARE:
     Company                                                          $0.51
     Data Tree                                                        $0.00
     Data Tree Equivalent Pro Forma                                   $0.05  (6)
     
BOOK VALUE PER SHARE:
     Company                                                          $23.68 (3)
     Company Pro Forma (Data Tree only)                               $25.24
     Company Pro Forma (Data Tree and Experian)                       $27.04 (5)
     Data Tree                                                         $1.04 (4)
     Data Tree Equivalent Pro Forma                                    $2.30 (6)
     Data Tree Equivalent Pro Forma (including Experian)               $2.47 (6)
<FN>
________________________

(1)  Determined by using the twelve months or period ended December 31, 1997 for
     the Company and  Experian and the twelve  months or period ended  September
     30, 1997 for Data Tree.
(2)  Determined by dividing Data Tree's net income reported on its Statements of
     Income by the number of shares of Data Tree Stock issued and outstanding on
     September 30, 1997 (7,039,830).
(3)  Determined by dividing the Company's total shareholders' equity reported on
     its Balance Sheet (rounded to the nearest thousand) by the number of shares
     of Stock issued and outstanding on December 31, 1997 (17,374,000).
(4)  Determined by dividing Data Tree's total  shareholders'  equity reported on
     its  Balance  Sheet by the number of shares of Data Tree  Stock  issued and
     outstanding on September 30, 1997 (7,039,830).
(5)  Determined by dividing the pro forma  stockholders'  equity  reported above
     ($486,861,000)  by the pro forma  weighted  average  shares  reported above
     (18,004,000).
(6)  The  Data  Tree  equivalent  pro  forma  combined  per  share  amounts  are
     calculated by multiplying  the Company pro forma combined per share amounts
     by .0912,  which represents the fraction of a share of Stock each Data Tree
     shareholder will receive for each share of Data Tree Stock converted in the
     Merger  (assuming there are no Dissenting  Shareholders (as defined below))
     if the  closing  price of the Stock on April 28,  1998  ($67.00) is used to
     determine the Purchase  Price and Surplus  Expenses equal  $113,373;  under
     these assumptions the Purchase Price equals  $43,000,000 and 641,791 shares
     of the Stock would be issued in the Merger.
</FN>
</TABLE>



<PAGE>


MARKET PRICE INFORMATION

     Shares of Data Tree Stock are not traded on an established public market.

     Shares of the Stock have  traded on the New York Stock  Exchange  under the
symbol "FAF" since December 3, 1993. The following table sets forth the range of
high and low sale prices  reported on the New York Stock  Exchange for the Stock
for the calendar quarters  indicated (share prices have been adjusted to reflect
a three-for-two stock split, effective January 16, 1998):


                                        HIGH              LOW
1994
            First Quarter              $25.00            $20.67
            Second Quarter             $20.42            $15.42
            Third Quarter              $16.33            $13.50
            Fourth Quarter             $13.66            $10.67
1995
            First Quarter              $13.75            $11.17
            Second Quarter             $17.00            $12.75
            Third Quarter              $16.92            $15.17
            Fourth Quarter             $18.25            $14.50
1996
            First Quarter              $21.33            $16.75
            Second Quarter             $22.50            $16.59
            Third Quarter              $23.83            $19.50
            Fourth Quarter             $27.42            $22.42
1997
            First Quarter              $29.75            $25.08
            Second Quarter             $26.58            $20.92
            Third Quarter              $40.21            $26.00
            Fourth Quarter             $49.25            $39.83
1998
            First Quarter              $69.00            $48.25

     On March 30, 1998, the last trading day prior to the public announcement by
the  Company  and Data Tree that they had reached an  agreement  concerning  the
Merger,  the  closing  price of a share of the Stock as reported by the New York
Stock Exchange was $62.94 per share. As of May 1, 1998 there  were approximately
3,109  shareholders  of record of the Stock.  The  Company  pays cash  dividends
quarterly  and in each  quarter  for the  previous  five  years  has paid a cash
dividend.  For the annual total of such cash dividends,  see "Summary - Selected
Historical and Pro Forma Financial Data."

     The  total  number  of  shares  Stock  to be  received  by  the  Data  Tree
shareholders  will not be fixed until the trading day immediately  preceding the
Data Tree Special Meeting (the "Determination Date"), which is anticipated to be
one  or  two  days  prior  to  the  Effective  Time.   Therefore,   through  the
Determination  Date,  changes in the market  price of the Stock will  affect the
fraction of a share of Stock to be received by the Data Tree shareholders in the
Merger.  Once the  exchange  ratio is fixed,  changes in the market price of the
Stock will affect the dollar  value of the Stock to be received by the Data Tree
shareholders in the Merger. Following the Effective Time, the value of the Stock
received  by the  former  Data  Tree  shareholders  will be  subject  to  market
fluctuations due to factors that may be outside the control of the Company. Data
Tree  shareholders  are urged to obtain current market  quotations for the Stock
prior to the Data Tree Special Meeting.

     Following the Merger,  the Stock will continue to be traded on the New York
Stock Exchange under the symbol "FAF."


                                  RISK FACTORS

     In addition to the other  information  contained  in this  Prospectus/Proxy
Statement and incorporated by reference herein,  Data Tree  shareholders  should
consider  carefully the following risk factors in evaluating  whether to approve
the Merger  Proposal and thereby become holders of the Stock.  To the extent any
of  the   information   contained   or   incorporated   by   reference  in  this
Prospectus/Proxy Statement constitutes a "forward-looking  statement" as defined
in Section  21E(i)(1) of the Exchange  Act, the risk factors set forth below are
cautionary  statements  identifying  important  factors  that could cause actual
results to differ materially from those in the forward-looking statement.

VOLATILITY OF STOCK PRICE

     The market price of the Stock could be subject to significant  fluctuations
in response to  variations  in financial  results or  announcements  of material
events by the Company or its competitors.  Regulatory  changes,  developments in
the real  estate  services  industry  or changes in  general  conditions  in the
economy or the financial markets could also adversely affect the market price of
the Stock.

CYCLICAL NATURE OF REAL ESTATE MARKET

     Substantially all of the Company's title insurance, tax monitoring,  credit
reporting,  flood zone determination and property  information  business results
from  resales  and  refinancings  of  real  estate,  including  residential  and
commercial properties, and from the construction and sale of new properties. The
Company's home warranty  business results from residential  resales and does not
benefit from refinancings or commercial  transactions.  Resales and refinancings
of residential properties constitute the major source of the Company's revenues.
Real estate  activity is cyclical in nature and is affected  greatly by the cost
and availability of long-term mortgage funds. Real estate activity and, in turn,
the Company's  revenue base,  can be adversely  affected  during periods of high
interest  rates and/or  limited money supply.  However,  this adverse  effect is
mitigated in part by the continuing  diversification of the Company's operations
into areas outside of its traditional title insurance business.

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

     As a key component of its growth  strategy,  the Company has pursued and is
pursuing  acquisitions in the real  estate-related  financial services industry.
Certain  risks are  inherent  in an  acquisition  strategy,  such as  increasing
leverage and debt service  requirements and combining disparate company cultures
and facilities,  which could adversely affect the Company's  operating  results.
The success of any  completed  acquisition  will depend in part on the Company's
ability to integrate  effectively the acquired businesses into the Company. This
process may involve  unforeseen  difficulties and may require a disproportionate
amount  of  management's   attention  and  the  Company's  financial  and  other
resources.  No  assurance  can be given  that  additional  suitable  acquisition
candidates  will be identified,  financed and purchased on acceptable  terms, or
that  recent  acquisitions  or  future  acquisitions,   if  completed,  will  be
successful.

DEPENDENCE ON KEY PERSONNEL

     The success of the Company is dependent upon the continued  services of the
Company's senior management,  particularly its President, Parker S. Kennedy, its
Chairman and Director,  D.P. Kennedy, and its Executive Vice President and Chief
Financial Officer,  Thomas A. Klemens.  The loss of the services of any of these
individuals  could have a material  adverse  effect on the  Company's  financial
position and results of  operations.  The Company's  success also depends on its
ability to attract and retain other highly qualified managerial personnel.

YEAR 2000 COSTS

     Currently,  many computer systems and software products are coded to accept
only two digit entries in the date code field.  These date code fields will need
to accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced in order to comply with such "Year 2000" requirements.  The
Company and third  parties with which the Company does business rely on numerous
computer programs in their day to day operations.  The Company is evaluating the
Year 2000 issue as it relates to the  Company's  internal  computer  systems and
third  party  computer  systems  with which the Company  interacts.  The Company
expects to incur  internal  staff costs as well as consulting and other expenses
related to these issues; these costs will be expensed as incurred.  In addition,
the  appropriate  course of action  may  include  replacement  or an  upgrade of
certain systems or equipment at a substantial cost to the Company.  There can be
no  assurance  that the Year 2000 issues  will be resolved in 1998 or 1999.  The
Company may incur  significant  costs in resolving its Year 2000 issues.  If not
resolved,  this issue could have a significant  adverse  impact on the Company's
operations.

GOVERNMENT REGULATION

     The  title  insurance   industry  is  subject  to  extensive   governmental
regulation.  Applicable laws and their  interpretation  vary from state to state
and are  enforced  with broad  discretion.  There can be no  assurance  that any
review of the Company's operations and business relationships by courts or other
regulatory  authorities will not result in  determinations  that could adversely
affect  the  Company  or that the  regulatory  environment  will not  change  to
restrict the Company's existing or future operations.

                          THE DATA TREE SPECIAL MEETING

     This Prospectus/Proxy Statement contains certain information set forth more
fully in the Merger Agreement attached hereto as Annex A and is qualified in its
entirety by reference to the Merger Agreement,  which is hereby  incorporated by
reference. The Merger Agreement,  including any schedule or exhibit thereto, and
this  Prospectus/Proxy  Statement  should  be read  carefully  by each Data Tree
shareholder in deciding whether to vote to approve the Merger Proposal.

GENERAL

     This Prospectus/Proxy  Statement is being furnished to holders of Data Tree
Stock in connection  with the  solicitation of proxies by the Data Tree board of
directors for use at the Data Tree Special Meeting to be held on ______ __, 1998
at 550 West "C" Street, Suite 2040, San Diego,  California 92101,  commencing at
9:00 a.m., California Time, and at any adjournments or postponements thereof.

     This  Prospectus/Proxy  Statement and the accompanying forms of proxies are
first being mailed to Data Tree shareholders on or about May __, 1998.

MATTERS TO BE CONSIDERED AT THE MEETING

     At the Data Tree Special Meeting,  holders of Data Tree Stock will consider
and vote upon a proposal to approve and adopt the Merger Proposal and any motion
to adjourn  the Data Tree  Special  Meeting  to a later  date to permit  further
solicitation  of  proxies  if  necessary  to  establish  a quorum  or to  obtain
additional votes, or any adjournments or postponements thereof.

RECOMMENDATION OF THE DATA TREE BOARD OF DIRECTORS

     The Data Tree  board of  directors  has  unanimously  approved  the  Merger
Agreement and the Merger and believes that the terms of the Merger Agreement are
fair to,  and that the  Merger is in the best  interests  of,  Data Tree and its
shareholders.  The Data Tree board of directors  therefore  recommends  that the
holders of Data Tree Stock vote FOR approval of the Merger Proposal.

RECORD DATE; QUORUM

     The Data  Tree  board of  directors  has fixed  the  close of  business  on
________ __, 1998 as the record date for determining  holders entitled to notice
of and to vote at the Data Tree Special Meeting.  Only shareholders of record of
Data Tree on the Record  Date will be  entitled  to notice of and to vote at the
Data  Tree  Special  Meeting.  On the  Record  Date,  there  were 27  Data  Tree
shareholders  of  record  and  7,039,830  shares  of  Data  Tree  Stock  issued,
outstanding  and  entitled  to one vote in person or by  proxy.  Each  holder of
record of shares of Data Tree Stock on the Record  Date is  entitled  to vote at
the Data Tree Special Meeting.

     The presence,  in person or by a properly  executed proxy, of a majority of
the issued and outstanding  shares of Data Tree Stock is necessary to constitute
a quorum at the Data Tree Special Meeting.

     Under  California law, the approval and adoption of the Merger Agreement by
Data Tree  shareholders  requires the affirmative vote of at least two-thirds of
the issued and  outstanding  shares of Data Tree Stock  entitled  to vote at the
Data Tree Special Meeting. The Merger Agreement provides,  however, that for the
Data Tree  shareholders  to approve the Merger  Agreement,  (i) no share of Data
Tree Stock may be voted  against  approval of the Merger  Proposal  and (ii) the
period  during  which any Data Tree  shareholder  who or which failed to vote in
favor of the Merger has the right to perfect dissenters' rights under California
law shall have expired or the  shareholder  shall have waived such right. If any
Data Tree shareholder fails to vote for the approval of the Merger Proposal, the
Effective  Time may be delayed by more than 30 days to  determine  whether  such
Data Tree shareholder will waive or perfect dissenters' rights.

EFFECTS OF ABSTENTIONS

     At the Data Tree Special  Meeting,  in determining  whether the proposal to
approve the Merger  Proposal has received the  requisite  number of  affirmative
votes,  abstentions  will have the same effect as a vote against such  proposal.
Abstentions  will be counted  for  purposes  of  determining  the  presence of a
quorum.

ADJOURNMENT OF THE DATA TREE SPECIAL MEETING

     In the event  that  there are  insufficient  votes to  approve  the  Merger
Proposal at the time of the Data Tree Special  Meeting,  such proposal could not
be approved  unless the Data Tree  Special  Meeting  were  adjourned in order to
permit further solicitation of proxies from Data Tree shareholders. Proxies that
are being solicited by the Data Tree board of directors grant the  discretionary
authority  to vote for any such  adjournment.  If it is necessary to adjourn the
Data Tree Special Meeting,  and such adjournment is for a period of less than 30
days, no notice of the time and place of the adjourned meeting is required to be
given to Data Tree  shareholders  other  than an  announcement  of such time and
place  at the  Data  Tree  Special  Meeting.  A  majority  of the  voting  power
represented  and voting at the Data Tree Special  Meeting is required to approve
any such adjournment whether or not a quorum is present at the Data Tree Special
meeting.

DISSENTERS' RIGHTS

     If the Merger  Agreement  is  approved  by the  required  vote of Data Tree
shareholders and is not abandoned or terminated,  holders of Data Tree Stock who
did not vote in favor of the Merger may, by complying with Sections 1300 through
1312 of the CGCL, be entitled to dissenters'  rights as described  therein.  The
record  holders of the shares of Data Tree Stock that are  eligible  to, and do,
exercise  their  dissenters'  rights with  respect to the Merger are referred to
herein as  "Dissenting  Shareholders,"  and the shares of stock with  respect to
which they  exercise  dissenters'  rights are referred to herein as  "Dissenting
Shares."

     The following  discussion is not a complete  statement of the CGCL relating
to dissenters' rights, and is qualified in its entirety by reference to Sections
1300 through  1312 of the CGCL  attached to this  Prospectus/Proxy  Statement as
Annex B hereto  and  incorporated  herein  by  reference.  This  discussion  and
Sections  1300  through  1312 of the CGCL  should be reviewed  carefully  by any
holder who wishes to exercise statutory dissenters' rights or wishes to preserve
the right to do so, since  failure to comply with the required  procedures  will
result in the loss of such rights.

     Shares of Data Tree Stock must satisfy each of the  following  requirements
to  qualify as  Dissenting  Shares  under the CGCL:  (i) the shares of Data Tree
Stock must have been  outstanding  on the Record  Date;  (ii) the shares of Data
Tree Stock must not have been voted in favor of the Merger;  (iii) the holder of
such  shares  of Data Tree  Stock  must  make a  written  demand  that Data Tree
repurchase  such  shares of Data Tree Stock at fair market  value (as  described
below);  and (iv) the  holder  of such  shares of Data Tree  Stock  must  submit
certificates for endorsement (as described  below). A vote by proxy or in person
against the Merger does not in and of itself  constitute a demand for  appraisal
under the CGCL.

     Pursuant to Sections  1300 through 1312 of the CGCL,  holders of Dissenting
Shares may require Data Tree to  repurchase  their  Dissenting  Shares at a cash
price equal to the fair market  value of such  shares  determined  as of the day
before  the  first  announcement  of the  terms  of the  Merger,  excluding  any
appreciation  or  depreciation  as a  consequence  of the proposed  Merger,  but
adjusted for any stock split, reverse stock split or stock dividend that becomes
effective thereafter.

     Within ten days following approval of the Merger by Data Tree shareholders,
Data Tree is  required  to mail to each  holder of shares of Data Tree Stock not
voted in favor of the Merger a notice of the approval of the Merger, a statement
of the price  determined  by Data Tree to  represent  the fair  market  value of
Dissenting Shares (which shall constitute an offer by Data Tree to purchase such
Dissenting  Shares at such stated price) and a description of the procedures for
such holders to exercise their rights as Dissenting Shareholders.

     Within 30 days  after the date on which the notice of the  approval  of the
Merger  by the  outstanding  shares  is mailed  to  Dissenting  Shareholders,  a
Dissenting  Shareholder must demand that Data Tree repurchase such shareholder's
Dissenting  Shares  in a  statement  setting  forth  the  number  and  class  of
Dissenting  Shares  held of  record  by such  Dissenting  Shareholder  that  the
Dissenting  Shareholder demands that Data Tree purchase, and a statement of what
the Dissenting  Shareholder claims to be the fair market value of the Dissenting
Shares  as of the day  before  the  announcement  of the  proposed  Merger.  The
statement  of fair  market  value  in this  demand  constitutes  an offer by the
Dissenting  Shareholder  to sell the  Dissenting  Shares at the specified  price
within such 30-day  period.  In  conjunction  with such demand,  the  Dissenting
Shareholder  must also submit to Data Tree or its transfer agent for endorsement
the  certificate or  certificates  representing  the Dissenting  Shares that the
Dissenting Shareholder demands Data Tree purchase.

     If  upon  the  Dissenting   Shareholder's  surrender  of  the  certificates
representing the Dissenting Shares, Data Tree and a Dissenting Shareholder agree
upon the price to be paid for the  Dissenting  Shares and agree that such shares
are  Dissenting  Shares,  then the agreed  price must be paid to the  Dissenting
Shareholder  within the later of 30 days after the date of such  agreement or 30
days after any statutory or contractual  conditions to the  consummation  of the
Merger are satisfied or waived.

     If Data Tree and a Dissenting Shareholder disagree as to the price for such
Dissenting  Shares or  disagree  as to whether  such  shares are  entitled to be
classified as Dissenting Shares, such holder has the right to bring an action in
California  Superior Court, within six months after the date on which the notice
of the approval of the Merger by Data Tree  shareholders  is mailed,  to resolve
such dispute.  In such action,  the court will  determine  whether the shares of
Data Tree Stock held by such shareholder are Dissenting  Shares, the fair market
value of such  shares of Data Tree Common  Stock,  or both.  The CGCL  provides,
among other things,  that a Dissenting  Shareholder  may not withdraw the demand
for  payment of the fair  market  value of  Dissenting  Shares  unless Data Tree
consents to such request for withdrawal.

PROXIES

     This   Prospectus/Proxy   Statement   is  being   furnished  to  Data  Tree
shareholders in connection with the  solicitation of proxies by and on behalf of
the Data Tree board of directors for use at the Data Tree Special  Meeting.  All
shares of Data Tree Stock which are entitled to vote and are  represented at the
Data Tree Special Meeting by properly  executed  proxies received prior to or at
the Data Tree Special  Meeting and before the  occurrence  of the vote,  and not
revoked,  will be voted at the Data Tree Special  Meeting in accordance with the
instructions  indicated on such proxies. If no instructions are indicated,  such
proxies  will be voted FOR  approval  and  adoption of the Merger and the Merger
Agreement.

     If any other matters are properly  presented for  consideration at the Data
Tree Special Meeting,  including, among other things,  consideration of a motion
to adjourn the Data Tree Special Meeting  (including,  without  limitation,  for
purposes of soliciting  additional  proxies) to another time and/or  place,  the
persons  named in the  enclosed  form of proxy and acting  thereunder  will have
discretion to vote on such matters in accordance with their best judgment.

     The  person  named as proxy is an officer  of Data  Tree.  Any proxy  given
pursuant to this Prospectus/Proxy  Statement may be revoked by the person giving
it at any time before it is voted. Proxies may be revoked by (i) filing with the
Secretary  of Data  Tree,  at or before  the taking of the vote at the Data Tree
Special  Meeting,  a written notice of revocation  bearing a later date than the
proxy,  (ii) duly  executing a later dated proxy relating to the same shares and
delivering it to the Secretary of Data Tree before the taking of the vote at the
Data Tree Special  Meeting or (iii)  attending the Data Tree Special Meeting and
voting in person (although  attendance at the Data Tree Special Meeting will not
in and of itself  constitute a  revocation  of a proxy).  Any written  notice of
revocation or subsequent proxy should be sent to Data Tree Corporation, 550 West
"C" Street, Suite 2040, San Diego,  California 92101,  Attention:  Secretary, or
hand delivered to the Secretary of Data Tree at or before the taking of the vote
at the Data Tree Special Meeting.

     All expenses  relating to this  Prospectus/Proxy  Statement,  including the
cost of preparing and mailing this Prospectus/Proxy  Statement, will be borne by
the Company.  In addition to  solicitation  by use of the mails,  proxies may be
solicited  by  directors,  officers  and  employees of Data Tree in person or by
telephone,  telegram or other means of communication.  Such directors,  officers
and employees will not be  additionally  compensated,  but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation.

     DATA TREE  SHAREHOLDERS  SHOULD NOT SEND ANY SHARE  CERTIFICATES WITH THEIR
PROXY CARDS.

                        BENEFICIAL SECURITY OWNERSHIP OF
                   CERTAIN OWNERS AND MANAGEMENT OF DATA TREE

     The following table sets forth certain information  regarding the ownership
of Data Tree  Stock as of May 4,  1998,  by:  (i) each  person or entity  who is
known by Data Tree to  beneficially  own five percent or more of the outstanding
Data Tree Stock,  (ii) each director of Data Tree; (iii) the executive  officers
of Data Tree named below; and (iv) all directors and executive  officers of Data
Tree set forth below as a group.
<TABLE>
                                                                 NUMBER OF        PERCENT OF DATA TREE
NAME AND ADDRESS                                                 SHARES (1)       STOCK OWNED (1) (2)
- ----------------                                                 ----------       --------------------
<S>                                                              <C>              <C>       
     R. Squared Limited.....................................     3,000,000              42.62%
     Cal. West Service Corporation..........................     1,964,830              27.91%
     Harish K. Chopra (3)...................................     565,000                 8.03%
     Robert F. Rice.........................................     400,000                 5.68%
     Carl A. Strunk.........................................     10,000                  *
     Michael D. Reynolds....................................     0                       *
     All Directors and Officers as a Group (4 people).......     975,000                13.85%
<FN>
*    Represents beneficial ownership of less than one percent.

(1)  This table is based upon  information  supplied by officers,  directors and
     principal shareholders. Unless otherwise indicated in the footnotes to this
     table and subject to community  property laws where  applicable,  Data Tree
     believes that each of the shareholders  named in this table has sole voting
     and investment  power with respect to the shares  indicated as beneficially
     owned.  Applicable percentages are based on 7,039,830 shares outstanding on
     May __, 1998, adjusted as required by rules promulgated by the Commission.
(2)  Beneficial  ownership is  determined  in  accordance  with the rules of the
     Commission. Except as indicated in the footnotes to this table and pursuant
     to applicable  community property laws, each shareholder named in the table
     has sole voting and  investment  power with respect to the shares set forth
     opposite such shareholder's name.
(3)  Includes  400,000  shares held by Harvindera  Chopra,  the mother of Harish
     Chopra,  5,000  shares held by Ravinder  K.  Chopra,  the brother of Harish
     Chopra,  25,000  shares held by Seema Chopra  Kapoor,  the sister of Harish
     Chopra,  and 125,000  shares held by Harish K. and Karen  Chopra and 10,000
     shares of Inteq Software  Development  Corp. Chopra does not have the legal
     right to vote or make investment  decisions with respect to the shares held
     by his mother,  brother and sister and  disclaims any  beneficial  interest
     therein.
</FN>
</TABLE>



<PAGE>


                                   THE MERGER

     The  following  discussion  of the parties'  reasons for the Merger and the
background of the acquisition contains forward-looking  statements which involve
risks and  uncertainties.  The actual results of the Company,  Data Tree and the
Surviving  Corporation  could differ  materially from those anticipated in these
forward-looking  statements as a result of certain factors,  including those set
forth under "Risk Factors" and elsewhere in this Prospectus/Proxy Statement.

BACKGROUND OF THE ACQUISITION; REASONS FOR THE MERGER

     In the third  quarter  of 1997,  Data Tree  began  exploring  ways to raise
capital to fund the growth of its business, including its planned expansion into
new  geographic  markets  for  its  Titlescape(R)  and  IDEA(TM)  products.   In
connection with its growth  objectives,  Data Tree retained Salomon Smith Barney
as its financial adviser to assist in examining  various strategic  alternatives
available  to Data Tree.  ON  September  26,  1997 at a meeting of the Data Tree
board of  directors,  Chopra,  Data Tree's  president,  described  the strategic
alternatives  available  for the  growth  of Data  Tree  and the  advice  of its
financial adviser,  and recommended that Data Tree seek a strategic or financial
buyer to  acquire  Data  Tree.  Following  discussion,  the  board of  directors
unanimously approved a strategy to privately market Data Tree for sale.

     During the fourth  quarter of 1997,  Data Tree,  with Salomon Smith Barney,
prepared  a  Confidential  Memorandum  that  was  sent  to  potential  investors
identified  by Salomon  Smith  Barney.  Investors  who  expressed an interest in
providing  equity capital to acquire  either a minority or majority  interest in
Data Tree under the terms set forth by Data Tree were contacted, and Data Tree's
executive  team  gave  formal  management  presentations  to  various  potential
investors  during December 1997 and January 1998.  During the same period,  Data
Tree's  financial  adviser  contacted  a board  member of  Experian  Information
Solutions, Inc. ("Experian") to determine whether the Company and Experian would
be  interested in acquiring  Data Tree.  Because Data Tree competes with certain
businesses  of the  Company  and  Experian,  Data  Tree  did not  send  them the
Confidential Memorandum at that time.

     In late January 1998,  Salomon Smith Barney and Chopra  contacted Parker S.
Kennedy ("Kennedy"), the Company's president, to discuss the Company's potential
interest in a transaction with Data Tree.  Kennedy indicated that he and members
of his management  team would be interested in an initial meeting with Chopra to
discuss Chopra's objectives and strategies for pursuing such a transaction.

     In early  February  1998,  Chopra met with  Kennedy  and Thomas A.  Klemens
("Klemens"),  Executive  Vice  President  and  Chief  Financial  Officer  of the
Company, to discuss the Company's possible acquisition of Data Tree. On February
4, 1998, Data Tree's  executive team, led by Chopra,  gave the Company's  senior
management  a  formal  management   presentation  at  the  Company's   corporate
headquarters in Santa Ana, California.

     On February 11, 1998,  Kennedy and Klemens,  along with Dennis Gilmore,  an
officer of FARES (defined below),  Chopra and a representative  of Salomon Smith
Barney met at Data Tree's data center in San  Bernardino,  California  to review
the facility and continue  discussions  regarding the potential  acquisition  of
Data Tree.

     On February 13, 1998,  Chopra and a representative  of Salomon Smith Barney
met with Kennedy and Klemens. During the meeting,  Kennedy and Klemens presented
proposed terms for the Company's acquisition of Data Tree.

     After further  discussions  between Kennedy and Chopra,  Kennedy and Chopra
jointly  agreed that the Company  would pursue the  acquisition  of Data Tree by
merger  subject  to  agreement  on terms and  conditions  and  approval  by each
company's board of directors and the Data Tree shareholders.

     From  February 20, 1998  through  March 27,  1998,  representatives  of the
Company and Data Tree,  along with  respective  legal  counsel for the companies
negotiated the structure of the  transaction and the terms and conditions of the
proposed  Merger  Agreement.  During this time the Company and Chopra,  together
with their respective legal advisors, negotiated the related party transactions.

     On February 26, 1998, the board of directors of the Company, believing that
the Merger (i) would enhance and eliminate  certain  costs  associated  with its
existing recorded real estate document imaging and storage business and (ii) was
generally in the best interest of the  Company's  shareholders,  authorized  the
officers of the Company to pursue the Merger.

     During March and April of 1998, the Company conducted due diligence.

     On March 20, 1998, the board of directors of Data Tree,  along with counsel
to Data Tree, met to discuss the principal  terms and conditions of the proposed
Merger Agreement and the related party transactions;  and on March 23, 1998, the
board of directors of Data Tree,  along with counsel to Data Tree,  again met to
discuss the Merger Agreement and related party transactions. Following extensive
discussion,  at the  March 23  meeting,  the  board of  directors  of Data  Tree
unanimously  approved the principal terms of the Merger Agreement and authorized
management  to  complete  the  negotiations  and  execute  the Merger  Agreement
consistent with the terms discussed at the meeting.

     On March 27, 1998, Data Tree,  Chopra, IAC and the Company entered into the
Merger Agreement.

RECOMMENDATION OF THE DATA TREE BOARD OF DIRECTORS

     The board of  directors  of Data Tree has  unanimously  approved the Merger
Agreement and recommends that the Data Tree  shareholders  approve and adopt the
Merger Agreement and the Merger.  See  "-Background of the Acquisition;  Reasons
for the Merger."

INTERESTS OF DIRECTORS, OFFICERS AND EMPLOYEES IN THE MERGER

     As of May 1, 1998,  certain  directors and executive officers of Data Tree,
and their affiliates,  held or may be deemed to have held 975,000 shares of Data
Tree Stock  directly or  beneficially,  representing  13.85% of the  outstanding
shares of Data Tree Stock.

     As of May  1,  1998,  certain  directors  and  executive  officers  of  the
Company,  and their  affiliates,  held or may be  deemed to have held  1,239,941
shares of Stock directly or beneficially,  representing 6.9% of the outstanding
shares of the Company.

     The Merger Agreement obligates Chopra to vote all Shares of Data Tree Stock
either  owned  or  controlled  by him in  favor of the  Merger.  Chopra  owns or
controls 565,000 shares of Data Tree Stock, representing approximately 8.03% of
the shares of Data Tree Stock issued and outstanding.

     Carl Strunk, a director and shareholder of Data Tree, is the Executive Vice
President,  Finance  of  Fidelity  and a  Vice  President  of Cal  West  Service
Corporation,  a major shareholder of Data Tree and a wholly-owned  subsidiary of
Fidelity.

     General. As described below, one or more of the directors and the executive
officers  of Data  Tree  have  interests  in the  Merger  and  the  transactions
contemplated  following  the Merger in addition to any interest they may have as
shareholders of Data Tree  generally.  These  interests  include,  among others,
ownership  interests in a joint venture to be created  following  the Merger,  a
supply  agreement,  employee  benefits and director and officer  indemnification
agreements  described  below.  Data Tree's board of  directors  was aware of the
interests of all such persons at the time it approved the Merger Agreement.  For
a more complete  description of these interests,  refer to Exhibits A through H,
inclusive, of the Merger Agreement included in Annex A hereto.

     Joint Venture;  Noncompetition  Agreement.  Following the Merger,  the Data
Tree business will be combined  with the Digistar  business  already owned by an
affiliate of the Company and will be  conducted  through a joint  venture  which
will use the name "Data Tree  LLC." Like Data Tree,  Digistar  is engaged in the
business of imaging real estate records and delivering  images to its customers.
The  Digistar  business  is valued at  approximately  $3,500,000.  R.  Squared
Limited,  an Irish company ("R2"),  will own 20% of the membership  interests of
the joint venture.  R2, which owns 42.6% of the Data Tree Stock as of the Record
Date,  was  established  by Chopra,  who  serves as Data  Tree's  President  and
Chairman of the Board. Chopra disclaims any beneficial interest in R2.

     Immediately  following   consummation  of  the  Merger,   pursuant  to  the
Contribution  and Joint  Venture  Agreement  (filed as  Exhibit C to the  Merger
Agreement and  incorporated  herein by reference)  (i) the Company has agreed to
contribute  all of the Surviving  Corporation's  capital stock to FAREISI,  (ii)
FAREISI has agreed to cause the Surviving  Corporation  to contribute all of its
assets and liabilities to First American Real Estate Solutions LLC ("FARES"),  a
joint venture  limited  liability  company,  80% of the membership  interests of
which are owned by FAREISI and certain of FAREISI's  subsidiaries and 20% of the
membership  interests  of which are owned by Experian and (iii) FARES has agreed
to contribute all of the assets and liabilities of the Surviving Corporation and
certain  assets and  liabilities  of the  Digistar  business to Data Tree LLC, a
newly formed California limited liability company ("NEWCO"). In addition,  prior
to the Merger, the Company will contribute cash in an amount equal to the sum of
the Surplus  Expenses (as defined in the Merger  Agreement) and $486,627 to IAC.
Following the Merger,  such cash will form part of the  Surviving  Corporation's
assets.

     R2 will be credited with a 1.893%  membership  interest in NEWCO (valued at
$1,150,000) in exchange for R2 and Harish Chopra entering into a  Noncompetition
Agreement  immediately  following  the  consummation  of the  Merger.  Under the
Noncompetition  Agreement  (filed  as  Exhibit  F to the  Merger  Agreement  and
incorporated  herein by  reference),  R2 and Chopra  have agreed for a period of
seven years not to engage in any activity in and substantially  competitive with
the  Data  Tree  or  Digistar   businesses,   including   the   automation   and
digitalization  of any  public  records  of  county  recorders  or the  official
recordkeeper  for  any  county  or  equivalent  political  subdivision  and  the
providing of digitized information to any person or entity.

     R2 also will purchase an 18.107%  membership  interest in NEWCO in exchange
for a promissory note in the principal  amount of $11,000,000,  bearing interest
at 8% per annum. The promissory note is payable in ten equal quarterly  payments
of $1,224,592 each, and is secured by 90% of R2's membership interests in NEWCO.
R2 has the  right to  offset  payments  due to R2  under  the  Supply  Agreement
described below against R2's payment obligations under the note. Pursuant to the
Employment  Agreement  described  below,  Chopra will serve as the  President of
NEWCO.

     Under the terms of the  Contribution  and Joint Venture  Agreement,  R2 may
sell or be required to sell its membership interests in NEWCO at a formula price
based upon an amount equal to 15 times NEWCO's adjusted  earnings, as defined 
in the agreement.  During the period from
March 31, 2001 until  March 30,  2002,  R2 shall have the right to put,  and the
Company shall have the right to call,  33-1/3% of R2's  membership  interests in
NEWCO for the  formula  exercise  price  described  above.  If during  the first
put/call period, no membership  interests are sold, then R2 shall have the right
to put, and the Company shall have the right to call, 66-2/3% of R2's membership
interests during the period from March 31, 2002 to March 30, 2003.  However,  if
during  the  first  put/call  period,  R2 has  sold  33-1/3%  of its  membership
interests,  then R2 shall have the right to put, and the Company  shall have the
right to call,  50% of R2's  remaining  membership  interests  during the second
put/call  period.  During the period from March 31 2003 until March 31, 2005, R2
shall have the right to put, and the Company shall have the right to call,  100%
of R2's membership  interests.  If the put or call option is not fully exercised
by the last business day  immediately  preceding  March 31, 2005,  then the call
shall be deemed to be exercised on March 31, 2005 and the Company shall purchase
any remaining membership interests owned by R2.

     The Company may not exercise the first call if the call exercise  price for
33-1/3% of R2's membership interests would be less than $3,300,000.  The Company
may not exercise the second call option if the call  exercise  price for 66-2/3%
of R2's  membership  interest would be less than $6,600,000 or, if R2 previously
sold to the Company 33-1/3% of its membership interests,  then the call exercise
price  would  be less  than  $3,300,000  for 50% of  R2's  remaining  membership
interests.  The  Company  may not  exercise  the third  call  option if the call
exercise  price  for  100% of  R2's  membership  interests  would  be less  than
$9,900,000  or, if R2 previously  sold to the Company  66-2/3% of its membership
interests,  the call  exercise  price  would be less  than  $3,300,000  for R2's
remaining membership interests.

     The put/call exercise price is the percentage of total membership interests
being  sold  multiplied  by the  Enterprise  Value of NEWCO,  subject to certain
minimums if Chopra is no longer  employed by NEWCO prior to the  exercise of the
option.  For purposes of the put/call option,  the Enterprise Value is an amount
in dollars equal to the product of (a) 15 and (b) the adjusted earnings of NEWCO
for the 12 consecutive  complete calendar month period ended prior to the option
exercise  (assuming an effective tax rate of 40% and  excluding  the effect,  if
any, on the profits of NEWCO of any amortization of goodwill  resulting from the
acquisition of Data Tree in accordance  with the Merger  Agreement and excluding
interest  paid or  accrued  on  working  capital  debt of  NEWCO  in  excess  of
$2,000,000  to which R2 has  objected).  The  Company is  expected to provide to
NEWCO  centralized  administrative  and  other  services  for a fee equal to one
percent of NEWCO's monthly operating revenues. If Chopra's employment with NEWCO
or its  affiliates  is terminated  by NEWCO  "without  cause" (as defined in the
Employment  Agreement) prior to the option  exercise,  then the minimum put/call
exercise  price is the  product  of  $5,000,000  and the  percentage  membership
interest  sold by R2. If  Chopra's  employment  is  terminated  for  "cause" (as
defined  in  the  Employment  Agreement)  or  if  Chopra  resigns,  retires,  is
permanently  disabled  or dies prior to the option  exercise,  then the  minimum
put/call  exercise  price is the  lesser of the  product of  $5,000,000  and the
percentage  membership  interest  sold by R2 and the  product of the  Enterprise
Value of NEWCO on the date Chopra's employment was terminated and the percentage
membership interest sold by R2.

     The Company, at its sole election,  may pay the put exercise price in cash,
an unsecured  promissory  note of the Company,  with interest at prime,  payable
quarterly  and  maturing  in three  years  or by the  issuance  of  unrestricted
registered shares of Stock or a combination of cash, promissory notes and Stock.
In the case of the  exercise of a call  option,  the Company may use cash or its
registered Stock or a combination of cash and Stock.

     Under the  Operating  Agreement for NEWCO (filed as Exhibit D to the Merger
Agreement  and  incorporated  herein by  reference),  FARES  will have the full,
complete and exclusive authority, power and discretion to manage and control the
business,  property and affairs of NEWCO. R2's consent,  however, is required in
order for NEWCO to take certain actions,  including,  among others,  engaging in
any business other than the Data Tree and Digistar business;  incurring any debt
for working capital purposes in excess of $2,000,000 or any other debt in excess
of $250,000; the sale, lease, transfer or encumbrance of any substantial portion
of the assets of the Company except in the ordinary course of business;  and the
acquisition  of any real  property or any  leasehold or other  interest  therein
other than in the ordinary  course of business for a purchase  price of not less
than $250,000.

     Supply Agreement.  Data Tree (India) Corporation,  an Indian proprietorship
that is owned by  Chopra  ("Data  Tree  India"),  has  provided  image  scanning
services  to Data Tree since  mid-1994.  For the twelve  months  ended March 31,
1998,  Data Tree has  purchased  66,590,345  real estate title records from Data
Tree India at a cost of  $197,000.  Data Tree has  provided  Data Tree India the
rent-free use of approximately $500,000 in scanning equipment and software owned
or leased by Data Tree.

     Following  the  Merger,  NEWCO will enter into a Supply  Agreement  with R2
(filed  as  Exhibit  G to  the  Merger  Agreement  and  incorporated  herein  by
reference)  pursuant to which R2 shall scan or cause to be scanned not less than
235,000,000  real estate title  records in the  aggregate  and  23,500,000  real
estate title records per calendar quarter into a database owned by NEWCO.  NEWCO
will pay R2 a cost of $0.055  per  image,  with a minimum  quarterly  payment of
$1,292,500. The Supply Agreement has a term of two and one-half years and may be
terminated  only with the  mutual  consent of the  parties.  R2 is  expected  to
contract  with Data Tree India for the  scanning of images at the same  contract
rate paid by Data Tree prior to the Merger.

     Option to Acquire Data Tree India. Under the Contribution and Joint Venture
Agreement, NEWCO has the option to acquire Data Tree (India) Private Limited, an
Indian corporation into which the assets and liabilities of Data Tree India will
be placed and of which  Chopra  owns 95% of the  capital  stock,  for a purchase
price of $200,000 during the period  beginning after the date on which NEWCO has
purchased 235,000,000 images under the Supply Agreement to and ending six months
thereafter.  If  Chopra  is  employed  by NEWCO at the time the  option  becomes
exercisable,  then in lieu of acquiring Data Tree India or its assets, NEWCO may
enter into a supply  agreement  with Data Tree India for the  purchase of all of
Data Tree India's output at cost during its term.

     Employment  Agreement.  The  Company has  required  as a  condition  to the
consummation  of the  Merger  that  Chopra  enter  into a five  year  Employment
Agreement (filed as Exhibit E to the Merger Agreement and incorporated herein by
reference) with NEWCO. The Employment  Agreement provides that Chopra will serve
as the  President  of NEWCO.  Chopra will be paid a base salary of $250,000  per
year plus an annual  formula  bonus  equal to two  percent  of  NEWCO's  pre-tax
earnings for each fiscal year,  payable in  quarterly  installments.  During the
first  fiscal  year,  Chopra will  receive a minimum  annual  bonus of $250,000,
payable in minimum quarterly installments of $62,500 each. Pre-tax earnings will
be calculated  without taking into account any  amortization of goodwill arising
in  connection  with the Merger and the  payment or accrual of  interest  on any
working  capital  debt in  excess  of  $2,000,000  to which R2 has  objected  in
accordance with the Operating Agreement. If Chopra's employment is terminated by
NEWCO  "without  cause," then Chopra will be entitled to be paid base salary and
bonus until the earlier of Chopra's  death,  permanent  disability or the end of
the five year term of the Employment Agreement.

     Change in Control  Payments  and  Employee  Retention  Program.  Michael D.
Reynolds ("Reynolds"), Chief Financial Officer and a vice-president of Data Tree
and William P. Dow ("Dow"), Data Tree's corporate  controller,  are each parties
to an Executive  Compensation  and Benefits  Continuation  Agreement  each dated
December 15, 1997 and a Contingent Bonus Agreement each dated December 15, 1997.
Under the Contingent Bonus  Agreements,  Reynolds and Dow, upon  consummation of
the Merger, will be entitled to receive a bonus equal to 20% of their respective
salaries.  Based upon their  salaries as of March 27,  1998,  Reynolds  would be
entitled  to  receive a bonus  equal to  approximately  $24,000  and Dow will be
entitled to receive a bonus equal to approximately  $14,000. Under the Executive
Compensation and Benefits Continuation Agreements,  upon the consummation of the
Merger Reynolds and Dow each will become subject to an agreement  providing that
should their  employment  with the Surviving  Corporation be terminated  without
cause or  should  they  voluntarily  end  their  employment  with the  Surviving
Corporation  for good  reason,  they each will be  entitled  to  receive  twelve
months' salary, payable in twelve equal installments,  among other benefits. The
Executive Compensation and Benefits Continuation  Agreements remain in effect so
long as Dow and Reynolds are employed by the Surviving Corporation.

     Prior to execution of the Merger Agreement, Data Tree set aside $200,000 to
pay  retention  bonuses to  certain  Data Tree  employees  (other  than  Chopra,
Reynolds and Dow) who remain  employed by NEWCO until  December  31,  1998.  The
Company is indirectly  contributing cash in the amount of these bonuses to NEWCO
and NEWCO is assuming this obligation.

INDEMNIFICATION

     The  Company  has  agreed to keep in effect  and to cause  NEWCO to keep in
effect the  provisions  of Data  Tree's  articles  of  incorporation  and bylaws
providing for exculpation of director  liability and the  indemnification of the
directors,  officers  and  agents of Data Tree for  actions or  omissions  while
serving  as a  director,  officer  or agent of Data Tree to the  fullest  extent
permitted  by the CGCL.  The  Company  has also  agreed to keep in effect and to
cause  NEWCO to keep in effect  and  comply  with the terms  and  conditions  of
indemnification  agreements  between Data Tree and its directors in effect as of
the date of the Merger Agreement.

     Prior to the execution of the Merger Agreement, Data Tree proposed to amend
its articles of incorporation to provide certain  indemnification  protection to
Data  Tree's  agents  and to  enter  into  indemnification  agreements  with its
directors and executive  officer  providing,  to the maximum extent  permissible
under the law, the directors,  officers and agents of Data Tree  protection from
liability for actions or omissions while serving as a director, officer or agent
of  Data  Tree.  The  amendment  to  the  articles  of  incorporation   and  the
indemnification agreements explicitly exclude the right of a Data Tree director,
officer or agent to indemnification for any liability of such director,  officer
or agent arising as a result of any breach of duty in connection with the Merger
Agreement or transactions contemplated by the Merger Agreement.

ACCOUNTING TREATMENT

     For financial reporting  purposes,  the Company will account for the Merger
using the purchase method under generally accepted accounting principles.

REGULATORY REQUIREMENTS

     Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"),  the Merger may not be consummated  until  notifications
have been given and certain  information  has been  furnished to the FTC and the
Antitrust  Division of the Department of Justice (the "Antitrust  Division") and
specified waiting period requirements have been satisfied.  The Company on March
30,  1998 and Data Tree on April 1, 1998 filed  notification  and  report  forms
under  the HSR Act  with the FTC and the  Antitrust  Division,  together  with a
request for early termination of the applicable 30-day waiting period. Effective
April 13, 1998, this 30-day waiting period was terminated.

     At any time before or after the Effective  Time, the Antitrust  Division or
the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest,  including  seeking to enjoin the consummation
of the Merger or seeking  divestiture  of  substantial  assets of the Company or
Data Tree. At any time before or after the Effective  Time, and  notwithstanding
that the HSR Act waiting  period has  expired,  any state could take such action
under the  antitrust  laws as it deems  necessary  or  desirable  in the  public
interest.  Such action could include  seeking to enjoin the  consummation of the
Merger or seeking  divestiture of Data Tree or businesses of the Company or Data
Tree.  Private  parties also may seek to take legal  action under the  antitrust
laws under certain circumstances.

     Based on  information  available to them, the Company and Data Tree believe
that the Merger can be effected in compliance  with federal and state  antitrust
laws. However, there can be no assurance that a challenge to the consummation of
the Merger on antitrust  grounds  will not be made or that,  if such a challenge
were made,  the Company and Data Tree would  prevail or would not be required to
accept  certain  conditions,   including  certain  divestitures,   in  order  to
consummate  the Merger.  In this regard,  it is a condition to the obligation of
the parties to consummate  the Merger that no injunction  shall have been issued
prohibiting  the Merger or other legal or  regulatory  restraint or  prohibition
preventing the consummation of the Merger.




<PAGE>


                              THE MERGER AGREEMENT

     The  following  is a brief  summary  of  certain  provisions  of the Merger
Agreement,  a copy of which  is  attached  as  Annex A to this  Prospectus/Proxy
Statement  and  incorporated  herein  by  reference.   The  discussion  in  this
Prospectus  of the Merger and the Merger  Agreement is qualified in its entirety
by reference  to the Merger  Agreement.  Shareholders  of Data Tree are urged to
read the Merger Agreement in its entirety for a more complete description of the
Merger.  The Merger  Agreement  rather than the summary set forth  herein,  will
control  the  terms  of the  Merger  and  the  rights  of the  parties  and  the
shareholders  of Data Tree. All  shareholders of Data Tree are urged to read the
Merger Agreement in its entirety.

EFFECTIVE TIME

     The Merger Agreement provides that the Merger will be consummated following
the  approval  of the Merger  Agreement  by the Data Tree  shareholders  and the
satisfaction  or waiver  of all  other  conditions  to the  consummation  of the
Merger.

     If all  conditions to the Merger are  satisfied or waived,  the Merger will
become effective at the time (the "Effective Time") that all documents  required
to be filed with the  California  Secretary of State to effect the Merger are so
filed.  At the Effective Time, IAC will merge with and into Data Tree, with Data
Tree continuing as the Surviving Corporation.  Data Tree, thereby, will become a
wholly-owned subsidiary of the Company. As a result of the Merger, the Data Tree
shareholders  will become  shareholders  of the Company and their rights will be
governed  by the  articles  of  incorporation  and  bylaws  of the  Company  and
California  law.  See  "Comparison  of Rights of  Holders of Data Tree Stock and
Company Stock."

MANNER AND BASIS FOR CONVERTING SHARES

     Merger Consideration.  At the Effective Time, the shares of Data Tree Stock
(other  than any  shares of Data Tree Stock  owned by the  Company or any of its
subsidiaries or owned by dissenting shareholders, if any) held by each Data Tree
shareholder will be converted into the right to receive shares of the Stock (the
"Merger Consideration") in accordance with the following formula:

                                (PSI)
         Merger Consideration = -----(x)
                                (AP)  

where (i) "PSI" equals the quotient  resulting from the division of the Purchase
Price by the number of shares of Data Tree Stock  issued and  outstanding  as of
the Effective  Time (the "Number of Shares  Outstanding"),  (ii) "AP" equals the
average of the last reported  sales price (the "Average  Price") of one share of
the Stock as reported on the New York Stock Exchange for the twenty  consecutive
Trading  Days  ending  on the  Trading  Day  immediately  prior to the Data Tree
Special  Meeting  and (iii) "x"  equals  the number of shares of Data Tree Stock
held by the such Data Tree shareholder.  In lieu of a fractional share of Stock,
Data Tree  shareholders  will  receive  cash in the form of a check in an amount
equal to the product of the Average Price and the fractional interest.

     In no event  will the  total  Merger  Consideration  paid to all Data  Tree
shareholders exceed 838,095 shares of Stock, less the aggregate number of shares
of Stock that any dissenting shareholders would be entitled to receive under the
preceding formula had such dissenting shareholders not so dissented.

     Shares of Data Tree Stock owned by the  Company or any of its  subsidiaries
or owned by Dissenting Shareholders,  if any, immediately prior to the Effective
Time will be canceled and extinguished without any conversion thereof.

     At the  Effective  Time the  Purchase  Price is  expected  to be less  than
$43,113,373  and the Number of Shares  Outstanding  is expected to be 7,039,830.
The exact Purchase  Price cannot be  ascertained  until the fees and expenses of
the legal  counsel,  accountants  and financial  advisors of Data Tree and legal
counsel to Chopra are determined.  The first  $1,000,000 of the aggregate amount
of these fees will be paid by Data Tree;  to the extent  that these fees  exceed
$1,000,000 (the "Surplus  Expenses"),  the amount is subtracted from $43,113,373
to arrive at the Purchase Price.

     As  suggested  above,  the Merger  Consideration  payable to each Data Tree
shareholder  cannot be fixed until the date of the Data Tree Special Meeting and
the amount of the Surplus  Expenses are  determined.  Fluctuations in the market
price of shares of Stock and the  ultimate  determination  of the  amount of the
Surplus Expenses, therefore, will impact the number of shares of Stock each Data
Tree  shareholder will receive in the Merger.  Once the Merger  Consideration is
fixed,  changes  in the  market  price of a share of the Stock  will  affect the
dollar  value of the Stock to be received by the Data Tree  Shareholders  in the
Merger.  Factors  affecting the value of a share of Stock  received by Data Tree
shareholders  may differ from factors that affected the value of a share of Data
Tree Stock.  Data Tree  shareholders are urged to obtain current  quotations for
the Stock prior to the Data Tree Special Meeting.

     Upon  the  consummation  of  the  Merger,  each  share  of IAC  issued  and
outstanding  prior to the Effective Time will be converted into one common share
of the Surviving Corporation.

     Exchange  Agent.  First American Trust Company has been appointed  exchange
agent  (the  "Exchange  Agent")  under  the  Merger  Agreement.  Each  Data Tree
shareholder  shall have received from the Exchange  Agent a notice and letter of
transmittal  detailing  the procedure by which each Data Tree  shareholder  will
surrender the certificates representing shares of Data Tree Stock and receive in
return   certificates   representing  shares  of  Stock.  Upon  each  Data  Tree
shareholder's  surrendering of shares of Data Tree Stock and compliance with the
instructions  in the notice and letter of  transmittal,  the Exchange Agent will
transfer  certificates  representing  the Merger  Consideration  to such person.
CERTIFICATES  REPRESENTING  SHARES OF DATA TREE STOCK SHOULD NOT BE  SURRENDERED
UNTIL  SUCH  HOLDERS  RECEIVE  THE NOTICE  AND  LETTER OF  TRANSMITTAL  FROM THE
EXCHANGE  AGENT,  AND THEN ONLY IN ACCORDANCE  WITH THE TERMS OF SUCH NOTICE AND
LETTER OF TRANSMITTAL.

     Questions and requests for assistance and requests for additional copies of
the notice and letter of  transmittal  should be directed to the Exchange  Agent
addressed as follows:

         First American Trust Company
         421 North Main Street
         Santa Ana, California  92701-4642
         Telephone:   800-854-3643
         Facsimile:   714-972-1368

EFFECT OF THE MERGER

     Once the Merger is  consummated,  IAC will cease to exist as a corporation;
Data Tree will continue to exist as the Surviving Corporation.

     Pursuant to the Merger  Agreement,  the articles of  incorporation  and the
bylaws of Data  Tree in  effect  immediately  prior to the  Effective  Time will
become the articles of incorporation and the bylaws of the Surviving Corporation
immediately  following  the Merger.  The directors of IAC prior to the Effective
Time will become the  directors of the  Surviving  Corporation.  The officers of
Data Tree prior to the Effective Time shall become the officers of the Surviving
Corporation.

REPRESENTATIONS AND WARRANTIES

     Data Tree and Chopra have made a number of  representations  and warranties
in the Merger Agreement,  including representations and warranties regarding the
organization,  existence,  good standing and capital structure of Data Tree, its
ownership of subsidiaries  and  investments,  financial  statements and material
changes, tax matters, books and records, title to properties, encumbrances, real
property,  leases, material contracts,  restrictive documents,  employee benefit
plans,  litigation,  compliance with laws,  intellectual property,  governmental
licenses, interests in clients and suppliers, bank accounts, powers of attorney,
compensation of employees,  labor matters,  disclosure,  consents and approvals,
broker's and finder's  fees,  copies of documents and other  matters,  including
Data Tree's  authority to enter into the Merger  Agreement and to consummate the
Merger.  The  Company  and IAC have also made a number  of  representations  and
warranties,  including  representations and warranties  regarding the existence,
good  standing  and  capital  structure  of the Company  and IAC,  consents  and
approvals,  restrictive  documents,  broker's  and  finder's  fees,  the  Stock,
financial statements and SEC reports, material changes,  litigation,  compliance
with laws, disclosure and other matters,  including the authority of the Company
and IAC to enter into the Merger Agreement and to consummate the Merger.

     Each of the  representations and warranties made by Data Tree and Chopra on
the one hand and the Company  and IAC on the other hand  survive for a period of
six  months  after  the  Effective   Time  and  will  serve  as  the  basis  for
indemnification  of any damages  suffered by any of the parties as a result of a
breach or inaccuracy of such  representations  and  warranties.  See "The Merger
Agreement -- Indemnification."

CERTAIN COVENANTS AND AGREEMENTS

     Operation  of  Data  Tree  Prior  to the  Merger.  Pursuant  to the  Merger
Agreement,  Data Tree has agreed  that  during  the period  from the date of the
Merger Agreement to the Effective Time (the  "Pre-Closing  Period"),  subject to
certain  exceptions,  it will conduct its  operations  in the ordinary and usual
course of business,  use its reasonable  efforts to preserve intact its business
organization,  keep  available  the  services  of its  officers  and  employees,
maintain its relations with all licensors, suppliers,  distributors,  customers,
landlords,   employees,   agents   and  others   with  which  it  has   business
relationships,  confer  with the  Company  concerning  operational  matters of a
material nature and report  periodically to the Company concerning its business,
operations and finances.  Under the Merger  Agreement,  Data Tree also agreed to
permit the Company and its authorized  representatives to review and have access
to, during the Pre-Closing  Period,  the  properties,  books and records of Data
Tree and information concerning its financial and legal condition.

     In addition,  except as permitted by the terms of the Merger Agreement, and
subject to certain exceptions,  during the Pre-Closing Period, each of Data Tree
and  Chopra  have  agreed  not to do or  permit,  as the case may be, any of the
following  without  the prior  written  consent of the  Company or as  otherwise
permitted or required by the Merger Agreement:

     (a) amend or modify Data Tree's articles of incorporation or bylaws;

     (b) increase any bonuses,  salaries, or other compensation to any director,
officer,  employee,  or shareholder or enter into any employment  severance,  or
similar  agreement with any director,  officer,  or employee (subject to certain
exceptions);

     (c) adopt or increase any profit  sharing,  bonus,  deferred  compensation,
savings, insurance,  pension,  retirement, or other employee benefit plan for or
with any of its employees;

     (d) enter into any contract or commitment  except in the ordinary course of
business;

     (e) increase its indebtedness for borrowed money, except current borrowings
in the ordinary course of business;

     (f)  cancel  or  waive  any  claim  or right  of  substantial  value  which
individually or in the aggregate is material;

     (g) declare or pay any dividends in respect of its capital stock or redeem,
purchase or otherwise acquire any of its capital stock;

     (h) make any material change in accounting methods or practices,  except as
required by generally accepted accounting principles;

     (i) issue or sell any shares of capital stock or any other  securities,  or
issue  any  securities  convertible  into,  or  options,  warrants  or rights to
purchase or subscribe to, or enter into any arrangement or contract with respect
to the  issue  and  sale of,  any  shares  of its  capital  stock  or any  other
securities,  or make any other  changes to its  capital  structure,  except such
issuances or sales of securities which Data Tree is already obligated to make as
of the date of the Merger Agreement and which are disclosed to the Company;

     (j) sell,  lease or  otherwise  dispose of any  material  asset or property
other than sales of inventory in the ordinary course of business;

     (k) make any capital  expenditure  or  commitment  therefor,  except in the
ordinary course of business;

     (l) write off as  uncollectible  any notes or accounts  receivable,  except
write offs in the ordinary  course of business  charged to applicable  reserves,
none of which individually or in the aggregate is material;

     (m) to the extent not  included in clauses (a) through (l) above,  take any
of the actions  which  constitute  changes to the balance  sheet of Data Tree as
described in Section 3.22 of the Merger Agreement;

     (n) agree in writing to do any of the foregoing; and

     (o) as it relates to Data Tree, file any amended tax returns.

     No Solicitation. Data Tree and Chopra have each agreed, through the closing
of the Merger,  that they shall not take any action to,  directly or indirectly,
encourage,  initiate or engage in discussions or  negotiations  with, or provide
any information to, any person other than the Company concerning any purchase of
the shares of Data Tree Stock or any merger,  sale of  substantially  all of the
assets of Data Tree or similar transaction involving Data Tree.

     Consents.  Under the Merger  Agreement,  the  Company,  IAC,  Data Tree and
Chopra have agreed to use their best efforts to take, or cause to be taken,  all
appropriate  action,  and to make, or cause to be made,  all filings  necessary,
proper or advisable  under the applicable laws and regulations to consummate and
make effective the transactions contemplated by the Merger Agreement, including,
without  limitation,  their  respective  best  efforts to  obtain,  prior to the
Effective  Time, all licenses,  permits,  consents,  approvals,  authorizations,
qualifications  and orders of governmental  authorities and parties to contracts
with Data Tree,  the Company and IAC as are  necessary for  consummation  of the
transactions  contemplated by the Merger Agreement and to fulfill the conditions
of the  Merger;  provided,  however,  that no loan  agreement  or  contract  for
borrowed  money shall be repaid  except as currently  required by its terms,  in
whole or in part,  and no  contract  shall be  amended  to  increase  the amount
payable  thereunder or otherwise to be more burdensome to Data Tree, the Company
or IAC in order to obtain any such consent,  approval or  authorization  without
first obtaining the written approval of the parties.

     Shareholder Approval. Data Tree shall seek the adoption and approval of the
Merger  Agreement by its shareholders at a duly called meeting and in accordance
with  applicable  laws.  Chopra has agreed to cause any Data Tree Stock owned or
controlled  by him to be voted in favor of the  Merger.  As of the Record  Date,
Chopra owned or  controlled  (through  relationships  with  immediate  family or
through ownership of shareholders)  approximately 8.03% of the Data Tree Stock.
The Company has caused all shares of IAC to be voted in favor of the Merger.

     Securities  Matters.  The Merger  Agreement  required the Company to make a
filing with the  Securities  and Exchange  Commission  (the "SEC")  covering the
issuing of the shares of Stock to be used in the Merger as well as the resale of
shares of Stock (the "Rule 145 Shares")  received by Data Tree  shareholders who
are  subject  to Rule 145 of the  Securities  Act . The  Company  has  agreed to
maintain and keep effective that portion of the SEC filing  relating to the Rule
145 Shares  until the earlier of (i) one year from the  Effective  Time and (ii)
the time at which  each  holder of Rule 145  Shares can sell all shares of Stock
held by such shareholder in a 90 day period pursuant to the resale  restrictions
imposed by Rule 145 under the Securities Act.

     Indemnification.  The Company has agreed to cause the Surviving Corporation
to keep in effect (i) provisions of Data Tree's  articles of  incorporation  and
bylaws providing for the exculpation and indemnification of directors,  officers
and agents to the fullest extent permitted by the California  Corporations Code,
and  (ii)  the  indemnification  agreements  between  Data  Tree and each of its
directors.

     Tax  Matters.  Data Tree,  the Company and IAC have each  acknowledged  and
agreed that (i) it intends the Merger to constitute a reorganization  within the
meaning of Section 368(a) of the Internal  Revenue Code of 1986, as amended (the
"Code") and (ii) it will report the Merger as such a  reorganization  in any and
all tax  returns  filed by it. At or prior to the  closing  of the  Merger,  the
Company, together with IAC and Data Tree will execute tax representation letters
for the  purpose  of (A) the  preparation  and  rendering  of a tax  opinion  in
accordance  with  the  Merger  Agreement  by  Cooley  Godward  LLP,  and (B) the
preparation  of the  discussion  of the tax  consequences  of the  Merger  to be
included in this Prospectus/Proxy Statement.

     Employee  Matters.  After the  Effective  Time,  the employees of Data Tree
shall  participate in the Company's  employee  benefit plans, and such employees
shall  receive  credit for accrued and unused sick leave,  vacation  and holiday
time and accumulated deductibles.

CONDITIONS TO THE MERGER

     The respective  obligations of each party to the Merger Agreement to effect
the Merger are subject to the  satisfaction  or waiver of each of the  following
conditions: (i) the Merger Agreement and the Merger shall have been approved and
by the  requisite  vote or consent of the Data Tree  Shareholders  in accordance
with applicable law and the articles of  incorporation  and bylaws of Data Tree;
(ii) the SEC shall have declared effective a registration statement covering the
(a)  issuance by the Company of the shares of Stock to be  delivered to the Data
Tree  shareholders  and (b) resale of the Stock to be  received by any Data Tree
shareholder  subject  to Rule 145 and all  applicable  time  periods  under  the
Securities  Act shall have  expired  and no stop order shall have been issued by
the SEC with respect to such registration  statement;  (iii) as of the Effective
Time,  no action or  proceedings  shall have been  instituted  before a court or
other  governmental  body or any public  authority  to restrain or prohibit  the
consummation of the Merger and consummation of the transactions  contemplated by
the  agreements  attached as Exhibits C through H to the Merger  Agreement  (the
"Related  Agreements");  (iv) any waiting  periods under the HSR Act relating to
the Merger will have  expired or  terminated;  (v) no  preliminary  or permanent
injunction  or  other  order  shall  have  been  issued  by any  court or by any
governmental  or  regulatory  agency,  body or  authority  which  prohibits  the
consummation  of the  Merger  and the  transactions  contemplated  by the Merger
Agreement and which is in effect at the closing of the Merger;  (vi) the Related
Agreements shall have been duly executed on or before the closing of the Merger;
(vii) the shares of Stock  issuable to  shareholders  of Data Tree in the Merger
shall have been listed on the New York Stock  Exchange upon  official  notice of
issuance; (viii) no statute, rule, regulation,  executive order, decree or order
of any kind shall have been  enacted,  entered,  promulgated  or enforced by any
court or governmental  authority which prohibits the consummation of the Merger;
all  governmental  and other  consents and approvals,  if any,  disclosed on any
schedule to the Merger  Agreement  or necessary  to permit  consummation  of the
transactions  contemplated  by the Merger  Agreement  shall have been  received,
except  where the failure to obtain a consent  will not have a material  adverse
effect  on Data  Tree or the  Company;  and (ix)  there  shall be no  dissenting
shareholder  of Data Tree and the period during which any Data Tree  shareholder
who or which  failed to vote in favor of the  Merger  has the  right to  perfect
dissenter's rights shall have expired or each shareholder shall have waived such
right.

     In  addition,  the  obligation  of Data Tree and Chopra to  consummate  and
effect the Merger are subject to the  satisfaction  or waiver,  at the specified
time, of each of the following conditions:

     (a) On the date of the closing of the Merger, Data Tree shall have received
(i) an opinion of White & Case LLP,  counsel to the  Company  and IAC and (ii) a
tax opinion of Cooley Godward LLP to the effect that the Merger will  constitute
a reorganization within the meaning of Section 368(a) of the Code and no gain or
loss  will be  recognized  by Data Tree or its  shareholders  as a result of the
transactions contemplated by the Merger Agreement;

     (b) As of the  closing  of the  Merger,  the  Company  and IAC  shall  have
delivered to Data Tree and Chopra (i) copies of the articles of incorporation of
the Company and IAC, respectively,  including all amendments thereto,  certified
by the Secretary of State of the State of California and (ii) a certificate from
the Secretary of the State of California to the effect that the Company and IAC,
respectively,  are in good  standing  and listing all charter  documents  of the
Company and IAC on file;

     (c) The  representations and warranties of the Company and IAC contained in
the Merger  Agreement  that are  qualified as to  materiality  shall be true and
accurate,  and those not so qualified shall be true and accurate in all material
respects,  in each case at and as of the date of the Merger  Agreement and as of
the date of the closing of the Merger (except to the extent a representation  or
warranty  speaks  specifically  as of an earlier date or as  contemplated in the
Merger Agreement),  and the Company shall have delivered to Data Tree and Chopra
a certificate to such effect (subject to certain exceptions);

     (d) All of the  agreements of the Company and IAC to be performed  prior to
the closing of the Merger  pursuant to the terms of the Merger  Agreement  shall
have been duly performed in all material  respects and the Company and IAC shall
have delivered to Data Tree and Chopra a certificate to such effect;

     (e) As of the  closing  of the  Merger,  all  proceedings  to be  taken  in
connection with the  transactions  contemplated by the Merger  Agreement and all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to Data Tree, Chopra and their respective  counsel,  and Data Tree and
Chopra shall have received  copies of all such documents and other  evidences as
they or  their  counsel  may  reasonably  request  in  order  to  establish  the
consummation  of  such  transactions  and  the  taking  of  all  proceedings  in
connection therewith;

     (f) As of the  closing of the  Merger  there  shall  have been no  material
adverse  effect on the Company and there shall not have  occurred  any change or
development  that would reasonably be expected to have a material adverse effect
on the Company; and

     (g) On each Trading Day between the date of the Data Tree  Special  Meeting
and the  closing of the Merger the  average  closing  sales  price of a share of
Stock for the  preceding  five  Trading Days shall have been equal to or greater
than $42.525.

     The  obligations of the Company and IAC to consummate and effect the Merger
are also subject to the  satisfaction or waiver,  at the specified time, of each
of the following conditions:

     (a) The representations and warranties of Data Tree and Chopra contained in
the Merger  Agreement  that are  qualified as to  materiality  shall be true and
accurate,  and those not so qualified shall be true and accurate in all material
respects,  in each case at and as of the date of the Merger  Agreement and as of
the  closing of the Merger  (except to the extent a  representation  or warranty
speaks  specifically  as of an  earlier  date or as  contemplated  in the Merger
Agreement), and Data Tree and Chopra shall have delivered to the Company to such
effect (subject to certain exceptions);

     (b) All of the agreements of Data Tree and Chopra to be performed  prior to
the closing of the Merger  pursuant to the terms of the Merger  Agreement  shall
have been duly  performed  in all  material  respects,  and Data Tree and Chopra
shall have delivered to the Company a certificate to such effect;

     (c) On the date of the  closing  of the  Merger,  the  Company  shall  have
received an opinion (i) from Cooley  Godward LLP,  counsel to Data Tree and (ii)
from counsel to R2;

     (d) As of the closing of the Merger,  Data Tree shall have delivered to the
Company  (i) copies of Data  Tree's  articles  of  incorporation  including  all
amendments  thereto,  certified by the  Secretary of State or other  appropriate
official of its  jurisdiction  of  incorporation,  (ii) a  certificate  from the
Secretary of State or other appropriate  official of Data Tree's jurisdiction of
incorporation  to the  effect  that  Data  Tree  is in  good  standing  in  such
jurisdiction  and listing all charter  documents  of Data Tree on file,  (iii) a
certificate  from the secretary of state or other  appropriate  official in each
state in which Data Tree is  qualified  to do  business  to the effect that Data
Tree is in good standing in such state,  (iv) a certificate as to the tax status
of Data Tree from the appropriate  official in its jurisdiction of incorporation
and each state in which Data Tree is  qualified to do business and (v) a copy of
the bylaws of Data Tree,  certified by the  Secretary of Data Tree as being true
and correct and in effect on the date of the closing of the Merger;

     (e) As of the  closing of the Merger (i) there  shall have been no material
adverse  effect on Data Tree and there  shall not have  occurred  any  change or
development  that would reasonably be expected to have a material adverse effect
on Data Tree, (ii) the Related Agreements shall be in full force and effect, and
no event shall have  occurred and no  condition  shall exist which has, or could
reasonably be expected to have, a material  adverse effect upon (A) the validity
or  enforceability  of any  Related  Agreement  or (B) the  ability of any party
(other  than the  Company) to any  Related  Document to perform its  obligations
under any such Related  Agreement and (iii) no party (other than the Company) to
any Related  Agreement  shall have breached any material  covenant of such party
thereunder  or  failed  to  perform  any  material   obligation  of  such  party
thereunder;

     (f) As of the Closing Date,  Imperial Bank shall have either  required Data
Tree to repurchase its warrants in accordance with the terms of such warrants or
exercised its warrants to purchase  shares of Data Tree Stock and, if exercised,
Imperial  Bank  shall  have  voted its shares of Data Tree Stock in favor of the
Merger;

     (g) As of the closing of the Merger,  all  indebtedness,  other than travel
and similar  advances,  of Chopra,  any Data Tree  shareholder or the directors,
officers and employees of Data Tree to Data Tree shall have been repaid in full,
except for approximately the $170,000 owed the Company by Kumar  Corporation,  a
company owned by Chopra;

     (h) As of the closing of the Merger, all corporate  proceedings to be taken
in connection with the transactions contemplated by the Merger Agreement and all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to the Company and its counsel,  and the Company  shall have  received
copies  of all such  documents  and other  evidences  as it or its  counsel  may
reasonably  request in order to establish the consummation of such  transactions
and the taking of all corporate proceedings in connection therewith;

     (i) Data Tree shall  furnish the Company a copy of a  statement,  dated not
more  than 30 days  prior to the  closing  of the  Merger,  issued  by Data Tree
pursuant to Section  1.897-2(h) of the Code,  certifying that the shares of Data
Tree  Stock  delivered  pursuant  to the  Merger  are not a U.S.  real  property
interest as defined in Section 897 of the Code; and

     (j)  On or  before  the  closing  of  the  Merger,  all  agreements  and/or
arrangements  between  Data  Tree on the one  hand and any  shareholder  (or any
person  controlling,  controlled or under common  control with any  shareholder)
(any such  shareholder  or other person,  a "Related  Party") on the other hand,
entered  into on or before  the date of the  Merger  Agreement,  shall have been
reduced to written agreements in form and substance  reasonably  satisfactory to
the Company.

TERMINATION

     The Merger  Agreement  provides  that it may be  terminated  at any time as
follows:

     (a) by mutual written consent of the Company, IAC, Data Tree and Chopra;

     (b) by the  Company if certain  conditions  to the Merger  (other  than the
execution and delivery by the Company of the Related  Agreements) shall not have
been materially  complied with or performed on or prior to the 90th day from the
date of the Merger Agreement and the Company shall not have materially  breached
any of its  representations,  warranties,  covenants or agreements in the Merger
Agreement;

     (c) by the  Company if the board of  directors  of Data Tree  withdraws  or
modifies  in  any  manner  adverse  to  the  Company  or  IAC  its  approval  or
recommendation of, the Merger;

     (d) by Data Tree  and/or  Chopra if  certain  conditions  precedent  to the
Merger, subject to certain exceptions, have not been materially complied with or
performed by the 90th day from the date of the Merger Agreement and Data Tree or
Chopra have not materially  breached any of their  representations,  warranties,
covenants or agreements contained in the Merger Agreement;

     (e) by Data Tree and/or  Chopra if the Average  Price is less than (but not
equal to) $44.525;

     (f) by any one of the parties to the Merger Agreement if the Effective Time
shall not have occurred within one month after the closing of the Merger; or

     (g) subject to certain  limitations,  by the  Company by written  notice to
Data Tree and Chopra,  received no later than April 10, 1998,  if the Company is
not satisfied with its due diligence review of the Related Parties.

     The parties may agree in writing to extend the time for the  performance of
the obligations described in clauses (b) and (d) above.

EFFECT OF TERMINATION

     If the Merger  Agreement is terminated  by the parties as described  above,
the Merger Agreement will be of no further force or effect,  except that certain
provisions with regard to  confidentiality,  publicity and expenses will survive
such termination,  and the Company, Data Tree, Chopra and IAC will remain liable
for certain breaches of the Merger Agreement.

AMENDMENT

     The Merger  Agreement  may not be amended or modified  orally,  but only by
written  agreement  signed by the  Company,  Data Tree,  and  Chopra.  Except as
otherwise   provided  by  California  law  or  as  approved  by  the  Data  Tree
shareholders, the Merger Agreement may not be amended subsequent to the approval
of the Data Tree shareholders.

INDEMNIFICATION

     Each of the  representations and warranties made by Data Tree and Chopra on
the one hand and by the Company and IAC on the other hand,  survive for a period
of six months after the date of the  consummation of the Merger and serve as the
basis for indemnification as discussed below.

     Chopra has  agreed to  indemnify  and hold the  Company  and its  officers,
directors,  shareholders,  employees,  agents  and any  successors  (the  "FAFCO
Parties") harmless from damages arising out of the failure of any representation
or warranty  made by Chopra or Data Tree to be true and correct in all  material
respects as of the date of the Merger Agreement or the closing of the Merger, as
the case may be. Chopra's indemnification  obligation becomes effective when the
aggregate  amount of damages  suffered by the FAFCO Parties exceeds $250,000 (at
which time the FAFCO Parties shall be entitled to  indemnification  for all such
damages). Chopra's indemnification liability cannot exceed $2,000,000.

     Similarly,  the  Company  has agreed to  indemnify  and hold each Data Tree
shareholder and Data Tree itself (the "Data Tree Parties") harmless from damages
suffered as a result of the failure of any  representation  or warranty  made by
the  Company or IAC to be true and  correct in all  material  respects as of the
date of the Merger  Agreement or the closing of the Merger,  as the case may be.
The Company's  indemnification  obligation  becomes effective when the aggregate
amount of damages  suffered by the Data Tree Parties exceeds  $250,000 (at which
time the Data Tree  Parties  shall be entitled to  indemnification  for all such
damages). The Company's indemnification liability cannot exceed $2,000,000.

     The aforementioned rights of indemnification shall be the sole recourse for
the Company,  the Data Tree  shareholders and Data Tree for any inaccuracy in or
breach of any  representation  or warranty  made by the parties  pursuant to the
Merger Agreement or any certificate,  instrument or document  delivered pursuant
to the Merger Agreement.

MERGER EXPENSES AND FEES AND OTHER COSTS

     Except as described  above,  all fees and expenses  incurred in  connection
with the  Merger  Agreement  and the  transactions  contemplated  by the  Merger
Agreement shall be paid by the party  incurring such expenses  (except that Data
Tree shall pay the reasonable  fees and expenses of counsel to Chopra),  whether
or not the Merger is  consummated.  To the extent that the expenses of Data Tree
and counsel to Chopra exceed  $1,000,000,  the excess  expenses will be deducted
from the  $43,113,373  to  determine  the purchase  price used to calculate  the
Merger   Consideration   and  will  have  the  effect  of  reducing  the  Merger
Consideration  payable to each Data Tree shareholder.  Data Tree is obligated to
pay Salomon  Smith Barney  investment  banking fees of $900,000 plus expenses in
connection with the Merger. In addition,  as of May __, 1998, in connection with
the Merger,  Data Tree has incurred legal and  accounting  fees in the amount of
approximately  $__________  and Chopra has incurred  legal fees in the amount of
approximately $__________.

RESALES BY SELLING SHAREHOLDERS

     The  shares  of Stock to be issued  to the Data  Tree  shareholders  in the
Merger have been  registered  for issuance by the Company  under the  Securities
Act. In addition,  the shares of Stock to be issued to Selling Shareholders have
been registered under the Securities Act for resale by such Selling Shareholders
(the "Resale  Registration  Statement").  Such Selling  Shareholders include the
directors  and  executive  officers  of Data Tree and  certain  other  Data Tree
shareholders.  Each Selling Shareholder who desires to resell the Stock received
in the Merger must sell such Stock either (i) pursuant to the  effective  Resale
Registration  Statement, or (ii) in accordance with the applicable provisions of
Rule 145 under the  Securities Act ("Rule 145").  While the Resale  Registration
Statement is effective,  the  restrictions on resale imposed by Rule 145 are not
applicable to the Selling Shareholders.

     Pursuant to the Merger Agreement, the Company has agreed to keep the Resale
Registration  Statement  effective  until the  earlier  of (i) one year from the
Effective  Time and the  time at which  each  Selling  Shareholder  can sell all
shares of Stock held by such Selling  Shareholder in a 90 day period pursuant to
the resale restrictions imposed by Rule 145.

     After  the one year  period  to which the  Company  has  agreed to keep the
Resale Registration Statement effective, the Selling Shareholders may sell their
shares of Stock  received in the Merger as provided by Rule 145, or as otherwise
permitted. In general, under Rule 145, a Selling Shareholder who receives shares
of the Stock in the Merger will be entitled, during the one-year period from the
date of receipt of such shares,  to sell in any  three-month  period a number of
shares of Stock that is the greater of (i) 1% of the then outstanding  shares of
the Stock and (ii) the  average  weekly  trading  volume of the Stock on the New
York Stock  Exchange  during the four calendar weeks  immediately  preceding the
date on which the  notice of sale is filed  with the  Commission.  In  addition,
during such  one-year  period,  sales of the Stock by the  Selling  Shareholders
pursuant to Rule 145 will be subject to certain other  requirements  relating to
manner of sale and availability of current public information about the Company.
Generally,  after  one year from the  issuance  of the  Stock in the  Merger,  a
Selling  Shareholder,  if such person is not an  affiliate of the Company at the
time of sale and the  Company is current in the filing of its  periodic  reports
pursuant  to the  Exchange  Act,  may freely  resell the Stock  received by such
Selling Shareholder in the Merger without  limitation.  After two years from the
issuance  of the Stock in the  Merger,  a former  Selling  Shareholder,  if such
person is not an  affiliate  of the Company and has not been an affiliate of the
Company for at least three  months  prior to such sale,  may freely  resell such
Stock, without limitation,  regardless of the status of the Company's filings of
its periodic reports.

                                 USE OF PROCEEDS

     The Company  will not receive  any of the  proceeds  from the resale by the
Selling Shareholders of any shares of Stock resold pursuant hereto. All proceeds
from such sale of shares of Stock offered  hereby will be for the account of the
Selling  Shareholders.  The Company will bear all  expenses  (other than selling
discounts and commissions and fees and expenses of the Selling  Shareholders) in
connection  with the  registration of the shares of Stock being reoffered by the
Selling Shareholders.

                              SELLING SHAREHOLDERS

     Assuming there are no dissenting  shareholders  of Data Tree, the following
table sets forth the name of each Selling  Shareholder,  the number of shares of
Stock that each  Selling  Shareholder  owned prior to the offering for sale (the
"Offering") of shares of Stock held by the Selling Shareholder, as of such date,
the  maximum  number of shares of Stock that can be offered  for the  account of
each Selling  Shareholder  pursuant to this  Prospectus/Proxy  Statement and the
amount of the shares of Stock to be owned by each Selling  Shareholder after the
Offering  (assuming each Selling  Shareholder offers all of such shares of Stock
for sale and such  shares of Stock are  sold).  With the  exception  of Cal West
Service  Corporation and R. Squared Limited no Selling Shareholder will own more
than one percent of the total number of shares of Stock issued and  outstanding.
After the Merger,  Cal West Service  Corporation will own approximately  1.3% of
the shares of Stock  issued and  outstanding  and R.  Squared  Limited  (see the
footnote (2),  below) will own  approximately  1.9% of the total shares of Stock
issued and outstanding.  All other Data Tree  shareholders will own less than 1%
of the total shares of Stock issued and outstanding subsequent to the Merger.

<TABLE>

       NAME OF SELLING SHAREHOLDER         SHARES OWNED OF RECORD           MAXIMUM          SHARES OWNED OF RECORD
                                                PRIOR TO THE        NUMBER OF SHARES TO BE     AFTER COMPLETION OF
                                                 OFFERING(3)            OFFERED FOR THE          THE OFFERING(5)
                                                                     SELLING SHAREHOLDER'S
                                                                          ACCOUNT(4)
<S>                                         <C>                     <C>                       <C>   
Harvindera Chopra(1)                               47,620                   47,620                      0
Robert F. Rice                                     47,620                   47,620                      0
Ravinder K. Chopra(1)                                595                      595                       0
Cal West Service Corporation                       233,913                  233,913                     0
Carl A. Strunk                                      1,190                    1,190                      0
R. Squared Limited(2)                              357,151                  357,151                     0
Harish K. & Karen Chopra(1)                        14,881                   14,881                      0
Inteq Software Development Corp.(1)                 1,190                    1,190                      0
<FN>
_______________________
(1)  Chopra affiliate.
(2)  R. Squared Limited,  an Irish company,  was established by Chopra.  Chopra,
     however, disclaims any beneficial interest in it.
(3)  No Selling  Shareholder  owned  shares of Stock  prior to the  Merger.  The
     shares of Stock  represented  in this column are those shares of Stock each
     Selling  Shareholder will receive in the Merger (assuming that each Selling
     Shareholder  receives  the  maximum  possible  number  of  shares  of Stock
     issuable to such Selling Shareholder in the Merger).
(4)  Assuming that the maximum number of shares of Stock that can be offered for
     the account of each Selling Shareholder  pursuant to this  Prospectus/Proxy
     Statement is so offered.
(5)  Assuming that the maximum number of shares of Stock that can be offered for
     the account of each Selling Shareholder  pursuant to this  Prospectus/Proxy
     Statement is sold.
</FN>
</TABLE>

     None of the Selling Shareholders has held any position or office or had any
material relationship with the Company during the past three years.

                              PLAN OF DISTRIBUTION

     The  shares of Stock  covered  by this  Prospectus/Proxy  Statement  may be
offered  and sold from time to time by the  Selling  Shareholders.  The  Selling
Shareholders  will act  independently  of the Company in making  decisions  with
respect to the timing,  manner and size of each sale.  The Selling  Shareholders
may  sell the  shares  of  Stock  being  offered  hereby  on the New York  Stock
Exchange,  or otherwise,  at prices and under terms then prevailing or at prices
related to the then current  market  price,  at varying  prices or at negotiated
prices. The shares of Stock may be sold, without  limitation,  by one or more of
the  following  means  of   distribution:   (a)  a  block  trade  in  which  the
broker-dealer  so engaged will attempt to sell shares of Stock as agent, but may
position  and  resell a portion  of the block as  principal  to  facilitate  the
transaction;  (b) purchases by a  broker-dealer  as principal and resale by such
broker-dealer   for  its  own  account  pursuant  to  this  Prospectus;   (c)  a
distribution in accordance  with the rules of the New York Stock  Exchange;  (d)
ordinary  brokerage  transactions  and transactions in which the broker solicits
purchasers;  and  (e)  in  privately  negotiated  transactions.  To  the  extent
required,  this Prospectus may be amended and supplemented  from time to time to
describe a specific plan of distribution.

     In connection with  distributions of the shares of Stock or otherwise,  the
Selling  Shareholders may enter into hedging transactions with broker-dealers or
other   financial   institutions.   In   connection   with  such   transactions,
broker-dealers or other financial  institutions may engage in short sales of the
shares of Stock in the course of hedging the positions  they assume with Selling
Shareholders.  The Selling  Shareholders may also sell the shares of Stock short
and  deliver  the  shares  of  Stock  offered  hereby  to close  out such  short
positions.  The  Selling  Shareholders  may  also  enter  into  option  or other
transactions with  broker-dealers or other financial  institutions which require
the delivery to such  broker-dealer or other financial  institution of shares of
Stock  offered  hereby,  which  shares  of  Stock  such  broker-dealer  or other
financial institution may resell pursuant to this Prospectus/Proxy Statement (as
supplemented or amended to reflect such transaction).  The Selling  Shareholders
may  also  pledge  shares  of  Stock  to  a  broker-dealer  or  other  financial
institution,  and,  upon  a  default,  such  broker-dealer  or  other  financial
institution,  may effect sales of the pledged  shares of Stock  pursuant to this
Prospectus  (as  supplemented  or  amended  to  reflect  such  transaction).  In
addition, any shares of Stock that qualify for sale pursuant to Rule 144 may, at
the option of the holder thereof, be sold under Rule 144 rather than pursuant to
this Prospectus.

     Any  broker-dealer  participating in such transactions as agent may receive
commissions  from the Selling  Shareholder  and/or  purchasers  of the shares of
Stock offered  hereby (and, if it acts as agent for the purchaser of such shares
of Stock, from such purchaser).  Usual and customary brokerage fees will be paid
by  the  Selling   Shareholder.   Broker-dealers  may  agree  with  the  Selling
Shareholder to sell a specified  number of shares of Stock at a stipulated price
per share,  and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Shareholder, to purchase as principal any unsold shares of
Stock at the price  required  to fulfill  the  broker-dealer  commitment  to the
Selling Shareholder. Broker-dealers who acquire shares of Stock as principal may
thereafter resell such shares of Stock from time to time in transactions  (which
may involve  cross and block  transactions  and which may  involve  sales to and
through other  broker-dealers,  including  transactions of the nature  described
above) in the market,  in negotiated  transactions or otherwise at market prices
prevailing at the time of sale or at negotiated  prices,  and in connection with
such resales may pay to, or receive from the  purchasers of such shares of Stock
commissions computed as described above.

     In  order  to  comply  with  the  securities  laws of  certain  states,  if
applicable,  the shares of Stock will be sold in such  jurisdictions only though
registered or licensed  brokers or dealers.  In addition,  in certain states the
shares of Stock may not be sold unless they have been  registered  or  qualified
for sale in the  applicable  state or an  exemption  from  the  registration  or
qualification requirement is available and is complied with.

     The Company has advised the Selling Shareholders that the anti-manipulation
rules of  Regulation  M under the  Exchange  Act may apply to sales of shares of
Stock in the market and to the activities of the Selling  Shareholders and their
affiliates.  In addition,  the Company will make copies of this Prospectus/Proxy
Statement  available to the Selling  Shareholders  and has informed  them of the
need for delivery of copies of this Prospectus/Proxy  Statement to purchasers at
or prior to the time of any sale of the  shares  of Stock  offered  hereby.  The
Selling  Shareholders  may  indemnify any  broker-dealer  that  participates  in
transactions  involving  the  sale  of  the  shares  of  Stock  against  certain
liabilities, including liabilities arising under the Securities Act.

     At the time a particular  offer of shares of Stock is made, if required,  a
Prospectus  Supplement  will be  distributed  that will set forth the  number of
shares of Stock being offered and the terms of the offering,  including the name
of any underwriter, dealer or agent, the purchase price paid by any underwriter,
any discount, commission and other item constituting compensation, any discount,
commission  or  concession  allowed or reallowed or paid to any dealer,  and the
proposed selling price to the public.

     The  Company  has  agreed  with  the  Selling   Shareholders  to  keep  the
Registration  Statement of which this  Prospectus  constitutes a part  effective
until the first to occur of (i) the one year  anniversary of the Effective Time,
as that  term is  defined  in the  Merger  Agreement  and (ii) such time as each
Selling  Shareholder  can  sell  all  shares  of  Stock  held  by  such  Selling
Shareholder in a 90 day period  pursuant to the resale  restrictions  imposed by
Rule 145. The Company  intends to deregister any of the shares of Stock not sold
by the Selling Shareholders by such date.

                    THE FIRST AMERICAN FINANCIAL CORPORATION

OVERVIEW

     The  Company  was  organized  in  1894  as  Orange  County  Title  Company,
succeeding to the business of two title abstract  companies  founded in 1889 and
operating in Orange County,  California.  In 1924, the Company commenced issuing
title insurance policies.  In 1986, the Company began a diversification  program
by acquiring and developing  financial service businesses closely related to the
real  estate  transfer  and  closing  process.   The  Company  is  a  California
corporation whose executive offices are located at 114 East Fifth Street,  Santa
Ana, California 92701-4642, and its telephone number is (714) 558-3211.

     The  Company,  through  its  subsidiaries,  is engaged in the  business  of
providing  real  estate-related  financial  and  informational  services to real
property  buyers and  mortgage  lenders.  The  Company's  products  and services
include  title  insurance,  tax  monitoring,  credit  reporting,  property  data
services,  flood certification,  field inspection services,  appraisal services,
mortgage loan servicing systems, mortgage document preparation and home warranty
services. The Company also provides investment, trust and thrift services.

     Through  growth and  acquisitions,  the Company  believes it has become the
United  States'   largest   provider  of  real   estate-related   financial  and
informational  services.  The Company has assembled an array of companies which,
together,  provide comprehensive  services to the mortgage industry,  commercial
and residential real estate developers, home buyers and other customers.

BUSINESS SEGMENTS

     TITLE INSURANCE

     Title insurance  policies are insured  statements of the condition of title
to real property,  showing priority of ownership as indicated by public records,
as well as  outstanding  liens,  encumbrances  and other matters of record,  and
certain other matters not of public record. Policies are issued based on a title
report  prepared after a search of public  records,  maps, and documents and are
typically issued when a title is transferred.

     Before issuing title  policies,  title insurers seek to limit their risk of
loss by  accurately  performing  title  searches  and  examinations.  The  major
expenses  of a title  company  relate to such  searches  and  examinations,  the
preparation of preliminary  reports or commitments  and the maintenance of title
plants,  and not from  claim  losses  as in the case of  property  and  casualty
insurers.

     The Company, through FATICO and its other subsidiaries, transacts its title
insurance  business  through a network of more than 300 branch  offices and more
than 4,000 independent agents. In 1997, the Company's title insurance operations
generated $1.46 billion in operating revenues.

     REAL ESTATE INFORMATION SERVICES

     In recent years management has developed a strategy to be a "one-stop" real
estate  information  service company.  To this end, in 1991 the Company acquired
what was  believed to be the second  largest tax  service  company,  and in 1995
acquired what were  believed to be, in each case,  the largest  mortgage  credit
reporting  company  and the largest  flood zone  determination  company,  in the
United States.

     In general, the Company's real estate information service products generate
higher  margins  than its title  insurance  products.  The  majority  of pre-tax
profits  generated  by the Company from  non-title  business is derived from the
real estate services business,  which generated $45.3 million in pre-tax profits
in 1997 and  $331.4  million in  operating  revenues.  Approximately  29% of the
Company's pre-tax profits in 1997 were derived from its real estate  information
services   businesses.   These  businesses  are  not  regulated  and  hence  not
constrained by dividend statutes  enforceable by the states in which the Company
operates  its title  business or by  constraints  imposed by  California  on the
Company's trust and banking business.

     FAREISI has grown from its tax service origins into a diversified  mortgage
services company.  FAREISI and its subsidiaries now serve mortgage  originators,
mortgage servicers, title companies, real estate attorneys, consumers as well as
non-lending  entities.  The business was initially established in 1987 to advise
mortgage  lenders as to the status of tax  payments  on real  property  securing
their loans.  The  Company's  real estate  information  services  also  includes
mortgage  and  other  credit  reporting  services,  flood  zone  determinations,
mortgage loan servicing systems,  property  inspections,  appraisal services and
mortgage document preparation.

     The tax service business includes both real estate tax reporting as well as
tax  outsourcing  and tax  certification.  The  Company's  tax service  business
reports on 11  million  properties  annually  and is  believed  to be the second
largest  provider of tax services to the real estate  market.  The Company works
with over 22,000 taxing authorities nationwide.

     First American  CREDCO,  Inc.  ("CREDCO"),  the Company's  mortgage  credit
reporting entity, is believed by the Company to be the largest provider of these
services in the United  States and  processes  over 600,000  credit  reports per
month.  CREDCO  provides  residential  mortgage  credit  reports,  prequalifying
reports,  merged credit data,  resident  screening  services,  business reports,
credit scoring tools and personal credit reports.  CREDCO has recently  branched
into the consumer lending and risk scoring areas, providing credit reporting and
information management services to automobile dealers, consumers and home equity
lenders  nationwide.  Approximately  25% of  CREDCO's  1997  revenues  were from
non-real estate related sources.

     The Company is the leading  provider  of flood zone  determinations.  Flood
reporting  services  consist  of  a  broad  range  of  information  required  by
regulatory  agencies  regarding  properties  in  relation to flood  zones.  This
business currently processes over 400,000 flood determinations per month.

     The  property/field  services business consists of processing single family
home  inspections,  conducting  field  interviews  with  delinquent  mortgagors,
monitoring   the  condition  of   properties   and  assuring   timely   property
preservation.  The Company's  acquisition  in December  1996 of Ward  Associates
places the Company among the leaders in this business.

     The appraisal  services  business  utilizes  leading  technology to provide
national  mortgage  lenders  with  property-relative   value  assessments.   The
appraisal  services business operates  throughout the United States.  Electronic
appraisals are supplemented with qualified local appraisers.

     In April 1996,  the Company  acquired the Excelis  Mortgage Loan  Servicing
System  ("Excelis  MLS"),  now known as  Excelis,  Inc.  Excelis MLS is the only
commercially   available  real-time  on-line  servicing  system  that  has  been
developed since 1990 to meet  increasingly  sophisticated  market  demands.  The
software employs rules-based  technology which enables the user to customize the
system to fit its individual servicing criteria and policies.

     In May 1997,  the Company  purchased  all of the  operations  of  Strategic
Mortgage  Services,  Inc.  ("SMS"),  other than SMS'  flood  zone  determination
business.  SMS is a leading provider of real estate information  services to the
U.S. mortgage and title insurance  industries.  The acquired  businesses include
SMS' credit  division,  which the Company believes is the third largest provider
of U.S. mortgage credit information; SMS' property appraisal division, which the
Company believes is the second largest provider of U.S. appraisal services; SMS'
title division,  which provides title and closing services throughout the United
States,  servicing  primarily  second  mortgage  originators;   SMS'  settlement
services business,  which provides title plant systems and accounting  services,
as well as escrow closing  software,  to the title  industry;  and a controlling
interest in what is believed by the Company to be the largest mortgage  document
preparation firm.

     On January 1, 1998,  the Company and its real  estate  information  service
subsidiaries   (other  than  Excelis   Inc.)  (the  "Real   Estate   Information
Subsidiaries")  consummated  a joint  venture with  Experian,  pursuant to which
FARES was  established.  Under the joint  venture,  the Real Estate  Information
Subsidiaries  contributed  substantially  all of their assets and liabilities to
FARES  in  exchange  for an 80%  ownership  interest  and  Experian  transferred
substantially  all of the assets and  liabilities  of its Real Estate  Solutions
division ("RES") to FARES in exchange for a 20% ownership interest.  The Company
believes  that RES is the nation's  foremost  supplier of core real estate data,
providing,   among  other  things,   property   valuation   information,   title
information,  tax  information and imaged title  documents.  As a result of this
joint venture,  the Company believes that FARES is the nation's largest and most
diverse provider of information  technology and decision  support  solutions for
the mortgage and real estate  industries.  See the Company's  Report on Form 8-K
dated January 27, 1998, which is incorporated by reference herein.

     HOME WARRANTY

     The  Company  currently  owns  79% of its  home  warranty  business,  First
American Home Buyers Protection Corporation ("Home Buyers"),  with the remaining
balance owned by current and former management of this subsidiary. Pursuant to a
pending  exchange  offer,  the Company  likely will acquire an additional  10.6%
ownership  interest in Home Buyers.  The home warranty  business issues one-year
warranties  which protect  homeowners  against defects in household  systems and
appliances such as plumbing,  water heaters, and furnaces. The warranties issued
are for household systems and appliances only, not for the homes themselves. The
Company's  home  warranty  business  currently  operates in certain  counties of
Arizona,  California,  Nevada, North Carolina,  South Carolina,  Texas, Utah and
Washington.  The Company's  home warranty  business is one of the largest in the
United States based on contracts under service,  with $46.9 million in operating
revenues in 1997.

     TRUST AND THRIFT

     Since  1960,  the  Company  has  conducted  a  general  trust  business  in
California.  In 1985,  the Company  formed a banking  subsidiary  into which its
subsidiary  trust  operation  was merged.  As of December  31,  1997,  the trust
operations  were  administering  fiduciary and custodial  assets having a market
value in excess of $1.3 billion.

     During 1988, the Company, through a majority owned subsidiary,  acquired an
industrial loan corporation (the "Thrift") that accepts thrift deposits and uses
deposited funds to originate and purchase loans secured by commercial properties
in Southern  California.  The loans made by the Thrift currently range in amount
from $20,000 to $1,105,000,  with an average loan balance of $270,500. Loans are
made only on a secured basis, at loan-to-value  percentages no greater than 75%.
The Thrift  specializes  in making  commercial  real estate loans and  financing
commercial  equipment leases. In excess of 93% of the Thrift's loans are made on
a variable rate basis.  The average  yield on the Thrift's loan  portfolio as of
December 31, 1997, was 11%. The Thrift's  average loan is 60 months in duration.
Current  deposits  total  $62.5  million  and the loan  portfolio  totals  $65.5
million.

RECENT DEVELOPMENTS

     On March 18, 1998, the Company announced a definitive  agreement to acquire
Contour Software,  the largest supplier of mortgage  origination software to the
mortgage loan  industry.  See the  Company's  Report on Form 8-K dated March 18,
1998, and incorporated by reference herein.

     On April 7, 1998,  the  Company  announced  the  issuance  of  $100,000,000
aggregate principal amount of its 7.55% senior debentures due 2028. The terms of
the senior  debentures are defined under an indenture  dated as of April 7, 1998
between  the Company  and The  Wilmington  Trust  Company,  as trustee.  See the
Company's Report on Form 8-K dated April 7, 1998.

                             IMAGE ACQUISITION CORP.

     IAC was  incorporated  in  California  in March  1998  exclusively  for the
purpose of effecting  the  acquisition  of Data Tree via the Merger.  IAC has no
material assets and has not engaged in any activities  except in connection with
the proposed  acquisition of Data Tree.  IAC's principal  offices are located at
114 East Fifth Street,  Santa Ana, California 92701, and its telephone number at
that address is (714) 558-3211.

                              DATA TREE CORPORATION

The following discussion of the Data Tree Corporation  contains  forward-looking
statements that involve risks and uncertainties. The actual results of Data Tree
and the Surviving  Corporation could differ materially from those anticipated in
these forward-looking statements as a result of certain factors.

OVERVIEW OF TITLE INSURANCE INDUSTRY

     The majority of Data Tree's revenues are generated from providing  document
imaging and database  management  systems to the title insurance industry and to
county recorder offices.  Title insurance  companies issue insurance policies in
connection with the purchase or refinancing of commercial and  residential  real
estate,  providing  protection to the purchaser or lender against loss or damage
resulting  from  existing  liens and claims and other  defects in the  ownership
chain of real  property.  Typically,  every  mortgage  lender  requires  a title
insurance  policy as a  precondition  of funding.  Prior to issuing a policy,  a
title  insurance  company  conducts  a search  of public  documents  to ensure a
property  is free of any such liens and  encumbrances.  The public  records  are
typically  available for review on microfiche at the county  recorder's  office.
For a transaction  fee, Data Tree provides  title  insurance  companies  on-line
access to Data Tree's image database of title records and software.  Data Tree's
Titlescape(R) software allows on-line access to and from a users' PC.

     County  recorder's  offices are the  official  record  keeping body for all
documentation   related  to   residential,   commercial  and   industrial   real
estate-related transactions,  including ownership and title transfers, liens and
encumbrances.  On any given day each recorder's  office receives these documents
which are then indexed and stored.  The  recorder's  offices also fulfill public
requests for copies of these  documents.  In order to manage  these  significant
inflow, storage and outflow requirements, many recorder's offices have automated
their processes.  To this end, Data Tree sells to county  recorders its IDEA(TM)
product, which offers an in-house, turnkey automation solution.

COMPANY OVERVIEW

     Data Tree is a leading provider of document imaging and database management
systems  to  the  title  insurance  industry  and  county  recorders  and  other
governmental  agencies.  Data Tree  believes it offers one of the largest  image
databases of recorded documents and maps with over 400 million images, through a
network of nine data centers in five states.

     Data Tree was founded in 1987 by Chopra and is  organized  as a  California
close  corporation.  Since its  founding,  Data Tree has built and  continues to
build an electronic database of scanned microfilm images of official records and
recorded  documents (liens,  trust deeds) and maps and  electronically  recorded
documents  on a county  by  county  basis to build  its  customer  base for such
services.  As of the  date  of  this  Prospectus/Proxy  Statement,  Data  Tree's
database  consists of images from 38  counties in Arizona,  California,  Nevada,
Florida and Texas.  Data Tree  maintains  data centers that assist in the timely
production of Data Tree's database.

     As of March 31,  1998,  Data Tree  employed 139  individuals  in the United
States.

PRODUCTS AND SERVICES

[OBJECT OMITTED]              [OBJECT OMITTED]              [OBJECT OMITTED]

     Database  Access  and  Document  Retrieval.  Titlescape(R)  is Data  Tree's
primary  product  offering  and is  licensed  to and used by local and  regional
offices of title insurance  companies.  Introduced in 1997,  Titlescape(R)  is a
Windows-based  document retrieval and integration software product that provides
an  integrated,  open-architecture  system for title  workflow  processing.  The
software package  combines  database access with the capability to integrate all
other  functions   associated   with  title  policy   processing  and  issuance,
effectively  creating  a  "one-stop  shop" at the users  desktop.  Titlescape(R)
allows each subscriber to customize the capabilities integrated into the system,
and is designed for individual  workstations or  client-server  based systems in
order to allow for access from remote locations.

     Titlescape(R) is licensed for a fixed license fee per user and installed on
either the customer's PCs or on hardware sold by Data Tree.  Customers  contract
for access to Data  Tree's  database,  paying a fixed  transaction  fee for each
document  retrieved.  Volume discounts are applied to the standard access charge
to encourage  large  commitments  from  customers.  Typically,  user access fees
exceed customer contract guarantees.

     Data Tree's  hardware  product  line  includes  communication  and scanning
hardware,  workstations and laser printers.  These products are normally sold at
market prices and in any event not discounted more than 10%. Data Tree's pricing
on hardware has stayed relatively steady over the past two to three years.

     Turnkey  Imaging,  Storage and  Retrieval.  Data Tree's other major product
line, known as IDEA(TM)  (Indexing  Document  Extraction  Application),  is Data
Tree's turnkey imaging system and represents a family of products sold to county
recorders who require a full in-house  scanning,  storage and retrieval  system.
This  system  enables a county to convert  its  backfiles  of  microfilm  stored
official  records  into  electronic  images and record and store new  records in
electronic  form.  The IDEA(TM)  system  provides the following  functions:  (1)
document  capture  performs  the  initial  scanning  and  indexing  of  paper or
film-based  documents;  (2) optical storage is used for permanent storage of the
scanned digital images;  and (3) retrieval and display  software allows users to
query the system and display and print stored images.  The system is designed to
integrate with other existing  systems such as accounting,  personnel,  and file
management that are particular to each county  recorder's  office.  The IDEA(TM)
set of modules which can be  individually  developed,  customized  and molded to
meet the specific needs of each county recorder.

     The IDEA(TM) system typically is sold under multiple contracts and includes
hardware,  proprietary software and software licenses, technical assistance, and
on-going maintenance.  In addition, as county recorders expand to integrate with
other systems,  additional software modules and technical assistance is provided
on a follow-on basis.

     As of March  31,  1998,  Data Tree has sold its  IDEA(TM)  system to Orange
County and San Bernardino County,  California. The IDEA(TM) system is compatible
with Data Tree's  Titlescape(R)  software,  and to the extent counties adopt the
IDEA(TM) systems as its operating  platform for images,  certain title companies
have  begun  using  Titlescape(R)  electronic  recording  software  in  order to
electronically file documents with the county recorder.

     Customer  Service.  Data  Tree  emphasizes  ongoing  customer  service  and
training.  Generally,  Data Tree's  representatives  visit existing customers at
least  once a month to  assess  customer  needs  and  satisfaction  and  provide
additional  training.  Data Tree provides  telephonic  customer  support  during
business hours.

PRODUCTION

     Data Tree maintains  imaging  facilities at two locations in California and
contracts with Data Tree India in India for the conversion of microfilm,  fiche,
and paper to Data Tree's image  database.  The  activities  at these  facilities
consist of scanning,  indexing,  assembling and testing all the components  that
integrate into the finished database.

     Data Tree  expands and updates its  database  continually  through its main
imaging plant facilities and regional data centers.  Document images,  either in
microfilm,  microfiche,  or paper form, are sent to any of the above  facilities
for  scanning  and  recording  onto hard disk or CD.  Typically  most  backplant
activity is handled by the three imaging centers, while daily go-forward imaging
is handled by the  appropriate  regional  facility.  The images  themselves  are
either  purchased,  borrowed or bartered from county recorder's  offices,  title
insurance  companies,  or third  party  vendors.  The stored data at each of the
facilities is linked together via dedicated T-1 communication  lines,  providing
Data Tree with an integrated image database.

     When customers place a request through their local workstation, the request
is sent  via  dedicated  lines  to one of Data  Tree's  central  servers,  which
accesses the relevant information and sends it back to the requesting site where
it can be viewed, manipulated and printed. The document retrieval time typically
takes between a few seconds and a couple of minutes.

     Data  Tree  leases  all  of its  imaging  facilities.  Data  Tree  has  two
facilities in California. The Sacramento,  California facility has approximately
4,506  square  feet and is on a 63 month  lease  expiring  March  15,  1999.  In
addition to film conversion and imaging, this facility houses the operations and
field  service  for  Northern  California.   The  facility  in  San  Bernardino,
California  has 5,846 square feet and is on a 60 month lease  expiring  February
28, 1999.

     Equipment.   Data  Tree's  production  facilities  house   state-of-the-art
microfiche,  microfilm,  and paper scanners, as well as extensive  communication
equipment.  The California facilities contain sophisticated  computer equipment,
optical systems, CDs and CD jukeboxes.

MARKETING AND SALES

     Data Tree's marketing strategy is to develop new business  opportunities by
creating  new  databases  in  additional  counties  to sell to new and  existing
customers, and by leveraging its success with its products and services into new
markets.  Data Tree markets its products and services  directly to its end-users
through its  internal  sales  force.  Data Tree  presently  employs  seven sales
professionals,  including  a Vice  President  of Sales  and six  regional  sales
representatives, most of whom have extensive computer industry experience.

     The typical  sales cycle for Data Tree's  products and service  requires an
investment of time and effort to determine the individual  customer's  needs and
workflow  requirements.  Data Tree  emphasizes  building a business  partnership
rather  than  maintaining  merely a vendor  relationship.  The process for title
insurance  companies from initial sales call to  installation  can take anywhere
from 2 to 12 months.  For county  recorders  this  process is  slightly  longer,
typically taking just over one year to complete.

RESEARCH AND DEVELOPMENT

     Data  Tree  believes  that the  continued  and  timely  development  of new
products and  enhancements  to its existing  technology  is necessary  for it to
maintain  its  competitive  position.   Data  Tree's  originating  research  and
development  spending  during  fiscal  1995,  1996 and  1997  was  approximately
$285,008, $651,290 and $764,939,  respectively,  and represented 6.3% , 8.7% and
9.1% of total revenue, respectively.

COMPETITION

     With its  Titlescape(R)  product,  Data Tree primarily  competes with title
insurance  companies'  existing  manual  processes  and  secondarily  with other
database  management  providers,  including  Security  Union  and  the  Digistar
business owned by FARES. With its turnkey IDEA(TM)  product,  Data Tree directly
competes with other companies with similar product offerings, including FileNet,
IBM, Eagle Systems, and Atpac.

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

The following  discussion contains forward looking statements that involve risks
and uncertainties.  Data Tree's and the Surviving  Corporation's  actual results
could differ  materially from those discussed here.  Factors that could cause or
contribute to such differences  include, but are not limited to, those discussed
in the sections  entitled "Risk Factors" and "Data Tree  Corporation" as well as
those discussed elsewhere in this Prospectus/Proxy Statement.

GENERAL

     Revenues.  Data Tree's  revenue  associated  with title  insurance  related
products  consists  primarily of title  document  fees which are  generated on a
daily and monthly basis as customers access Data Tree's database.  Additionally,
Data  Tree  sells  equipment  and  offers  maintenance  agreements.   Data  Tree
recognizes  revenue  associated with title  insurance  products upon the monthly
delivery of the images and upon the shipment of equipment.

     Revenue  associated  with  county  recorder  related  products  consists of
software,  hardware,  maintenance  and  services,  and may  also  include  title
document images.  In accordance with SOP 91-1, Data Tree recognizes  revenue for
the  software  component  when the  software  is  delivered,  when  there are no
remaining  significant  Data  Tree  obligations  to the  customer,  and when the
collection of the related  receivable is deemed  probable.  Data Tree recognizes
revenue  on  hardware  when the  hardware  is  shipped.  Maintenance  revenue is
recognized ratably over the maintenance period, and title document image revenue
is recognized upon delivery.

     On October 27, 1997, the Accounting  Standards  Executive committee (AcSEC)
of the AICPA issued  Statement  of Position  97-2 (SOP 97-2),  Software  Revenue
Recognition,  that  supersedes SOP 91-1. Data Tree will be required to adopt SOP
97-2  effective  October  1,  1998.  SOP 97-2 replaces  the SOP 91-1  method  of
distinguishing  between  significant and insignificant  vendor  obligations as a
basis for recording  revenue with a requirement  that each element of a software
licensing  arrangement  (e.g.,  postcontract  customer support (PCS),  specified
upgrades and enhancements - even on a when-and-if  available  basis,  additional
software products and services) be separately identified and accounted for based
on relative fair values of each element. Data Tree is evaluating the impact that
the adoption of SOP 97-2 may have on future reported results of operations.

     Title Plant. In accordance with SFAS 61, both the direct and indirect costs
of building title plant are capitalized and are not amortized. The cost of title
plant  maintenance  is charged to income in the period  incurred.  Direct  costs
which  are  capitalized  include,  but are not  limited  to,  direct  labor  and
associated  benefits,  film,  shipping,  compact disks,  and production  related
depreciation.  Additionally, Data Tree capitalizes a portion of certain indirect
costs to title plant  based  primarily  upon the ratio of title plant  images to
total images (including  maintenance images).  These indirect costs include, but
are  not  limited  to,  indirect   salaries  and  associated   benefits,   rent,
depreciation, occupancy, insurance, and supplies. Further, Data Tree allocates a
portion of originating interest expense to title plant.


RESULTS OF OPERATIONS

     The  following  table sets forth,  for the periods  indicated,  information
derived from Data Tree's  statements  of income,  expressed  as a percentage  of
revenue.  There  can be no  assurance  that the  trends  in  revenue  growth  or
operating results shown below will continue in the future.

<TABLE>
<CAPTION>
                                                           PERCENT OF NET SALES
                                   ------------------------------------------------------------------
                                     FISCAL YEAR ENDED SEPTEMBER 30,              SIX MONTHS ENDED
                                                                                       March 31,
                                   ------------------------------------------------------------------
                                   1994       1995      1996      1997        1997            1998
                                   ----       ----      ----      ----        ----            ----
<S>                               <C>        <C>       <C>       <C>           <C>            <C>
Net Revenues                      100.0%     100.0%    100.0%    100.0%        100%           100.0%

Cost of Revenue                    25.9       27.6      26.6      27.4         26.3            31.9

Gross Profit                       74.1       72.4      73.4      72.6         73.7            68.1

Selling, general and
  administrative expenses          50.5       44.9      36.3      33.7         32.8            34.9

Research and development            __         __        __        __           1.1             6.2

Income from operations             23.6       27.5      37.1      38.9         39.9            27.0

Interest expense, net               5.7       10.2       7.3       3.7          7.1             4.0

Provision for income taxes          8.3       5.7       11.4      14.1         13.1             9.2

Net income                          9.6       11.6      18.4      21.1         19.7            13.8
</TABLE>

Six Months Ended March 31, 1998 Compared to Six Months Ended March 31, 1997

     Revenues.  For the six months  ended March 31,  1998,  Data Tree's  revenue
increased  $806,000,  or 21.1%, to $4,626,000  from  $3,820,000  during the same
period in the prior  year.  The  increase  in revenue is  primarily  a result of
increased  revenue  related to Data  Tree's  Titlescape(R)  product  offset by a
decrease in revenue from its IDEA(TM) product. During the six months ended March
31, 1998,  the IDEA(TM)  product  comprised  12.6% of total revenue  compared to
21.3% of total  revenue for the same period in the prior year.  The  increase in
Titlescape(R)  revenue is a result of increased  penetration and sales volume in
Data Tree's existing  markets as well as the entry into new geographic  markets.
The decrease in IDEA(TM)  revenues is largely due to the  completion of existing
contracts originated in prior years.

     Gross Profit.  Gross profit as a percentage  of total revenue  decreased to
68.1% for the six months  ended March 31, 1998 from 73.7% during the same period
in 1997.  The decrease in gross  margin is primarily  due to a change in revenue
mix  from  higher   gross  profit   IDEA(TM)   revenue  to  lower  gross  profit
Titlescape(R) revenue.  

     Selling, General, and Administrative.  Selling, general, and administrative
expenses for the six months ended March 31, 1998 increased $323,000,  or 25%, to
$1,616,000 compared to $1,293,000 for the same period during 1997. This increase
is  primarily  a result of  increased  salaries  associated  with an increase in
executive  and sales  headcount,  as well as  increases  in  professional  fees,
commissions,  and  general  infrastructure  costs to support  the growth of Data
Tree.

     Research and  Development.  Research and  development  expenses for the six
months ended March 31, 1998 increased $246,000,  or 600.6%, to $287,000 compared
to $41,000 for the same period in the prior year, which amount is not separately
presented due to lack of materiality.  This significant  increase is primarily a
result of Data Tree ceasing the  capitalization of certain software  programming
costs,  since the related products were available for general release during the
first  quarter  of 1998.  During the first six  months of 1998,  these  software
programming costs were expensed as incurred. Additionally,  during the first six
months of 1998, Data Tree increased its software  programming  staff  headcount,
resulting in increased research and development expenses.

     Interest Expense, Net. Interest expense, net, decreased $83,000 to $186,000
for the six months  ended March 31,  1998,  compared  to  $269,000  for the same
period in the prior year.  This  decrease is primarily due to an increase in the
percentage  of  interest  expense  allocated  to title  plant  during  1998 when
compared  to 1997.  This  decrease  was  offset by  increased  interest  expense
associated with an increase in Data Tree's bank borrowings  during 1998 compared
to 1997.

     Provision  for Income  Taxes.  The  provision  for income  taxes  decreased
approximately  15% to $425,000 for the six months ended March 31, 1998  compared
to $501,000 for the same period in the prior year. While the amount decreased in
absolute  dollars due to a decrease in income before income taxes, the effective
income tax rate remained unchanged at 40%.

Year Ended September 30, 1997 Compared to Year Ended September 30, 1996

     Revenues.  For the year ended  September  30,  1997,  Data  Tree's  revenue
increased $906,000, or 12.1%, to $8.4 million from $7.5 million. The increase in
revenue  was  primarily  due to the  addition  of two new data  centers  and the
expansion of the number of counties with records in Data Tree's database.

     Gross Profit.  Gross profit as a percentage of revenue remained  consistent
from 1996 to 1997 at approximately 73.0%.

     Selling, General and Administrative.  Selling,  general, and administrative
costs increased  approximately  $110,000, or 4.0%, for 1997 as compared to 1996.
These costs  increased  primarily  due to  increased  salaries  associated  with
additional  headcount.   These  costs  as  a  percentage  of  revenue  decreased
approximately  2.6% to 33.7% from  36.3%.  This  decrease  is  primarily  due to
revenue  increasing at a faster rate then selling,  general,  and administrative
spending.

     Interest Expense, Net. Interest expense decreased  approximately  $240,000,
or 43.9%,  from $546,000  during 1996 to $307,000  during 1997. This decrease is
due primarily to an increase in the percentage of interest expense  allocated to
title plant during 1997.  This  decrease  was offset by the  increased  interest
expense associated with higher average borrowing during 1997.

     Provision for Income Taxes. The provision for income taxes increased during
1997 when compared to the prior year due to the increase in income before income
taxes as compared to the prior year. Data Tree's  effective tax rate during 1997
was 40% as compared to 38.3% during 1996.

Year Ended September 30, 1996 Compared to Year Ended September 30, 1995

     Revenues.  For the year ended  September  30,  1996,  Data  Tree's  revenue
increased  $2.9  million,  or 63.7% to  approximately  $7.5  million  from  $4.6
million.  The  increase in revenue is due to a  significant  increase in revenue
from Data Tree's  IDEA(TM)  product,  two new data  centers  that were opened in
fiscal 1995, and increased market penetration in certain existing markets during
1996.

     Gross Profit. Gross profit as a percentage of revenue increased slightly in
1996 to 73.4%  from  72.4% in  1995.  This  increase  in  gross  margin  was due
primarily to increased  revenue  associated with Data Tree's  IDEA(TM)  product,
which commands higher gross margins than Data Tree's Titlescape(R) product.

     Selling, General and Administrative.  Selling,  general, and administrative
costs increased to approximately $670,000 or 32.5%, during 1996 when compared to
1995. These costs increased  primarily due to increased salaries associated with
increased  headcount,  increased costs associated with a complete year of office
costs  related to two data centers  opened in 1995,  and  increased  general and
administrative  costs to support  Data  Tree's  growth.  Selling,  general,  and
administrative  costs as a percentage  of revenue  decreased  8.6% to 36.3% from
44.9%.  This  decrease is primarily  due to revenues  increasing at a more rapid
rate than selling, general, and administrative costs.

     Interest Expense, Net. Interest expense increased approximately $81,000, or
17.4%,  from $465,000  during 1995 to $546,000 during 1996. This increase is due
largely to an increase in outstanding debt during 1996 as compared to 1995.

     Provision for Income Taxes.  Data Tree's  effective  income tax rate during
1996  increased to 38.3% as compared to  approximately  32.9% in the prior year.
The effective  income tax rate was less than the Federal  statutory rate in 1995
primarily  due  to  the  utilization  of  loss   carryforwards  and  tax  credit
carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

     Data  Tree's  cash  needs  are  primarily  for  working  capital,   capital
expenditures, and the building of title plant to support Data Tree's current and
projected  growth.  Data Tree has  financed  its  operations  to date  primarily
through  cash  generated  from  operations,   bank  debt,   long-term  equipment
financing, and, to a lesser extent, the issuance of common stock. In addition to
its term notes  payable  with a commercial  bank,  Data Tree may borrow up to $1
million under a line of credit,  secured by eligible accounts receivable.  As of
March 31, 1998, Data Tree had no amount  outstanding under this credit facility.
The line of credit expires in June 1998.

     For the six months ended March 31, 1998,  operating activities provided net
cash of $1,349,000 as a result of net income,  depreciation and amortization and
an  increase  in income  taxes  payable of  $637,000,  $474,000,  and  $421,000,
respectively.  This was offset by a $186,000 decrease in accounts payable.  Data
Tree used  $1,410,000  in investing  activities,  primarily  for building  title
plant.  Data Tree used  $1,189,000  in  financing  activities,  largely  for the
payment of notes payable to a commercial bank.

     As of March 31, 1998,  Data Tree had $497,000 in cash and negative  working
capital of  $1,682,000,  compared to $1,747,000 in cash and $164,000 in negative
working  capital as of September  30,  1997.  The  negative  working  capital is
primarily due to the current  portion of notes payable of  $2,200,000.  In April
1998, Data Tree secured a $3 million revolving credit facility with a commercial
bank, guaranteed by the Company, which expires in March 1999. Data Tree believes
that its current cash balances,  available credit  facilities and cash flow from
operations  will be sufficient to meet its working  capital,  debt service,  and
capital expenditure requirements for at least the next 12 months.

YEAR 2000

     Data Tree believes its  proprietary  and third party  software is Year 2000
compliant  and  Data  Tree  does  not  anticipate  expending  any  resources  in
connection with any Year 2000 issues.


                       COMPARISON OF RIGHTS OF HOLDERS OF
                        DATA TREE STOCK AND COMPANY STOCK

     The Company and Data Tree are both organized under the laws of the State of
California.  Any differences,  therefore,  between the rights of shareholders of
the  Company  and the  rights of  shareholders  of Data Tree arise  solely  from
differences  between the respective  articles of incorporation and bylaws of the
two corporations and the fact that Data Tree is organized as a close corporation
within the meaning of Section 158 of the CGCL.

     The following summary sets forth certain material  differences  between the
rights of Company  shareholders and the rights of Data Tree  shareholders and is
qualified in its entirety by reference  to the  Company's  Restated  Articles of
Incorporation (the "Articles"), the Company's Bylaws (the "Bylaws"), Data Tree's
Articles of Incorporation (the "Data Tree Articles") and Data Tree's Bylaws (the
"Data Tree Bylaws").

AUTHORIZED AND ISSUED CAPITAL STOCK

     The  authorized   capital  stock  of  the  Company  currently  consists  of
36,000,000 shares of Stock and 500,000  Preferred shares,  $1.00 par value, (the
"Preferred  Shares") of which 1,000 of such shares have been designated Series A
Junior Participating  Preferred Shares (the "Series A Preferred Shares").  As of
March 27, 1998,  17,850,189  shares of Stock were issued and  outstanding and no
Preferred  Shares were issued and outstanding.  The authorized  capital stock of
Data Tree currently  consists of 10,000,000 shares of Data Tree Stock. As of May
__, 1998,  7,039,830  shares of Data Tree Stock were issued and  outstanding and
warrants  (the  "Warrants")  to acquire  110,136  shares of Data Tree Stock were
issued  and  outstanding.  Based  upon the  maximum  Merger  Consideration,  the
Warrants  are not  expected to be  exercised  and will be  purchased  from their
holder prior to the Merger.

VOTING RIGHTS

     Each  share  of  Stock  entitles  its  holder  to one  vote on all  matters
submitted to a vote of the Company's  shareholders.  Each Preferred  Share would
entitle its holder to 100,000  votes on all matters  submitted  to a vote of the
Company's shareholders. Each share of Data Tree Stock entitles its holder to one
vote on all matters submitted to a vote of Data Tree shareholders.

PREEMPTIVE RIGHTS; CUMULATIVE VOTING

     Neither  the  Articles  nor the Data Tree  Articles  grants any  preemptive
rights to shareholders.  Subject to certain conditions,  both the Bylaws and the
Data Tree Bylaws provide for cumulative voting during the election of directors.

ACTION BY WRITTEN CONSENT OF SHAREHOLDERS

     Both the Bylaws and the Data Tree Bylaws  provide that actions which may be
taken at an annual or special meeting of shareholders  may be taken without such
meeting and without  prior  notice,  if a consent in writing  setting  forth the
action so taken is signed by the holders of  outstanding  shares 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.

SPECIAL MEETINGS OF SHAREHOLDERS

     Both the Bylaws and the Data Tree  Bylaws  state that a special  meeting of
the  shareholders  may be  called  at any time by the  board of  directors,  the
chairman of the board,  the president,  or by one or more  shareholders  holding
shares in the aggregate  entitled to cast not less than 10% of the votes at that
meeting.

QUORUM AND VOTING REQUIREMENTS FOR SHAREHOLDER MEETINGS

     Both the Bylaws  and the Data Tree  Bylaws  state  that a  majority  of the
shares  entitled  to  vote  at a  meeting  shall  constitute  a  quorum  for the
transaction of business at such meeting. If a quorum is present, the affirmative
vote of the majority of shares  represented  at the meeting and entitled to vote
on any matter (other than the election of directors) is required to take action,
unless  the vote of a greater  number or voting by classes  is  required  by the
CGCL.  Directors  are elected by a plurality  of shares  entitled to vote at the
meeting subject to cumulative voting described above.

BOARD OF DIRECTORS

     The Company board of directors currently consists of 16 directors who serve
for one-year terms. The number of directors on the Company board of directors is
subject  to  change  by action of the  Company's  board of  directors  or by the
Company's shareholders, but cannot be less than nine (9) nor more than seventeen
(17).  The Data Tree board of  directors  consists of 3 directors  who serve for
one-year  terms.  The number of directors on the Data Tree board of directors is
subject  to change by action  of the Data  Tree  board of  directors  or by Data
Tree's  shareholders  but  cannot be less than three (3) nor more than five (5).
The number of Data Tree directors is currently set at three.

VACANCIES

     Subject to identical  conditions,  both the Bylaws and the Data Tree Bylaws
provide that  vacancies in the board of directors may be filled by a majority of
the  remaining  directors,  though  less than a quorum,  or by a sole  remaining
director.

LIMITATION ON DIRECTORS' LIABILITY

     The  Articles  and the Data Tree  Articles  provide  that the  liability of
directors  of the  Company for  monetary  damages be  eliminated  to the fullest
extent permissible under law.

REMOVAL OF DIRECTORS

     Neither the  Articles  nor the Bylaws  contain  provisions  relating to the
removal of  directors.  The Data Tree Bylaws  provide  that,  subject to certain
limitations,  the  Data  Tree  shareholders  may  remove  a  director  upon  the
affirmative  vote or the  consent  of a majority  of shares of Data Tree  Stock.
Moreover,  under  certain  circumstances  the board of  directors  may  remove a
director or  shareholders  holding at least 10% of the shares of Data Tree Stock
outstanding may petition the superior court to remove a director.

INDEMNIFICATION

     The  Bylaws  provide  that  (i) the  Company  indemnify  its  Officers  and
Directors to the fullest extent permitted by law, including those  circumstances
in which indemnification  would otherwise be discretionary;  (ii) the Company is
required  to  advance  expenses  to its  Officers  and  Directors  as  incurred,
including  expenses relating to obtaining a determination that such Officers and
Directors are entitled to indemnification, provided that they undertake to repay
the amount advanced if it is ultimately determined that they are not entitled to
indemnification;  (iii) an  Officer  or  Director  may bring  suit  against  the
corporation if a claim for  indemnification is not timely paid; (iv) the Company
may not retroactively  amend the  indemnification  provisions in the Bylaws in a
way which is  adverse to its  Officers  and  Directors;  (v) the  provisions  of
subsections (i) through (iv) above shall apply to all past and present  Officers
and Directors of the corporation.

     Indemnification  of Agents of the  corporation who are not its Officers and
Directors shall be in accordance with the provisions of Section 317 of the CGCL.

     The Company may enter into  indemnification  agreements with its Directors,
Officers and other Agents upon such terms and  conditions as are deemed to be in
the best interests of the Company by its board of directors.

     The other  provisions  of the Bylaws to the contrary  notwithstanding,  the
Company is not obligated:

          (a) to indemnify or advance expenses to an Officer,  Director or Agent
     with respect to proceedings or claims  initiated or brought  voluntarily by
     such  Officer,  Director  or Agent and not by way of  defense,  except with
     respect  to  proceedings  brought  to  establish  or  enforce  a  right  to
     indemnification under an indemnification agreement or any statute or law or
     otherwise   as  required   under   Section  317  of  the  CGCL,   but  such
     indemnification   or  advancement  of  expenses  may  be  provided  by  the
     corporation  in specific  cases if the board of directors  has approved the
     bringing of such suit;

          (b) to  indemnify  an  Officer,  Director  or Agent  for any  expenses
     incurred  with  respect  to any  proceeding  instituted  by  such  Officer,
     Director  or Agent to  enforce  or  interpret  provisions  of an  indemnity
     agreement  or  this  Section  of  the  Bylaws,  if  a  court  of  competent
     jurisdiction  determines  that each of the material  assertions made by the
     Officer, Director or Agent in such proceeding was not made in good faith or
     was frivolous;

          (c) to  indemnify  an  Officer,  Director  or Agent  for  expenses  or
     liabilities  of  any  type  whatsoever  (including,  but  not  limited  to,
     judgments,  fines,  ERISA  excise taxes or  penalties,  and amounts paid in
     settlement) which have been paid or satisfied by an insurance carrier under
     a policy of officers' and directors'  liability insurance maintained by the
     corporation;  provided that the corporation  shall be obligated to remit to
     the Officer,  Director or Agent any insurance  proceeds received in respect
     of expenses or  liabilities  previously  paid or satisfied by such Officer,
     Director or Agent;

          (d)  to  indemnify  an  Officer,   Director  or  Agent  for  expenses,
     judgments,  fines or penalties  sustained,  or for an accounting of profits
     made from,  the  purchase  and sale by such  Officer,  Director or Agent of
     securities  of the  corporation  in violation of the  provisions of Section
     16(b)  of  the  Exchange  Act,  the  rules  and   regulations   promulgated
     thereunder,  any  amendments  thereto  or  any  similar  provisions  of any
     federal, state or local statutory law; or

          (e) in the event a court of competent  jurisdiction finally determines
     that such indemnification is unlawful.

     The term "Officer" as used herein is defined as each person who is, or was,
appointed  to the office of Chairman of the Board,  President,  Vice  President,
Secretary,  Assistant Secretary, Chief Financial Officer,  Treasurer,  Assistant
Treasurer and such other office of the Company as the board shall designate from
time to time.  The term  "Director"  as used herein is defined as any person who
is,  or was,  appointed  to  serve  on the  board  of  directors  either  by the
shareholders or the remaining board members.  The term "Agent" as used herein is
defined  as having the same  meaning as that set forth in Section  317(a) of the
CGCL, except that it shall not include Officers and Directors.

     The Data Tree Articles provide that the liability of directors of Data Tree
for monetary  damages shall be eliminated to the fullest extent  permitted under
California law. In addition,  Data Tree is authorized to provide indemnification
to agents of Data Tree for breach of duty to Data Tree and its  shareholders  in
excess of that otherwise  provided under California law, except that such agents
shall not be entitled to any such  indemnification for matters related to claims
arising out of or occurring in connection with the transactions  contemplated by
the Merger Agreement.
     
     In addition to the foregoing  right to indemnity  provided to the agents of
Data  Tree  under  the  Data  Tree   Articles,   Data  Tree  has  entered   into
indemnification  agreements with its directors and executive  officer (the "Data
Tree Indemnitees").  Under such indemnity agreements, other than with respect to
any liability or expense of a Data Tree  Indemnitee for a breach of duty to Data
Tree and its  shareholders  related to any claims arising out of or occurring in
connection with the transactions contemplated by the Merger Agreement, Data Tree
is obligated to hold harmless and indemnify  the Data Tree  Indemnitees  against
any and all expenses and damages to which such persons  become subject by reason
of the fact that such  persons  were  acting in the  capacity  of  directors  or
executive  officers  of Data  Tree.  Notwithstanding  the  foregoing,  under the
indemnity  agreements,  Data Tree shall not be obligated  to indemnify  the Data
Tree Indemnitees for expenses or damages arising out of, among other things, (i)
a claim  against a Data Tree  Indemnitee  for an accounting of profits made from
the purchase or sale by such person of securities of Data Tree, (ii) a Data Tree
Indemnitee's  conduct  from which such person (A)  derived an improper  personal
benefit,  (B) believed to be contrary to the best interests of Data Tree and its
shareholders, (C) showed reckless disregard for his or her duty to Data Tree and
its shareholders,(D) engaged in an execused pattern of inattention that amounted
to an abdication of such person's duty to Data Tree or its  shareholders,  (iii)
any action by or in the right of Data Tree under certain circumstances, (iv) any
proceeding initiated by a Data Tree Indemnitee under certain circumstances.

     Under the  indemnification  agreements,  Data Tree is obligated to advance,
prior to the final  disposition of any  proceeding,  all expenses  incurred by a
Data Tree  Indemnitee  in  connection  with such  proceeding  upon receipt of an
undertaking  by such Data Tree  Indemnitee to repay such amounts  advanced it is
ultimately   determined  that such  Data  Tree  Indemnitee  is  not  entitled to
indemnification  under the  indemnification  agreement,  the Data  Tree  charter
documents or California law.


AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS

     Neither the Articles nor the Data Tree  Articles  specifies  the  approvals
necessary  to amend  the  Articles  and the Data  Tree  Articles,  respectively.
Therefore,  under the California  General  Corporation Law, any amendment to the
Articles  or the Data  Tree  Articles  must be  approved  by a  majority  of the
outstanding shares of Stock or shares of Data Tree Stock, respectively. Both the
Bylaws and the Data Tree  Bylaws  provide for  adoption  of new bylaws,  and for
their  respective  amendment or repeal by the vote or written consent of holders
of a majority of the  outstanding  shares entitled to vote;  provided,  however,
that the  authorized  number of directors may be changed only by an amendment to
the relevant articles of incorporation. Both the Bylaws and the Data Tree Bylaws
provide for adoption of new bylaws, and for their respective amendment or appeal
by the board of directors,  provided,  however,  that the board of directors may
adopt a bylaw or amendment  thereof changing the authorized  number of directors
only for the purpose of fixing the exact number of  directors  within the limits
specified in the relevant articles or bylaws.

RIGHTS TO PURCHASE PREFERRED STOCK

     Each share of Stock has attached to it a right which,  subject to the terms
and  conditions of the Rights  Agreement  (the "Rights  Agreement")  between the
Company and  Wilmington  Trust  Company,  dated  October 23, 1997,  entitles the
holder to  purchase a fraction  of a  Preferred  Share  upon the  occurrence  of
certain events which are defined in the Rights Agreement. As of the date of this
Prospectus/Proxy  Statement,  such rights are not  exerciseable.  Shares of Data
Tree Stock do not have any such rights.  See  "Description of the Stock" and the
description of Rights to Purchase Series A Junior Participating Preferred Shares
contained in the Company's Registration Statement on Form 8-A, dated November 7,
1997, and incorporated by reference herein.

                                   TAX MATTERS

     The following is a general  discussion of the material U.S.  Federal income
tax  consequences  of the  receipt  of the Stock by a holder of Data Tree  Stock
pursuant to the Merger  contemplated by this  Prospectus/Proxy  Statement and is
not intended to constitute  advice regarding the federal income tax consequences
of the Merger to any such holder.  Except as specifically noted, this discussion
applies only to a U.S.  Holder (as  hereinafter  defined).  This summary applies
only to U.S.  Holders  who hold Data Tree Stock as  capital  assets and does not
address  aspects of U.S.  Federal  income tax that may be  applicable to holders
that are subject to special tax rules, including, without limitation,  insurance
companies,   tax-exempt  organizations,   financial  institutions,   dealers  in
securities, foreign persons, persons with a "functional currency" other than the
U.S.  dollar,  persons  who  acquired  shares of Data Tree Stock  pursuant to an
exercise of employee  stock options or rights or otherwise as  compensation  and
persons who hold shares of Data Tree Stock as part of a "straddle," "hedging" or
"conversion"  transaction.  Also, the summary does not address  state,  local or
foreign income tax consequences of the Merger. Consequently,  each holder should
consult such holder's own tax advisor as to the specific tax consequences of the
Merger to such holder.

     For purposes of this discussion,  a "U.S.  Holder" means a beneficial owner
of shares of Data Tree Stock that is (i) a citizen or resident of the U.S., (ii)
a corporation or  partnership  organized in or under the laws of the U.S. or any
political subdivision thereof or therein, (iii) an estate the income of which is
subject to U.S. Federal income taxation regardless of its source or (iv) a trust
if (x) a U.S. court can exercise primary  supervision over the administration of
such trust and (y) one or more U.S.  fiduciaries  have the  authority to control
all of the substantial  decisions of such trust.  Notwithstanding  the preceding
sentence, to the extent provided in United States Treasury Regulations,  certain
trusts in existence on August 20, 1996, and treated as U.S. persons also will be
U.S. Holders. A "Non-U.S. Holder" is a beneficial owner of Data Tree Stock other
than a U.S. Holder.

     General. The transaction contemplated in this Prospectus/Proxy Statement is
structured  as a merger of IAC with and into Data Tree.  Except with  respect to
the fractional shares to be issued in connection with such Merger, consideration
paid for Data Tree Stock is solely voting stock of the Company.  For purposes of
this discussion,  the continuity of stockholder interest requirement  applicable
to corporate reorganizations (which requires a continuing equity interest in the
Company by holders owning a significant  percentage of the Data Tree Stock prior
to the consummation of the Merger) is assumed.

     In  addition,  substantially  contemporaneous  with such  Merger,  indirect
subsidiaries  of the Company will enter into the following four  agreements with
one or more shareholders of Data Tree: an Operating  Agreement for NEWCO between
FARES and R2; a Supply Agreement  between NEWCO and R2; an Employment  Agreement
between NEWCO and Chopra;  and a  Noncompetition  Agreement  among NEWCO, R2 and
Chopra. The description of the federal income tax consequences of the merger set
forth below assumes that all payments made in  connection  with such  agreements
constitute  payments  solely in exchange for such future  services,  property or
cash.

     Tax  Consequences  to  Holders  of  Data  Tree  Stock.  If  the  Merger  is
consummated as contemplated by this Prospectus/Proxy  Statement and based on the
above  assumptions,  the material U.S.  Federal income tax  consequences to U.S.
Holders who hold Data Tree Stock as capital  assets and who  exchange  such Data
Tree Stock pursuant to the Merger will be as follows:

          (i) no  gain  or  loss  will be  recognized  by a U.S.  Holder  on the
     exchange of Data Tree Stock for the Stock,  except as described  below with
     respect to the receipt of cash in lieu of fractional shares of the Stock;

          (ii) the aggregate  adjusted tax basis of shares of the Stock received
     by a U.S. Holder (including  fractional shares of the Stock deemed received
     and redeemed as described below) will be the same as the aggregate adjusted
     tax basis of the Data Tree Stock exchanged therefor;

          (iii) the holding period of shares of the Stock (including the holding
     period of fractional  shares of the Stock)  received by a U.S.  Holder will
     include the holding period of the Data Tree Stock exchanged therefor; and

          (iv) a U.S.  Holder of Data Tree  Stock who  receives  cash in lieu of
     fractional  shares of the Stock  will be treated  as having  received  such
     fractional  shares and then as having  received  such cash in redemption of
     such fractional shares.  Under Section 302 of the Code,  provided that such
     deemed  distribution is  "substantially  disproportionate"  with respect to
     such U.S.  Holder or is "not  essentially  equivalent to a dividend"  after
     giving effect to the  constructive  ownership  rules of the Code,  the U.S.
     Holder  will  generally  recognize  capital  gain or  loss  on such  deemed
     redemption equal to the difference  between the amount of cash received and
     the U.S.  Holder's  adjusted tax basis in the fractional  share interest in
     the Stock. Such capital gain or loss will be long-term capital gain or loss
     if the U.S.  Holder's holding period in the fractional  shares is more than
     eighteen months.

     Consequences of Holding First American Financial  Corporation Common Stock.
Distributions  of cash or  property  (other  than  shares of the Stock,  if any,
distributed  pro rata to all  shareholders  of the  Company)  generally  will be
includible  in ordinary  income by a U.S.  Holder in  accordance  with such U.S.
Holder's method of tax  accounting,  to the extent such  distributions  are made
from the  current or  accumulated  earnings  and  profits of the  Company.  Such
dividends  will be  eligible  for the  dividends  received  deduction  generally
allowed to corporate U.S. Holders.  The dividends  received deduction is subject
to certain limitations, though, and the benefit of such deduction may be reduced
by the corporate  alternative minimum tax. Corporate U.S. Holders should consult
their own tax advisors  regarding the  availability  of, and limitations on, the
dividends  received  deduction.  To the extent,  if any,  that the amount of any
distribution  by the Company  exceeds  the  Company's  current  and  accumulated
earnings and profits,  it will be treated first as a tax-free return of the U.S.
Holder's tax basis in the shares of Stock and  thereafter as capital gain.  Upon
the sale,  exchange  or  redemption  of Shares,  a U.S.  Holder  generally  will
recognize  taxable  gain or loss  equal to the  difference  between  the  amount
realized and such holder's adjusted tax basis. Such gain or loss will be capital
gain or loss,  provided  that the U.S.  Holder  holds such  shares of Stock as a
capital asset. In the case of a noncorporate  U.S. Holder,  the maximum marginal
U.S.  federal  income  tax rate  applicable  to such gain will be lower than the
maximum  marginal U.S.  federal income tax rate applicable to ordinary income if
such U.S.  Holder's holding period for such shares of Stock exceeds one year and
will be  further  reduced  if such  shares  of Stock  were held for more than 18
months.

     Information Reporting and Backup Withholding Tax. United States information
reporting  requirements  and  backup  withholding  tax  generally  will apply to
certain  payments  to certain  non-corporate  holders of the Stock.  Information
reporting  will  generally  apply  to  payments  of  proceeds  from  the sale or
redemption  of the Stock by a payor within the United  States to a holder of the
Stock (other than an "exempt recipient," which includes  corporations,  Non-U.S.
Holders that provide an appropriate  certification and certain other persons). A
payor  within the United  States will be required to withhold 31% of any payment
of proceeds from the sale or redemption of the Stock within the United States to
a holder  (other than a  corporation  or an "exempt  recipient")  if such holder
fails to furnish its correct taxpayer  identification  number or otherwise fails
to comply with such backup withholding requirements.  Any amounts withheld under
the backup  withholding  rules from a payment to a holder will be  refunded  (or
credited  against such  holder's U.S.  federal  income tax  liability,  if any),
provided the required  information  is  furnished to the U.S.  Internal  Revenue
Service.

     Treasury  Regulations  issued  on  October  6,  1997,  and  an  IRS  notice
announcing  revisions to such  regulations,  would  modify  certain of the rules
discussed  above  generally  with  respect to  payments  on the Stock made after
December  31, 1998.  In  particular,  a payor  within the United  States will be
required to withhold  31% of any payment of dividends  on, or proceeds  from the
sale of, the Stock within the United States to a Non-U.S.  Holder if such holder
fails to provide an appropriate certification. In the case of such payments by a
payor within the United States to a foreign  partnership (other than payments to
a foreign  partnership  that  qualifies as a "withholding  foreign  partnership"
within the  meaning  of such  Treasury  Regulations  and  payments  to a foreign
partnership  that  are  effectively  connected  with the  conduct  of a trade or
business  in the  United  States),  the  partners  of such  partnership  will be
required to provide the  certification  discussed above in order to establish an
exemption from backup  withholding tax and information  reporting  requirements.
Moreover, a payor may rely on a certification provided by a Non-U.S. Holder only
if such  payor  does not have  actual  knowledge  or a reason  to know  that any
information or certification stated in such certificates is unreliable.

     THE  FOREGOING  IS A GENERAL  DISCUSSION  OF  CERTAIN  FEDERAL  INCOME  TAX
CONSEQUENCES  OF THE MERGER AND IS INCLUDED FOR GENERAL  INFORMATION  ONLY.  THE
FOREGOING  DISCUSSION  DOES NOT TAKE  INTO  ACCOUNT  THE  PARTICULAR  FACTS  AND
CIRCUMSTANCES  OF EACH  HOLDER'S  TAX STATUS AND  ATTRIBUTES.  AS A RESULT,  THE
FEDERAL INCOME TAX  CONSEQUENCES  ADDRESSED IN THE FOREGOING  DISCUSSION MAY NOT
APPLY  TO  EACH  HOLDER.  IN  VIEW  OF  THE  INDIVIDUAL  NATURE  OF  INCOME  TAX
CONSEQUENCES,  EACH HOLDER IS URGED TO CONSULT SUCH  HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER,  INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL,  STATE,  LOCAL AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND OTHER TAX LAWS.


                            DESCRIPTION OF THE STOCK

     The authorized  capital stock of the Company consists of 36,000,000  Common
shares,  $1.00 par value  (defined  above as the "Stock") and 500,000  Preferred
shares, $1.00 par value (defined above as "Preferred Shares"), of which 1,000 of
such shares have been designated Series A Preferred Shares.

     Common  Shares.  As of May 1,  1998,  there were  approximately  17,899,902
shares  of the Stock  outstanding  and held of  record  by  approximately  3,109
shareholders.

     The  holders of the Stock are  entitled  to one vote for each share held of
record on all matters submitted to a vote of shareholders.  Accordingly, holders
of a  majority  of the  shares  of Stock  entitled  to vote in any  election  of
directors  may elect all of the  directors  standing  for  election.  Subject to
preferences that may be applicable to any outstanding Preferred Shares,  holders
of the Stock are entitled to receive  ratably such  dividends as may be declared
by the Company's board of directors our of funds legally available therefor.  In
the event of a liquidation, dissolution or winding up of the Company, holders of
the Stock are entitled to share ratably in the assets remaining after payment of
liabilities and the liquidation  preference of any outstanding  preferred stock.
Holders of the Stock have no preemptive, conversion or redemption rights. All of
the  outstanding  shares of Stock are, and the shares to be issued in connection
with the Merger when issued will be, fully paid and non-assessable.

     Preferred  Shares.  On October 23,  1997,  the Company  declared a dividend
distribution  of  one  right  (the  "Right")  for  each  share  of  Stock  ,  to
shareholders  of record at the  close of  business  on  November  15,  1997 (the
"Preferred Record Date"). Each Right entitles the record holder to purchase from
the Company one one  hundred-thousandth  of a Preferred Share  ("Preferred Share
Fraction") at a price of $265 (the "Purchase  Price"),  subject to adjustment in
certain circumstances.

     Initially,  the Rights will be attached  to the  certificates  representing
outstanding shares of Stock, and no certificates  evidencing such rights will be
issued.  The  Rights,  however,  will  separate  from the  shares of Stock and a
"Distribution  Date" will occur upon the earlier of (i) the close of business on
the  tenth  day  after  the date  (the  "Share  Acquisition  Date")  of a public
announcement  that a person or group of  affiliated  or  associated  persons (an
"Acquiring Person") has acquired,  or obtained the right to acquire,  beneficial
ownership of 15% or more of the  outstanding  shares of Stock, or (ii) the close
of business on the tenth  business day (or such later date as may be  determined
by the Company  prior to such time as any person  becomes an  Acquiring  Person)
after the commencement of a tender offer or exchange offer if, upon consummation
thereof,  the person or group making such offer would be the beneficial owner of
15% or more of the outstanding shares of Stock. Until the Distribution Date, (i)
the Rights will be evidenced by the Stock  certificates  and will be transferred
with and only with such Stock  certificates,  (ii) new Stock certificates issued
after the Preferred Record Date will bear a legend  incorporating  the agreement
evidencing  the Rights by reference  and (iii) the surrender for transfer of any
certificates  for shares of Stock  outstanding will also constitute the transfer
of  the  Rights  associated  with  the  shares  of  Stock  represented  by  such
certificate.   As  soon  as  practicable   following  the   Distribution   Date,
certificates evidencing the Rights will be mailed to holders of record of shares
of  the  Stock  as of the  close  of  business  on the  Distribution  Date  and,
thereafter, such separate certificates alone will evidence the Rights.

     The Rights are not exercisable  until the Distribution Date and will expire
at the close of business on October  23,  2007  unless  earlier  redeemed by the
Company as described below.

     Except in the  circumstances  described below,  after the Distribution Date
each Right will be exercisable  into a Preferred Share Fraction.  Each Preferred
Share Fraction  carries voting and dividend  rights that are intended to produce
the  equivalent  of one share of Stock.  The voting and  dividend  rights of the
Series A Preferred  Shares are subject to  adjustment in the event of dividends,
subdivisions and  combinations  with respect to the shares of the Stock. In lieu
of issuing  certificates  for fractions of Series A Preferred Shares (other than
fractions  which are  integral  multiples  of Preferred  Share  Fractions),  the
Company may pay cash.

     In the event that, at any time  following the  Distribution  Date, a person
becomes an Acquiring Person (other than pursuant to an offer for all outstanding
shares of Stock at a price and on terms which the  majority  of the  independent
directors  of the Company  determine  to be fair to, and  otherwise  in the best
interests of, shareholders),  proper provision shall be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof,
shares  of  Stock  (or,  in  certain  circumstances,  cash,  property  or  other
securities,  including Preferred Share Fractions, of the Company) having a value
equal to two times the exercise price of the Right. In lieu of requiring payment
of the Purchase Price upon exercise of the Rights  following any such event, the
Company  may  provide  that each Right be  exchanged  for one share of Stock (or
cash,  property  or  other  securities,  as the  case  may  be).  Following  the
occurrence  of any of the events set forth in this  paragraph,  any Rights  that
are, or (under  certain  other  circumstances)  were,  beneficially  owned by an
Acquiring Person shall immediately become null and void.

     In the event that, at any time  following the Share  Acquisition  Date, (i)
the Company engages in a merger or consolidation in which the Company is not the
surviving  corporation,  (ii) the Company  engages in a merger or  consolidation
with another  person in which the Company is the surviving  corporation,  but in
which all or part of its shares of Stock are changed or exchanged,  or (iii) 50%
or more of the Company's assets or earning power is sold or transferred  (except
with  respect  to  clauses  (i) and (ii),  a merger or  consolidation  (a) which
follows an offer  described in the second  preceding  paragraph and (b) in which
the amount  and form of  consideration  is the same as was paid in such  offer),
proper  provision  shall be made so that each holder of a Right  (except  Rights
which  previously have been voided as set forth above) shall thereafter have the
right to receive,  upon the  exercise  thereof,  common  stock of the  acquiring
company having a value equal to two times the exercise  price of the Right.  The
events set forth in this  paragraph  and in the second  preceding  paragraph are
referred to as the "Triggering Events."

     The Purchase Price payable,  and the number of Preferred Share Fractions or
other securities or property  issuable,  upon exercise of the Rights are subject
to adjustment from time to time to prevent  dilution (i) in the event of a stock
dividend  on the  Series A  Preferred  Shares  or  other  capital  shares,  or a
subdivision,  combination or  reclassification of the Series A Preferred Shares,
(ii) upon the grant to  holders  of the  Series A  Preferred  Shares of  certain
rights or warrants to  subscribe  for Series A  Preferred  Shares or  securities
convertible into Series A Preferred Shares at less than the current market price
of the Series A Preferred  Shares,  or (iii) upon the distribution to holders of
the Series A Preferred Shares of evidences of indebtedness or assets  (excluding
regular  quarterly  cash  dividends or  dividends  payable in Series A Preferred
Shares) or of  subscription  rights or warrants  (other  than those  referred to
above).

     With  certain  exceptions,  no  adjustment  in the  Purchase  Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such  Purchase  Price.  No  fractional  Series A  Preferred  Shares  (other than
fractions  which are integral  multiples of Preferred  Share  Fractions) will be
issued upon exercise of the Rights and, in lieu thereof,  a cash payment will be
made based on the  market  price of the  Series A  Preferred  Shares on the last
trading date prior to the date of exercise.

     At any time prior to the earlier of (i) the date on which a person  becomes
an Acquiring  Person and (ii) the Final  Expiration Date, the board of directors
of the  Company may redeem the Rights in whole,  but not in part,  at a price of
$.001 per Right, payable in cash or securities or both (the "Redemption Price").
Immediately  upon the action of the board of directors  of the Company  ordering
redemption  of the Rights,  the Rights will  terminate and the only right of the
holders of Rights will be to receive the Redemption Price.

     Issuance of Common  Shares upon exercise of Rights is subject to regulatory
approval.  Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive  dividends.  While the distribution of the Rights will not
be taxable to shareholders or to the Company,  shareholders may,  depending upon
the circumstances,  recognize taxable income in the event that the Rights become
exercisable  for Common  Shares (or other  consideration)  of the Company or for
common stock of the acquiring company as set forth above.

     Any  of  the  provisions  of  the  Rights  Agreement,  other  than  certain
provisions  relating  to the  principal  economic  terms of the  Rights,  may be
amended by the board of directors of the Company prior to the Distribution Date.
Thereafter,  the  provisions,  other than  certain  provisions  relating  to the
principal  economic terms of the Rights,  of the Rights Agreement may be amended
by the Board in  order:  to cure any  ambiguity,  defect  or  inconsistency;  to
shorten or lengthen any time period under the agreement  evidencing  the Rights;
or in any other respect that will not adversely  affect the interests of holders
of Rights  (excluding the interests of any Acquiring  Person);  provided that no
amendment to adjust the time period  governing  redemption shall be made at such
time as the Rights are not redeemable.

     As long as the  Rights are  attached  to the shares of Stock and in certain
other  limited  circumstances,  the  Company  will issue one Right with each new
Common Share so that all such shares will have attached Rights.

     As of March 27, 1998, there were no Series A Preferred Shares outstanding.

                                  LEGAL MATTERS

     The validity of the shares of Stock offered  hereby will be passed upon for
the Company by White & Case LLP, Los Angeles, California.

                                     EXPERTS

     The   financial   statements   of  the   Company   incorporated   in   this
Prospectus/Proxy Statement by reference have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants,  given on the authority
of said firm as experts in auditing and accounting.

     The  financial  statements  of Data Tree as of September 30, 1997 and 1996,
and for each of the three years in the period ended September 30, 1997, included
in the Proxy Statement of Data Tree Corporation, which is referred to and made a
part of this Prospectus and Registration Statement, have been audited by Ernst &
Young  LLP,  independent  auditors,  as set  forth  in  their  report  appearing
elsewhere  herein,  and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

<PAGE>

                    INDEX TO DATA TREE'S FINANCIAL STATEMENTS

DATA TREE CORPORATION

Report of Ernst & Young LLP, Independent Auditors                            F-1
Balance Sheets as of September 30, 1996 and 1997                             F-2
Statements of Income for the Years Ended
         September 30, 1995, 1996 and 1997                                   F-3
Statements of Shareholders' Equity for the Years
         Ended September 30, 1995, 1996 and 1997                             F-4
Statements of Cash Flows for the Years Ended
         September 30, 1995, 1996 and 1997                                   F-5
Notes to Financial Statements                                                F-6
Balance Sheet as of March 31, 1998 (Unaudited)                              F-13
Statements of Income for the Six Months Ended
   March 31, 1997 and 1998 (Unaudited)                                      F-14
Statement of Shareholders' Equity for the Six Months Ended
   March 31, 1998 (Unaudited)                                               F-15
Statements of Cash Flows for the Six Months Ended
   March 31, 1997 and 1998 (Unaudited)                                      F-16
Notes to Financial Statements (Unaudited)                                   F-17


<PAGE>

                         Report of Independent Auditors

The Board of Directors and Shareholders Data Tree Corporation

We have audited the  accompanying  balance sheets of Data Tree Corporation as of
September 30, 1997 and 1996, and the related statements of income, shareholders'
equity and cash flows for each of the three years in the period ended  September
30, 1997.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Data Tree  Corporation  at
September  30,  1997 and 1996,  and the results of its  operations  and its cash
flows for each of the three years in the period ended  September  30,  1997,  in
conformity with generally accepted accounting principles.

                                             /s/ Ernst & Young LLP
December 3, 1997


<PAGE>
<TABLE>
<CAPTION>


                                               Data Tree Corporation

                                                  Balance Sheets

                                                                                    September 30
                                                                            1997                  1996
                                                                    --------------------------------------
<S>                                                                      <C>                 <C>        
Assets
Current Assets:
  Cash and cash equivalents                                              $ 1,746,777            $641,848
  Accounts receivable, net of allowance for doubtful
    accounts of $32,000 and $30,000 in 1997 and 1996,
    respectively                                                           1,341,977             764,914
  Prepaid expenses and other current assets                                  570,603             114,638
                                                                    ------------------ -------------------
Total current assets                                                       3,659,357           1,521,400

Property and equipment, net                                                3,587,239           3,030,817
Title plant and computer software technology, net                         13,764,707           9,956,450
Note receivable from related party                                           143,392             143,392
Other assets                                                                 102,932             110,200
                                                                    ------------------ -------------------
                                                                         $21,257,627         $14,762,259
                                                                    ================== ===================

Liabilities and shareholders' equity Current liabilities:
    Accounts payable                                                     $   490,512        $    175,227
    Accrued expenses and other current liabilities                           660,775             342,527
    Income taxes payable                                                     217,610             206,650
    Deferred income taxes                                                    131,554             156,000
    Current portion of notes payable to bank                               2,200,000           1,060,877
    Current portion of capital lease obligations                             122,482             102,293
                                                                    ------------------ -------------------
  Total current liabilities                                                3,822,933           2,043,574

  Notes payable to bank, less current portion                              7,400,000           6,895,373
  Capital lease obligations, less current portion                            307,606             246,216
  Deferred income taxes                                                    2,435,560           1,640,000

  Commitments

  Shareholders' equity:
    Common shares, no par value:
       Authorized shares - 10,000,000
       Issued and outstanding shares - 7,039,830 in 1997
       and 6,406,250 in 1996                                               2,420,800             836,850
    Retained earnings                                                      4,870,728           3,100,246
                                                                    ------------------ -------------------
  Total shareholders' equity                                               7,291,528           3,937,096
                                                                    ------------------ -------------------
                                                                         $21,257,627         $14,762,259
                                                                    ================== ===================

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                               Data Tree Corporation

                                               Statements of Income


                                                                       Years ended September 30
                                                              1997                        1996                    1995
                                              -----------------------------------------------------------------------------------
<S>                                                       <C>                          <C>                      <C>       
Net sales                                                 $8,375,982                   $7,470,333               $4,564,818
Cost of sales                                              2,295,110                    1,984,225                1,261,584
                                              ------------------------------ ----------------------------- ----------------------
Gross profit                                               6,080,872                    5,486,108                3,303,234
Selling, general and
   administrative expenses                                 2,823,342                    2,714,825                2,048,526
                                              ------------------------------ ----------------------------- ----------------------
Income from operations                                     3,257,530                    2,771,283                1,254,708
Interest expense, net                                        306,724                      546,370                  465,457
                                              ------------------------------ ----------------------------- ----------------------
Income before provision for
   income taxes                                            2,950,806                    2,224,913                  789,251

Provision for income taxes                                 1,180,324                      853,000                  260,000
                                              ============================== ============================= ======================
Net income                                                $1,770,482                   $1,371,913               $  529,251
                                              ============================== ============================= ======================

The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                               Data Tree Corporation

                                        Statements of Shareholders' Equity

                                                                  Common Stock                   Retained
                                                            Shares             Amount            Earnings            Total
                                                   ---------------------------------------- ------------------- -----------------
<S>                                                        <C>              <C>                 <C>               <C>       
Balance at September 30, 1995                              5,125,000          $136,850          $1,728,333        $1,865,183
   Issuance of common shares on
     conversion of $700,000 of
     convertible notes payable                             1,281,250           700,000                  --           700,000
   Net income                                                     --                --           1,371,913         1,371,913
                                                   -------------------- ------------------- ------------------- -----------------
Balance at September 30, 1996                              6,406,250           836,850           3,100,246         3,937,096
   Exercise of common shares on
     exercise of stock purchase right                        633,580         1,583,950                  --         1,583,950
   Net income                                                     --                --           1,770,482         1,770,482
                                                   -------------------- ------------------- ------------------- -----------------
Balance at September 30, 1997                              7,039,830        $2,420,800          $4,870,728        $7,291,528
                                                   ==================== =================== =================== =================

The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                               Data Tree Corporation
                                             Statements of Cash Flows

                                                                                  Years Ended September 30
                                                                          1997                    1996                 1995
                                                                -------------------------------------------------------------------
<S>                                                                     <C>                      <C>                 <C>      
Operating activities
Net income                                                              $1,770,482             $1,371,913          $  529,251
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                         695,601                431,207             275,850
     Deferred income taxes                                                 771,114                583,000             290,000
     Repayment of note receivable                                               --                     --             102,590
     Changes in operating assets and liabilities:
       Accounts receivable                                                (577,063)               (17,053)           (255,811)
       Inventory                                                                --                  8,870              59,302

       Prepaid expenses and other current assets                          (448,697)              (127,667)            113,492
       Accounts payable                                                    315,285               (100,047)            (46,494)
       Accrued expenses and other current liabilities                      318,248                 80,741              24,593
       Income taxes payable                                                 10,960                206,650                  --
                                                                ------------------------- --------------------- -------------------
Net cash provided by operating activities                                2,855,930              2,437,614           1,092,773

Investing activities
Purchases of property and equipment                                     (1,159,194)              (746,014)           (915,673)
Title plant                                                             (3,080,716)            (2,289,832)         (2,517,036)
Computer software technology                                              (608,302)              (441,617)           (137,511)
Note receivable from related party                                              --                106,608                  --
                                                                ------------------------- --------------------- -------------------
Net cash used by investing activities                                   (4,848,212)            (3,370,855)         (3,570,220)

Financing activities
Net proceeds of notes payable to bank                                   11,000,000                     --                  --
Payments on notes payable to bank                                       (4,356,250)                    --                  --
Net proceeds of convertible notes payable                                       --              4,300,000           3,000,000
Payments on convertible notes payable                                   (5,000,000)            (3,046,528)            (97,222)
Proceeds from exercise of common stock purchase right                    1,583,950                     --                  --
Payments on capital lease obligations                                     (130,489)              (156,481)           (146,963)
                                                                ------------------------- --------------------- -------------------
Net cash provided by financing activities                                3,097,211              1,096,991           2,755,815

Increase in cash and cash equivalents                                    1,104,929                163,750             278,368
Cash and cash equivalents at beginning of year                             641,848                478,098             199,730
                                                                ========================= ===================== ===================
Cash and cash equivalents at end of year                                $1,746,777            $   641,848          $  478,098
                                                                ========================= ===================== ===================

Supplemental disclosure of cash flow information
Interest paid                                                           $  995,000            $   865,000       $     762,000
                                                                ========================= ===================== ===================
Income taxes paid                                                       $  397,659           $     63,000       $          --
                                                                ========================= ===================== ===================

Supplemental disclosure of non-cash investing and financing
   activities
Capital lease obligations entered into for equipment                   $   212,068            $   309,570       $          --
                                                                ========================= ===================== ===================
Conversion of convertible notes payable into common stock
                                                                  $             --             $  700,000       $          --
                                                                ========================= ===================== ===================

The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>


                              Data Tree Corporation

                          Notes to Financial Statements

                               September 30, 1997


1.  Summary of  Significant Accounting Policies

Description of Business

Data Tree  Corporation  (the  "Company") is engaged in the business of providing
large  databases  of high quality  digitized  real estate  title  documents  and
turnkey systems consisting of hardware and software to title insurance companies
and governmental agencies,  respectively. The Company has two product lines. The
first, Titlescape(R), consists of a software package and title document database
marketed to title insurance companies whereby the customer remotely accesses the
Company's  database to obtain  specific  recorded title  documents.  The second,
IDEA(TM), is  a  turnkey  imaging,  indexing,  and  document  management  system
consisting  of hardware  and software  that allows  county  recorder  offices to
streamline and automate office workflow.

Cash and Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments purchased with
a maturity date of three months or less.  Cash  equivalents  are stated at cost,
which approximates market value.

Concentration of Credit Risk

Credit is extended based on an evaluation of the customer's  financial condition
and collateral is generally not required.  Credit losses have traditionally been
minimal and such losses have been within management's expectations.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and equipment
is provided using the  straight-line  method over the estimated  useful lives of
the assets ranging from five to ten years.

Leased property meeting certain criteria is capitalized and the present value of
the  related  lease  payments  is recorded  as an  obligation.  Amortization  of
capitalized  leased assets is provided over the shorter of the lease term or the
estimated useful lives of the assets.

Title Plant

The Company  capitalizes  certain costs associated with constructing title plant
in accordance with Financial Accounting Standards Board Statement 61, Accounting
for Title Plant ("Statement 61"). Pursuant to Statement 61, capitalized costs of
title  plant are not  amortized.  Both direct  costs,  consisting  primarily  of
salaries, benefits, and depreciation, and certain indirect costs are capitalized
as title plant until the title plant begins generating  revenue.  Indirect costs
consist of certain  salaries and benefits,  depreciation,  interest,  and office
related  costs and are  allocated to title plant based upon  certain  production
ratios. Costs incurred to maintain the title plant subsequent to initial revenue
generation are expensed as incurred.

In  accordance  with  Financial   Accounting   Standards  Board  Statement  121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
Be  Disposed  Of,  the  Company  annually  reviews  title  plant for  changes in
circumstances  that  could  indicate  the  carrying  amount  of the asset may be
impaired.  If the sum of the  estimated  future  cash flows of a regional  title
plant  database is less than its carrying  value,  an  impairment  loss would be
recognized.  Based on  management's  analysis at September  30, 1997,  the title
plant is not impaired.

Computer Software Technology

In accordance with Financial Accounting Standards Board Statement 86, Accounting
for the Costs of Computer Software to Be Sold,  Leased,  or Otherwise  Marketed,
the Company  capitalizes the cost of computer software  technology  purchased or
incurred in the development of specific products after technological feasibility
has been  established.  Capitalization  of costs  ceases  when  the  product  is
available  for  general  release to the  Company's  customers.  The  capitalized
software technology costs are amortized using the straight-line  method over the
estimated economic life of the product.

Revenue Recognition

Revenues  from the  Titlescape(R)  product  are  recognized  when  the  customer
accesses the Company's  proprietary  database.  Revenues from computer  hardware
sales are  recognized  when the  hardware is  shipped.  Revenues  from  software
licenses are recognized  when the software has been  delivered,  all significant
Company  obligations  have  been  completed,  and  collectability  is  probable.
Revenues from maintenance agreements are recognized ratably over the maintenance
contract term.

Basis of Presentation

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. This basis of accounting  contemplates
the recovery of the Company's  assets and the satisfaction of its liabilities in
the normal course of conducting  business.  The Company anticipates that it will
require additional funds to continue the expansion of its Titlescape(R)  product
line into new counties and to complete the  development of its IDEA(TM)  product
line.  Management  believes that the funds necessary to meet these  requirements
for the next  twelve  months  will be raised  through a  combination  of debt or
equity   financing  or  a  modification  or  expansion  of  its  bank  borrowing
relationship. Without such additional or modified financing, the Company will be
required  to  delay,  reduce  the  scope of,  or  eliminate  the  aforementioned
expansion of its business.

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 financial  statements and disclosures made in
the accompanying notes to the financial statements.  Actual results could differ
from those estimates.

Reclassifications

Certain  prior year amounts have been  reclassified  to be  consistent  with the
current year's presentation.

2.  Property and Equipment

Property and equipment consist of the following at September 30:

                                           1997             1996
                                      --------------------------------
Furniture and fixtures                $   459,372       $   405,885
Machinery and equipment                 5,988,693         4,670,918
                                      --------------------------------
                                        6,448,065         5,076,803
Less accumulated depreciation           2,860,826         2,045,986
                                      ================================
                                       $3,587,239        $3,030,817
                                     =================================


The  Company has  recorded  at cost  approximately  $1,184,000  and  $975,000 of
equipment  under capital  leases at September  30, 1997 and 1996,  respectively.
Accumulated  depreciation on the leased equipment totaled approximately $766,000
and $625,000 at September 30, 1997 and 1996, respectively.

3.  Title Plant and Computer Software Technology

Title  plant and  computer  software  technology  consist  of the  following  at
September 30:

                                     1997                 1996
                                 --------------------------------------
Title plant                      $13,022,622         $ 9,597,768
Computer software technology       1,531,334             923,032
                                 --------------------------------------
                                  14,553,956          10,520,800
Less accumulated amortization
of software technology               789,249             564,350
                                 ======================================
                                 $13,764,707         $ 9,956,450
                                 ======================================

Approximately  $344,000 and $413,000 of property and equipment  depreciation was
capitalized to the title plant during 1997 and 1996, respectively. Additionally,
approximately $544,000 and $311,000 of interest expense was capitalized to title
plant during 1997 and 1996, respectively.

4.  Related Party Transactions

The Company sells Titlescape(R)  related products  consisting  primarily of real
estate title documents and hardware to a customer that has a  representative  on
the  Company's  Board  of  Directors.   These  related  party  revenues,   which
approximated $1,362,000,  $1,699,000 and $716,000 in fiscal 1997, 1996 and 1995,
respectively,  are earned and recognized  under the same pricing,  payment,  and
other terms as with the Company's other customers.

The  sole  owner  of  Kumar  Corporation  is the  president,  CEO  and  majority
shareholder  of Data Tree  Corporation.  During fiscal 1995,  the Company loaned
$250,000 to Kumar  Corporation  under an unsecured  note that bears  interest at
prime plus 2 1/2%.  Terms of the loan require  payment of interest  only for the
first  thirty-six  months followed by thirty-six equal payments of principal and
interest, with all unpaid principal and interest due August 1, 2000. The Company
pays a $5,000 monthly  management fee to Kumar Corporation for management of the
Company's  affiliated  business  in  India.   Effective  October  1,  1997,  the
management fee was terminated.

During  1997 and 1996,  the  Company  engaged  Datatree  India  Private  Limited
("Datatree  India") and Inteq  Software  Development  Corporation  ("Inteq")  to
construct  title  plant  database  and  develop  software  used in  title  plant
production.  The Company  paid  approximately  $212,000 and $149,000 to Datatree
India in fiscal 1997 and 1996, respectively,  and $126,000 and $197,000 to Inteq
in fiscal  1997 and 1996,  respectively,  for such  services.  The sole owner of
Datatree India and the majority  shareholder of Inteq is the president,  CEO and
majority shareholder of Data Tree Corporation.

5.  Notes Payable

In April 1997, the Company  entered into a $3.0 million term note agreement with
a bank. The term note bears interest at prime plus 2.0% (10.50% at September 30,
1997) and requires  monthly  principal  payments of $50,000 plus interest for 60
months beginning May 1997. Also in April 1997, the Company renewed its bank line
of credit through March 1998. The line of credit provides for up to $1.0 million
in borrowings  at prime plus 2.0% (10.50% at September  30, 1997).  At September
30, 1997,  there were no  borrowings  outstanding  under the line of credit.  In
connection  with  these  financings,  the  Company  issued the bank a warrant to
purchase  31,000 shares of the Company's  common stock at $10.50 per share.  The
warrant expires in April 2004.

In November  1996,  the Company  entered into a $8.0 million term note agreement
with a bank.  The term note  bears  interest  at prime  plus  1.75%  (10.25%  at
September  30, 1997) and requires  monthly  principal  payments of $133,333 plus
interest for 60 months beginning December 1996. The Company used the proceeds of
this  financing  to repay  the  balance  of $7.8  million  outstanding  under an
existing convertible note agreement and bank term note agreements. In connection
with this  financing,  the Company issued the bank a warrant to purchase  37,684
shares of the Company's  common stock at $7.96 per share. The warrant expires in
November 2003.

During fiscal 1993 and 1994 the Company  borrowed  amounts  totaling  $7,500,000
under two variable rate convertible note agreements (the "Notes").  The terms of
one Note gave the  holder  the right to  purchase  up to 20% of the  outstanding
common stock of the Company for $700,000 in cash or through the  conversion of a
portion of the Note principal.  During 1996, the Note holder elected to exercise
this  conversion  option on the first  Note,  and upon  conversion,  was  issued
1,281,250  shares of the Company's  common  stock.  The terms of the second Note
gave the holder the right to purchase up to 9% of the  outstanding  common stock
of the Company for up to $2.50 per share in cash or through the conversion of an
equivalent  amount of Note  principal.  During  1997,  the  Company  repaid  the
outstanding  amount on the second note and the holder  elected to  exercise  its
purchase  right  and  received  633,580  shares  of  common  stock  for  cash of
$1,583,950.  In  connection  with the  execution of the first  convertible  note
agreement,  the  holder  was  given  representation  on the  Company's  Board of
Directors.  During 1997, the Company repaid the $5.0 million balance outstanding
under the second Note.

In 1996, the Company  entered into a $2 million line of credit and a $3,300,000,
48 month term note agreement with a bank. The line of credit expired in February
1997. The balance  outstanding under the $3.3 million term note of approximately
$2.8 million was repaid during fiscal 1997. In connection  with this  financing,
the  Company  issued  to the bank a warrant  to  purchase  41,452  shares of the
Company's common stock at $7.96 per share. The warrant expires in March 2001.

The bank term notes are secured by  substantially  all of the Company's  assets.
The line of credit and term note  agreements  require the Company to comply with
certain covenants (measured quarterly), including maintaining a minimum level of
net worth as well as a ratio  for  liabilities  to net worth and a fixed  charge
coverage ratio.  During 1997, the Company was in violation of certain  quarterly
covenants  which have been  waived by the bank.  These  loans are secured by all
assets of the Company and limit other outside indebtedness of the Company.

Aggregate  maturities  of the bank  term  notes  payable  for the  years  ending
subsequent to September 30, 1997 are as
follows:

                 1998                        $2,200,000
                 1999                         2,200,000

                 2000                         2,200,000
                 2001                         2,200,000
                 2002                           800,000
                                             ----------
                                             $9,600,000
                                             ==========

Interest  expense on the notes payable to bank totaled  $907,000 and $844,000 in
fiscal  1997  and  1996,   respectively,   of  which   $544,000  and   $311,000,
respectively, was capitalized as part of the cost of the Company's title plant.

6.       Commitments

The Company is  obligated  under  various  noncancellable  operating  leases for
office space through  fiscal 2002.  Certain  leases provide that the Company pay
all or a portion of taxes, maintenance,  insurance and other operating expenses.
Rent  expense  is  recognized  on a  straight-line  basis  over the terms of the
leases.  Accordingly,  rent expense incurred in excess of rent paid is reflected
as deferred  rent,  which is included  in accrued  expenses in the  accompanying
balance sheets. Aggregate rent expense was approximately $489,000,  $429,000 and
$423,000 in fiscal 1997,  1996 and 1995,  respectively,  of which  approximately
$247,000,  $193,000 and  $178,000  was  allocated to title plant in fiscal 1997,
1996 and 1995.

The Company has also entered  into  various  capital  leases for  machinery  and
equipment.

Future minimum lease payments under noncancellable  operating and capital leases
are as follows for fiscal years ending September 30:

<TABLE>
<CAPTION>
                                                       Operating Leases            Capital Leases
     Years ending September 30,
<S>                                                        <C>                        <C>     
     1998                                                  $  482,596                 $163,391
     1999                                                     401,674                  136,821
     2000                                                      69,082                  136,821
     2001                                                      57,674                   86,344
     2002                                                      21,887                   16,841
     Thereafter                                                    --                       --
                                                       ------------------------------------------
     Total minimum lease payments                          $1,032,913                  540,218
                                                       ================
     Less amount representing interest                                                 110,130
                                                                                   --------------
     Present value of minimum lease payments                                            430,088

Less current portion of capital lease obligations                                       122,482
                                                                                   --------------
Capital lease obligations, excluding current portion                                    $307,606
                                                                                   ==============
</TABLE>

7.  Shareholders' Equity

On June 20, 1997,  the  Company's  Board of Directors  authorized a  ten-for-one
stock split to  shareholders  of record on June 20, 1997.  All references in the
financial  statements  and notes  thereto  to the number of shares and per share
amounts of the  Company's  common  stock  have been  retroactively  restated  to
reflect the increased number of common shares outstanding.

Additionally, the Company's Board of Directors approved a stock option plan (the
"Plan")  that  provides for the granting of either  incentive  stock  options or
non-qualified stock options to key employees,  directors, and consultants of the
Company.  The Plan  provides for the granting of the option to purchase  500,000
shares of common  stock.  The  options  granted  under the Plan are to  purchase
common stock at not less than 85% of fair market value at the date of grant. The
options  are  generally  exercisable  one year  from the date of grant  and vest
monthly  thereafter up to 48 months with a term of ten years.  To date, no stock
options have been granted.

8.  Income Taxes

The Company's provision for income taxes consists of the following:

                           Years ended September 30
                      1997             1996              1995
                  -----------------------------------------------
Current:
Federal           $  323,300         $200,000          $     --
State                 94,310           70,000             1,000
                  -----------------------------------------------

                     417,610          270,000             1,000
Deferred:
Federal              589,424          465,000           185,000
State                173,290          118,000            74,000
                  -----------------------------------------------
                     762,714          583,000           259,000
                  -----------------------------------------------
                  $1,180,324         $853,000          $260,000
           ======================================================

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts  used for income tax  purposes.  Deferred  income taxes
have been recognized for capitalized  title plant costs that have been amortized
for tax purposes.

Significant components of the Company's deferred tax liabilities are as follows:

                                                           September 30
                                                      1997              1996
                                                  -----------------------------
Deferred tax liabilities:
  Capitalized title plant costs                   $1,883,000         $1,316,000
  Capitalized computer software technology           268,000            136,000
  Accrual to cash adjustment                         156,000            156,000
  Depreciation and amortization                      130,000             85,000

  Other, net                                         130,000            103,000
                                                  -----------------------------
Deferred tax liability                            $2,567,000         $1,796,000
                                                  =============================


9.  Employee Benefit Plan

The Company  maintains a deferred  savings plan for its  employees,  which allow
participants  to make  contributions  by salary  reductions  pursuant to Section
410(k) of the Internal  Revenue  Code.  Additionally,  the plan  provides for an
employer  contribution  in such amounts as the Board of  Directors  may annually
determine.  The Company made no employer contributions to the plan during fiscal
1997, 1996 and 1995.
<TABLE>
<CAPTION>
<PAGE>
                                               Data Tree Corporation
                                                   Balance Sheet
                                                  March 31, 1998
                                                    (Unaudited)


                                                                       March 31, 1998
<S>                                                                     <C>          
     Assets

Current Assets
   Cash                                                                    $497,052  
   Accounts Receivable, net of allowance for doubtful 
     accounts of $42,000                                                  1,375,904  
   Other Current Assets                                                     519,047  
                                                                         ----------  
Total Current Assets                                                      2,392,003  

Property and Equipment
   Title Plant                                                           14,504,431  
   Equipment                                                              6,271,752  
   Furniture and Fixtures                                                   487,304  
   Capitalized Software                                                   1,395,572  
   Purchased Software                                                       143,103  
                                                                         ----------  
                                                                         22,802,162  
   Accumulated Depreciation                                              (3,354,077) 
   Accumulated Amortization                                                (947,300) 
                                                                         ----------  
    Net Property and Equipment                                           18,500,783  

Other Assets                                                                232,589  
                                                                        -----------  
Total Assets                                                            $21,125,377  
                                                                        ===========  

     Liabilities and Stockholders' Equity

Current Liabilities
   Accounts Payable                                                        $304,402  
   Accrued Expenses and Other Current Liabilities                           631,931  
   Income Taxes Payable                                                     638,860  
   Deferred Taxes                                                           131,554  
   Notes Payable - Current Portion                                        2,200,000  
   Current Portion of Obligations under Capital Leases                      167,514  
                                                                         ----------  
Total Current Liabilities                                                 4,074,261  

   Notes Payable                                                          6,250,000  
   Obligations under Capital Leases                                         436,601  
   Deferred Taxes                                                         2,435,560  

Stockholders' Equity
   Common Shares, no par value, Authorized Shares - 10,000,000
      Issued and Outstanding Shares - 7,039,830                              34,350  
   Additional Paid in Capital                                             2,368,450  
   Retained Earnings                                                      5,508,155  
                                                                         ----------  
Total Stockholders' Equity                                                7,928,955  

Total Liabilities and Stockholders' Equity                              $21,125,377  
                                                                        -----------  

The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>

                             Data Tree Corporation
                              Statements of Income
                                  (Unaudited)



                                                             SIX MONTHS ENDED
                                                                MARCH 31
                                                           1998          1997
                                                        ------------------------


Net sales                                               $4,626,394    $3,819,998
Cost of sales                                            1,474,631     1,004,725
                                                        ------------------------
Gross Profit                                             3,151,763     2,815,273

Selling, general and administrative expenses             1,616,161     1,292,549
Research and development                                   286,881             -
                                                        ------------------------
Income from operations                                   1,248,721     1,522,724

Interest expense, net                                      186,343       269,163
                                                        ------------------------
Income before provision for income taxes                 1,062,378     1,253,561

Provision for income taxes                                 424,951       501,426
                                                        ------------------------
Net income                                              $ 637,427     $  752,135
                                                        ========================


The accompanying notes are an integral part of these financial statements.





<PAGE>
<TABLE>
<CAPTION>

                                               Data Tree Corporation
                                           Statements of Shareholders' Equity
                                                      (Unaudited)


                                                         SIX MONTHS ENDED MARCH 31, 1998
                                               COMMON STOCK                   RETAINED
                                       SHARES               AMOUNT            EARNINGS        TOTAL 
                                 ------------------------------------------------------------------------
<S>                               <C>                   <C>               <C>               <C> 

Balance at September 30, 1997     7,039,830             $ 2,420,800       $4,870,728        $7,291,528   
   Net income                             -                       -          637,427           637,427
                                 ------------------------------------------------------------------------
Balance at March 31, 1998         7,039,830             $ 2,420,800       $5,508,155        $7,928,955
                                 ========================================================================


The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                               Data Tree Corporation
                                              Statements of Cash Flows
                                                    (Unaudited)



                                                                                  Six Months Ended
                                                                                     March 31,
                                                                            1998                   1997
                                                                    -----------------------------------------
<S>                                                                     <C>                   <C>        
OPERATING ACTIVITES                                                        
Net Income                                                                 $637,427            $752,137
Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation and amortization                                          474,069             335,150
     Changes in operating assets and liabilities:
          Accounts receivable                                               (33,927)           (412,219)
          Prepaid expenses and other current assets                          65,291             (78,427)
          Accounts payable                                                 (186,110)            (85,476)
          Accrued expenses and other current liabiliteis                    (28,844)            (87,589)
          Income taxes payable                                              421,250             304,736
                                                                    ----------------------------------------

Net cash provided by operating activities                                 1,349,156             728,310

INVESTING ACTIVITIES
Purchases of property and equipment                                        (105,791)           (426,115)
Computer Software technology                                                     --            (281,058)
Title plant                                                              (1,304,576)         (1,110,011)
                                                                    ----------------------------------------
Net cash used by investing activities                                    (1,410,367)         (1,817,184) 

FINANCING ACTIVITIES
Payments on notes payable to bank                                        (1,150,000)           (489,583)
Payments on capital lease obligatins                                        (38,514)            (67,863)

Proceeds from exercise of common stock purchase right                            --           1,583,950
                                                                    ----------------------------------------
Net cash used by financing activities                                    (1,188,514)          1,026,504

Decrease in cash and cash equivalents                                    (1,249,725)           (62,370)
Cash and cash equivalents at beginning of year                            1,746,777            641,848
                                                                    ----------------------------------------
Cash and cash equivalents at end of period                               $  497,052          $ 579,478
                                                                    ========================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                            $  534,973          $ 414,056
Income taxes paid                                                        $       --          $ 197,659
                                                                    ========================================

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES
Capital lease obligations entered into for equipment                     $  212,541          $ 212,068
                                                                    ========================================


The accompanying notes are an integral part of these financial statements.
</TABLE>



<PAGE>


                              Data Tree Corporation
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)



Note 1 - Basis of Presentation

The unaudited interim financial  statements  presented do not include all of the
information  and note  disclosures  required by  generally  accepted  accounting
principles. In the opinion of management, all adjustments,  consisting of normal
recurring  accruals,  considered  necessary  for a fair  presentation  have been
included.  The statement of  operations  for the six months ended March 31, 1998
may not be indicative of the expected  results for the year ended  September 30,
1998.


Note 2 - Subsequent Event

In April 1998, Data Tree obtained a $3 million  revolving credit facility from a
commercial  bank. The credit facility  accrues interest at the bank's prime rate
of  interest,  expires in March  1999 and is  guaranteed  by The First  American
Financial  Corporation  ("FAFCO").

On March 27, 1998,  Data Tree entered into an Agreement  and Plan of Merger with
FAFCO under which all of the  outstanding  shares of Data Tree would be acquired
by FAFCO. Completion of the merger is subject to approval of the shareholders of
Data Tree and certain other terms and conditions.

<PAGE>
                                                                         ANNEX A



                          AGREEMENT AND PLAN OF MERGER


                                  BY AND AMONG


                    THE FIRST AMERICAN FINANCIAL CORPORATION,


                            IMAGE ACQUISITION CORP.,


                             DATA TREE CORPORATION,


                                       AND


                                  HARISH CHOPRA




                           Dated as of March 27, 1998


<PAGE>

                                TABLE OF CONTENTS

                                                                            Page


SECTION 1....................................................................-2-
     DEFINITIONS AND INTERPRETATIONS.........................................-2-
          1.1      Defined Terms.............................................-2-
          1.2      Principles of Construction................................-7-

SECTION 2....................................................................-8-
     THE MERGER AND RELATED MATTERS..........................................-8-
          2.1      The Merger................................................-8-
          2.2      Company Actions...........................................-8-
          2.3      Conversion of Shares......................................-8-
          2.4      Dissenting Shares.........................................-9-
          2.5      Surrender of Certificates................................-10-
          2.6      No Further Rights of Transfers...........................-11-
          2.7      Stock Option and Other Plans.............................-11-
          2.8      Articles of Incorporation of the Surviving
                   Corporation..............................................-11-
          2.9      By-Laws of the Surviving Corporation.....................-12-
          2.10     Directors and Officers of the Surviving
                   Corporation..............................................-12-
          2.11     Closing..................................................-12-

SECTION 3...................................................................-12-
     REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
     MAJOR SHAREHOLDER......................................................-12-
          3.1      Existence and Good Standing..............................-12-
          3.2      Binding Effect...........................................-13-
          3.3      Capitalization...........................................-13-
          3.4      Subsidiaries and Investments.............................-13-
          3.5      Financial Statements and No Material Changes.............-13-
          3.6      Books and Records........................................-14-
          3.7      Title to Properties; Encumbrances........................-14-
          3.8      Real Property............................................-15-
          3.9      Leases...................................................-15-
          3.10     Material Contracts.......................................-15-
          3.11     Restrictive Documents....................................-16-
          3.12     Litigation...............................................-16-
          3.13     Taxes....................................................-16-
          3.14     Insurance................................................-18-
          3.15     Intellectual Properties..................................-18-
          3.16     Compliance with Laws.....................................-18-
          3.17     Governmental Licenses....................................-18-
          3.18     Labor Matters............................................-18-
          3.19     Employee Benefit Plans...................................-19-
          3.20     Interests in Clients, Suppliers, Etc.....................-23-
          3.21     Bank Accounts, Powers of Attorney and Compensation
                   of Employees.............................................-23-
          3.22     No Changes Since Balance Sheet Date......................-24-
          3.23     Consents and Approvals; No Violations....................-24-
          3.24     Disclosure...............................................-25-
          3.25     Broker's or Finder's Fees................................-25-
          3.26     Copies of Documents......................................-25-

SECTION 4...................................................................-25-
     REPRESENTATIONS AND WARRANTIES OF FAFCO AND FAFCOSUB...................-25-
          4.1      Existence and Good Standing; Power and Authority.........-25-
          4.2      Consents and Approvals; No Violations....................-26-
          4.3      Restrictive Documents....................................-26-
          4.4      Broker's or Finder's Fees................................-26-
          4.5      FAFCO Common Shares......................................-27-

SECTION 5...................................................................-29-
     TRANSACTIONS PRIOR TO THE EFFECTIVE TIME...............................-29-
          5.1      Conduct of the Business of the Company Prior to
                   Closing..................................................-29-
          5.2      Review of the Company....................................-30-
          5.3      Exclusive Dealing........................................-30-
          5.4      Shareholder Approval.....................................-31-
          5.5      Best Efforts.............................................-31-
          5.6      HSR Act..................................................-31-

SECTION 6...................................................................-32-
     CONDITIONS PRECEDENT TO MERGER.........................................-32-
          6.1      Conditions Precedent to Obligations of FAFCO,
                   FAFCOSUB, and the Company and the Major 
                   Shareholder..............................................-32-
          6.2      Conditions Precedent to Obligations of FAFCO and
                   FAFCOSUB.................................................-33-
          6.3      Conditions Precedent to Obligation of the Company and
                   the Major Shareholder....................................-35-

SECTION 7...................................................................-36-
     COVENANTS RELATING TO SECURITIES MATTERS...............................-36-
          7.1      Prospectus Supplement....................................-36-
          7.2      Listing..................................................-37-

SECTION 8...................................................................-38-
     OTHER COVENANTS........................................................-38-
          8.1      Amended Returns..........................................-38-
          8.2      Tax Free Reorganization..................................-38-
          8.3      Continuity of Interest...................................-38-
          8.4      Continuity of Business Enterprise........................-38-
          8.5      Directors and Officers Indemnification...................-38-
          8.6      Employee Matters.........................................-39-

SECTION 9...................................................................-39-
     TERMINATION............................................................-39-
          9.1      Events of Termination....................................-39-
          9.2      Effect of Termination....................................-40-

SECTION 10..................................................................-40-
     SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...........................-40-
          10.1     Survival of Representations..............................-40-
          10.2     Indemnification..........................................-41-
          10.3     Indemnification Procedure................................-42-

SECTION 11..................................................................-44-
     MISCELLANEOUS..........................................................-44-
          11.1     Knowledge................................................-44-
          11.2     Expenses.................................................-45-
          11.3     Governing Law............................................-45-
          11.4     Jurisdiction; Agents for Service of Process..............-45-
          11.5     Publicity................................................-45-
          11.6     Notices..................................................-46-
          11.7     Parties in Interest......................................-47-
          11.8     Counterparts.............................................-47-
          11.9     Entire Agreement.........................................-47-
          11.10    Amendments...............................................-47-
          11.11    Severability.............................................-47-
          11.12    Third Party Beneficiaries................................-48-


SCHEDULES

3.1      Jurisdiction Where Qualified
3.3      List of Shareholders, Options, Warrants and Other Rights
         to Capital Stock as of the Date of the Merger Agreement
3.6      Records, Systems, Controls, etc. in Control of Third Parties
3.7      Encumbrances
3.9      Leases
3.10     Material Contracts
3.12     Litigation
3.13     Tax Matters
3.14     List of Insurance Policies
3.15     Intellectual Properties
3.19     Employee Benefit Plans
3.20     Interests in Clients, Suppliers, etc.
3.21     Bank Accounts, Powers of Attorney and Compensation of Employees
3.22     Changes Since Balance Sheet Date
3.23     Consents and Approvals
3.25     Broker's or Finder's Fees
4.6      Registration and Other Rights

EXHIBITS

Exhibit A         Article of Incorporation of the Company
Exhibit B         Bylaws of the Company
Exhibit C         Contribution and Joint Venture Agreement
Exhibit D         Operating Agreement
Exhibit E         Employment Agreement
Exhibit F         Noncompetition Agreement
Exhibit G         Supply Agreement
Exhibit H         Secured Promissory Note
Exhibit I         Form of Cooley Godward LLP Opinion
Exhibit J         Form of Opinion of Counsel for R2
Exhibit K         Form of White & Case LLP Opinion
Exhibit L         Form of FAFCO and FAFCOSUB Tax Representation Letter
Exhibit M         Form of the Company's Tax Representation Letter

<PAGE>


                          AGREEMENT AND PLAN OF MERGER


     AGREEMENT   AND  PLAN  OF  MERGER,   dated  as  of  March  27,  1998  (this
"Agreement"),   by  and  among  The  First  American  Financial  Corporation,  a
California  corporation   ("FAFCO"),   Image  Acquisition  Corp.,  a  California
corporation  and a  wholly-owned  subsidiary  of FAFCO  ("FAFCOSUB"),  Data Tree
Corporation,  a California corporation (the "Company"; the Company together with
FAFCOSUB,  the  "Constituent  Corporations")  and Harish  Chopra,  an individual
residing in Rancho Santa Fe, California (the "Major Shareholder").

                              W I T N E S S E T H:

     WHEREAS,  FAFCO and FAFCOSUB are  corporations  duly organized and existing
under  the laws of the  State  of  California  and  FAFCOSUB  is a  wholly-owned
subsidiary of FAFCO;

     WHEREAS, the Company is a corporation duly organized and existing under the
laws of the State of California with an authorized  capitalization  as set forth
in Section 3.3 hereof;

     WHEREAS,  the Board of  Directors  of the Company has approved and declared
fair to, and in the best interests of, the Company and its shareholders, and the
board of directors of FAFCOSUB and FAFCO,  as the sole  shareholder of FAFCOSUB,
has approved,  the merger of FAFCOSUB  with and into the Company (the  "Merger")
upon the terms and subject to the  conditions  set forth  herein,  whereby  each
issued and outstanding  Share (as defined below) will be cancelled and converted
into the right to receive the Merger  Consideration  (as defined below) to which
each such Share is entitled;

                  WHEREAS, the Parties (as defined below) desire to make certain
     representations,  warranties and  agreements in connection  with the Merger
and also to prescribe various conditions to the Merger;

     WHEREAS,  in order to effectuate and facilitate the Merger,  each Party has
independently  determined  that its in its best  interest  to  enter  into  this
Agreement and to consummate the transactions contemplated hereby;

     WHEREAS,  by executing this Agreement the Parties intend to adopt a plan of
reorganization within the meaning of Section 368 of the Code (as defined below);

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants,  representations,  warranties and agreements  herein  contained,  the
parties hereto agree as follows:


<PAGE>
                                    SECTION 1
                         DEFINITIONS AND INTERPRETATIONS

     1.1 Defined Terms.

     In this  Agreement  the  following  words and  expressions  shall  have the
following  meanings (such meaning to be equally  applicable to both the singular
and plural forms of the terms defined):

     "Agreed Claims" shall have the meaning provided in Section 10.3(d);

     "Agreement"  shall have the meaning provided in the first paragraph of this
Agreement;

     "Antitrust  Division"  means the  Antitrust  Division of the  Department of
Justice;

     "Articles of Incorporation" shall have the meaning provided in Section 2.8;

     "Average  Price" means the  arithmetic  average of the last reported  sales
price of one FAFCO Common  Share as reported on the New York Stock  Exchange for
the twenty consecutive  Trading Days ending on the Trading Day immediately prior
to the Data Tree Shareholder Meeting;

     "Balance Sheet" shall have the meaning provided in Section 3.5(a);

     "Balance Sheet Date" shall have the meaning provided in Section 3.5(a);

     "Business Day" shall mean any day, excluding Saturday, Sunday or any
day which shall be a legal holiday in the State of California;

     "By-Laws" shall have the meaning provided in Section 2.9;

     "Certificate" shall mean the certificate referenced in Section 10.3 of this
Agreement which shall:

          (i) state  that the  Indemnified  Party has paid or  properly  accrued
     Damages or reasonably  anticipates that it will incur liability for Damages
     for which such Indemnified Party is entitled to indemnification pursuant to
     this Agreement; and

          (ii)  specify in  reasonable  detail  each  individual  item of Damage
     included  in the amount so stated,  the date such item was paid or properly
     accrued,  the basis for any  anticipated  liability  and the  nature of the
     misrepresentation, breach of warranty, breach of covenant or claim to which
     each such item is related and the  computation  of the amount to which such
     Indemnified  Party  claims  to be  entitled  under  Section  10.3  of  this
     Agreement;

     "Closing" shall have the meaning provided in Section 2.11;

     "Closing Date" shall have the meaning provided in Section 2.11;

     "Code" shall have the meaning provided in Section 3.19(a);

     "Company"  shall have the meaning  provided in the first  paragraph of this
Agreement;

     "Constituent  Corporations"  shall have the  meaning  provided in the first
paragraph of this Agreement;

     "Corporations Code" shall mean the California Corporations Code;

     "Damages" shall have the meaning provided in Section 10.2(a);

     "Data Tree Common  Certificate"  shall have the meaning provided in Section
2.5(a);

     "Data Tree Shareholder  Meeting" shall have the meaning provided in Section
5.4;

     "Dissenting Shareholders" shall have the meaning provided in Section 2.4;

     "Effective Time" shall have the meaning provided in Section 2.1(a);

     "Employee  Benefit  Plans"  shall  have the  meaning  provided  in  Section
3.19(a);

     "ERISA" shall have the meaning provided in Section 3.19(a);

     "Excepted  Shares" means (i) any Shares which are held by any subsidiary of
the Company or in the  treasury of the Company,  or which are held,  directly or
indirectly,  by FAFCO or any direct or indirect  subsidiary of FAFCO  (including
FAFCOSUB) and (ii) Shares held by Dissenting Shareholders;

     "Exchange Agent" shall have the meaning provided in Section 2.5(a);

     "FAFCO"  shall have the  meaning  provided in the first  paragraph  of this
Agreement;

     "FAFCO  Common  Certificates"  shall have the  meaning  provided in Section
2.5(a);

     "FAFCO Common  Shares"  means the common  shares,  par value $1.00,  of The
First American Financial Corporation;

     "FAFCO Parties" shall have the meaning provided in Section 10.2(a);

     "FAFCOSUB"  shall have the meaning  provided in the first paragraph of this
Agreement;

     "FAFCOSUB  Common  Shares"  means  the  common  shares,  no par  value,  of
FAFCOSUB;

     "FTC" means the Federal Trade Commission;

     "HSR Act" shall have the meaning provided in Section 3.23;

     "Imperial  Warrants" means each of Imperial  Warrant I, Imperial Warrant II
and Imperial Warrant III, or all of them, as the case may be;

     "Imperial  Warrant I" means the  warrant,  expiring  March 3, 2003,  giving
Imperial Bank the right to purchase 41,452 Shares at $7.96 per Share;

     "Imperial Warrant II" means the warrant, expiring November 27, 2003, giving
Imperial Bank the right to purchase 37,684 Shares at $7.96 per share;

     "Imperial  Warrant III" means the warrant,  expiring April 22, 2004, giving
Imperial Bank the right to purchase 31,000 Shares at $10.50 per share;

     "Indemnified Party" has the meaning provided in Section 10.3;

     "Indemnifying Party" has the meaning provided in Section 10.3;

     "Intellectual  Property"  means all  domestic and foreign  patents,  patent
applications,  registered  and  unregistered  trade  marks  and  service  marks,
registered and unregistered  copyrights,  computer  programs,  databases,  trade
secrets and proprietary information;

     "IRS" shall have the meaning provided in Section 3.19(c);

     "Key Employee Bonuses" means an amount not to exceed $200,000;

     "Licenses" shall have the meaning provided in Section 3.17;

     "Major  Shareholder" shall have the meaning provided in the first paragraph
of this Agreement;

     "Material  Adverse  Effect" means,  with respect to any Person,  a material
adverse effect on (i) the validity or enforceability of this Agreement, (ii) the
ability of such Person to perform its obligations under this Agreement (iii) the
business,  assets,  conditions  or results of  operations  of the Person and its
subsidiaries, taken as a whole; provided however, that any adverse change, event
or effect that is  proximately  caused by (i)  conditions  affecting  the United
States  economy  generally  or the  economy  of the  regions in which the Person
conducts a material  part of its  business,  (ii) by  conditions  affecting  the
industry in which the Person  competes,  (iii) by the announcement of the Merger
or by virtue of this Agreement, including without limitation, compliance by such
Person with its  covenants  hereunder  or  thereunder  or (iv) the breach by any
other Person of any covenant or obligation set forth in this Agreement shall not
be taken into account in determining  whether there has been a Material  Adverse
Effect;

     "Merger" shall have the meaning provided in third WHEREAS clause hereto;

     "Merger Consideration" means, with respect to each Shareholder,  the number
of FAFCO Common Shares to be received by such  Shareholder at the Effective Time
which shall equal the product of (a) the quotient resulting from the division of
the Per Share  Interest  by the  Average  Price,  expressed  as a decimal to the
thousandths  place  and (b)  the  number  of  Shares  set  forth  opposite  such
Shareholder's  name on Schedule  3.3 hereto;  provided,  however that (i) if the
aggregate  number of FAFCO Common Shares to be received by all  Shareholders  at
the  Effective  Time as determined  in  accordance  with the  preceding  formula
exceeds  838,095  less the  aggregate  number of FAFCO  Common  Shares  that the
Dissenting  Shareholders  would be entitled to under the  preceding  formula had
such Dissenting Shareholders not so dissented, the number of FAFCO Common Shares
to be received by such Shareholder at the Effective Time shall equal the product
of 838,095 and such Shareholder's  Percentage Interest as of the Effective Time,
and (ii) in lieu of a fractional  FAFCO Common  Share,  such  Shareholder  shall
receive cash in the form of a check  (rounded to the nearest cent) drawn against
FAFCO in an amount  equal to the  product of (x) the  Average  Price and (y) the
fractional interest;

     "Merger  Documents"  means  those  documents  required to be filed with the
California   Secretary  of  State  in  accordance   with  section  1103  of  the
Corporations Code;

     "Multiemployer Plan" shall have the meaning provided in Section 3.19(c);

     "Number of Shares  Outstanding"  is the  number  7,039,830  plus  41,452 if
Imperial  Warrant I is exercised,  plus 37,684 Imperial  Warrant II is exercised
plus 31,000 if Imperial Warrant III is exercised;

     "Operating   Agreement"   shall  have  the  meaning   provided  in  Section
6.1(f)(ii);

     "Party" or  "Parties"  each of FAFCO,  FAFCOSUB,  the Company and the Major
Shareholder or all of them, as the case may be;

     "PBGC" shall have the meaning provided in Section 3.19(c);

     "Percentage  Interest"  shall mean,  with respect to any Shareholder on any
date,  the quotient  resulting from the division of the number of Shares held by
such  Shareholder  on  such  date by the  total  number  of  Shares  issued  and
outstanding on such date;

     "Permitted Liens" shall have the meaning provided in Section 3.7;

     "Per Share Interest" means the quotient  resulting from the division of the
Purchase Price by the Number of Shares Outstanding;

     "Person" shall mean and include any individual, partnership, joint venture,
association, joint stock company, corporation, trust, limited liability company,
unincorporated  organization,  a group  and a  government  or other  department,
agency or political subdivision thereof;

     "Prospectus Supplement" shall have the meaning provided in Section 7.1(a);

     "Purchase Price" means $43,113,373 less Surplus Expenses;

     "Registration Statement" shall have the meaning provided in Section 7.1(a);

     "Related  Documents"  shall  mean  all  of  the  documents  and  agreements
described in Section 6.1(f);

     "Related Party" shall have the meaning provided in Section 6.2(j);

     "Returns" shall have the meaning provided in Section 3.13(a);

     "SEC" means the Securities and Exchange Commission;

     "SEC Reports" shall have the meaning provided in Section 4.7;

     "Securities Act" shall mean the Securities Act of 1933, as amended;

     "Share" or "Shares" means one or more of the 7,039,830 (plus 41,452 if
Imperial Warrant I is exercised, plus 37,684 if Imperial Warrant II is exercised
plus 31,000 if Imperial Warrant III is exercised) issued and outstanding  common
shares, no par value, of the Company;

     "Shareholder" means those Persons listed on Schedule 3.3 as owning Shares;

     "Surplus Expenses" shall have the meaning provided in Section 11.2;

     "Surviving Corporation" shall have the meaning provided in Section 2.1(b);

     "Taxes" means all taxes,  assessments,  charges,  duties,  fees,  levies or
other governmental charges,  including,  without limitation, all Federal, state,
local,  foreign and other income,  franchise,  profits,  capital gains,  capital
stock, transfer, sales, use, occupation,  property, excise, severance,  windfall
profits,  stamp,  license,  payroll,  withholding and other taxes,  assessments,
charges,  duties,  fees,  levies  or  other  governmental  charges  of any  kind
whatsoever  (whether  payable  directly  or by  withholding  and  whether or not
requiring the filing of a Return), all estimated taxes,  deficiency assessments,
additions to tax,  penalties  and interest and shall  include any  liability for
such amounts as a result  either of being a member of a combined,  consolidated,
unitary or  affiliated  group or of a  contractual  obligation  to indemnify any
person or other entity;

     "Trading Day" means a day on which the New York Stock  Exchange is open for
at least one-half of its normal business hours; and

     "US GAAP" means United  States  generally  accepted  accounting  principles
applied on a consistent basis.

     1.2 Principles of Construction.

     (a) All references to Sections, subsections,  Schedules and Exhibits are to
Sections,  subsections,  Schedules and Exhibits in or to this  Agreement  unless
otherwise  specified.  The words "hereof," "herein" and "hereunder" and words of
similar  import when used in this  Agreement  shall refer to this Agreement as a
whole  and  not  to  any  particular  provision  of  this  Agreement.  The  term
"including" is not limiting and means "including without limitation."

     (b) All accounting terms not specifically defined herein shall be
construed in accordance with US GAAP.

     (c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but  excluding";  and the word "through" means "to and
including."

     (d) The Table of Contents  hereto and the Section  headings  herein are for
convenience only and shall not affect the construction hereof.

     (e)  This  Agreement  is the  result  of  negotiations  among  and has been
reviewed by each  Party's  counsel.  Accordingly,  this  Agreement  shall not be
construed  against any Party merely  because of such Party's  involvement in its
preparation.

                                    SECTION 2
                         THE MERGER AND RELATED MATTERS

     2.1 The Merger.

     (a)  Subject  to the terms and  conditions  of this  Agreement,  the Merger
Documents shall be duly prepared,  executed and  acknowledged by the Constituent
Corporations  and shall be filed with the  California  Secretary of State on the
Closing Date.  The Merger shall become  effective  upon the filing of the Merger
Documents  with  the  California  Secretary  of  State  in  accordance  with the
provisions and requirements of the Corporations Code (the "Effective Time").

     (b) At the  Effective  Time,  FAFCOSUB  shall be  merged  with and into the
Company and the separate  corporate  existence of FAFCOSUB shall cease,  and the
Company shall continue as the surviving  corporation under the laws of the State
of California (the "Surviving  Corporation")  and shall continue to use the name
of the Company (which, for the avoidance of doubt, is "Data Tree Corporation").

     (c) From and after the  Effective  Time,  the Merger shall have the effects
provided for in section 1107 of the Corporations Code.

     2.2  Company  Actions.  The  Company  hereby  consents  to the  Merger  and
represents, together with the Major Shareholder, that its Board of Directors (at
a meeting duly called and held) has (i)  determined by the unanimous vote of the
Directors  that  the  Merger  is fair  to,  and in the best  interests  of,  the
Shareholders,  (ii)  approved  the Merger  and (iii)  recommended  approval  and
adoption of the Merger to the Shareholders.

     2.3  Conversion of Shares.  At the Effective  Time, by virtue of the Merger
and  without  any action on the part of FAFCO,  FAFCOSUB,  the Company or any of
their  respective  shareholders  (including,   without  limitation,   the  Major
Shareholder):

     (a) Each Share then issued and  outstanding,  other than  Excepted  Shares,
shall be  converted  into the Merger  Consideration.  All such  Shares,  when so
converted,  shall no longer be outstanding and shall  automatically be cancelled
and retired and each holder of a Data Tree Common  Certificate  representing any
such  Shares  shall  cease to have any rights with  respect  thereto.  All FAFCO
Common  Shares to be received by holders of Shares  pursuant to the Merger shall
be  duly   authorized,   validly   issued  and   outstanding,   fully  paid  and
nonassessable,  free of preemptive rights, and will not be liable to any further
call,  nor shall the  holder  thereof be liable for any  further  payments  with
respect  thereto.  All FAFCO  Common  Shares to be received by holders of Shares
pursuant to the Merger shall have been  registered by FAFCO under the Securities
Act and shall have been issued in compliance with all federal  securities  laws,
California securities laws and the securities laws of any other state within the
United  States in which any  Shareholder  is domiciled  (provided  that FAFCO is
provided  with a list of such  states  at least  ten days  prior to the  Closing
Date);

     (b) Excepted  Shares shall be cancelled at the Effective Time and shall not
receive  the  Merger  Consideration  or  any  cash  payment  with  respect  to a
fractional share; and

     (c) Each FAFCOSUB Common Share shall be converted into one common share, no
par value, of the Surviving Corporation.

     2.4 Dissenting  Shares.  Notwithstanding  anything in this Agreement to the
contrary,  but only to the extent  required by California law, Shares issued and
outstanding  immediately  prior to the  Effective  Time and held by  holders  of
Shares  that were not voted in favor of the Merger  and who comply  with all the
provisions  of  Chapter  13 of the  Corporations  Code  concerning  the right of
holders of Shares to dissent  from the Merger  and  require  appraisal  of their
Shares ("Dissenting  Shareholders") shall not be converted into or represent the
right to receive the Merger  Consideration but shall become the right to receive
such  consideration  as may be determined to be due such Dissenting  Shareholder
pursuant  to the law of the State of  California.  From and after the  Effective
Time,  Dissenting  Shareholders  shall  not have and shall  not be  entitled  to
exercise  any of the  voting  rights  or other  rights of a  shareholder  of the
Surviving  Corporation.  If any Dissenting  Shareholder  shall fail to assert or
perfect,  or shall waive,  rescind,  withdraw or otherwise  lose,  such holder's
right to dissent and obtain payment under Chapter 13 of the  Corporations  Code,
then such Shares shall  automatically  be converted  into and represent only the
right to receive (upon  surrender of a Data Tree Common  Certificate  previously
representing  such Shares) FAFCO Common Shares in accordance with Section 2.3(a)
(and cash in lieu of any fractional  share in accordance  with the terms of this
Agreement).  The Company  shall give FAFCO and FAFCOSUB (i) prompt notice of any
written  demands for  appraisal,  withdrawals  of demands for  appraisal and any
other related  instruments  received by the Company and (ii) the  opportunity to
direct all  negotiations  and proceedings with respect to demands for appraisal.
The Company  will not  voluntarily  make any payment with respect to any demands
for  appraisal  and will not,  except with the prior  written  consent of FAFCO,
settle or offer to settle any demand for appraisal.

     2.5 Surrender of Certificates.

     (a) Exchange of Data Tree Common  Certificate;  Other Purchase Price. At or
prior to the Effective Time, or as soon as practicable  thereafter,  FAFCO shall
deposit with First American  Trust Company (the  "Exchange  Agent") in trust for
the  holders of  certificates  which  immediately  prior to the  Effective  Time
represented Shares (each such certificate a "Data Tree Common Certificate"), and
each such holder will be entitled to receive, upon surrender of one or more Data
Tree  Common  Certificates  to the  Exchange  Agent in the  manner  set forth in
subsection  (b) below,  certificates  representing  the FAFCO Common Shares (the
"FAFCO Common Certificates") into which the Shares represented by such Data Tree
Common Certificates were converted in the Merger.

     (b)  Exchange  Procedures.  As soon as  practicable  after the date of this
Agreement,  FAFCO and the Company shall cause the Exchange  Agent to mail and/or
make  available  to each  holder of a Data Tree Common  Certificate  (other than
those which are held by any  subsidiary of the Company or in the treasury of the
Company  or which are held  directly  or  indirectly  by FAFCO or any  direct or
indirect  subsidiary  of FAFCO,  including  FAFCOSUB)  a copy of the  Prospectus
Supplement  and a notice and letter of  transmittal  advising such holder of the
proposed  Merger and the procedure for  surrendering  to the Exchange Agent such
Data  Tree  Common   Certificate  in  exchange  for  the  Merger   Consideration
deliverable  in respect  thereof  pursuant to this Section 2. Upon the surrender
for  cancellation  to the Exchange Agent of such Data Tree Common  Certificates,
together with a letter of transmittal, duly executed and completed in accordance
with the  instructions  thereon,  and any other items specified by the letter of
transmittal,  the Exchange Agent shall promptly  transfer to the Person entitled
thereto the Merger  Consideration  deliverable  in respect  thereof.  The Merger
Consideration  shall be  transferred  by delivery of a FAFCO Common  Certificate
registered  in the name of such Person  representing  the number of FAFCO Common
Shares to be received by such Person and a check drawn on FAFCO in the amount of
any fractional interest to be received by such Person.

     Until so surrendered,  each Data Tree Common  Certificate  shall be deemed,
for all  corporate  purposes,  to evidence  only the right to receive  upon such
surrender the Merger Consideration  deliverable in respect thereof to which such
Person is  entitled  pursuant to this  Section 2. No  interest  shall be paid or
accrued in respect of any cash  payment due for a  fractional  share.  Data Tree
Common  Certificates so surrendered shall be cancelled upon the effectiveness of
the Merger.

     (c) Registration Name on Certificates.  If the Merger Consideration (or any
portion  thereof) is to be  delivered to a Person other than the Person in whose
name the Data Tree  Common  Certificate  surrendered  in  exchange  therefor  is
registered,  it shall be a condition to the payment of the Merger  Consideration
that the Data Tree Common Certificates so surrendered shall be properly endorsed
or  accompanied  by  appropriate  stock powers and  otherwise in proper form for
transfer,  that such transfer otherwise be proper and that the Person requesting
such  transfer pay to the Exchange  Agent any transfer or other taxes payable by
reason of the foregoing or establish to the  satisfaction  of the Exchange Agent
that such taxes have been paid or are not required to be paid.

     (d) Unavailable Certificates. In the event any Data Tree Common Certificate
shall have been lost,  stolen or  destroyed,  upon the making of an affidavit of
that  fact by the  Person  claiming  such  certificate  to be  lost,  stolen  or
destroyed,  the Exchange  Agent will issue in exchange for such lost,  stolen or
destroyed certificate the Merger Consideration deliverable in respect thereof as
determined in  accordance  with this Section 2, provided that the Person to whom
the Merger  Consideration is paid shall, as a condition precedent to the payment
thereof,  give the Surviving  Corporation a bond in such sum as it may direct or
otherwise  indemnify the Surviving  Corporation in a manner  satisfactory  to it
against  any claim  that may be made  against  the  Surviving  Corporation  with
respect to the Data Tree Common Certificate claimed to have been lost, stolen or
destroyed.

     (e) Merger Not Consummated.  In the event the Merger is not consummated for
any reason,  FAFCO and the Company shall direct the Exchange  Agent to return to
(i) each  Person  who  deposited  a Data Tree  Share  Certificate  and any other
agreements or instruments tendered to the Exchange Agent by such Person and (ii)
FAFCO, the Merger Consideration.

     2.6 No Further Rights of Transfers.  At and after the Effective  Time, each
holder of a Data Tree  Common  Certificate  shall  cease to have any rights as a
shareholder  of the Company,  except for, in the case of a holder of a Data Tree
Common Certificate  (other than Excepted Shares),  the right to surrender his or
her Data Tree Common Certificate in exchange for the Merger Consideration or, in
the case of a  Dissenting  Shareholder,  to perfect  his or her right to receive
payment  for his or her shares  pursuant  to  California  law if such holder has
validly  perfected and not withdrawn his or her right to receive payment for his
or her shares,  and no transfer  of Shares  shall be made on the stock  transfer
books of the Surviving  Corporation.  Data Tree Common Certificates presented to
the  Surviving  Corporation  after the  Effective  Time shall be  cancelled  and
exchanged  as provided in this Section 2. At the close of business on the day of
the  Effective  Time the stock  ledger of the Company with respect to the Shares
shall be closed.

     2.7 Stock Option and Other Plans.  Prior to the Closing Date,  the board of
directors of the Company (or, if appropriate, any committee thereof) shall adopt
appropriate  resolutions and take all other actions necessary to provide for the
cancellation or termination, effective on or before the Closing Date, of all the
outstanding  employee stock options to purchase Shares heretofore  granted under
any stock option plan of the Company applicable to employees, including, without
limitation,  that  certain  1997  Stock  Option  Plan  listed as item  (a)(1) on
Schedule 3.19.

     2.8 Articles of Incorporation of the Surviving Corporation. The articles of
incorporation of the Company,  as in effect  immediately  prior to the Effective
Time and attached hereto as Exhibit A, shall be the articles of incorporation of
the Surviving  Corporation  and thereafter  shall continue to be its articles of
incorporation  (the  "Articles  of  Incorporation")  until  amended as  provided
therein and under the Corporations Code.

     2.9 By-Laws of the Surviving Corporation. The by-laws of the Company, as in
effect immediately prior to the Effective Time and attached hereto as Exhibit B,
shall be the by-laws of the Surviving  Corporation and thereafter shall continue
to be its by-laws (the  "By-Laws")  until amended as provided  therein and under
the Articles of Incorporation and the Corporations Code.

     2.10 Directors and Officers of the Surviving Corporation.  At the Effective
Time, the directors of FAFCOSUB immediately prior to the Effective Time shall be
the  directors  of the  Surviving  Corporation,  each of such  directors to hold
office,  subject to the applicable  provisions of the Articles of  Incorporation
and By-Laws of the Surviving  Corporation,  until the next annual  shareholders'
meeting of the Surviving Corporation and until their respective successors shall
be duly elected or appointed and qualified.  At the Effective Time, the officers
of the Company  immediately  prior to the Effective  Time shall,  subject to the
applicable  provisions  of the  Articles  of  Incorporation  and  By-Laws of the
Surviving Corporation,  be the officers of the Surviving Corporation until their
respective successors shall be duly elected or appointed and qualified.

     2.11 Closing. The closing of the Merger (the "Closing") shall take place at
the offices of White & Case,  633 West Fifth  Street,  Suite 1900,  Los Angeles,
California, as soon as practicable after the last of the conditions set forth in
Section 6 hereof is fulfilled or waived  (subject to  applicable  law) but in no
event later than the first  Business Day  thereafter,  or at such other time and
place and on such other date as FAFCO and the Company shall  mutually agree (the
"Closing Date").


                                    SECTION 3
                         REPRESENTATIONS AND WARRANTIES
                    OF THE COMPANY AND THE MAJOR SHAREHOLDER

     The  Company  and the  Major  Shareholder  represent,  warrant  and  agree,
severally and not jointly, as follows:

     3.1  Existence  and  Good  Standing.  The  Company  is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
California.  The Company has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.  The
Company is duly  qualified or licensed to conduct its  business,  and is in good
standing  in each  jurisdiction  listed  on  Schedule  3.1,  which  are the only
jurisdictions  in which the character or location of the property owned,  leased
or  operated  by the  Company or the  nature of the  business  conducted  by the
Company makes such qualification necessary except for any jurisdiction where the
failure to so qualify would not cause a Material Adverse Effect.

     3.2 Binding Effect.  This Agreement has been duly executed and delivered by
the  Company and the Major  Shareholder  and  constitutes  the valid and binding
agreement  of the  Company  and the Major  Shareholder  enforceable  against the
Company and the Major  Shareholder,  as the case may be, in accordance  with its
terms except as such enforceability may be limited by bankruptcy,  insolvency or
similar laws and  equitable  principles  relating to or affecting  the rights of
creditors generally from time to time in effect.

     3.3  Capitalization.  The  authorized  capital  stock  of  the  Company  is
10,000,000 common shares,  without par value, of which 7,039,830 (plus 41,452 if
Imperial Warrant I is exercised, plus 37,684 if Imperial Warrant II is exercised
plus 31,000 if Imperial  Warrant III is exercised) are issued and outstanding as
of the date of this  Agreement  and owned of record by the  shareholders  as set
forth on Schedule 3.3. All such outstanding shares have been duly authorized and
validly  issued  and are fully  paid and  nonassessable.  Except as set forth on
Schedule  3.3,  there is not and as of the  Effective  Time  there  will not be,
outstanding options,  warrants,  rights, calls, commitments,  conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase,  issuance or sale of any Shares,  any other securities of the Company,
or any equity interest in the Company or its business.

     3.4  Subsidiaries and  Investments.  The Company does not own,  directly or
indirectly,  any  capital  stock or other  equity or  ownership  or  proprietary
interest in any corporation,  partnership,  association, trust, joint venture or
other entity.

     3.5 Financial Statements and No Material Changes.

     (a) FAFCO has  heretofore  been  furnished  with the balance  sheets of the
Company as of September  30, 1997,  September  30, 1996 and  September 30, 1995,
inclusive,  and the related statements of income,  shareholders' equity and cash
flows for the years then ended,  all certified by Ernst & Young LLP (the balance
sheet of the Company as at September 30, 1997 is hereinafter  referred to as the
"Balance  Sheet").  FAFCO also has heretofore  been furnished with the unaudited
balance sheet of the Company as of December 31, 1997 and the related  statements
of income,  shareholders'  equity and cash flow  (collectively,  the  "Unaudited
Financial  Statements").  Such  financial  statements,  including  the footnotes
thereto,  except as indicated therein,  have been prepared in accordance with US
GAAP. The Balance Sheet fairly presents, in all material respects, the financial
position of the Company at the date thereof and, except (i) as indicated therein
(ii) for  obligations,  including under  contracts,  that are not required to be
recorded  as a  liability  under US GAAP or  disclosed  in  notes  to  financial
statements  and (iii) as disclosed on Schedule 3.5,  reflects all claims against
and all debts and  liabilities of the Company,  fixed or  contingent,  as at the
date thereof and the related statements of income, shareholders' equity and cash
flows fairly present, in all material respects, the results of the operations of
the Company and the changes in the Company's  financial position for the periods
indicated.  The unaudited balance sheet as of December 31, 1997 fairly presents,
in all material  respects,  the  financial  condition of the Company at the date
thereof and, except (x) as indicated  therein,  (y) for  obligations,  including
under  contracts,  that are not required to be recorded as a liability  under US
GAAP or  disclosed  in notes to  financial  statements  and (z) as  disclosed on
Schedule 3.5,  reflect all claims  against and all debts and  liabilities of the
Company,  fixed or  contingent,  as at the  respective  dates  thereof,  and the
related  statements  of  income,  shareholders'  equity  and cash  flows  fairly
present, in all material respects,  the results of the operations of the Company
and the changes in its financial position for the periods indicated.

     (b) Since  September 30, 1997 (the "Balance  Sheet Date") there has been no
change in the assets or liabilities, or in the business or condition,  financial
or  otherwise,  or in the results of  operations,  of the Company,  whether as a
result of any  legislative  or regulatory  change,  revocation of any license or
rights to do business,  fire,  explosion,  accident,  casualty,  labor  trouble,
flood, drought, riot, storm, condemnation, act of God, public force or otherwise
other than changes reflected in the Unaudited  Financial  Statements and changes
in the  ordinary  course of  business  that have not had and are not  reasonably
expected to have a Material Adverse Effect on the Company.

     (c)  Since  September  30,  1997,  there  has been no  change in any of the
significant  accounting  (including  tax  accounting)  policies,   practices  or
procedures of the Company  except  changes  resulting from changes in accounting
pronouncements  of the  Financial  Accounting  Standards  Boards or  changes  in
applicable laws or rules or regulations thereunder.

     3.6 Books and  Records.  The minute books of the Company  contain  accurate
records of all meetings of, and  corporate  action  taken by  (including  action
taken by  written  consent)  the  Shareholders  and  Board of  Directors  of the
Company.  Except (i) as set forth on Schedule 3.6,  (ii) for license  agreements
listed on Schedule 3.15 and (iii) for "shrinkwrap"  software license agreements,
the Company has no records,  systems,  controls,  data or information  recorded,
stored,  maintained,  operated or otherwise  wholly or partly  dependent upon or
held by any means (including any electronic, mechanical or photographic process,
whether  computerized  or not) which  (including all means of access thereto and
therefrom)  are not under the  exclusive  ownership  and  direct  control of the
Company.

     3.7 Title to Properties;  Encumbrances. Except as set forth on Schedule 3.7
and except for properties and assets  reflected in the Balance Sheet or acquired
since the Balance  Sheet Date which have been sold or  otherwise  disposed of in
the ordinary  course of  business,  the Company has good,  valid and  marketable
title to (a) all of its properties  and assets (real and personal,  tangible and
intangible),  including,  without  limitation,  all of the properties and assets
reflected in the Financial Statements, except as indicated in the notes thereto,
and (b) all of the  properties  and assets  purchased  by the Company  since the
Balance  Sheet Date;  in each case subject to no  encumbrance,  lien,  charge or
other  restriction of any kind or character,  except for (i) liens  reflected in
the Balance  Sheet,  (ii) liens  consisting of zoning or planning  restrictions,
easements,  permits and other  restrictions  or  limitations  on the use of real
property or irregularities in title thereto which do not materially detract from
the  value of,  or  impair  the use of,  such  property  by the  Company  in the
operation  of its  business,  (iii)  liens for  current  taxes,  assessments  or
governmental  charges or levies on  property  not yet due and  delinquent,  (iv)
liens that will not have a Material  Adverse Effect on the Company and (v) liens
described on Schedule 3.7 (liens of the type  described in clauses (i), (ii) and
(iii) above are hereinafter sometimes referred to as "Permitted Liens").  Except
as set forth on Schedule  3.7,  all  tangible  assets of the Company are located
within the United States.

     3.8 Real Property.  The Company does not own,  directly or  indirectly,  in
whole or in part any interest in any real property.

     3.9 Leases. Schedule 3.9 contains an accurate and complete list of all real
property and tangible property leases to which the Company is a party (as lessee
or lessor). Each lease set forth on Schedule 3.9 (or required to be set forth on
Schedule 3.9) is in full force and effect; all rents and additional rents due by
the  Company  to date on each such  lease  have been paid  (other  than any pass
through expenses not yet invoiced to the Company);  in each case, the lessee has
been in peaceable possession since the commencement of the original term of such
lease and is not in default thereunder and no waiver, indulgence or postponement
of the lessee's obligations thereunder has been granted by the lessor; and there
exists no event of default or event,  occurrence,  condition or act which,  with
the giving of notice, the lapse of time or the happening of any further event or
condition,  would  become a default  under  such  lease,  other  than any event,
occurrence or act that would not have a Material  Adverse Effect on the Company.
The tangible  property  leased by the Company is in a state of good  maintenance
and repair,  reasonable wear and tear excepted.  Except as set forth on Schedule
3.9, none of the tangible  property leased by the Company is located outside the
United States.

     3.10 Material Contracts.  Except as set forth on Schedule 3.10, the Company
is not  bound by (a) any  agreement,  contract  or  commitment  relating  to the
employment of any Person (as  hereinafter  defined) by the Company or any bonus,
deferred compensation,  pension,  profit sharing,  stock option,  employee stock
purchase,  retirement  or  other  employee  benefit  plan,  (b)  any  agreement,
indenture  or other  instrument  which  contains  restrictions  with  respect to
payment of dividends or any other  distribution in respect of its capital stock,
(c) any agreement,  contract or commitment  relating to capital  expenditures in
excess of $25,000 per individual item or $100,000 in the aggregate, (d) any loan
or  advance  to, or  investment  in, any Person or any  agreement,  contract  or
commitment  relating to the making of any such loan, advance or investment,  (e)
any guarantee or other  contingent  liability in respect of any  indebtedness or
obligation of any Person (other than the  endorsement of negotiable  instruments
for collection in the ordinary course of business),  (f) any management service,
consulting  or any  other  similar  type  contract,  other  than  the  Company's
Titlescape subscription system agreements entered into in the ordinary course of
its business, (g) any agreement,  contract or commitment limiting the ability of
the Company to engage in any line of business or to compete with any Person, (h)
any agreement, contract or commitment not entered into in the ordinary course of
business which involves  $50,000 or more and is not cancelable  without  penalty
within  30  days  or (i) any  agreement,  contract  or  commitment  which  might
reasonably  be  expected to have a Material  Adverse  Effect.  Each  contract or
agreement  set forth on Schedule  3.10 (or  required to be set forth on Schedule
3.10) is in full force and effect. The Company has not violated any of the terms
or  conditions  of any  contract or  agreement  set forth on  Schedule  3.10 (or
required to be set forth on Schedule 3.10) in any material respect,  and, to the
best knowledge, information and belief of the Company and the Major Shareholder,
all of the  covenants to be performed by any other party thereto have been fully
performed.

     3.11  Restrictive  Documents.  Except as set forth on  Schedule  3.11,  the
Company is not subject to, or a party to, any charter,  by-law,  mortgage, lien,
lease, license, permit, agreement,  contract,  instrument, law, rule, ordinance,
regulation,  order,  judgment or decree, or any other restriction of any kind or
character,  which (a) has or might  reasonably  be  expected  to have a Material
Adverse Effect on the Company,  or (b) would restrict the ability of the Company
to acquire any property or conduct business in any area.

     3.12 Litigation.  Except as set forth on Schedule 3.12, there is no action,
suit,  proceeding at law or in equity,  arbitration or  administrative  or other
proceeding by or before (or to the best knowledge, information and belief of the
Company and the Major  Shareholder  any  investigation  by) any  governmental or
other instrumentality or agency, pending, or, to the best knowledge, information
and belief of the  Company  and the Major  Shareholder,  threatened,  against or
affecting the Company or any of its properties or rights which could  materially
and  adversely  affect  the  right or  ability  of the  Company  to carry on its
business as now conducted,  or which could have a Material  Adverse Effect.  The
Company is not subject to any judgment,  order or decree  entered in any lawsuit
or proceeding which may have a Material Adverse Effect on the Company.

     3.13 Taxes.

     (a) Tax Returns.  The Company has timely filed or caused to be timely filed
with the appropriate taxing authorities all material returns,  statements, forms
and reports for Taxes (the  "Returns") that are required to be filed by, or with
respect  to, the  Company on or prior to the  Closing  Date.  The  Returns  have
accurately reflected in all material respects and will accurately reflect in all
material respects all liability for Taxes of the Company for the periods covered
thereby.

     (b) Payment of Taxes. All material Taxes and Tax liabilities of the Company
for all taxable  years or periods  that end on or before the  Closing  Date and,
with respect to any taxable year or period beginning before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date (the "Pre-Closing  Period") have been timely paid or adequately
accrued and  disclosed  and fully  provided  for on the books and records of the
Company in accordance with US GAAP.

     (c) Other Tax Matters.

          (i) Except as set forth on  Schedule  3.13(c)(i),  the Company has not
been  the  subject  of an  audit  or  other  examination  of  Taxes  by the  tax
authorities  of any nation,  state or locality nor has the Company  received any
written  notices  from any taxing  authority  relating  to any issue which could
affect the Tax liability of the Company.

          (ii) Except as set forth on Schedule  3.13(c)(ii)  the Company (A) has
not,  as of the  Closing  Date,  entered  into an  agreement  or  waiver or been
requested  to enter  into an  agreement  or  waiver  extending  any  statute  of
limitations  relating to the payment or  collection  of Taxes of the Company and
(B) is not, as of the Closing Date,  currently  contesting  the Tax liability of
the Company before any court, tribunal or agency.

          (iii)  The  Company  has  not  been  included  in any  "consolidated,"
"unitary" or "combined" Return provided for under the laws of the United States,
any foreign  jurisdiction or any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired.

          (iv) All  Taxes  which  the  Company  is (or was)  required  by law to
withhold or collect have been duly withheld or  collected,  and have been timely
paid over to the proper authorities to the extent due and payable.

          (v)  The  Company  is  not a  "United  States  real  property  holding
corporation" within the meaning of Section 897(c)(2) of the Code.

          (vi) There are no tax sharing, allocation,  indemnification or similar
agreements  in effect as between the  Company or any  predecessor  or  affiliate
thereof  and  any  other  party   (including  the  Major   Shareholder  and  any
predecessors  or affiliates  thereof)  under which FAFCO or the Company could be
liable for any Taxes or other claims of any party.

          (vii) The Company has not applied for, been granted, or agreed
to any  accounting  method  change  for which it will be  required  to take into
account any adjustment under Section 481 of the Code or any similar provision of
the Code or the corresponding tax laws of any nation, state or locality.

          (viii) No election  under Section  341(f) of the Code has been made or
shall be made prior to the  Closing  Date to treat the  Company as a  consenting
corporation, as defined in Section 341 of the Code.

     3.14 Insurance.  Set forth on Schedule 3.14 is a complete list of insurance
policies which the Company maintains with respect to its businesses,  properties
or  employees.  Such policies are in full force and effect and are free from any
right of  termination  on the part of the  insurance  carriers  (other  than any
statutory or contract  rights to  terminate  for  convenience  upon notice or to
decline to renew).  Such  policies,  with respect to their  amounts and types of
coverage,  are adequate to insure fully  against  risks to which the Company and
its property and assets are normally  exposed in the  operation of its business.
There has not been any material  adverse  change in the  Company's  relationship
with its insurers or in the premiums  payable  pursuant to such policies  during
the past year.

     3.15 Intellectual Properties.  The Company possesses or has adequate rights
to use all material  Intellectual  Property  necessary  for the operation of the
business of the Company as now conducted.  All of the Intellectual Property that
is material to the conduct of the Company's  business taken as a whole is listed
on  Schedule  3.15  and is owned by the  Company  free and  clear of any and all
encumbrances  that would have a Material  Adverse  Effect on the  Company or its
ability to utilize the item of Intellectual  Property to which such  encumbrance
relates  other than any  material  Intellectual  Property  that is  licensed  to
Company as  disclosed  on  Schedule  3.15  hereto.  The use of the  Intellectual
Property  by the Company  does not  conflict  with,  infringe  upon,  violate or
interfere with or constitute a  misappropriation  of any  Intellectual  Property
owned by any other Person, except where such conflict,  infringement,  violation
or interference  would not result in a Material  Adverse Effect on Company.  The
Company  has not  received  written  notice  that  the  use of any  Intellectual
Property conflicts with,  infringes upon, violates or interferes with the rights
of any other Person.  The Company is not in default under the terms of any third
party  license or other  right to use  Intellectual  Property  which  default is
likely to have a Material Adverse Effect on Company.

     3.16  Compliance  with Laws.  The Company is in  compliance in all material
respects with all applicable laws, regulations,  orders,  judgments and decrees,
except  where the  failure to comply is not  likely to have a  Material  Adverse
Effect.

     3.17  Governmental  Licenses.  The Company has all  governmental  licenses,
permits,  franchises,  approvals and other  authorizations  of any  governmental
authority  (the  "Licenses")  necessary to own, lease and operate its properties
and enable it to carry on its business as presently  conducted  except for those
Licenses,  the lack of which  would not have a  Material  Adverse  Effect on the
Company. All Licenses held by the Company, are in full force and effect.

     3.18 Labor  Matters.  (a) The Company is in  compliance  with all  federal,
state or other applicable laws, domestic or foreign,  respecting  employment and
employment  practices,  terms and  conditions of employment and wages and hours,
except  where the  failure to comply is not  likely to have a  Material  Adverse
Effect,  and has not and is not  engaged in any unfair  labor  practice;  (b) no
unfair  labor  practice  complaint  against  the  Company is pending  before the
National Labor Relations Board;  (c) there is no labor strike,  dispute slowdown
or stoppage actually pending or threatened against or involving the Company; (d)
no representation  question exists respecting the employees of the Company;  (e)
no grievance which might have a Material Adverse Effect upon the Company exists,
no  arbitration  proceeding  arising out of or under any  collective  bargaining
agreement is pending and no claim therefor has been asserted;  (f) no collective
bargaining  agreement is currently being negotiated by the Company;  and (g) the
Company has not experienced any material labor difficulty  during the last three
years.

     3.19 Employee Benefit Plans.

     (a) List of  Plans.  Set  forth in  Schedule  3.19(a)  is an  accurate  and
complete list of all domestic and foreign (i) "employee  benefit  plans," within
the meaning of Section 3(3) of the Employee  Retirement  Income  Security Act of
1974,  as amended,  and the rules and  regulations  thereunder  ("ERISA");  (ii)
bonus,  stock  option,  stock  purchase,  restricted  stock,  incentive,  fringe
benefit, profit-sharing, pension, or retirement, deferred compensation, medical,
life,  disability,  accident,  salary  continuation,  severance,  accrued leave,
vacation, sick pay, sick leave, supplemental retirement and unemployment benefit
plans,  programs,  arrangements,  commitments  and/or practices  (whether or not
insured); and (iii) employment, consulting, termination, and severance contracts
or agreements; for active, retired or former employees or directors,  whether or
not any such plans, programs, arrangements,  commitments,  contracts, agreements
and/or practices (referred to in (i), (ii) or (iii) above) are in writing or are
otherwise  exempt  from the  provisions  of ERISA;  that have been  established,
maintained  or  contributed  to (or  with  respect  to which  an  obligation  to
contribute has been undertaken) or with respect to which any potential liability
is borne by the Company (including,  for this purpose and for the purpose of all
of the representations in this Section 3.19, any predecessors to the Company and
all employers  (whether or not incorporated) that would be treated together with
the Company and/or the  Shareholders as a single employer (1) within the meaning
of Section 414 of the Internal  Revenue Code of 1986, as amended,  and the rules
and regulations  promulgated  thereunder (the "Code"), or (2) as a result of the
Company and/or the  Shareholders  being or having been a general  partner of any
such employer), since September 2, 1974 ("Employee Benefit Plans").

     (b) Status of Plans.  Each  Employee  Benefit Plan  (including  any related
trust) complies in form with the requirements of all applicable laws, including,
without  limitation,  ERISA and the Code, except for any noncompliance that will
not have a Material  Adverse  Effect on the  Company,  and has at all times been
maintained  and  operated  in  substantial  compliance  with its  terms  and the
requirements of all applicable laws,  including,  without limitation,  ERISA and
the Code. No complete or partial  termination  of any Employee  Benefit Plan has
occurred or is expected to occur, and no proceedings  have been instituted,  and
no condition  exists and no event has occurred  that could  constitute  grounds,
under Title IV of ERISA to  terminate or appoint and trustee to  administer  any
Employee Benefit Plan. The Company has no commitment, intention or understanding
to create,  modify or terminate any Employee Benefit Plan. Except as required to
maintain  the  tax-qualified  status of any Employee  Benefit  Plan  intended to
qualify under Section  401(a) of the Code, no condition or  circumstance  exists
that would prevent the amendment or termination of any Employee Benefit Plan. No
event has  occurred  and no  condition  or  circumstance  has existed that could
result  in a  material  increase  in  the  benefits  under  or  the  expense  of
maintaining  any  Employee  Benefit  Plan from the level of  benefits or expense
incurred for the most recent fiscal year ended thereof. No Employee Benefit Plan
is a "multiple employer plan" within the meaning of the Code or ERISA.

     (c) Liabilities. No Employee Benefit Plan subject to Section 412 or 418B of
the Code or Section 302 of ERISA has incurred any accumulated funding deficiency
within the  meaning of Section  412 or 418B of the Code or Section 302 of ERISA,
respectively,  or has applied for or obtained a waiver from the Internal Revenue
Service  ("IRS") of any  minimum  funding  requirement  or an  extension  of any
amortization  period  under  Section  412 of the Code or  Section  303 or 304 of
ERISA.  Except  for  payments  of  premiums  to  the  Pension  Benefit  Guaranty
Corporation  ("PBGC"),  which have been timely paid in full, the Company has not
incurred any liability  (including,  for this purpose and for the purpose of all
of the  representations  in this Section  3.19,  any  indirect,  contingent,  or
secondary  liability) to the PBGC in connection  with any Employee  Benefit Plan
covering  any active,  retired or former  employees or directors of the Company,
including,  without  limitation,  any liability under Section 4069 or 4212(c) of
ERISA or any penalty imposed under Section 4071 of ERISA,  or ceased  operations
at any facility or  withdrawn  from any such  Employee  Benefit Plan in a manner
which could subject it to liability  under Section 4062,  4063 or 4064 of ERISA,
or knows of any facts or circumstances  that might give rise to any liability of
the  Company  to the PBGC  under  Title IV of ERISA  that  could  reasonably  be
anticipated to result in any claims being made against FAFCO by the PBGC.

     The  Company has not  incurred  any  withdrawal  liability  (including  any
contingent or secondary withdrawal liability) within the meaning of Section 4201
or 4204 of ERISA to any Employee  Benefit Plan which is a  "multiemployer  plan"
(as such term is defined in Section 4001(a)(3) of ERISA) ("Multiemployer Plan"),
and no event has occurred and no condition  or  circumstance  has existed,  that
presents  a  material  risk  of the  occurrence  of any  withdrawal  from or the
partition,  termination,  reorganization or insolvency of any such Multiemployer
Plan  which  could  result  in  any   liability  of  the  Company  to  any  such
Multiemployer Plan.

     The Company does not  maintain any Employee  Benefit Plan which is a "group
health  plan" (as such term is  defined  in  Section  5000(b)(1)  of the Code or
Section  607(1) of ERISA)  that has not been  administered  and  operated in all
respects in compliance with the applicable  requirements of Sections  601-609 of
ERISA  and  Section  4980B of the Code and the  Company  is not  subject  to any
material liability,  including,  without limitation,  additional  contributions,
fines,  taxes,  penalties  or  loss  of  tax  deduction  as  a  result  of  such
administration  and  operation.  Each Employee  Benefit Plan that is intended to
meet the requirements of Section 125 of the Code meets such requirements, except
where the  failure  to meet such  requirement  would  not  result in a  material
liability  of the  Company,  and each  program of  benefits  for which  employee
contributions are provided pursuant to elections under any Employee Benefit Plan
meets the  requirements  of the Code  applicable  thereto.  The Company does not
maintain any Employee  Benefit Plan which is an "employee  welfare benefit plan"
(as such term is  defined  in  Section  3(1) of  ERISA)  that has  provided  any
"disqualified  benefit" (as such term is defined in Section 4976(b) of the Code)
with respect to which an excise tax could be imposed.

     The Company does not maintain any Employee Benefit Plan (whether  qualified
or non-qualified under Section 401(a) of the Code) providing for post-employment
or retiree  health,  life  insurance  and/or other  welfare  benefits and having
unfunded  liabilities,  and the Company does not have any  obligation to provide
any such  benefits  to any  retired  or former  employees  or  active  employees
following such  employees'  retirement or termination of service (other than (i)
benefit  coverage  mandated by Section 4980B of the Code, or similar state laws,
(ii)  death or  retirement  benefits  under any  Employee  Benefit  Plan that is
intended to be qualified  under Section  401(a) of the Code,  (iii) benefits the
full cost of which are borne by the current or former  employees  of the Company
(or the  employees'  beneficiaries),  (iv)  disability  benefits  for  employees
currently away from work under any Company  disability plan that is an "employee
welfare  benefit plan" (as such term is defined in section 3(1) of ERISA and (v)
life insurance  benefits in respect of employees who died while in service,  the
premiums for which are solely payable prior to the death of such employee).  The
Company does not have any unfunded  liabilities pursuant to any Employee Benefit
Plan that is not intended to be qualified under Section 401(a) of the Code.

     Except as set forth in Schedule  3.19(a),  the Company has not incurred any
liability for any tax or excise tax arising under Chapter 43 of the Code, and no
event has occurred and no condition or circumstance  has existed that could give
rise to any such liability.

     No asset of the Company is subject to any lien arising under Section 302(f)
of ERISA or  Section  412(n)  of the  Code,  and no event  has  occurred  and no
condition or circumstance has existed that could give rise to any such lien. The
Company has not been required to provide any security under Section 307 of ERISA
or Section  401(a)(29)  or 412(f) of the Code,  and no event has occurred and no
condition  or  circumstance  has  existed  that  could  give  rise  to any  such
requirement to provide any such security.

     There are no actions,  suits,  claims or disputes pending,  or, to the best
knowledge,  information  and  belief of the  Company  and the Major  Shareholder
threatened,  anticipated or reasonably  expected to be asserted  against or with
respect to any Employee  Benefit Plan or the assets of any such plan (other than
routine claims for benefits and appeals of denied routine  claims).  No civil or
criminal action brought  pursuant to the provisions of Title I, Subtitle B, Part
5 of ERISA is pending,  threatened,  anticipated,  or reasonably  expected to be
asserted  against the Company or any fiduciary of any Employee  Benefit Plan, in
any case with respect to any Employee  Benefit Plan. No Employee Benefit Plan or
any  fiduciary  thereof  has been the  direct or  indirect  subject of an audit,
investigation or examination by any governmental or quasi-governmental agency.

     (d)  Contributions.  Full payment has been timely made of all amounts which
the Company is required, under applicable law or under any Employee Benefit Plan
or any agreement relating to any Employee Benefit Plan to which the Company is a
party, to have paid as  contributions  or premiums thereto as of the last day of
the most recent  fiscal year of such  Employee  Benefit  Plan ended prior to the
date hereof. All such contributions and/or premiums have been fully deducted for
income tax purposes and no such  deduction has been  challenged or disallowed by
any governmental  entity,  and to the best knowledge,  information and belief of
the Major Shareholder no event has occurred and no condition or circumstance has
existed that could  reasonably give rise to any such challenge or  disallowance.
The Company has made adequate  provision for reserves in accordance with US GAAP
to meet  contributions and premiums and any other liabilities that have not been
paid or  satisfied  because they are not yet due under the terms of any Employee
Benefit Plan, applicable law or related agreements.  Benefits under all Employee
Benefit Plans are as represented  and have not been increased  subsequent to the
date as of which documents have been provided.

     (e) Funded  Status;  Withdrawal  Liability.  No  Employee  Benefit  Plan is
covered by Title IV of ERISA.

     (f) Tax Qualification.  Each Employee Benefit Plan intended to be qualified
under Section 401(a) of the Code has, as currently in effect, been determined to
be so  qualified  by the IRS.  Each trust  established  in  connection  with any
Employee  Benefit  Plan  which is  intended  to be exempt  from  Federal  income
taxation  under  Section  501(a) of the Code has, as currently  in effect,  been
determined to be so exempt by the IRS. To the best  knowledge,  information  and
belief of the  Company  and the Major  Shareholder,  since the date of each most
recent  determination  referred to in this  paragraph (f), no event has occurred
and no  condition  or  circumstance  has existed  that  resulted or is likely to
result in the  revocation  of any such  determination  or that  could  adversely
affect the  qualified  status of any such  Employee  Benefit  Plan or the exempt
status of any such trust.

     (g) Transactions. No "reportable event" (as such term is defined in
Section  4043 of ERISA) for which the  30-day  notice  requirement  has not been
waived by the PBGC has  occurred  or is  expected  to occur with  respect to any
Employee Benefit Plan. Neither the Company nor any of its respective  directors,
officers,  employees or, to the best  knowledge,  information  and belief of the
Company  and  the  Major  Shareholder,  other  persons  who  participate  in the
operation of any Employee Benefit Plan or related trust or funding vehicle,  has
engaged in any transaction with respect to any Employee Benefit Plan or breached
any applicable fiduciary  responsibilities or obligations under Title I of ERISA
that would  subject any of them to a tax,  penalty or liability  for  prohibited
transactions  or  breach  of any  obligations  under  ERISA or the Code or would
result in any  claim  being  made  under,  by or on behalf of any such  Employee
Benefit Plan by any party with standing to make such claim.

     (h)  Triggering  Events.  Except  as set  forth on  Schedule  3.19(h),  the
execution  of  this  Agreement  and  the   consummation   of  the   transactions
contemplated  hereby,  do not  constitute a triggering  event under any Employee
Benefit Plan, policy, arrangement,  statement,  commitment or agreement, whether
or not legally  enforceable,  which (either alone or upon the  occurrence of any
additional  or subsequent  event) will or may result in any payment  (whether of
severance  pay or  otherwise),  "parachute  payment" (as such term is defined in
Section 280G of the Code), acceleration,  vesting or increase in benefits to any
employee or former employee or director of the Company. No Employee Benefit Plan
provides  for the  payment  of  severance,  termination,  change in  control  or
similar-type payments or benefits.

     (i) Documents. The Company has made available to FAFCO and its counsel true
and complete  copies of all material  documents in connection with each Employee
Benefit Plan, including, without limitation (where applicable): (i) all Employee
Benefit  Plans as in effect on the date  hereof,  together  with all  amendments
thereto,  including,  in the case of any Employee  Benefit Plan not set forth in
writing,  a  written  description   thereof;   (ii)  all  current  summary  plan
descriptions,  summaries of material modifications, and material communications;
(iii) all current trust  agreements,  declarations  of trust and other documents
establishing  other funding  arrangements  (and all  amendments  thereto and the
latest financial  statements  thereof);  (iv) the most recent IRS  determination
letter  obtained  with  respect to each  Employee  Benefit  Plan  intended to be
qualified under Section 401(a) of the Code or exempt under Section 501(a) of the
Code; (v) the annual report on IRS Form  5500-series  for each of the last three
years for each Employee  Benefit Plan required to file such form;  (vi) the most
recently  prepared  actuarial  valuation  report for each Employee  Benefit Plan
covered  by Title  IV of  ERISA;  (vii)  the most  recently  prepared  financial
statements;  and (viii) all contracts and  agreements  relating to each Employee
Benefit  Plan,  including,  without  limitation,  service  provider  agreements,
insurance  contracts,  annuity  contracts,   investment  management  agreements,
subscription agreements,  participation agreements, and recordkeeping agreements
and collective bargaining agreements.

     3.20 Interests in Clients,  Suppliers, Etc. Except as set forth on Schedule
3.20, to the Company's and the Major  Shareholder's best knowledge,  information
and belief  neither the Major  Shareholder  nor, to the  Company's and the Major
Shareholder's  knowledge  without  inquiry or further  investigation,  any other
officer or director  of the  Company  possesses,  directly  or  indirectly,  any
financial  interest  in, or is a director,  officer or  employee  of, any Person
which  is a  client,  supplier,  customer,  lessor,  lessee,  or  competitor  or
potential competitor of the Company.  Ownership of securities of a company whose
securities are registered under the Securities Exchange Act of 1934, as amended,
of 1% or less of any  class  of such  securities  shall  not be  deemed  to be a
financial interest for purposes of this Section 3.20.

     3.21 Bank Accounts,  Powers of Attorney and Compensation of Employees.  Set
forth on Schedule 3.21 is an accurate and complete list showing (a) the name and
address of each bank in which the  Company has an account or safe  deposit  box,
the  number of any such  account  or any such box and the  names of all  persons
authorized  to draw  thereon  or to have  access  thereto,  (b) the names of all
persons,  if any,  holding  powers of  attorney  from the  Company and a summary
statement  of  the  terms  thereof  and  (c)  the  names  of all  persons  whose
compensation  from the Company  for the fiscal  year ended on the Balance  Sheet
Date  exceeded an annualized  rate of $50,000,  together with a statement of the
full  amount paid or payable to each such person for  services  rendered  during
such fiscal year.

     3.22 No Changes Since  Balance Sheet Date.  Except as set forth on Schedule
3.22,  since the Balance Sheet Date,  except as expressly  contemplated  by this
Agreement,  the Company has not (a) incurred any  liability or obligation of any
nature  (whether  accrued,  absolute,  contingent or  otherwise),  except in the
ordinary course of business,  (b) permitted any of its assets to be subjected to
any mortgage,  pledge,  lien,  security  interest,  encumbrance,  restriction or
charge of any kind  (other  than  Permitted  Liens),  (c) sold,  transferred  or
otherwise disposed of any assets except in the ordinary course of business,  (d)
made any capital  expenditure  or  commitment  therefor,  except in the ordinary
course of business,  (e) declared or paid any dividend or made any  distribution
on any  shares of its  capital  stock,  (f)  redeemed,  purchased  or  otherwise
acquired  any shares of its  capital  stock,  (g)  granted or issued any option,
warrant or other right to  purchase or acquire any shares of its capital  stock,
(h) made any bonus or profit  sharing  distribution  or payment of any kind, (i)
increased its  indebtedness for borrowed money,  except current  borrowings from
banks in the ordinary  course of business,  or made any loan to any Person,  (j)
written off as uncollectible any notes or accounts receivable, except write-offs
in the ordinary course of business charged to applicable reserves, none of which
individually  or in the  aggregate is material to the  Company,  (k) granted any
increase in the rate of wages,  salaries,  bonuses or other  remuneration of any
executive  employee  or  other  employees,  except  in the  ordinary  course  of
business, (l) cancelled or waived any claims or rights of substantial value, (m)
made any change in any method of accounting or auditing practice,  (n) otherwise
conducted its business or entered into any transaction,  except in the usual and
ordinary manner and in the ordinary course of business,  or (o) agreed,  whether
or not in writing, to do any of the foregoing.

     3.23  Consents  and  Approvals;  No  Violations.  Assuming  (i) the filings
required  under the  Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976, as
amended  (the "HSR Act") are made and the  waiting  period  thereunder  has been
terminated or expired,  (ii) the  Shareholders  approve the Merger and (iii) the
Merger Documents are accepted for filing with the California Secretary of State,
the  execution  and  delivery  of this  Agreement  by the  Company and the Major
Shareholder and the  consummation of the transactions  contemplated  hereby will
not (a) violate any  provision of the articles of  incorporation  or by-laws (or
equivalent)  of  the  Company,  (b)  violate  any  statute,   ordinance,   rule,
regulation, order or decree of any court or any governmental or regulatory body,
agency or  authority  applicable  to the Company or the Major  Shareholder,  (c)
require any filing with, or permit, consent or approval of, or the giving of any
notice to, any governmental or regulatory body, agency or authority,  (d) result
in a violation  or breach of,  conflict  with,  constitute  (with or without due
notice  or lapse  of time or  both) a  default  (or  give  rise to any  right of
termination,  cancellation,  payment or  acceleration)  under,  or result in the
creation of any lien,  security interest,  charge or encumbrance upon any of the
properties  or assets of the  Company  under,  any of the terms,  conditions  or
provisions of any note, bond, mortgage,  indenture,  license, franchise, permit,
agreement, lease, franchise agreement or other instrument or obligation to which
the Company is a party, or by which it or any of its properties or assets may be
bound,  excluding  from the  foregoing  clauses  (c) and (d)  filings,  notices,
permits, consents and approvals the absence of which, and violations,  breaches,
defaults, conflicts and liens which, in the aggregate, would not have a Material
Adverse Effect on the Company.

     3.24  Disclosure.   None  of  this  Agreement,  any  Schedule,  Exhibit  or
certificate attached hereto or delivered pursuant to this Agreement contains any
untrue  statement of a material  fact, or omits any statement of a material fact
necessary in order to make the statements  contained herein or therein, in light
of the  circumstances in which they were made, not misleading.  There is no fact
known to the Company or the Major Shareholder which is reasonably likely to have
a Material  Adverse  Effect on the Company and which has not been disclosed in a
Schedule, Exhibit or certificate attached or provided hereto.

     3.25 Broker's or Finder's  Fees.  Subject to Section 11.2 and except as set
forth on Schedule 3.25, no agent, broker, person or firm acting on behalf of any
of the  Major  Shareholder  or the  Company  is,  or will  be,  entitled  to any
commission or broker's or finder's  fees from any of the parties  hereto or from
any Person  controlling,  controlled by or under common  control with any of the
parties hereto, in connection with any of the transactions  contemplated by this
Agreement.

     3.26 Copies of Documents.  The Major Shareholder or the Company have caused
to be made available for inspection and copying by FAFCO and its advisers, true,
complete and correct copies of all documents referred to in this Section 3 or in
any Schedule or Exhibit attached hereto.


                                    SECTION 4
              REPRESENTATIONS AND WARRANTIES OF FAFCO AND FAFCOSUB

     Each of FAFCO and FAFCOSUB represents,  warrants and agrees,  severally and
not jointly, as follows:

     4.1 Existence and Good  Standing;  Power and  Authority.  Each of FAFCO and
FAFCOSUB is a corporation duly organized,  validly existing and in good standing
under the laws of the State of  California.  Each of FAFCO and  FAFCOSUB has the
corporate power and authority to enter into,  execute and deliver this Agreement
and perform its obligations  hereunder.  This Agreement has been duly authorized
and  approved  by all  required  corporate  action  of FAFCO  and  FAFCOSUB  and
constitutes the legal, valid and binding obligation of FAFCO and FAFCOSUB and is
enforceable  against FAFCO and FAFCOSUB in  accordance  with its terms except as
such enforceability may be limited by bankruptcy, insolvency or similar laws and
equitable  principles relating to or affecting the rights of creditors generally
from time to time in effect.

     4.2  Consents  and  Approvals;  No  Violations.  Assuming  (i) the  filings
required under the HSR Act are made and the waiting  period  thereunder has been
terminated  or  expired,  (ii) the  Registration  Statement  has been  filed and
declared  effective and any waiting period under the Securities Act has expired,
(iii) the  Shareholders  approve  the  Merger,  (iv) the  Merger  Documents  are
accepted for filing with the California  Secretary of State and (v) assuming the
Prospectus  Supplement  is  delivered to the  Shareholders  at lease twenty (20)
Business  Days prior to the Data Tree  Shareholders  Meeting the  execution  and
delivery of this  Agreement by FAFCO and FAFCOSUB  and the  consummation  of the
transactions  contemplated  hereby  will not (a) violate  any  provision  of the
articles of incorporation  or by-laws (or equivalent) of FAFCO or FAFCOSUB,  (b)
violate any statute,  ordinance, rule, regulation,  order or decree of any court
or any governmental or regulatory body, agency or authority  applicable to FAFCO
or FAFCOSUB,  (c) require any filing with, or permit, consent or approval of, or
the giving of any notice to, any  governmental  or  regulatory  body,  agency or
authority,  (d) result in a violation or breach of,  conflict  with,  constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of  termination,  cancellation,  payment or  acceleration)  under,  or
result in the creation of any lien,  security  interest,  charge or  encumbrance
upon any of the  properties  or assets of FAFCO or  FAFCOSUB  under,  any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
franchise,  permit, agreement, lease, franchise agreement or other instrument or
obligation to which either FAFCO or FAFCOSUB is a party, or by which they or any
of their properties or assets may be bound, excluding from the foregoing clauses
(c) and (d) filings,  notices,  permits,  consents and  approvals the absence of
which,  and violations,  breaches,  defaults,  conflicts and liens which, in the
aggregate,  would not have a Material  Adverse Effect on FAFCO or FAFCOSUB taken
as a whole.

     4.3  Restrictive  Documents.  Neither  FAFCO nor FAFCOSUB is subject to any
charter, by-law, mortgage, lien, lease, agreement, instrument, order, law, rule,
regulation,  judgment  or  decree,  or any  other  restriction  of any  kind  or
character,  which has or might reasonably be expected to have a Material Adverse
Effect on FAFCO or FAFCOSUB.

     4.4 Broker's or Finder's Fees. No agent,  broker,  person or firm acting on
behalf  of FAFCO or  FAFCOSUB  is, or will be,  entitled  to any  commission  or
broker's or finder's  fees from any of the  Parties  hereto,  or from any Person
controlling,  controlled  by or under  common  control  with any of the  Parties
hereto,  in  connection  with  any  of the  transactions  contemplated  by  this
Agreement.

     4.5 FAFCO Common Shares. The FAFCO Common Shares to be delivered at Closing
have been  authorized  and, when delivered at Closing,  will be validly  issued,
fully paid,  nonassessable and registered pursuant to an effective  registration
statement  under the  Securities  Act and will be issued in compliance  with all
federal and state securities laws.

     4.6  Capitalization.  The authorized capital stock of FAFCO is 1,000 shares
of Series A Junior  Participating  Preferred  Shares,  $1.00 par value,  none of
which are issued and outstanding and 36,000,000 common shares,  $1.00 par value,
of which 17,850,189 are issued and outstanding as of the date of this Agreement.
All such  outstanding  shares have been duly authorized and validly issued,  and
are fully paid and nonassessable,  were not issued in violation or breach of any
preemptive  or  similar  rights,  and have been  issued in  compliance  with all
applicable  federal and state securities laws.  Except for options granted under
FAFCO's 1996 Employee Stock Option Plan and the 1997  Directors  Stock Plan, and
except as set forth on Schedule 4.6, there are no outstanding options, warrants,
convertible  securities or other securities or rights issued or granted by FAFCO
which entitle the holder  thereof to purchase or acquire FAFCO Common Shares and
none of the foregoing  will arise as a result of the execution or performance of
this Agreement or the transactions  contemplated herein.  Except as set forth on
Schedule  4.6,  no Person has any  demand or  piggyback  registration  rights in
respect of their FAFCO Common Shares.

     4.7 SEC Reports and  Financial  Statements.  Each form,  report,  schedule,
registration  statement,  definitive proxy statement filed by FAFCO with the SEC
prior to the date hereof (as such  documents have been amended prior to the date
hereof,  the "SEC  Reports"),  as of their  respective  dates,  complied  in all
material respects with the applicable requirements of the Securities Act and the
Securities  Exchange  Act of 1934,  as  amended,  and the rules and  regulations
thereunder  and,  since the first date on which FAFCO Common  Shares were listed
for  trading  on the New York  Stock  Exchange,  the rules of the New York Stock
Exchange.  FAFCO has made available to the Company  accurate and complete copies
of all SEC Reports filed by the Company  since January 1, 1997.  None of the SEC
Reports,  as of  their  respective  dates,  contained  or  contains  any  untrue
statement  of  material  fact or omits to state a material  fact  required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances  under  which they were made,  not  misleading.  The  consolidated
financial statements of FAFCO and its subsidiaries  included in such SEC Reports
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements  and with published  rules and  regulations of the SEC with respect
thereto,  have  been  prepared  in  accordance  with US GAAP  (except  as may be
indicated in the notes thereto,  or in the case of unaudited  interim  financial
statements,  as  permitted  by Form 10-Q of the SEC) and  fairly  present in all
material  respects,  subject,  in the case of the  unaudited  interim  financial
statements, to normal, year-end adjustments, the consolidated financial position
of FAFCO and its  subsidiaries as of the dates thereof and neither FAFCO nor any
of its  subsidiaries  has  incurred any  liabilities  and  obligations  (whether
absolute, accrued, fixed, contingent, liquidated,  unliquidated or otherwise and
whether due or to become due) of any nature except liabilities,  obligations and
contingencies (a) which are reflected in the consolidated balance sheet of FAFCO
and its  subsidiaries  at December 31, 1997,  (b) which (i) were incurred in the
ordinary course of business after December 31, 1997 or (ii) are disclosed in the
SEC Reports  filed after  December  31,  1997,  (c) which are not required to be
recorded  as a  liability  under US GAAP or  disclosed  in  notes  to  financial
statements  or (d) which  individually  or in the  aggregate are not expected to
have a Material Adverse Effect on FAFCO. Since December 31, 1996, there has been
no  change  in any of the  significant  accounting  (including  tax  accounting)
policies,  practices or  procedures of FAFCO or any of its  subsidiaries  except
changes  resulting  from changes in accounting  pronouncements  of the Financial
Accounting   Standards  Boards  or  changes  in  applicable  laws  or  rules  or
regulations thereunder.

     4.8 No Material  Changes.  Except as  contemplated  by this Agreement or as
disclosed  in any SEC Report or for changes in the  ordinary  course of business
that have not had and are not  reasonably  expected  to have a Material  Adverse
Effect on FAFCO or its  subsidiaries  taken as a whole,  since December 31, 1997
there has been no change in the assets or  liabilities,  or in the  business  or
condition,  financial or otherwise,  or in the results of operations,  of FAFCO,
whether as a result of any legislative or regulatory  change,  revocation of any
license or rights to do business,  fire, explosion,  accident,  casualty,  labor
trouble, flood, drought, riot, storm, condemnation,  act of God, public force or
otherwise.

     4.9 Litigation. Except as disclosed in the SEC Reports, there is no
action, suit,  proceeding at law or in equity,  arbitration or administrative or
other proceeding by or before (or to the best knowledge,  information and belief
of FAFCO any  investigation  by) any  governmental or other  instrumentality  or
agency,  pending,  or, to the best  knowledge,  information and belief of FAFCO,
threatened,  against or  affecting  FAFCO or its  subsidiaries  or any of its or
their properties or rights which could have a Material Adverse Effect taken as a
whole.  Neither FAFCO nor its subsidiaries is subject to any judgment,  order or
decree  entered in any lawsuit or proceeding  which may have a Material  Adverse
Effect on FAFCO or its subsidiaries taken as a whole.

     4.10 Compliance with Laws.  FAFCO and its subsidiaries are in compliance in
all  material  respects  with  (i) all  applicable  laws,  regulations,  orders,
judgments and decrees,  except where the failure to comply would not likely have
a Material  Adverse  Effect on FAFCO and its  subsidiaries  taken as a whole and
(ii) FAFCO and its subsidiaries have not violated any of the terms or conditions
of any material contract or agreement in any material respect,  and, to the best
knowledge, information and belief of FAFCO, all of the covenants to be performed
by any other party thereto have been fully performed.

     4.11  Disclosure.   None  of  this  Agreement,  any  Schedule,  Exhibit  or
certificate attached hereto or delivered pursuant to this Agreement contains any
untrue  statement of a material  fact, or omits any statement of a material fact
necessary in order to make the statements  contained herein or therein, in light
of the  circumstances in which they were made, not misleading.  There is no fact
known to FAFCO which is reasonably  likely to have a Material  Adverse Effect on
FAFCO.


                                    SECTION 5
                    TRANSACTIONS PRIOR TO THE EFFECTIVE TIME

     5.1 Conduct of the  Business of the  Company  Prior to Closing.  During the
period from the date of this Agreement to the Effective  Time, the Company shall
conduct its  operations  only  according  to its  ordinary  and usual  course of
business;   use  its  reasonable   efforts  to  preserve   intact  its  business
organizations,  keep  available  the  services  of its  officers  and  employees
(without  having any  obligation  to provide  retention  packages)  and maintain
existing  relationships  with  licensors,  suppliers,  distributors,  customers,
landlords,  employees,  agents and others having business relationships with it;
confer with FAFCO  concerning  operational  matters of a material  nature (other
than any  matters  relating  to sales  presentations  in which  the  Company  is
competing with First American Real Estate  Solutions LLC or its  affiliates) and
report periodically to FAFCO concerning the business, operations and finances of
the Company.  Notwithstanding the immediately  preceding sentence,  prior to the
Effective  Time,  except as may be first  approved  in writing by FAFCO or as is
otherwise  permitted or required by this  Agreement,  the Company  shall and the
Major  Shareholder  shall  cause the  Company to (a)  refrain  from  amending or
modifying its articles of  incorporation  or by-laws from their respective forms
on the  date of  this  Agreement,  (b)  refrain  from  increasing  any  bonuses,
salaries,  or  other  compensation  to  any  director,   officer,   employee  or
stockholder or entering into any  employment,  severance,  or similar  agreement
with any  director,  officer,  or employee  (except that the Company may adopt a
severance or bonus plan for payment of the Key Employee  Bonuses and may pay the
President  of the  Company a bonus of $62,500 on or about March 31,  1998),  (c)
refrain  from  adopting  or  increasing  any  profit  sharing,  bonus,  deferred
compensation, savings, insurance, pension, retirement, or other employee benefit
plan  for or with any of its  employees,  (d)  refrain  from  entering  into any
contract or commitment  except  contracts and commitments in the ordinary course
of business,  (e) refrain from increasing its  indebtedness  for borrowed money,
except current  borrowings in the ordinary course of business,  (f) refrain from
canceling or waiving any claim or right of substantial value which  individually
or in the  aggregate  is  material,  (g) refrain  from  declaring  or paying any
dividends in respect of its capital stock or redeeming,  purchasing or otherwise
acquiring any of its capital stock,  (h) refrain from making any material change
in accounting  methods or practices,  except as required by law or US GAAP,  (i)
refrain  from  issuing  or  selling  any  shares of  capital  stock or any other
securities,  or issuing any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or entering into any arrangement or contract
with  respect to the issue and sale of, any shares of its  capital  stock or any
other securities,  or making any other changes in its capital structure,  except
such issuances or sales of securities which the Company is already  obligated to
make as of the date of this  Agreement  and which are  disclosed  to FAFCO,  (j)
refrain from selling,  leasing or otherwise  disposing of any material  asset or
property other than sales of inventory in the ordinary  course of business,  (k)
refrain from making any capital  expenditure or commitment  therefor,  except in
the ordinary course of business,  (l) refrain from writing off as  uncollectible
any notes or accounts  receivable,  except  write-offs in the ordinary course of
business charged to applicable  reserves,  none of which  individually or in the
aggregate is material, (m) to the extent not included in clauses (a) through (l)
above,  refrain from taking any of the actions described in Section 3.22 and (n)
refrain from agreeing in writing to do any of the foregoing.

     5.2  Review of the  Company.  (a) FAFCO  may,  prior to the  Closing  Date,
directly  or  through  its  representatives,  review the  properties,  books and
records of the Company and its financial and legal condition to the extent FAFCO
deems  necessary or advisable to  familiarize  itself with such  properties  and
other matters;  such review shall not, however,  affect the  representations and
warranties made by the Company or the Major Shareholder in this Agreement or the
remedies of FAFCO for  breaches of those  representations  and  warranties.  The
Company shall and the Major  Shareholder shall cause the Company to permit FAFCO
and its  representatives to have, after the date of execution of this Agreement,
full access to the  premises and to all the books and records of the Company and
to cause the officers of the Company to furnish  FAFCO with such  financial  and
operating data and other information with respect to the business and properties
of the Company as FAFCO shall from time to time reasonably request.

     (b) In the  event  of  termination  of this  Agreement,  FAFCO  shall  keep
confidential  any material  information  obtained  from the Company or the Major
Shareholder concerning the Company's properties, operations and business (unless
readily  ascertainable  from public or published  information  or trade sources)
until the same ceases to be material (or becomes so  ascertainable)  and, at the
request of the Company, shall return to the Company all copies of any schedules,
statements,  documents  or other  written  information  obtained  in  connection
therewith,  including  any  materials  prepared by FAFCO or its  representatives
(except  for  work  product  encompassed  by  the   attorney-client   privilege)
containing  any such  confidential  information,  except to the extent that such
materials  contain  information  confidential  to  FAFCO,  in  which  case  such
materials  shall be  destroyed.  The  Company  and the Major  Shareholder  shall
deliver  or  cause  to  be  delivered  to  FAFCO  such  additional  instruments,
documents,  certificates  and opinions as FAFCO may  reasonably  request for the
purpose of (a) verifying the  information set forth in this Agreement and on any
Schedule or Exhibit  attached  hereto and (b)  consummating  or  evidencing  the
transactions contemplated by this Agreement.

     5.3 Exclusive  Dealing.  During the period from the date of this  Agreement
through the Closing Date, the Company and the Major  Shareholder  shall not take
any  action  to,  directly  or  indirectly,  encourage,  initiate  or  engage in
discussions or  negotiations  with, or provide any  information  to, any Person,
other than FAFCO,  concerning any purchase of the Shares or any merger,  sale of
substantially all of the assets of the Company or similar transaction  involving
the Company.

     5.4 Shareholder  Approval.  In order to consummate the Merger, the Company,
acting through its Board of Directors, shall, in accordance with applicable law,
promptly call a special meeting of the Shareholders  (the "Data Tree Shareholder
Meeting") or solicit written  consents from its  Shareholders for the purpose of
voting  upon this  Agreement  and the Merger and the  Company  agrees  that this
Agreement  and the  Merger  shall be  submitted  at such Data  Tree  Shareholder
Meeting (or in connection with such written consent);  provided,  however,  that
the Data  Tree  Shareholder  Meeting  shall not be held,  or a  written  consent
solicited, on a day earlier than the day that is twenty (20) Business Days after
the Prospectus  Supplement has been delivered to the  Shareholders.  The Company
agrees that it will  include in materials  distributed  to the  Shareholders  in
connection  with the Merger the  recommendation  of its board of directors  that
holders of Shares approve and adopt this  Agreement and approve the Merger.  The
Major  Shareholder  will  cause  all  Shares  owned or  controlled  by the Major
Shareholder  to be voted in favor of the Merger.  FAFCO will cause all shares of
FAFCOSUB to be voted in favor of the Merger.

     5.5 Best  Efforts.  Each of the  Company,  FAFCO,  FAFCOSUB  and the  Major
Shareholder  shall,  and the Company  shall cause each of its  Subsidiaries  to,
cooperate and use their  respective  best efforts to take, or cause to be taken,
all appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions  contemplated by this Agreement,  including,  without
limitation,  their  respective  best efforts to obtain,  prior to the  Effective
Time, all licenses, permits, consents, approvals, authorizations, qualifications
and  orders of  governmental  authorities  and  parties  to  contracts  with the
Company,   FAFCO  and  FAFCOSUB  as  are  necessary  for   consummation  of  the
transactions  contemplated  by this  Agreement and to fulfill the conditions the
Merger; provided, however, that no loan agreement or contract for borrowed money
shall be repaid except as currently  required by its terms, in whole or in part,
and no contract  shall be amended to increase the amount  payable  thereunder or
otherwise to be more  burdensome  to the Company,  FAFCO or FAFCOSUB in order to
obtain any such consent,  approval or authorization  without first obtaining the
written approval of the Parties.

     5.6 HSR Act. The Company and FAFCO shall,  as soon as  practicable,  file a
Notification  and Report  Form under the HSR Act with the FTC and the  Antitrust
Division and shall use their best efforts to respond as promptly as  practicable
to all inquiries  received from the FTC or the Antitrust Division for additional
information or documentation.


                                    SECTION 6
                         CONDITIONS PRECEDENT TO MERGER

     6.1 Conditions Precedent to Obligations of FAFCO, FAFCOSUB, and the Company
and the Major Shareholder.  The respective obligations of FAFCO and FAFCOSUB, on
the one hand, and the Major  Shareholder and the Company,  on the other hand, to
effect  the  Merger  are  subject  to the  satisfaction  or waiver  (subject  to
applicable  law) at or  prior  to the  Closing  Date  of  each of the  following
conditions:

     (a) Approval of Company's Shareholders. This Agreement and the Merger shall
have  been  approved  and  adopted  by the  requisite  vote  or  consent  of the
stockholders  of the Company in accordance with applicable law and the Company's
articles of incorporation and by-laws;

     (b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated;

     (c) Injunction. No preliminary or permanent injunction or other order shall
have been issued by any court or by any governmental or regulatory agency,  body
or authority which prohibits the consummation of the Merger and the transactions
contemplated by this Agreement and which is in effect at the Closing Date;

     (d)  Statutes;   Governmental  Approvals.  No  statute,  rule,  regulation,
executive order,  decree or order of any kind shall have been enacted,  entered,
promulgated or enforced by any court or  governmental  authority which prohibits
the  consummation  of the  Merger;  all  governmental  and  other  consents  and
approvals,  if any,  disclosed on any Schedule  attached  hereto or necessary to
permit the consummation of the transactions contemplated by this Agreement shall
have been received, except where the failure to obtain a consent will not have a
Material Adverse Effect on the Company or FAFCO;

     (e) No Litigation. As of the Effective Time, no action or proceedings shall
have been  instituted  before a court or other  government body or by any public
authority  to restrain or prohibit  the  consummation  of the Merger (each Party
agreeing to use commercially reasonable efforts to avoid the effect of any order
or having  any  injunction  lifted)  and the  consummation  of the  transactions
contemplated by the agreements described in Section 6.1(f);

     (f)  Agreements.  On or before the Closing Date,  the following  agreements
shall have been duly  executed and delivered by each of the  respective  parties
thereto:

          (i) the Contribution and Joint Venture Agreement, substantially in the
form of Exhibit C;

          (ii)   the   Operating   Agreement   (the   "Operating    Agreement"),
substantially in the form of Exhibit D;

          (iii) the Employment  Agreement,  substantially in the form of Exhibit
E;

          (iv)  the  Noncompetition  Agreement,  substantially  in the  form  of
Exhibit F;

          (v) the Supply Agreement, substantially in the form of Exhibit G; and

          (vi) the Promissory Note substantially in the form of Exhibit H;

     (g) Securities Matters. As of the Closing Date, the SEC shall have declared
effective a  Registration  Statement  covering  the (i) issuance by FAFCO of the
FAFCO Common Shares to be delivered to the  Shareholders  and (ii) resale of the
FAFCO Common  Shares to be received by any  Shareholder  subject to Rule 145 and
all  applicable  time periods under the Securities Act shall have expired and no
stop order  shall have been issued by the SEC with  respect to the  Registration
Statement;

     (h) Dissenting  Shareholders.  There shall be no Dissenting Shareholder and
the period during which any  Shareholder who or which failed to vote in favor of
the Merger has the right to perfect dissenters' rights shall have expired or the
Shareholder shall have waived such right; and

     (i) Listing. As of the Closing Date, the FAFCO Common Shares to be
delivered shall have been listed with the New York Stock Exchange,  subject only
to official notice of issuance.

     6.2  Conditions  Precedent  to  Obligations  of  FAFCO  and  FAFCOSUB.  The
obligations  of FAFCO and  FAFCOSUB to effect the Merger are also subject to the
satisfaction  or  waiver,  at the  specified  time,  of  each  of the  following
conditions:

     (a)  Truth of  Representations  and  Warranties.  The  representations  and
warranties of the Company and the Major  Shareholder  contained  herein that are
qualified  as to  materiality  shall  be true and  accurate,  and  those  not so
qualified shall be true and accurate in all material  respects,  in each case at
and as of the date of this  Agreement  and as of the Closing Date (except to the
extent a representation or warranty speaks specifically as of an earlier date or
as contemplated in this  Agreement),  and the Company and the Major  Shareholder
shall have  delivered to FAFCO,  a  certificate  dated the Closing Date, to such
effect;  provided,  however that the representations and warranties contained in
Section 3.5(b) need only be true and accurate as of the date of this Agreement.

     (b) Performance of Agreements. All of the agreements of the Company and the
Major  Shareholder to be performed prior to the Closing pursuant to the terms of
this Agreement shall have been duly performed in all material respects,  and the
Company and the Major  Shareholder  shall have delivered to FAFCO a certificate,
dated the Closing Date, to such effect;

     (c) Opinions of Counsel.  On the Closing  Date FAFCO shall have  received a
favorable opinion, dated the Closing Date, of (i) Cooley Godward LLP, counsel to
the  Company,  in the form set forth in Exhibit I and (ii) counsel to R. Squared
Limited, in the form set forth in Exhibit J;

     (d) Good  Standing  and Other  Certificates.  As of the Closing  Date,  the
Company shall have  delivered to FAFCO (a) copies of the  Company's  articles of
incorporation  including all amendments  thereto,  certified by the Secretary of
State or other appropriate official of its jurisdiction of incorporation,  (b) a
certificate  from the  Secretary of State or other  appropriate  official of the
Company's  jurisdiction  of  incorporation  to the effect that the Company is in
good  standing in such  jurisdiction  and listing all charter  documents  of the
Company  on  file,  (c) a  certificate  from  the  Secretary  of  State or other
appropriate  official  in each  State in which the  Company is  qualified  to do
business to the effect that the Company is in good standing in such State, (d) a
certificate as to the tax status of the Company from the appropriate official in
its  jurisdiction  of  incorporation  and each  state in which  the  Company  is
qualified to do business and (e) a copy of the by-laws of the Company, certified
by the  Secretary  of the Company as being true and correct and in effect on the
Closing Date;

     (e) No Material Adverse Change. As of the Closing Date (i) there shall have
been no Material Adverse Effect on the Company and there shall not have occurred
any change or development  that would  reasonably be expected to have a Material
Adverse Effect on the Company, (ii) the Related Documents shall be in full force
and effect,  and no event shall have occurred and no condition shall exist which
has, or could reasonably be expected to have, a material adverse effect upon (A)
the validity or enforceability of any Related Document or (B) the ability of any
party  (other  than FAFCO) to any  Related  Document to perform its  obligations
under such Related Document and (iii) no party (other than FAFCO) to any Related
Document shall have breached any material  covenant of such party  thereunder or
failed to perform any material obligation of such party thereunder;

     (f) Imperial  Warrants.  As of the Closing  Date,  Imperial Bank shall have
either put or exercised the Imperial  Warrants and, if exercised,  Imperial Bank
shall have voted its Shares in favor of the Merger;

     (g)  Intra-Company  Debt. As of the Closing Date, all  indebtedness,  other
than travel and similar advances,  of the Major Shareholder,  any Shareholder or
the  directors,  officers and employees of the Company to the Company shall have
been repaid in full,  except for  approximately the $170,000 owed the Company by
Kumar Corporation as evidenced by a certain promissory note;

     (h)  Proceedings.  As of the Closing Date, all corporate  proceedings to be
taken in connection with the transactions contemplated by this Agreement and all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to FAFCO and its counsel,  and FAFCO shall have received copies of all
such documents and other  evidences as it or its counsel may reasonably  request
in order to establish the  consummation of such  transactions  and the taking of
all corporate proceedings in connection therewith;

     (i) FIRPTA  Statement.  The Company shall furnish to FAFCO on or before the
Closing Date a copy of a statement, dated not more than thirty days prior to the
Closing Date, issued by the Company pursuant to Section  1.897-2(h) of the Code,
certifying that the Shares delivered  pursuant to the Merger are not a U.S. real
property interest as defined in section 897 of the Code; and

     (j)  Related  Party  Transactions.  On or  before  the  Closing  Date,  all
agreements  and/or  arrangements  between  the  Company  on the one hand and any
Shareholder (or any Person controlling,  controlled or under common control with
any  Shareholder)  (such  Shareholder or other Person, a "Related Party") on the
other hand,  entered  into on or before the date of this  Agreement,  shall have
been reduced to written agreements in form and substance reasonably satisfactory
to FAFCO.

     6.3  Conditions  Precedent  to  Obligation  of the  Company  and the  Major
Shareholder.  The obligation of the Company and the Major  Shareholder to effect
the Merger are also subject to the  satisfaction  or waiver,  at or prior to the
Closing Date, of each of the following conditions:

     (a)  Opinions  of  Counsel.  On the  Closing  Date the  Company  shall have
received (i) a favorable  opinion,  dated the Closing Date, of White & Case LLP,
counsel to FAFCO and FAFCOSUB, in the form set forth in Exhibit K and (ii) a tax
opinion,  dated the Closing Date,  of Cooley  Godward LLP to the effect that the
Merger will constitute a reorganization  within the meaning of Section 368(a) of
the  Code  and no  gain  or  loss  will  be  recognized  by the  Company  or its
shareholders as a result of the transactions contemplated by this Agreement;

     (b) Good  Standing  Certificate.  As of the Closing Date FAFCO and FAFCOSUB
shall have delivered to the Company and the Major  Shareholder (i) copies of the
articles of  incorporation  of FAFCO and FAFCOSUB,  respectively,  including all
amendments  thereto,  certified  by the  Secretary  of  State  of the  State  of
California  and (ii) a  certificate  from the Secretary of State of the State of
California  to the effect  that  FAFCO and  FAFCOSUB,  respectively,  is in good
standing in such State, and listing all charter documents of FAFCO on file;

     (c)  Truth of  Representations  and  Warranties.  The  representations  and
warranties  of FAFCO and  FAFCOSUB  contained  herein that are  qualified  as to
materiality shall be true and accurate, and those not so qualified shall be true
and  accurate in all  material  respects,  in each case at and as of the date of
this Agreement and as of the Closing Date (except to the extent a representation
or warranty speaks specifically as of an earlier date or as contemplated in this
Agreement),  and  FAFCO  shall  have  delivered  to the  Company  and the  Major
Shareholder a  certificate,  dated the Closing  Date, to such effect;  provided,
however that the representations and warranties  contained in the third sentence
of Section 4.6 and Section 4.8 need only be true and  accurate as of the date of
this Agreement.

     (d) Performance of Agreements.  All of the agreements of FAFCO and FAFCOSUB
to be  performed  prior to the Closing  pursuant to the terms of this  Agreement
shall have been duly performed in all material respects,  and FAFCO and FAFCOSUB
shall have  delivered to the Company and the Major  Shareholder  a  certificate,
dated the Closing Date, to such effect;

     (e)  Proceedings.  As of the Closing Date,  all  proceedings to be taken in
connection  with  the  transactions  contemplated  by  this  Agreement  and  all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to the Company,  the Major  Shareholder and their respective  counsel,
and the Company and the Major Shareholder shall have received copies of all such
documents and other evidences as they or their counsel may reasonably request in
order to establish the  consummation of such  transactions and the taking of all
proceedings in connection therewith;

     (f) No Material  Adverse  Change.  As of the Closing  Date there shall have
been no Material  Adverse  Effect on FAFCO and there shall not have occurred any
change or  development  that would  reasonably  be  expected  to have a Material
Adverse Effect on FAFCO; and

     (g) FAFCO Common  Share Price.  On each Trading Day between the date of the
Data Tree  Shareholder  Meeting and the Closing Date the average  closing  sales
price of a FAFCO  Common  Share for the  preceding  five Trading Days shall have
been equal to or greater than $42.525.


                                    SECTION 7
                    COVENANTS RELATING TO SECURITIES MATTERS

     7.1 Prospectus Supplement.

     (a) FAFCO, the Company and the Major  Shareholder shall jointly prepare and
FAFCO shall file with the SEC as soon as practicable  following the date of this
Agreement a Prospectus Supplement (the "Prospectus  Supplement") to registration
statement  no.  333-45459  of  FAFCO  (the  "Registration   Statement"),   which
Prospectus  Supplement  shall  describe,  among other things,  the  transactions
contemplated by this Agreement.  The Prospectus  Supplement shall also cover the
resale of FAFCO Common Shares  received by all  Shareholders  who are subject to
Rule 145  (promulgated  under the Securities  Act  restrictions  on resale.  The
portion of the  Registration  Statement  relating to the  registration  of FAFCO
Common Shares for resale will be maintained and kept effective until the earlier
of (i) one year from the Effective  Time and (ii) the time at which each selling
Shareholder named in the Registration Statement can sell all FAFCO Common Shares
held by such Shareholder in a 90 day period pursuant to the resale  restrictions
imposed by Rule 145 under the Securities Act. All  Shareholders  subject to Rule
145  restrictions are the intended  beneficiaries of this covenant,  which shall
survive the Closing.  FAFCO,  and the Company  shall also take any action (other
than,  with respect to FAFCO and the Company,  qualifying  to do business in any
jurisdiction in which they are not now so qualified)  required to be taken under
state blue sky or  securities  laws in  connection  with the  issuance  of FAFCO
Common  Shares  necessary  to  fulfill  the  transaction  contemplated  by  this
Agreement.  FAFCO, the Company and the Major  Shareholder shall each furnish the
other all information concerning FAFCO, the Company or the Major Shareholder, as
the  case  may be,  and  all  such  other  information  required  for use in the
Prospectus  Supplement and each of FAFCO, the Company and the Major  Shareholder
shall  each take such  other  action as the  other  may  reasonably  request  in
connection  with the preparation of the Prospectus  Supplement.  FAFCO shall use
commercially  reasonable efforts to have or to cause the Registration  Statement
and the Prospectus Supplement to become effective as promptly as practicable and
shall take all action required under applicable federal or state securities laws
in connection with the issuance of FAFCO Common Shares in the Merger (other than
qualifying  to do  business  in any  jurisdiction  in which  FAFCO is not now so
qualified).

     (b) If at any time  prior to the  Closing  Date any event  with  respect to
FAFCO,  the  Company or the Major  Shareholder  shall occur which is required at
that time to be described in the Prospectus  Supplement,  the Party with respect
to whom the event occurs shall  promptly  notify the other  Parties,  and to the
extent required by law, FAFCO will promptly file an amendment or supplement with
the SEC and disseminate such amendment to the Shareholders.

     7.2 Listing.  FAFCO shall promptly prepare and submit to the New York Stock
Exchange listing  applications  covering the FAFCO Common Shares to be issued in
the Merger,  and shall use its best  efforts to cause such shares to be approved
for listing and trading on the New York Stock  Exchange  prior to the  Effective
Time, subject to official notice of issuance.


                                    SECTION 8
                                 OTHER COVENANTS

     8.1 Amended Returns. The Company shall not file any amended federal, state,
local and foreign tax return and tax report with respect to the Company  without
the prior written consent of FAFCO.

     8.2  Tax  Free  Reorganization.   The  Company,  FAFCO  and  FAFCOSUB  each
acknowledges  and  agrees  that  (i) it  intends  the  Merger  to  constitute  a
reorganization within the meaning of Section 368(a) of the Code and (ii) it will
report the Merger as such a  reorganization  in any and all Returns filed by it.
At or prior to the Closing,  FAFCO, together with FAFCOSUB, and the Company will
execute  and   deliver  to  White  &  Case  LLP  and  Cooley   Godward  LLP  tax
representation  letters substantially in the form set forth in Exhibits L and M,
respectively,  for the  purpose  of (A) the  review of the  federal  income  tax
consequences of the Merger and the preparation and rendering of a tax opinion in
accordance  with this Agreement by Cooley Godward LLP and (B) the preparation of
the  discussion  of the tax  consequences  of the Merger to be  included  in the
Prospectus Supplement.

     8.3 Continuity of Interest.  (a) Except for transfers  described in Section
368(a)(2)(C) of the Code and transfers permitted to be made pursuant to Treasury
Regulation  Sections  1.368-1(d),  -1(e)  and  -2(k)(2)  FAFCO  has no  plan  or
intention  to: (i)  liquidate  the Company;  (ii) merge the Company with or into
another corporation including FAFCO or its affiliates; (iii) sell, distribute or
otherwise dispose of the stock of the Company; or (iv) cause the Company to sell
or  otherwise  dispose  of any of its  assets  or of any  assets  acquired  from
FAFCOSUB,  except for  dispositions  made in the ordinary  course of business or
payment of expenses incurred by the Company pursuant to the Merger; and

     (b) Except for  repurchases  or  redemptions of FAFCO Common Stock that are
consistent  with past practices and pursuant to pre-existing  purchase  programs
that were not  created  or  modified  in  connection  with the  Merger,  neither
FAFCOSUB nor FAFCO nor any "related person" (as such term is defined by Treasury
Regulation Section  1.368-1(e)(3)) of FAFCOSUB or FAFCO will, in connection with
the Merger,  repurchase  or redeem any of the FAFCO Common Stock to be issued to
the Shareholders in the Merger.

     8.4 Continuity of Business  Enterprise.  FAFCO intends that,  following the
Merger,  the Company will  continue its historic  business or use a  significant
portion  of its  historic  business  assets in a  business  in  accordance  with
Treasury Regulation Section 1.368-1(d).

     8.5 Directors and Officers  Indemnification.  FAFCO shall,  and FAFCO shall
cause the Surviving Corporation to, keep in effect provisions of the articles of
incorporation  and bylaws of  Company  providing  for  exculpation  of  director
liability and  indemnification  of directors,  officers and agents of Company to
the fullest extent permitted under the Corporations Code, which provisions shall
not be amended  except as required by  applicable  law or except to make changes
permitted  by law  that  would  enlarge  the  right of  indemnification  of such
directors,  officers  and agents.  FAFCO  shall,  and shall cause the  Surviving
Corporation  to,  keep in  effect  and  cause  compliance  with  the  terms  and
conditions of the indemnification  agreements,  if any, between Company and each
of its directors in effect as of the date of this Agreement.

     8.6 Employee  Matters.  From and after the Effective  Time the employees of
the Surviving  Corporation  shall cease to participate  in any Employee  Benefit
Plans or any other  benefit  plan of the  Company  and shall  from and after the
Effective Time  participate in FAFCO's employee benefit plans, as in effect from
time to time, in the same manner as similarly  situated employees of other FAFCO
subsidiaries.

     At or before the Effective Time, FAFCO and the Company shall make
reasonable  provision  for the  crediting  of each of the  Company's  employee's
accrued and unused sick leave,  vacation and holiday  time and the  crediting of
each employee's accumulated deductibles, in each case, as of the Effective Time,
for purposes of similar  FAFCO  employee  policies and employee  welfare  plans,
which recognize such time or deductibles.


                                    SECTION 9
                                   TERMINATION

     9.1 Events of Termination. This Agreement may be terminated (a) at any time
by mutual  written  agreement of the Parties,  (b) by FAFCO by written notice to
the Major  Shareholder  and the Company,  if the conditions set forth in Section
6.1 and 6.2 (other than the  execution  and delivery by FAFCO of the  agreements
set  forth in  Section  6.1(f))  hereof  shall not have  been  complied  with or
performed  on or prior to the 90th day from the date  hereof (or such later date
as the Parties may have agreed to in writing) in any material  respect and FAFCO
shall  not have  materially  breached  any of its  representations,  warranties,
covenants or agreements  contained herein, (c) by FAFCO by written notice to the
Company  and the Major  Shareholder,  if the Board of  Directors  of the Company
shall have  withdrawn or modified in any manner adverse to FAFCO or FAFCOSUB its
approval or  recommendation  of the Merger,  (d) by the Company and/or the Major
Shareholder by written  notice to FAFCO,  if the conditions set forth in Section
6.1 and  Section  6.3  (other  than the  execution  and  delivery  by the  Major
Shareholder  and R.  Squared  Limited  of the  agreements  set forth in  Section
6.1(f)) hereof shall not have been complied with or performed on or prior to the
90th day from the date hereof (or such later date as the Parties may have agreed
to in writing) in any material respect and the Company or the Major  Shareholder
shall not have  materially  breached any of their  representations,  warranties,
covenants or agreements  contained  herein,  (e) by the Company and/or the Major
Shareholder by written  notice to FAFCO,  if the Average Price is less than (but
not equal to) $42.525,  (f) by any of the Parties by written notice to the other
Parties if the Effective Time shall not have occurred within one month after the
Closing  Date or (g) by FAFCO by  written  notice to the  Company  and the Major
Shareholder,  to be  received no later than the date that is two weeks after the
date of this Agreement,  if FAFCO is not satisfied with its due diligence review
of the Related  Parties,  provided that such due diligence  review is limited to
such Related Party's existence, good standing, power and authority to enter into
and perform its  obligations  under the agreements it has with the Company,  and
the  enforceability of such agreements,  and, further,  with regard to Data Tree
India Private Limited, only, that (1) it has good, valid and marketable title to
all of its  assets,  (2) all leases to which it is a party are in full force and
effect  and all rents and  additional  rents to be paid by it on each such lease
have been paid,  (3) it is not bound by,  subject to or a party to any  material
contract or restrictive document,  (4) that there is no action, suit, proceeding
at law or in equity, arbitration or administrative or other proceeding involving
it, (5) it has  timely  filed or cause to be timely  filed with the  appropriate
taxing  authorities all returns and has timely paid or provided for all material
Taxes,  (6) it has  all  Licenses  necessary  to  own,  lease  and  operate  its
properties and enable it to carry on its business as presently conducted and (7)
it is in compliance  with all applicable  labor laws and has not experienced any
material labor difficulty in the last year.

     9.2  Effect of  Termination.  In the event  that  this  Agreement  shall be
terminated  pursuant  to Section  9.1,  all further  obligations  of the Parties
hereto under this Agreement  (other than pursuant to Sections  5.2(b) (Review of
the Company),  11.2 (Expenses) and 11.5 (Publicity) which shall continue in full
force and effect) shall terminate without further liability or obligation of any
Party to any other Party hereunder;  provided,  however,  that no Party shall be
released  from  liability  hereunder  if this  Agreement is  terminated  and the
transaction  abandoned  by reason of (a)  willful  failure of such Party to have
performed its obligations hereunder and (b) any knowing  misrepresentation  made
by such Party of any matter set forth herein.


                                   SECTION 10
                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

     10.1 Survival of Representations.

     (a) The  representations  and  warranties  of the  Company  and  the  Major
Shareholder  contained  in  Section 3 (or in any  certificate  delivered  by the
Company or the Major  Shareholder in connection  with the Closing related to any
such  representation  and warranty of the Company or the Major  Shareholder) are
made only as of the date of this  Agreement  and as of the Closing  Date, as the
case may be. Such  representations  and warranties shall expire for all purposes
at 12:01 A.M., Pacific Standard Time, on the day after the six month anniversary
of the Closing Date. Without limiting the foregoing, except solely as and to the
extent provided in Sections 10.1(c) and 10.2, from and after any such expiration
of any such  representation or warranty of the Company or the Major Shareholder,
such  representation  or warranty  shall be of no further  force or effect,  and
FAFCO  shall not  assert  any claim or bring  any  legal  action,  suit or other
proceeding  based upon or  relating  to any  inaccuracy  in or breach of, or any
breach of any obligation in respect of, or any other claim with respect to, such
representation or warranty.

     (b) The  representations  and warranties of FAFCO and FAFCOSUB contained in
Section 4 (or in any  certificate  delivered by FAFCO or FAFCOSUB in  connection
with the Closing  related to any such  representation  and  warranty of FAFCO or
FAFCOSUB)  are made only as of the date of this  Agreement and the Closing Date,
as the case may be. Such  representations  and  warranties  shall expire for all
purposes at 12:01 A.M.,  Pacific  Standard  Time, on the day after the six month
anniversary of the Closing Date.  Without limiting the foregoing,  except solely
as and to the extent  provided by Sections  10.1(c) and 10.2, from and after any
such  expiration  of  any  such   representation  or  warranty  of  FAFCO,  such
representation  or warranty shall be of no further force or effect,  and neither
the Company,  the Major  Shareholder nor any other  Shareholder shall assert any
claim or bring any legal action, suit or other proceeding based upon or relating
to any  inaccuracy  in or breach of any  obligation  in  respect of or any other
claim with respect to, such representation or warranty.

     (c) All claims for  indemnification  under Section 10.2 with respect to the
representations and warranties  contained herein, or in any certificate referred
to in  Sections  10.1(a)  or (b),  must be  asserted  on or prior to the date of
expiration of such  representations  and warranties set forth in Section 12.1(a)
or (b), as the case may be, by the  transmittal  of written  notice to the other
Parties prior to such date of expiration  in accordance  with Section 10.3,  and
all legal actions,  suits or other  proceedings with respect to such claims must
be brought within 90 days after such date of expiration.

     10.2 Indemnification.

     (a) The  Major  Shareholder  agrees  to  indemnify  and hold  FAFCO and its
officers, directors, shareholders,  employees, agents and any successors thereto
(the  "FAFCO  Parties"),   harmless  from  any  and  all  losses,   liabilities,
obligations,  damages,  costs and expenses (including  reasonable attorney fees)
(collectively,  "Damages") suffered or paid as a result of or arising out of the
failure of any  representation  or warranty made by the Major Shareholder or the
Company in Section 3 of this Agreement (or in any  certificate  delivered by the
Company or the Major  Shareholder in connection  with the Closing related to any
such  representation and warranty of the Company or the Major Shareholder) to be
true and  correct in all  material  respects  as of the date hereof or as of the
Closing  Date,  as the case may be;  provided,  however,  that the FAFCO Parties
shall be entitled to indemnification  with respect to Damages (i) only after the
aggregate amount of such Damages exceeds two hundred fifty thousand U.S. dollars
($250,000),  provided that once such damages  exceed two hundred fifty  thousand
U.S. dollars  ($250,000),  subject to clause (ii) below, FAFCO shall be entitled
to  indemnification  as to all Damages  (including the initial two hundred fifty
thousand U.S. dollars ($250,000) and (ii) equal to or less than two million U.S.
dollars ($2,000,000).

     (b) FAFCO agrees to  indemnify  and hold each  Shareholder  and the Company
harmless  from  Damages  suffered  or paid as a result of or arising  out of the
failure of any representation or warranty made by FAFCO or FAFCOSUB in Section 4
of this  Agreement  (or in any  certificate  delivered  by FAFCO or  FAFCOSUB in
connection with the Closing related to any such  representation  and warranty of
FAFCO or  FAFCOSUB)  to be true and correct in all  material  respects as of the
date hereof or as of the Closing  Date, as the case may be;  provided,  however,
that the Shareholders and the Company shall be entitled to indemnification  with
respect to Damages (i) only after the aggregate  amount of such Damages  exceeds
two hundred fifty  thousand  U.S.  dollars  ($250,000),  provided that once such
damages exceed two hundred fifty thousand U.S.  dollars  ($250,000),  subject to
clause (ii) below, the Shareholders and the Company, in the aggregate,  shall be
entitled to indemnification as to all Damages (including the initial two hundred
fifty  thousand  U.S.  dollars  ($250,000)  and (ii)  equal to or less  than two
million U.S. dollars ($2,000,000), in the aggregate.

     (c) The sole  recourse and remedy of FAFCO for any  inaccuracy in or breach
of, or any breach of any  obligation  with  respect  of, or any other claim with
respect to, any representation or warranty or alleged representation or warranty
by or on behalf of the Major  Shareholder  or the Company  contained  in or made
pursuant to this  Agreement or any other  certificate,  instrument,  or document
delivered  pursuant  hereto or thereto,  shall be under the provisions of and to
the extent  provided in this  Section 10.  FAFCO shall  comply with this Section
10.2(c), will not assert any inaccuracy, breach or claim or seek any recourse or
remedy in respect thereof other that under the provisions of this Section 10.

     (d) The sole  recourse and remedy of the  Shareholders  and the Company for
any  inaccuracy in or breach of, or any breach of any  obligation in respect of,
or any claim  with  respect  to,  any  representation  or  warranty  or  alleged
representation or warranty by or on behalf of FAFCO or FAFCOSUB  contained in or
made  pursuant  to this  Agreement,  or any  other  certificate,  instrument  or
document delivered pursuant hereto or thereto,  shall be under the provisions of
and to the  extent  provided  for in  this  Section  10.  The  Company  and  the
Shareholders  shall  comply with this Section  10.2(d),  and not assert any such
inaccuracy,  breach or claim or seek any  recourse or remedy in respect  thereof
other than under the provisions of this Section 10.

     (e) The obligations to indemnify and hold harmless pursuant to this Section
10.2 shall survive the  consummation  of the  transactions  contemplated by this
Agreement.

     10.3 Indemnification Procedure.

     (a)  Promptly  after the  incurring of Damages by any Party or other Person
entitled  to  indemnification  under  this  Section  10 (each,  an  "Indemnified
Party"), including,  without limitation, any claim by a third party described in
Section  10.3(c)  which  might  give  rise  to  indemnification  hereunder,  the
Indemnified  Party shall  promptly  deliver a  Certificate  to the Party that is
required to indemnify such Indemnified Party under Section 10 (such indemnifying
Party, the "Indemnifying Party").

     (b) In case the Indemnifying  Party shall object to the  indemnification of
an  Indemnified  Party in  respect  of any  claim  or  claims  specified  in any
Certificate,  the Indemnifying Party shall, within ten days after receipt by the
Indemnifying  Party of such  Certificate,  deliver  to the  Indemnified  Party a
written  notice to such effect and the  Indemnifying  Party and the  Indemnified
Party shall,  within the 30-day  period  beginning on the date of receipt by the
Indemnified Party of such written objection, attempt in good faith to agree upon
the rights of the  respective  parties  with  respect to each of such  claims to
which the Indemnifying  Party shall have so objected.  If the Indemnified  Party
and the  Indemnifying  Party  shall  succeed  in  reaching  agreement  on  their
respective rights with respect to any of such claims,  the Indemnified Party and
the  Indemnifying  Party shall  promptly  prepare and sign a memorandum  setting
forth such agreement. Should the Indemnified Party and the Indemnifying Party be
unable to agree as to any  particular  item or items or amount or amounts,  then
such dispute shall be settled by arbitration  in the County of Orange,  State of
California,  in accordance with the Commercial Arbitration Rules of the American
Arbitration  Association  then in effect  and,  as to matters  not  specifically
governed thereby, shall comply with the provisions of the California Arbitration
Act  (Cal.  Code  Civ.  Proc.  Sections  1280-1294.2).   There  shall  be  three
arbitrators,  one to be chosen by each  party  directly  at will,  and the third
arbitrator to be selected by the two arbitrators so chosen. Each party shall pay
the fees of the  arbitrator he or it selects and of his or its own attorneys and
the  expenses  of his or her  witnesses,  and all other fees and costs  shall be
borne equally by the parties.  Judgment on any award rendered by the arbitrators
may be entered in any court having jurisdiction.

     (c) Promptly  after the  assertion by any third party of any claim  against
any  Indemnified  Party that,  in the judgment of such  Indemnified  Party,  may
result in the  incurring  by such  Indemnified  Party of Damages  for which such
Indemnified  Party  would  be  entitled  to  indemnification  pursuant  to  this
Agreement,  such  Indemnified  Party shall deliver to the  Indemnifying  Party a
written notice  describing in reasonable detail such claim and such Indemnifying
Party may, at its option,  assume the defense of the  Indemnified  Party against
such  claim  (including  the  employment  of  counsel,  who shall be  reasonably
satisfactory  to such  Indemnified  Party),  and the  payment  of  expenses.  An
Indemnified  Party shall have the right to employ  separate  counsel in any such
action or claim and to  participate  in the  defense  thereof,  but the fees and
expenses of such counsel shall not be at the expense of the  Indemnifying  Party
unless (x) the  Indemnifying  Party shall have failed,  within a reasonable time
after having been  notified by the  Indemnified  Party of the  existence of such
claim as  provided  in the  preceding  sentence,  to assume the  defense of such
claim,  (y) the employment of such counsel has been  specifically  authorized in
writing by the  Indemnifying  Party or (z) the named  parties to any such action
(including any impleaded  parties) include both such  Indemnified  Party and the
Indemnifying Party and such Indemnified Party shall have been advised in writing
by such  counsel  that there may be on or more legal  defenses  available to the
Indemnified  Party  which  are  not  available  to the  Indemnifying  Party,  or
available to the Indemnifying Party, but the assertion of which would be adverse
to the interests of the Indemnified Party. No Indemnifying Party shall be liable
to indemnify  any  Indemnified  Party for any  settlement  of any such action or
claim effected  without the written consent of the  Indemnifying  Party,  but if
settled with the written  consent of the  Indemnifying  Party,  or if there be a
final  judgment for the  plaintiff in any such action,  the  Indemnifying  Party
shall  indemnify and hold harmless each  Indemnified  Party from and against any
loss or  liability by reason of such  settlement  or  judgment.  An  Indemnified
Party's election to defend against the claim of any third party shall be without
prejudice  to its rights to seek  indemnification  from the  Indemnifying  Party
under  this  Section  10.3.  An  Indemnifying  Party may  challenge  a claim for
indemnification  pursuant to Section  10.3(b) while  assuming the defense of the
underlying claim under this Section 10.3(c).

     (d)  Claims  for  Damages   specified  in  any   Certificate  to  which  an
Indemnifying  Party  shall not object in  writing  within ten days of receipt of
such Certificate, claims for Damages covered by a memorandum of agreement of the
nature described in Section 10.3(b),  claims for Damages the validity and amount
of which have been the subject of arbitral determination as described in Section
10.3(b) and claims for Damages the  validity and amount of which shall have been
the subject of a final judicial  determination,  or shall have been settled with
the consent of the  Indemnifying  Party,  as  described  in Section  10.3(c) are
hereinafter  referred to as "Agreed  Claims".  Within ten  business  days of the
determination of the amount of any Agreed Claims,  the Indemnifying  Party shall
pay to the  Indemnified  Party  an  amount  equal  to the  Agreed  Claim by wire
transfer  in  immediately  available  funds  to the  bank  account  or  accounts
designated  in writing by the  Indemnified  Party not less than one business day
prior to such payment.


                                   SECTION 11
                                  MISCELLANEOUS

     11.1   Knowledge.   Except  as  otherwise  set  forth  herein,   where  any
representation or warranty contained in this Agreement is expressly qualified by
reference  to the best  knowledge,  information  and  belief of (i) the  Company
and/or Major  Shareholder,  the Company and the Major  Shareholder each confirms
that it or he has made due and  diligent  inquiry as to the matters that are the
subject of such  representations  and  warranties or (ii) FAFCO,  FAFCO confirms
that its president,  chief financial  officer,  general counsel and tax director
has made due and diligent inquiry as to the matters that are the subject of such
representations and warranties.

     11.2 Expenses.

     (a) In connection with the transactions contemplated by this Agreement
and the  related  documents,  the  Company  shall  pay the  reasonable  fees and
expenses of the counsel,  auditors and financial advisors of the Company and all
reasonable  fees and expenses of the counsel to the Major  Shareholder.  The sum
total amount of such expenses that exceed  $1,000,000 shall be known as "Surplus
Expenses".

     (b) Except as provided in Section 11.29(a),  the other Parties hereto shall
pay all of their own expenses relating to the transactions  contemplated by this
Agreement and the documents described herein, including, without limitation, the
fees and expenses of their respective counsel, auditors and financial advisers.

     11.3 Governing Law. The  interpretation and construction of this Agreement,
and all matters relating  hereto,  shall be governed by the laws of the State of
California  applicable to agreements  executed and to be performed solely within
such State.

     11.4 Jurisdiction;  Agents for Service of Process.  Any judicial proceeding
brought  against any of the Parties to this Agreement on any dispute arising out
of this  Agreement or any matter  related hereto may be brought in the courts of
the State of California,  or in the United States District Court for the Central
District of California,  and, by execution and delivery of this Agreement,  each
of the Parties to this  Agreement  accepts the  exclusive  jurisdiction  of such
courts,  and irrevocably  agrees to be bound by any judgment rendered thereby in
connection with this Agreement.

     11.5 Publicity.  Except as otherwise  required by law,  neither the Company
nor the Major Shareholder shall issue any press release or make any other public
statement,  in each case  relating  to,  connected  with or arising  out of this
Agreement or the matters contained  herein,  without obtaining the prior consent
of FAFCO to the contents and the manner of presentation and publication thereof,
which consent shall not be unreasonably  withheld.  Except as otherwise required
by law,  FAFCO  shall  not  issue any  press  release  or make any other  public
statement,  in each case  relating  to,  connected  with or arising  out of this
Agreement or the matters contained herein,  without obtaining the prior approval
of the  Company  and the Major  Shareholder  to the  contents  and the manner of
presentation  and publication  thereof,  which consent shall not be unreasonably
withheld.

     11.6 Notices. Any notice or other communication required or permitted under
this  Agreement  shall be  sufficiently  given if delivered in person or sent by
facsimile or by  registered or certified  mail,  postage  prepaid,  addressed as
follows:

if to FAFCO or FAFCOSUB, to:

         The First American Financial Corporation
         114 East Fifth Street
         Santa Ana, California  92702
         Telephone:        714-558-3211
         Facsimile:        714-647-2242
         Attention:        Parker S. Kennedy

with a copy to:

         White & Case LLP
         633 West Fifth Street, Suite 1900
         Los Angeles, California  90071
         Telephone:        213-620-7700
         Facsimile:        213-687-0758
         Attention:        Neil W. Rust

if to the Company, to:

         Data Tree Corporation
         550 West "C" Street, Suite 2040
         San Diego, California  92101
         Telephone:        619-231-3300
         Facsimile:        619-231-3301
         Attention:        Harish K. Chopra

with a copy to:

         Cooley Godward LLP
         4365 Executive Drive, Suite 1100
         San Diego, California  92121
         Telephone:        619-550-6064
         Facsimile:        619-452-3555
         Attention:        Barbara L. Borden

if to the Major Shareholder, to:

         Harish K. Chopra
         P.O. Box 9360
         Rancho Santa Fe, California  92067
         Telephone:        619-759-9959
         Facsimile:        619-759-1747

with a copy to:

         Sheppard, Mullin, Richter & Hampton LLP
         501 W. Broadway, 19th Floor
         San Diego, California  92101
         Telephone:        619-338-6618
         Fax:              619-234-3815
         Attention:        Michael Changaris

or such  other  address or number as shall be  furnished  in writing by any such
Party, and such notice or communication shall, if properly addressed,  be deemed
to have  been  given as of the date so  delivered,  sent by  facsimile  or three
business days after deposit into the U.S. mail.

     11.7 Parties in Interest. This Agreement may not be transferred,  assigned,
pledged or  hypothecated  by any Party hereto.  This Agreement  shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
heirs, executors, administrators, successors and permitted assigns.

     11.8  Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts, all of which taken together shall constitute one instrument.

     11.9  Entire  Agreement.  This  Agreement,  including  the other  documents
referred to herein which form a part hereof,  contains the entire  understanding
of the parties  hereto with respect to the subject matter  contained  herein and
therein.  This  Agreement  supersedes all prior  agreements  and  understandings
between the parties with respect to such subject matter.

     11.10 Amendments. This Agreement may not be amended or modified orally, but
only by an  agreement  in writing  signed by FAFCO,  the  Company  and the Major
Shareholder.

     11.11  Severability.  In case any provision in this Agreement shall be held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the  remaining  provisions  hereof  will not in any way be  affected or impaired
thereby.

     11.12 Third Party Beneficiaries.  Except as expressly provided herein, each
Party hereto intends that this  Agreement  shall not benefit or create any right
or cause of action in or on behalf of any Person  other than the Parties  hereto
or the Shareholders.
<PAGE>

         IN WITNESS WHEREOF,  each of FAFCO, FAFCOSUB and the Company has caused
its  corporate  name to be hereunto  subscribed  by its officer  thereunto  duly
authorized and the Major Shareholder,  has signed this Agreement,  all as of the
day and year first above written.

                                         THE FIRST AMERICAN FINANCIAL
                                            CORPORATION


                                        By____________________________
                                          Name:
                                          Title:


                                       IMAGE ACQUISITION CORP.


                                        By____________________________
                                          Name:
                                          Title:


                                        DATA TREE CORPORATION


                                        By____________________________
                                          Name:
                                          Title:



                                          ____________________________
                                              Harish K. Chopra


<PAGE>





                                                                       EXHIBIT A


                         CERTIFICATE OF AMENDMENT OF THE
                          ARTICLES OF INCORPORATION OF
                              DATA TREE CORPORATION


     HARISH K. CHOPRA and MICHAEL D. REYNOLDS certify that:

     FIRST:  They are the President and  Secretary,  respectively,  of DATA TREE
CORPORATION, a California corporation (the "Corporation").

     SECOND:  Article V of the Articles of  Incorporation of this Corporation is
amended to read in its entirety as follows:

     "V. STOCK

     The  corporation is authorized to issue one class of stock to be designated
"Common  Stock".  The total number of shares which the Corporation is authorized
to issue is ten million (10,000,000) shares. Upon this amendment of the Articles
of  Incorporation,  each  outstanding  share of Common  Stock shall be split and
converted into ten (10) shares of Common Stock."

     THIRD: The foregoing  amendment of the Articles of  Incorporation  has been
duly approved by the Board of Directors of this Corporation.

     FOURTH:  The foregoing  amendment of the Articles of Incorporation has been
duly  approved by the  required  vote of  shareholders  in  accordance  with the
Articles of  Incorporation of this Corporation and Section 903 of the California
Corporations Code. The total number of outstanding shares of this Corporation is
703,983 shares of Common Stock.  The percentage  vote required was more than 50%
of the  outstanding  Common  Stock.  The number of shares voting in favor of the
amendment and restatement equaled or exceeded the vote required.

     I further  declare  under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of his own knowledge.

     Dated: May 20, 1997


     /s/ Harish K. Chopra
     ------------------------------
     HARISH K. CHOPRA, President

     /s/ Michael D. Reynolds
     ------------------------------
     MICHAEL D. REYNOLDS, Secretary



<PAGE>


                            CERTIFICATE OF AMENDMENT

                                       OF

                            ARTICLES OF INCORPORATION

                                       OF

                              DATA TREE CORPORATION

                     (Formerly Image Provider Systems, Inc.)



Harish K. Chopra,  Robert F. Rice,  and Peter J.  Wetterlind,  and each of them,
declare and certify as follows:

1.   DATA  TREE  CORPORATION,  (formerly  Image  Provider  Systems,  Inc.),  was
     incorporated  on  January  4,  1988  as  Image  Provider   Systems,   Inc.,
     Corporation Number 1426074.  On July 29, 1992, the name of said Corporation
     was changed to DATA TREE CORPORATION, Document A 421134.

2.   Harish K. Chopra is one of three (3) Directors,  the  President,  the Chief
     Financial  Officer,  and the owner of  60.9756%.  of the total  issued  and
     outstanding capital stock of DATA TREE CORPORATION.

3.   Robert F. Rice is one of three (3)  Directors,  and the owner of 7.8049% of
     the total issued and outstanding capital stock of DATA TREE CORPORATION.

4.   Peter J. Wetterlind is one of three (3) Directors of DATA TREE CORPORATION.

5.   Harish K. Chopra,  Robert F. Rice, and Peter J.  Wetterlind are all and the
     only Directors of DATA TREE CORPORATION.

6.   Harish K.  Chopra,  Robert F. Rice,  and Peter J.  Wetterlind,  and each of
     them, adopted, effective as of July 26, 1993, the amendment to the Articles
     of Incorporation of DATA TREE CORPORATION as set forth hereinbelow.

7.   Said amendment has been duly approved by the required vote of  shareholders
     in accordance  with Section 902 of the  California  Corporations  Code. The
     total  number of  outstanding  shares of the  Corporation  is 512,500.  The
     number of shares voting in favor of said amendment  equaled or exceeded the
     vote required. The percentage vote required was more than 50%.

                                      FIRST

Article III is amended to read as follows:

     III.     DIRECTORS

     "The number of  Directors of the  Corporation  shall be not less than three
     (3) , nor more  than  five  (5) , the  exact  number  to be  determined  by
     amendment  to the Bylaws of the  Corporation  approved by a majority of the
     total issued and outstanding capital stock of the Corporation."

Harish K. Chopra, Robert F. Rice, and Peter J. Wetterlind,  as the Directors and
owners of a total of 68.7805% of the total issued and outstanding  capital stock
of DATA TREE CORPORATION,  and each of them, further declare and certify,  under
the  penalty  of  perjury  as  defined  by and  under  the laws of the  State of
California, that the matters set forth in the foregoing Certificate of Amendment
of Articles of  Incorporation  of DATA TREE  CORPORATION are true and correct of
their own knowledge.

Dated:   July 30, 1993.


                    /s/ Harish K. Chopra 
                    ------------------------------------------------------------
                    HARISH  K.  CHOPRA,  Director,  President,  Chief  Financial
                    Officer,  and  Owner of  60.9756%  of the total  issued  and
                    outstanding capital stock of DATA TREE CORPORATION (formerly
                    Image Provider Systems, Inc.)


                    /s/  Robert F. Rice  
                    ------------------------------------------------------------
                    ROBERT F. RICE,  Director  and owner of 7.8049% of the total
                    issued   and   outstanding   capital   stock  of  DATA  TREE
                    CORPORATION (formerly Image Provider Systems, Inc.)


                    /s/ Peter J.  Wetterlind  
                    ------------------------------------------------------------
                    PETER  J.  WETTERLIND,  Director  of DATA  TREE  corporation
                    (formerly Image Provider Systems, Inc.)


                    /s/ Logan L. Hines 
                    ------------------------------------------------------------
                    Logan  ("Pat")  Hines,  Secretary  of DATA TREE  CORPORATION
                    (formerly Image Provider Systems, Inc.)



<PAGE>


                            CERTIFICATE OF AMENDMENT

                                       OF

                            ARTICLES OF INCORPORATION

                                       OF

                          IMAGE PROVIDER SYSTEMS, INC.

Harish K. Chopra,  Robert F. Rice,  and Peter J.  Wetterlind,  and each of them,
declare and certify as follows:

1.   IMAGE PROVIDER SYSTEMS,  INC., a California Corporation organized under the
     General  Corporation  Law of the State of California,  was  incorporated on
     January 4, 1988 as Corporation Number 1426074.

2.   Harish K. Chopra is one of three Directors, the President, Secretary, Chief
     Financial  Officer,  and the  owner  of  60.19%  of the  total  issued  and
     outstanding capital stock of IMAGE PROVIDER SYSTEMS, INC.

3.   Robert  F.  Rice is one of three  Directors,  and the owner of 7.58% of the
     total issued and outstanding capital stock of IMAGE PROVIDER SYSTEMS, INC.

4.   Peter J.  Wetterlind is one of three  Directors of IMAGE PROVIDER  SYSTEMS,
     INC.

5.   Harish K. Chopra,  Robert F. Rice, and Peter J.  Wetterlind are all and the
     only Director of IMAGE PROVIDER SYSTEMS, INC.

6.   Harish K. Chopra Robert F. Rice, and Peter J. Wetterlind,  and each of them
     adopted,  effective  as of July 29,  1992,  the two (2)  amendments  to the
     Articles of  Incorporation  of IMAGE  PROVIDER  SYSTEMS,  INC. as set forth
     hereinbelow.

7.   Said   amendments   have  been  duly  approved  by  the  required  vote  of
     shareholders in accordance with Section 902 of the  Corporations  Code. The
     total  number of  outstanding  shares of the  corporation  is 527,500.  The
     number of shares voting In favor of said amendments equaled or exceeded the
     vote required. The percentage vote required was more than 50%.

                                      FIRST

     Article I is amended to read as follows:

     I. "The name of this Corporation is DATA TREE CORPORATION".

                                     SECOND

     Article V is amended to read as follows:

     V. STOCK

     "The Corporation is authorized to issue ten million  (10,000,000) shares of
     capital stock."

Said Harish K. Chopra, Robert F. Rice, and Peter J. Wetterlind, as the Officers,
Directors,  and  owners of 67.77% of the total  issued and  outstanding  capital
stock of IMAGE PROVIDER  SYSTEMS,  INC., and each of them,  further  declare and
certify  under the  penalty  of  perjury as defined by and under the laws of the
State of California  that the matters set forth in the foregoing  Certificate of
Amendment  of  Articles  of  Incorporation  are true and  correct  of their  own
knowledge.



Dated:  July 22, 1992.



     /s/ Harish K. Chopra
     ------------------------------------------------------------
     HARISH K.  CHOPRA,  Director,  President,  Secretary,  Chief
     Financial  Officer,  and Owner of 60.19% of the total issued
     and  outstanding  capital stock Of IMAGE  PROVIDER  SYSTEMS,
     INC.


     /s/ Robert F. Rice
     ------------------------------------------------------------
     ROBERT F.  RICE;  Director-land  owner of 7.58% of the total
     issued  and  outstanding  capital  stock of  IMAGE  PROVIDER
     SYSTEMS, INC.


     /s/ Peter J. Wetterlind
     ------------------------------------------------------------
     PETER J. WETTERLIND, Director of IMAGE PROVIDER SYSTEMS, INC.




<PAGE>


                           ARTICLES OF INCORPORATION OF

                          IMAGE PROVIDER SYSTEMS, INC.



I.   NAME

The name of the corporation is Image Provider Systems. Inc.

II.  PURPOSE

The purpose of this  corporation  is to engage in any lawful act or activity for
which a  corporation  may be  organized  under the  General  Corporation  Law of
California  other than the  banking  business or the  practice  of a  profession
permitted to be incorporated by the California Corporations Code.

III. DIRECTORS

The number of Directors of the  corporation  is one (1). The name and address of
the person appointed as initial director is:

1.  Harish K. Chopra      408 Caldwell Court, San Dimas, CA 9,1773

IV.  AGENT FOR SERVICE OF PROCESS

The name and address of this corporation's  initial agent for service of process
in this state is:

                     Harish K. Chopra
                     408 Caldwell Court
                     San Dimas, CA 91773

V.   STOCK

The corporation is authorized to issue one million (1,000,000) shares of capital
stock.

VI.  CLOSE CORPORATION

This corporation is a close corporation.  All of the corporation's issued shares
shall be held of record by not more than 35 persons.


IN WITNESS WHEREOF the  undersigned  who is the above named initial  Director of
this  corporation,  have  executed the Articles of  Incorporation  on January 4,
1988.


                                                            /s/ Harish K. Chopra
                                                            --------------------
                                                            Harish K. Chopra


The undersigned,  being the person named above as the initial director, declares
that he is the person who executed the foregoing Article of Incorporation, which
execution is his act and deed.


Dated:  1-4-88


                                                            /s/ Harish K. Chopra
                                                            --------------------
                                                            Harish K. Chopra



<PAGE>


                                                                       EXHIBIT B

                            CERTIFICATE OF ADOPTION

                                       OF

                             AMENDMENT TO BYLAWS OF

                              DATA TREE CORPORATION

                     (formerly Image Provider Systems, Inc.)

                          EFFECTIVE AS OF JULY 26, 1993

I, the undersigned, do hereby certify as follows:

1.   I am the  President  of DATA TREE  CORPORATION,  (formerly  Image  Provider
     Systems,  Inc.), a corporation  organized under the General Corporation Law
     of the State of  California,  and the  holder of  approximately  61% of the
     total issued and outstanding capital stock of said Corporation;

2.   The Bylaws of DATA TREE  CORPORATION,  (formerly  Image  Provider  Systems,
     Inc.), have been duly amended through July 26, 1993 as follows:

                                      FIRST

Article II, Section 1, Principal  Executive Office, is hereby amended to fix the
principal executive office of the Corporation at:

          330 North "D" Street, Suite 405
          San Bernardino, California 92401

                                     SECOND

Article IV,  Section 2, Number of Directors,  is hereby  amended to provide that
the authorized number of Directors of this Corporation shall be five (5).

                                      THIRD

Article VII,  Fiscal  Year,  shall be amended to provide that the fiscal year of
the Corporation  shall begin on the first day of October and end on the last day
of September of each year.

IN WITNESS WHEREOF,  I have hereunto set my hand effective as of the 26th day of
July, 1993.

                                   /s/Harish  K.  Chopra
                                   Harish  K.  Chopra,
                                   President,  Director,  and the holder of
                                   60.9756%   of  the  total   issued   and
                                   outstanding  capital  stock of DATA TREE
                                   CORPORATION,  (formerly  Image  Provider
                                   Systems, Inc.)

Approved:

                                   /s/Robert F. Rice
                                   ROBERT F. RICE,  Director and owner of
                                   7.8049% of the total issued and  outstanding
                                   capital stock of DATA TREE CORPORATION,
                                   (formerly Image Provider Systems, Inc.)



                                   /s/Peter  J.  Wetterlind
                                   PETER J WETTERLIND, Director of DATA TREE
                                   CORPORATION,(formerly Image Provider Systems,
                                   Inc.)

Approved:

                                   /s/ Logan  Hines  Logan,   ("Pat")
                                   Hines,  Secretary,  DATA  TREE
                                   CORPORATION,  (formerly  Image
                                   Provider Systems, Inc.)


<PAGE>
                                     BY LAWS

                                       OF

                          IMAGE PROVIDER SYSTEMS, INC.


                                    ARTICLE I

                                   DEFINITIONS

Section 1.  Purpose of  Bylaws

These Bylaws shall serve to govern and regulate the affairs of the  Corporation,
except as otherwise provided by the Corporations Code of the State of California
and  other  applicable   statutes  or  the  Articles  of  Incorporation  of  the
Corporation.


Section 2.  Board

As used in these  Bylaws,  the term "Board"  means the Board of Directors of the
Corporation.


Section 3.  Directors

As used in these  Bylaws in relation to any power or duty  requiring  collective
action, the term "Directors" means the Board of Directors of the Corporation.


Section 4.  Articles

As used in these Bylaws, the term "Articles" means the Articles of Incorporation
of the Corporation.


Section 5.  Code

As used in these  Bylaws,  the term "Code"  means the  Corporations  Code of the
State of California as from time to time amended.


Section 6.  Construction

Except  as  otherwise  provided  in these  Bylaws or when the  context  requires
otherwise, the general provisions, rules of construction, and definitions in the
Code  shall  govern the  construction  of these  Bylaws.  Without  limiting  the
generality of this  provision,  the singular  number includes the plural and the
plural number includes the singular;  the masculine gender includes the feminine
and neuter  genders;  and the term "person"  includes  both a corporation  and a
natural person.


                                   ARTICLE II

                                     OFFICES


Section 1.  Principal Executive Office

The principal  executive  office of the  Corporation is hereby fixed and located
at:

            398 West Fourth Street, Suite 205
            San Bernardino, California 92401.

The Board is hereby  granted full power and  authority to change the location of
said  principal  executive  office to any place  within or outside  the State of
California.

If the principal  executive  office is located  outside the State of California,
and if the  Corporation  has one or more  business  offices  within the State of
California, the Board shall fix and designate a principal business office within
the State of California.

Any change of  location of the  principal  executive  office of the  Corporation
shall be noted on a schedule which shall be attached to these Bylaws.


Section 2.  Other Offices

The Corporation may also have offices at such other places within or outside the
State of  California  where the  Corporation  is qualified to do business as the
Board may from time to time  designate  or the business of the  Corporation  may
require.


                                   ARTICLE III

                            MEETINGS OF SHAREHOLDERS


Section 1.  Annual Meetings of Shareholders

a.   Place of Meetings

     Meetings of  shareholders  shall be held either at the principal  executive
     office of the Corporation or at any other place within or without the State
     of California which may be designated either by the Board or by the written
     consent,  given  either  before or after  the  meeting  and filed  with the
     Secretary, of all persons entitled to vote at such meeting.

b.   Time of Meetings; Business Transacted

     The annual  meeting of  shareholders  shall be held on the third Tuesday of
     April of each year, at the hour of 10:00 A.M., if not a legal holiday;  and
     if a legal holiday,  on the next  succeeding  full business day.  Provided,
     however,  that any annual  meeting  may be  adjourned  as provided in these
     Bylaws.

     If the annual meeting of  shareholders  shall not be held on the date above
     specified,  the Board shall  cause a meeting in lieu  thereof to be held as
     soon thereafter as convenient,  and, in any case, not later than sixty (60)
     days  after the date  designated  above,  and any  business  transacted  or
     election held at such meeting shall be as valid as if transacted or held at
     the annual meeting.

     At the annual meeting,  Directors shall be elected,  reports of the affairs
     of the  Corporation  shall be  considered,  and any other  business  may be
     transacted which is within the powers of the shareholders.


Section 2.  Special Meetings of Shareholders

a.   Persons Entitled to Call

     A  special  meeting  of the  shareholders  may be called at any time by the
     Board, the Chairperson of the Board, if any, the President,  or one or more
     shareholders holding shares in the aggregate entitled to cast not less than
     ten percent (10%) of the votes at such meeting.

     A special  meeting of the  shareholders  may also be called as  provided in
     section 5 of article IV hereof on filling vacancies on the Board.

b.   Method of Calling

     If a special  meeting  is called by any  person or  persons  other than the
     Board,  the  request  shall be in writing,  shall  specify the time of such
     meeting and the general  nature of the business  proposed to be transacted,
     and shall be delivered  personally or sent by registered or certified  mail
     or by telegraphic or other facsimile transmission to the Chairperson of the
     Board, if any, the President,  any Vice President,  or the Secretary of the
     Corporation.

     The officer  receiving such request shall cause notice to be promptly given
     to all shareholders  entitled to vote, in accordance with the provisions of
     section 3 hereof, that a meeting will be held at the time requested by such
     person or persons calling the meeting,  not less than  thirty-five (35) nor
     more than sixty (60) days after the receipt of such request.

     Nothing  contained in this  subsection  (b) shall be construed as limiting,
     fixing,  or  otherwise  affecting  the time when a meeting of  shareholders
     called by action of the Board may be held.


Section 3.  Notice of Shareholders' Meetings

a.   Notice of Meetings

     Whenever  shareholders  are  required or  permitted to take any action at a
     meeting, a written notice of the meeting shall be given to each shareholder
     entitled to vote  thereat,  subject to the  provisions  of  subsection  (f)
     hereof.

b.   Method of Giving Notice of Meeting or Report

     Notice of a  shareholders'  meeting  or any report  thereof  shall be given
     either personally or by first-class mail,  postage prepaid,  or other means
     of written  communication,  addressed to the  shareholder at the address of
     such shareholder  appearing on the books of the Corporation or given by the
     shareholder  to the  Corporation  for the purpose of notice;  or if no such
     address  appears or is given,  at the place where the  principal  executive
     office of the Corporation is located.  The notice or report shall be deemed
     to have been given at the time when  delivered  personally  or deposited in
     the mail or sent by other means of written communication.

     If any notice or report addressed to the shareholder at the address of such
     shareholder  appearing on the books of the  Corporation  is returned to the
     Corporation  by the United  States Postal  Service  because it could not be
     delivered to the shareholder at such address, all future notices or reports
     shall be deemed to have been duly  given  without  further  mailing if they
     shall be available for the  shareholder  on written demand at the principal
     executive  office of the  Corporation for a period of one (1) year from the
     date of the giving of such notice or report to all other shareholders.

     An  affidavit of the mailing or other means of giving such notice or report
     of any shareholders' meeting shall be executed by the Secretary,  Assistant
     Secretary,  or any transfer agent of the Corporation  giving such notice or
     report,  and  shall be  filed  and  maintained  in the  minute  book of the
     Corporation.

c.   Time of Notice

     Notice of any  meeting of  shareholders  shall be sent to each  shareholder
     entitled  thereto  not less  than ten (10) nor more  than  sixty  (60) days
     before the date of the meeting. Provided, however, that notice of a special
     meeting of shareholders shall be sent to each shareholder  entitled thereto
     forthwith and in any event within twenty (20) days after the receipt of the
     request for such meeting as provided in section 2(b) hereof.

d.   Contents of Notice

     1)   Generally

          The notice of any meeting of shareholders shall state the place, date,
          and hour of the meeting and:

          a)   in the case of a  special  meeting,  the  general  nature  of the
               business to be transacted, or

          b)   in the case of the annual meeting, those matters which the Board,
               at the time of giving such  notice  intends to present for action
               by the shareholders.

          The notice of any meeting at which  Directors  are to be elected shall
          include the name of any nominee or nominees  whom, at the time of such
          notice, management intends to present for election.

     2)   Additional Contents of Notice

          If action is proposed to be taken at any meeting of  shareholders  for
          approval of:

          a)   a contract  or  transaction  in which a Director  has a direct or
               indirect financial interest, pursuant to section 310 of the Code;

          b)   an  amendment  to the  Articles,  pursuant  to section 902 of the
               Code;

          c)   a reorganization of the Corporation,  pursuant to section 1201 of
               the Code;

          d)   a voluntary  dissolution of the  Corporation  pursuant to section
               1900 of the Code; or

          e)   a distribution  in dissolution  other than in accordance with the
               rights of outstanding preferred shares,  pursuant to section 2007
               of the Code,

          the notice of such meeting shall also state the general nature of such
          proposal.

e.   Notice of Adjourned Meeting

     Any  meeting of  shareholders  may adjourn by the vote of a majority of the
     shares represented either in person or by proxy to another time or place or
     from day to day or time to time until its  business is  completed  or, if a
     quorum is not and was not  present  in  person or by proxy,  until a quorum
     shall attend.  Any  adjournment  and the reason for it shall be recorded in
     the minutes of the meeting.

     If the  adjournment is for more than  forty-five  (45) days, or if the time
     and place of the  adjourned  meeting  are not  announced  at the meeting at
     which the  adjournment is taken,  or if after the  adjournment a new record
     date is fixed for the adjourned  meeting, a notice of the adjourned meeting
     shall be given  to each  shareholder  of  record  entitled  to vote at such
     meeting.  Otherwise,  no notice of the adjourned  meeting need be given. At
     the adjourned  meeting,  the  Corporation  may transact any business  which
     might have been transacted at the original meeting.

f.   Validation of Defectively Called or Noticed Meeting

     The  transactions  of any  meeting  of  shareholders,  however  called  and
     noticed,  and wherever  held,  shall be as valid as though had at a meeting
     duly held after regular call and notice,  if a quorum be present  either in
     person or by proxy, and if, either before or after the meeting, each person
     entitled  to vote,  who was not  present  in person  or by  proxy,  signs a
     written  waiver of notice,  a consent to the holding of the meeting,  or an
     approval of the minutes.

     Said waiver,  consent,  or approval need not specify either the business to
     be transacted or the purpose of any meeting of shareholders, except that if
     action  is  taken or  proposed  to be taken  for  approval  of any of those
     matters specified in subsection  (d)(2) hereof,  said waiver,  consent,  or
     approval shall state the general nature of such proposal.

     All such waivers, consents, or approvals shall be filed with and maintained
     in the corporate records.

     Attendance  by any person at a meeting  shall also  constitute  a waiver of
     notice of such meeting,  except when such person objects,  at the beginning
     of the meeting,  to the transaction of any business  because the meeting is
     not lawfully called or convened, and except that attendance at a meeting is
     not a waiver of any right to object to the  consideration  of  matters  not
     included in the notice of the meeting if such  objection is expressly  made
     at such meeting.

Section 4.   Quorum of Shareholders

a.   Definition of Quorum

     A majority  of the shares  entitled  to vote,  represented  in person or by
     proxy, shall constitute a quorum at any meeting of shareholders.  Provided,
     however,  that whenever shares are disqualified  under any provision of the
     Code from voting on any matter,  they shall not be  considered  outstanding
     for the  determination  of a quorum at any  meeting  to act on such  matter
     under any other provision of such Code, the Articles, or these Bylaws.

b.   Loss of Quorum.

     The shareholders present at a duly called or held meeting at which a quorum
     is present may continue to transact business notwithstanding the withdrawal
     of shareholders  sufficient to leave less than a quorum, if any such action
     taken  is  approved  by at  least a  majority  of the  shares  required  to
     constitute a quorum.

c.   Adjournment for Lack of Quorum

     In the absence of a quorum,  any meeting of  shareholders  may be adjourned
     from  time to time by the  vote of a  majority  of the  shares  represented
     either  in person or by proxy,  but no other  business  may be  transacted,
     except as provided in subsection (b) hereof.


Section 5.  Determining Shareholders of Record

a.   Record Date Fixed By Board

     For  purposes of  determining  the  shareholders  entitled to notice of any
     meeting, to vote, to give consent to corporate action without a meeting, to
     receive  payment of any dividend or other  distribution or allotment of any
     rights,  or to exercise any rights in respect of any other  lawful  action,
     the Board may fix in  advance a record  date,  which date shall not be more
     than  sixty  (60) nor less than ten (10) days prior to the date of any such
     meeting,  nor more than sixty (60) days prior to any such action  without a
     meeting, any such payment, or any such exercise of rights.

b.   Record Date Not Fixed By Board

     If no record date is fixed:

     1)   The record date for determining  shareholders entitled to notice of or
          to vote at a meeting of shareholders shall be the close of business on
          the business day next  preceding  the day on which notice is given or,
          if notice is waived, at the close of business on the business day next
          preceding the day on which the meeting is held;

     2)   The record date for determining  shareholders entitled to give consent
          to  corporate  action  without a meeting,  when no prior action by the
          Board has been taken, shall be the day on which the first such written
          consent is given; and

     3)   The record date for  determining  shareholders  for any other  purpose
          shall be the close of  business  on the day on which the Board  adopts
          the resolution  relating thereto,  or the sixtieth (60th) day prior to
          the date of such action, whichever is later.

c.   Record Date for Adjourned Meeting

     A determination  of shareholders of record entitled to notice of or to vote
     at a meeting of shareholders  shall apply to any adjournment of the meeting
     unless the Board fixes a new record  date for the  adjourned  meeting.  The
     Board must, however,  fix a new record date if the meeting is adjourned for
     more than forty-five (45) days from the date set for the original meeting.

d.   Rights of Shareholders of Record

     Shareholders  on the record date are entitled to notice,  to vote,  to give
     consent to corporate  action without a meeting,  to receive payments of any
     dividends  or  other  distributions  or  allotments  of any  rights,  or to
     exercise any rights in respect of any other lawful action,  as the case may
     be,  notwithstanding  any  transfer  of  any  shares  on the  books  of the
     Corporation  after the record  date,  except as  otherwise  provided in the
     Articles or in the Code.


Section 6.  Voting

a.   Votes Per Share

     Except as otherwise  provided in subsection  (c) hereof,  and except as may
     otherwise be provided in the Articles,  each outstanding share,  regardless
     of class,  shall be entitled to one vote on each matter submitted to a vote
     of  shareholders.  Whenever shares are disqualified by the Code from voting
     on  any  matter,   they  shall  not  be  considered   outstanding  for  the
     determination  of the required vote to approve  action on such matter under
     any other provision of the Code, the Articles, or these Bylaws.

b.   Voting Procedure

     1)   Voice or Ballot

          Shareholders may vote by voice or ballot. Provided,  however, that any
          election of Directors must be by ballot if demanded by any shareholder
          at a meeting and before the voting has begun.

     2)   Election of Directors.

          At a meeting of shareholders at which Directors are to be elected,  no
          shareholder shall be entitled to cumulate votes (that is, cast for any
          one or more  candidates  a number of votes  greater than the number of
          such  shareholder's  shares)  unless the  candidates'  names have been
          placed  in  nomination  prior  to  commencement  of the  voting  and a
          shareholder  has given notice at the meeting prior to  commencement of
          the  voting  of  his  or  her  intention  to  cumulate  votes.  If any
          shareholder has given such notice, then every shareholder  entitled to
          vote may cumulate  votes for  candidates  in nomination by casting for
          any one  candidate a number of votes equal to the number of  Directors
          to be  elected  multiplied  by the  number  of  votes  to  which  such
          shareholder's shares are entitled,  or distributing such shareholder's
          votes on the same  principle  among any or all such  candidates as the
          shareholder  sees fit. The candidates  receiving the highest number of
          such votes,  up to the number of  Directors  to be  elected,  shall be
          elected.

     3)   Matters Other than the Election of Directors

          On any matter other than the election of  Directors,  any  shareholder
          may  vote  part of his or her  shares  in favor  of the  proposal  and
          refrain  from  voting the  remaining  shares or vote them  against the
          proposal.  However, if such shareholder fails to specify the number of
          shares  which  he  or  she  is  voting   affirmatively,   it  will  be
          conclusively  presumed that his or her approving  vote is with respect
          to all shares that such shareholder is entitled to vote.

          If a quorum is present,  the  affirmative  vote of the majority of the
          shares  represented at a meeting of shareholders  and entitled to vote
          on any matter other than the election of Directors shall be the act of
          the  shareholders,  unless  the vote of a greater  number or voting by
          classes is required by the Code or the Articles.


Section 7.  Proxies

Every  person  entitled to vote for  Directors or on any other matter shall have
the right to do so either in  person or by one or more  agents  authorized  by a
written  proxy  signed  by such  person  and  filed  with the  Secretary  of the
Corporation.

Except as  otherwise  provided by written  agreement  between the  parties,  the
recordholder  of shares  which such  person  holds as pledgee  or  otherwise  as
security or which belong to another must issue to the pledgor or to the owner of
such shares,  on demand therefor and payment of necessary  expenses  thereof,  a
proxy to vote or take other action thereon.

a.   Validity of Proxy

     A proxy shall be deemed signed if the  shareholder's  name is placed on the
     proxy, whether by manual signature, typewriting,  telegraphic transmission,
     or otherwise,  by the shareholder or the shareholder's  attorney in fact. A
     proxy bearing no  handwritten  or  handprinted  signature is  presumptively
     invalid;  provided,  however,  that facsimile  signatures  from  securities
     brokers or dealers and by banks and trust companies are presumptively valid
     in the absence of evidence of lack of authenticity or authorization.

     If a proxy bears a legible  date, it will be presumed to have been executed
     on that date. The dates  contained on the proxies  presumptively  determine
     the  order of their  execution,  regardless  of the  postmark  dates on the
     envelopes in which they are transmitted.  If a proxy bears no legible date,
     it will be  presumed  to have been  executed  on the  postmark  date on the
     envelope  in which it was  transmitted.  In the absence of evidence of such
     postmark date, the proxy will be presumed to have been executed on the date
     it was received by the Corporation.

b.   Duration of Proxy

     A validly executed proxy which does not state that it is irrevocable  shall
     continue in full force and effect unless:

     1)   Revoked by the person executing it, prior to the vote pursuant to such
          proxy,  by a writing  delivered to the  Corporation  stating that such
          proxy is revoked,  or by a subsequent proxy executed by, or attendance
          at the  meeting  and voting in person by,  the person  executing  such
          proxy; or

     2)   Written notice of the death or incapacity of the maker of any proxy is
          received by the Corporation  before the vote pursuant to said proxy is
          counted;

     Provided,  however,  that no proxy shall be valid after the  expiration  of
     eleven  (11)  months  from  the date  thereof,  unless  otherwise  provided
     therein.

c.   Proxy Providing for Irrevocability

     1)   When Proxy is Irrevocable

          A proxy which states that it is  irrevocable  is  irrevocable  for the
          period specified  therein when it is held by any of the following or a
          nominee of any of the following:

          a)   A pledgee;

          b)   A person  who has  purchased  or agreed to  purchase  or holds an
               option to purchase the shares,  or a person who has sold all or a
               portion of such person's  shares in the  Corporation to the maker
               of the proxy;

          c)   A creditor or creditors of the Corporation or the shareholder who
               extended  or  continued   credit  to  the   Corporation   or  the
               shareholder in  consideration  of the proxy,  if the proxy states
               that  it  was  given  in   consideration  of  such  extension  or
               continuation  of credit and the name of the person  extending  or
               continuing such credit; or

          d)   A person who has contracted to perform services as an employee of
               the  Corporation,  if a proxy  is  required  by the  contract  of
               employment  and  if  the  proxy  states  that  it  was  given  in
               consideration  of such  contract of  employment,  the name of the
               employee, and the period of employment contracted for.

          In  addition,  a proxy may be made  irrevocable,  notwithstanding  the
          death or incapacity of the maker thereof, if it is given to secure the
          performance  of a  duty  or  to  protect  a  title,  either  legal  or
          equitable,  until the happening of events which by its terms discharge
          the obligations secured by the proxy.

     2)   When Irrevocable Proxy is Revocable

          Notwithstanding  the period of  irrevocability  specified in paragraph
          (1) hereof,  such proxy becomes revocable when the pledge is redeemed,
          the option or  agreement  to  purchase  is  terminated,  the seller no
          longer  owns any shares of the  Corporation  or dies,  the debt of the
          Corporation  or the  shareholder  is paid, or the period of employment
          provided for in the contract of employment has terminated.

          A  proxy  may  be  revoked,  notwithstanding  a  provision  making  it
          irrevocable,  by a  purchaser  of  shares  without  knowledge  of  the
          existence of such provision, unless the existence of the proxy and its
          irrevocability appears on the certificate representing such shares.

d.   Directors' Determination of Execution and Use of Proxies

          The Board  may,  in  advance  of any  annual  or  special  meeting  of
          shareholders,  prescribe additional  regulations concerning the manner
          of execution,  filing, and validation of proxies which are intended to
          be voted at any such meeting.


Section  8.  Conduct of Meetings

a.   Presiding Officer and Secretary

     The  presiding  officer  at  each  meeting  of  shareholders  shall  be the
     President of the  Corporation,  or in his or her absence any Vice President
     designated  by the  President,  or if no such  officer  is present a person
     chosen  at the  meeting  by a  majority  in  interest  of the  shareholders
     represented in person or by proxy and entitled to vote.

     The  Secretary  of  the  Corporation,  or in  the  Secretary's  absence  an
     Assistant  Secretary,  or if no such officer is present a person designated
     by the  presiding  officer at such  meeting  shall act as  secretary of the
     meeting and take minutes of such meeting.

b.   Procedure

     Procedural matters at shareholders'  meetings shall be governed by Robert's
     Rules of Order  insofar as such rules are not  inconsistent  with the Code,
     the Articles, or these Bylaws.


Section 9.  Shareholders' Action by Written Consent Without a Meeting

a.   When Authorized

     Any  action  which  may be  taken  at any  annual  or  special  meeting  of
     shareholders may be taken without a meeting and without prior notice,  if a
     consent in writing,  setting forth the action so taken,  shall be signed by
     the holders of  outstanding  shares 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.

     In the case of an election of Directors,  however,  such a consent shall be
     effective only if signed by the holders of all outstanding  shares entitled
     to vote for the election of Directors;  provided,  however, that a Director
     may be elected at any time to fill a vacancy on the Board that has not been
     filled  by the  Directors,  by the  written  consent  of the  holders  of a
     majority of the  outstanding  shares  entitled to vote for the  election of
     Directors.

     All such  consents  shall be filed  with and  maintained  in the  corporate
     records.

b.   Notice of Shareholders' Approval

     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
     solicited  in writing,  and if the  unanimous  written  consent of all such
     shareholders has not been received,  the Secretary of the Corporation shall
     give prompt notice of the  corporate  action  approved by the  shareholders
     without a meeting in the manner specified in section 3 hereof.

     In the case of  approval of the  following  actions,  such notice  shall be
     given  at  least  ten (10)  days  before  the  consummation  of any  action
     authorized by such approval:

     1)   Any  contract  or  transaction  in which a  Director  has a direct  or
          indirect financial interest, pursuant to section 310 of the Code;

     2)   Any indemnification by the Corporation of any of its agents,  pursuant
          to section 317 of the Code;

     3)   Any reorganization of the Corporation, pursuant to section 1201 of the
          Code; or

     4)   Any  distribution  in  dissolution  other than in accordance  with the
          rights of outstanding  preferred  shares,  pursuant to section 2007 of
          the Code.

c.   Revocation of Consent

     Any   shareholder,   a  transferee  of  his  or  her  shares,   a  personal
     representative  of such shareholder,  or their respective  proxyholders may
     revoke any such written  consent by a writing  received by the Secretary of
     the Corporation  prior to the time that written  consents for the number of
     shares  required to authorize the proposed  action have been filed with the
     Secretary, but may not do so thereafter. The revocation is effective on its
     receipt by the Secretary.


                                   ARTICLE IV

                                    DIRECTORS


Section 1.  Powers

Subject to the provisions of the Code, the Articles,  and these Bylaws  relating
to action  required to be approved by the  shareholders,  and provided  that the
Board may delegate the day to day operations of the business of the  Corporation
to others,  the business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the Board.


Section 2.   Number of Directors

The authorized number of Directors of this Corporation shall be three (3).

The authorized number of Directors may be changed by a duly adopted amendment to
the  Articles or by an  amendment  to this Bylaw  adopted by the vote or written
consent of holders of a majority  of the  outstanding  shares  entitled to vote.
Provided,  however,  that an  amendment  reducing  the number of  Directors to a
number  less than five (5)  cannot be  adopted  if the votes  cast  against  its
adoption at a meeting of  shareholders,  or if the shares not  consenting in the
case of action by written consent, are equal to more than sixteen and two-thirds
percent (16 2/3%) of the outstanding shares entitled to vote.


Section 3.   Election and Term of Office of Directors

Directors shall be elected at each annual meeting of shareholders and shall hold
office until the next such annual meeting.  Provided,  however, that if any such
annual  meeting of  shareholders  is not held or the  Directors  are not elected
thereat,  the  Directors may be elected at any special  meeting of  shareholders
held for that purpose.  Each  Director,  including a Director  elected to fill a
vacancy on term for which  elected  and until a successor  has been  elected and
qualified.


Section 4.   Vacancies on the Board

a.   When Vacancy Occurs

     A vacancy or vacancies on the Board shall be deemed to exist:

     1)   In the event of the death, resignation, or removal of any Director;

     2)   If the authorized number of Directors is increased; or

     3)   If the shareholders  fail, at any meeting of shareholders at which any
          Director  or  Directors  are to be  elected,  to elect  the  number of
          Directors to be voted for at such meeting.

b.   Reduction in Authorized Number of Directors

     No reduction in the authorized number of Directors shall have the effect of
     removing any Director before such Director's term of office expires.

c.   Resignation of Director

     Any  Director  may  resign  effective  on  giving  written  notice  to  the
     Chairperson  of the Board,  if any, the President,  the  Secretary,  or the
     Board,  unless the notice  specifies  a later time for the  resignation  to
     become effective. If the resignation of a Director is effective at a future
     time,  the Board may elect a successor to take office when the  resignation
     becomes effective.

     Unless otherwise specified therein,  the acceptance of any such resignation
     shall not be necessary to make it effective.

d.   Removal of Director

     No Director  may be removed  from office  prior to the  expiration  of such
     Director's  term of office  other  than in  accordance  with the  following
     provisions:

     1)   Removal by the Board

          The Board may remove any  Director  who has been  declared  of unsound
          mind by a court order or convicted of a felony.

     2)   Removal by Shareholders

          Any or all of the Directors may be removed by the shareholders without
          cause if such removal is approved by the  affirmative  vote or written
          consent of a majority  of the  outstanding  shares  entitled  to vote,
          subject to the following:

          a)   No Director  may be removed,  unless the entire Board is removed,
               when the votes cast against removal (or not consenting in writing
               to such  removal)  would be  sufficient to elect such Director if
               voted  cumulatively at an election at which the same total number
               of votes  were  cast  (or,  if such  action  is taken by  written
               consent, at which all shares entitled to vote were voted) and the
               entire  number  of  Directors  authorized  at  the  time  of  the
               Director's most recent election were then being elected; and

          b)   When by the  provisions of the Articles the holders of the shares
               of any class or series, voting as a class or series, are entitled
               to elect one or more  Directors,  any  Director so elected may be
               removed only by the applicable  vote of the holders of the shares
               of such class or series.

     3)   Removal by Court

          Shareholders  holding  at least  ten  percent  (10%) of the  number of
          outstanding  shares of any class may sue in the superior  court of the
          county in which the principal  executive  office of the Corporation is
          located,  to remove from office any Director in case of  fraudulent or
          dishonest  acts  or  gross  abuse  of  authority  or  discretion  with
          reference to the  Corporation.  In such case, the Corporation  must be
          made a party to the action.


Section 5.  Filling Vacancies

a.   By the Board

     Except as otherwise provided in the Articles or in these Bylaws, and except
     for a vacancy  created by the  removal of a Director as provided in section
     4(d)  hereof,  vacancies  on the Board may be filled by a  majority  of the
     Directors then in office,  whether or not less than a quorum,  or by a sole
     remaining Director.

     Each Director so elected shall hold office until the next annual meeting of
     shareholders and until a successor has been elected and qualified.

b.   By Shareholders

     The  shareholders  may elect a Director at any time to fill any vacancy not
     filled by the  Directors  and any such  election by written  consent  shall
     require  the consent of a majority of the  outstanding  shares  entitled to
     vote.

     Each Director so elected shall hold office until the next annual meeting of
     shareholders and until a successor has been elected and qualified.

c.   By Special Meeting of Shareholders

     If, after the filling of any vacancy by the  Directors,  the Directors then
     in office who have been elected by the  shareholders  shall constitute less
     than a majority of the Directors  then in office,  any holder or holders of
     an  aggregate of five percent (5%) or more of the total number of shares at
     such time outstanding  having the right to vote for such Directors may call
     a special  meeting of  shareholders,  or apply to the superior court of the
     county in which  the  principal  executive  office  of the  Corporation  is
     located  for an order that a special  meeting be held,  to elect the entire
     Board.

     Each Director so elected shall hold office until the next annual meeting of
     shareholders and until a successor has been elected and qualified.

     Notwithstanding  any other provision of these Bylaws, the term of office of
     any Director shall  terminate on the election of a successor as provided in
     this subsection (c).


Section 6.  Meetings of the Board

a.   Call of Meetings

     Meetings  of the Board may be called by the  Chairperson  of the Board,  if
     any, the President,  any Vice President, the Secretary, the Chief Financial
     Officer, or any Director of the Corporation.

b.   Place of Meetings

     1)   Regular Meetings

          Regular  meetings  of the  Board  may be held at any  place  within or
          outside the State of California  that has been designated from time to
          time by resolution of the Board. In the absence of such a designation,
          regular  meetings shall be held at the principal  executive  office of
          the Corporation.

     2)   Special Meetings

          Special  meetings  of the Board  shall be held at any place  within or
          outside the State of California that has been designated in the notice
          of the  meeting or, if not stated in the notice or there is no notice,
          at the principal executive office of the Corporation.

     3)   Meetings by Telephone

          Any meeting,  regular or special,  may be held by conference telephone
          or similar  communication  equipment,  whenever such  participation is
          authorized  by  resolution  adopted  by  the  Board,  so  long  as all
          Directors  participating  in such  meeting can hear one  another.  All
          Directors  participating in such meeting shall be deemed to be present
          in person.

c.   Time of Meetings

     1)   Regular Meetings

          a)   Annual Meeting

               Immediately  following each annual meeting of  shareholders,  the
               Board   shall  hold  a  regular   meeting   for  the  purpose  of
               organization,  election of officers, and the transaction of other
               business.

          b)   Other Regular Meetings

               Other regular meetings of the Board shall be held at such time as
               shall from time to time be fixed by the Board.

     2)   Special Meetings

          Special  meetings of the Board shall be held on four (4) days'  notice
          by first-class  mail,  postage  prepaid,  or  forty-eight  (48) hours'
          notice delivered personally or by telephone.

d.   Notice of Meetings

     1)   Regular Meetings

          Regular meetings of the Board shall be held without notice.

     2)   Special Meetings

          Notice of the time and place of any special  meeting of the Board must
          be:

          a)   in writing and  delivered  personally to each Director or sent to
               each  Director  by  first-class  mail,  postage  prepaid,  or  by
               telegraph  or  telegram,   charges  prepaid,  addressed  to  such
               Director  at his or her  address  as shown on the  records of the
               Corporation; or

          b)   by telephone.

          Notice by mail must be  deposited  in the  United  States  mail in the
          place where the Corporation  principal  executive office is located at
          least  four (4) days  prior  to the  time the  meeting  is to be held.
          Notice by  telegraph or telegram  must be  delivered to the  telegraph
          company  in the place  where  the  Corporation's  principal  executive
          office is located at least  forty-eight  (48) hours  prior to the time
          the meeting is to be held. Notice delivered personally or by telephone
          must be  delivered or given at least  forty-eight  (48) hours prior to
          the time the meeting is to be held.

          Oral notice  given  personally  or by  telephone  may be  communicated
          either to the  Director or to any person at the office of the Director
          whom the person  giving the notice has reason to believe will promptly
          communicate it to the Director.

          The notice  need not  specify the purpose of the meeting nor the place
          of the meeting if the meeting is to be held at the principal executive
          office of the Corporation.

          Notice given as herein provided shall constitute due and legal notice.

     3)   Entry of Service of Notice

          The fact of service of notice,  showing  that  notice was given in the
          manner provided hereinabove, shall be filed with and maintained in the
          corporate  records and shall be  conclusive on the question of service
          of notice.

     4)   Registration of Address for Notice

          Each Director  shall  register his or her address with the  Secretary,
          and notices of meetings  mailed or  telegraphed  to such address shall
          constitute valid notices thereof.

e.   Waiver of Notice

     The  transactions  of any meeting of the Board,  however called and noticed
     and wherever  held,  shall be as valid as though had at a meeting duly held
     after  regular call and notice if a quorum is present and if, either before
     or after the meeting,  each of the  Directors  not present  signs a written
     waiver of notice,  a consent to the holding of the meeting,  or an approval
     of the minutes thereof. Said waiver,  consent, or approval need not specify
     the purpose of the meeting. All such waivers, consents, and approvals shall
     be filed with and maintained in the corporate records.

     Notice of a meeting  shall also be deemed given to any Director who attends
     the meeting  without  objecting,  either  before or at the beginning of the
     meeting, to the lack of notice to such Director.


Section 7.  Quorum

a.   Definition of Quorum

     1)   Where Corporation has only one Director

          Where  the  Corporation  has only one  Director,  one  Director  shall
          constitute a quorum for purposes of the Code, the Articles,  and these
          Bylaws.

     2)   Where Corporation has two or more Directors

          Where the Corporation has two (2) or more Directors,  a quorum for the
          transaction of business shall be:

          a)   not  less  than  one-third  (1/3)  of the  authorized  number  of
               Directors; or

          b)   not less than two (2) Directors, whichever is larger.

b.   Loss of Quorum

     Business may continue to be  transacted at any meeting at which a quorum is
     initially present notwithstanding the withdrawal of Directors sufficient to
     leave less than a quorum,  so long as any action  taken is  approved  by at
     least a majority of the required quorum for such meeting.


Section 8.  Adjourned Meeting

a.   When Permitted

     A majority of the Directors present,  whether or not constituting a quorum,
     may adjourn any meeting to another time and place.

b.   Notice of Adjournment

     Notice of the time and place of holding an  adjourned  meeting  need not be
     given,  unless the  meeting is  adjourned  for more than  twenty-four  (24)
     hours.  In that  case,  notice of the time and place  shall be given to the
     Directors who are not present at the time of the  adjournment in the manner
     specified  in section  6(d)(2)  hereof,  before the time of such  adjourned
     meeting.


Section 9.  Conduct of Meetings

a.   Presiding Officer and Secretary

     The presiding officer at each meeting of the Board shall be the Chairperson
     of the Board, if any, or in his or her absence the Vice  Chairperson of the
     Board,  if any, or the  President,  or if he or she is not present any Vice
     President,  and if no such  officer is  present  any  Director  chosen by a
     majority of the Directors present.

     The  Secretary or an Assistant  Secretary  shall attend and take minutes of
     each meeting of the Board.  In the absence of such  officer,  the presiding
     officer at such meeting shall designate some person present to take minutes
     of the meeting.

b.   Procedure

     Procedural  matters at meetings of the Board shall be  governed,  so far as
     practicable,  by  Robert's  Rules of  Order,  provided  such  rules are not
     inconsistent   with  the  Code,  the  Articles,   these  Bylaws,  or  Board
     resolutions.


Section 10.  Transactions of Board

a.   In General

          Except as otherwise provided in the Articles or in these Bylaws, every
          act or decision done or made by a majority of the Directors present at
          a meeting duly held at which a quorum is present  shall be regarded as
          the act of the  Board,  subject  to the  provisions  of the  following
          sections of the Code:

     1)   Section  310  of  the  Code  relating  to  approval  of  contracts  or
          transactions  in which a Director  has a direct or  indirect  material
          financial interest;

     2)   Section 311 of the Code relating to the appointment of committees; and

     3)   Section 317(e) of the Code relating to indemnification of Directors.

b.   Validity of Transactions

     The  transactions  of any meeting of the Board,  however called and noticed
     and wherever  held, are as valid as though had at a meeting duly held after
     regular  call and notice if a quorum is present  and if,  either  before or
     after the meeting, each of the Directors not present signs a written waiver
     of notice,  a consent to the holding of the meeting,  or an approval of the
     minutes thereof. All such waivers,  consents,  and approvals shall be filed
     with and maintained in the corporate records.


Section 11.  Action Without a Meeting

Any action required or permitted to be taken by the Board may be taken without a
meeting, if all members of the Board shall individually or collectively  consent
in writing to such action.  Such written consent or consents shall be filed with
and maintained in the corporate  records.  Such action by written  consent shall
have the same  force and  effect as a  unanimous  vote of the Board at a meeting
duly held after regular call and notice.


Section 12.  Board Committees

a.   Authority to Appoint.

     The Board may, by resolution adopted by a majority of the authorized number
     of Directors,  designate one or more committees, each consisting of two (2)
     or more  Directors,  to serve at the  pleasure of the Board.  The Board may
     designate one or more Directors as alternate members of any committee,  who
     may replace any absent member at any meeting of such committee.

     Vacancies on any committee may be filled by the Board only.

b.   Authority of Committees

     The Board may delegate to any such  committee any of the Board's powers and
     authority in the management of the business and affairs of the Corporation,
     consistent  with the  Articles,  these  Bylaws,  and the Code,  except with
     respect to the following:

     1)   The  approval  of  any  action  for  which  the  Code  also   requires
          shareholders' approval or approval of the outstanding shares.

     2)   The filling of vacancies on the Board or on any committee.

     3)   The fixing of compensation of any Director for serving on the Board or
          on any committee.

     4)   The amendment or repeal of these Bylaws or the adoption of new bylaws.

     5)   The  amendment or repeal of any  resolution  of the Board which by its
          express terms is not so amendable or repealable.

     6)   A distribution  to the  shareholders  as defined in section 166 of the
          Code,  except at a rate, in a periodic amount, or within a price range
          determined by the Board.

     7)   The  appointment of any other  committee of the Board or of any member
          thereof.

c.   Conduct of Committee Meetings

     1)   The  Chairperson  of  the  Board,  if  any,  or the  President  of the
          Corporation  shall be an ex-officio  member of each Board committee so
          appointed.

     2)   The Board may prescribe the manner in which committee  proceedings are
          conducted or authorize the committee to do so.

     3)   Regular  meetings of any committee shall be held at the time and place
          specified  in any  resolution  duly  adopted  by the  Board or, in the
          absence thereof,  by the committee.  On failure to designate a meeting
          place,  such meetings shall be held at the principal  executive office
          of the Corporation.

     4)   Special  meetings of any committee may be called by the chairperson of
          the committee,  any two members of the committee,  the  Chairperson of
          the  Board,  if  any,  or the  President  by  written  notice  to each
          committee member. Such special meetings of the committee shall be held
          at the time and place  specified  in such  notice  or, on  failure  to
          specify  the  place,  at  the  principal   executive   office  of  the
          Corporation.

     5)   Notice of such special meetings of the committee shall be given in the
          same  manner as  specified  in section  6(d)  hereof for the giving of
          notice of special meetings of the Board.

     6)   A majority of the authorized  number of members of any committee shall
          constitute a quorum of such committee for the transaction of business.

     7)   Minutes  shall be kept of each  committee  meeting.  The original or a
          copy of such minutes,  certified by the committee  chairperson or such
          other  person  as such  committee  chairperson  designates,  shall  be
          delivered  to the  Secretary  of the  Corporation  for  filing  in the
          corporate  records  and a  copy  thereof  shall  be  retained  by  the
          committee.

     8)   The  transactions of any meeting of any committee,  however called and
          noticed  and  wherever  held,  shall be as valid  as  though  had at a
          meeting duly held after regular call and notice if a quorum is present
          and if, either  before or after such meeting,  each of the members not
          present signs a written waiver of notice,  a consent to the holding of
          such meeting, or an approval of the minutes thereof. All such waivers,
          consents,  and  approvals  shall be filed with and  maintained  in the
          corporate records and in the committee records.

     9)   Any action  required or permitted  to be taken by any Board  committee
          may be taken without a meeting,  if all members of the committee shall
          individually  or  collectively  consent in writing such  action.  Such
          written  consent or consents shall be filed with and maintained in the
          corporate records and in the committee records.


Section 13.  Fees and Compensation of Directors

Directors and members of committees may receive such  compensation,  if any, for
their services,  and such  reimbursement  for their expenses,  if any, as may be
fixed or  determined  from time to time by  resolution  of the Board.  Provided,
however, that nothing contained herein shall be construed in any way to preclude
any Director from serving the  Corporation  in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation for such services.


Section 14.  Transactions with Corporation

a.   Interested Directors

     No contract or other transaction between the Corporation and one or more of
     its Directors,  or between the  Corporation and any  corporation,  firm, or
     association in which one or more of such Directors has a material financial
     interest,  is either void or voidable  because such  Director or such other
     corporation,  firm, or association are parties, or because such Director is
     present at the meeting of the Board or Board  committee  which  authorizes,
     approves, or ratifies such contract or transaction, if:

     1)   The material  facts as to the  transaction  and as to such  Director's
          interest therein are fully disclosed or known to the shareholders, and
          such  contract  or  transaction  is  approved  in  good  faith  by the
          affirmative  vote or written  consent of a majority of the outstanding
          shares entitled to vote other than the shares owned by such interested
          Director or Directors; or

     2)   The material  facts as to the  transaction  and as to such  Director's
          interest  therein are fully  disclosed  or known to the Board or Board
          committee,  such Board or Board  committee  authorizes,  approves,  or
          ratifies  the  contract  or  transaction  in  good  faith  by  a  vote
          sufficient  without  counting the vote of such interested  Director or
          Directors,  and the contract or  transaction is just and reasonable as
          to  the  Corporation  at  the  time  it is  authorized,  approved,  or
          ratified; or

     3)   As  to  contracts  or   transactions   not  approved  as  provided  in
          subparagraphs (1) and (2) hereof, the person asserting the validity of
          such contract or  transaction  sustains the burden of proving that the
          contract or transaction  was just and reasonable as to the Corporation
          at the time it was authorized, approved, or ratified.

          A mere common  directorship  does not constitute a material  financial
          interest within the meaning of the above provisions. Nor is a Director
          interested  within the meaning of the above provisions in a resolution
          fixing the compensation of another Director as a Director, officer, or
          employee of the Corporation,  notwithstanding  the fact that the first
          Director is also receiving compensation from the Corporation.

b.   Common Directors

     No  contract  or  other   transaction   between  the  Corporation  and  any
     corporation  or  association  of which one or more of the Directors of this
     Corporation are directors is either void or voidable  because such Director
     or  Directors  are present at the Board or Board  committee  meeting  which
     authorizes, approves, or ratifies such contract or transaction, if:

     1)   The material  facts as to the  transaction  and as to such  Director's
          other  directorship are fully disclosed or known to the Board or Board
          committee,  and the Board or Board committee authorizes,  approves, or
          ratifies  the  contract  or  transaction  in  good  faith  by  a  vote
          sufficient  without  counting  the  vote  of the  common  Director  or
          Directors, or the contract or transaction is approved in good faith by
          the  affirmative  vote  or  written  consent  of  a  majority  of  the
          outstanding shares entitled to vote; or

     2)   As  to  contracts  or   transactions   not  approved  as  provided  in
          subparagraph  (1) hereof,  such  contract or  transaction  is just and
          reasonable  as to  the  Corporation  at  the  time  it is  authorized,
          approved, or ratified.

     This subsection (b) does not apply to contracts or transactions  covered by
     subsection (a) hereof.

Interested or common  Directors may be counted in determining  the presence of a
quorum at a meeting of the Board or Board committee which authorizes,  approves,
or ratifies a contract or transaction.


                                    ARTICLE V

                                    OFFICERS


Section 1.  Number and Titles

The  officers  of  the  Corporation  shall  be a  President,  one or  more  Vice
Presidents, a Secretary, and a Chief Financial Officer. The Corporation may also
have, at the discretion of the Board,  a Chairperson  of the Board,  one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as may be appointed in accordance with the provisions of section 3 hereof.

Any number of offices may be held by the same person.

In its  discretion,  the Board may leave  unfilled any office except  President,
Secretary, and Chief Financial Officer.


Section 2.  Election of Officers

The  officers of the  Corporation,  except such  officers as may be appointed in
accordance  with the  provisions  of  sections  3 or 4  hereof,  shall be chosen
annually by the Board,  and each shall hold office and serve at the  pleasure of
the Board  subject  to any  rights  which any such  officer  may have  under any
contract of employment with the Corporation, until his or her successor shall be
appointed or until he or she shall  resign,  be removed  from office,  or become
otherwise disqualified to serve.


Section 3.  Other Officers

The Board may  appoint,  and may empower the  President  to appoint,  such other
officers as the business of the Corporation may require, each of whom shall hold
office for such  period,  have such  authority,  and perform  such duties as are
provided by these Bylaws or as the Board may from time to time determine.


Section 4.  Vacancies

If the office of President, Secretary, or Chief Financial Officer becomes vacant
by  reason  of death,  resignation,  removal,  or  otherwise,  the  Board  shall
forthwith  fill it by appointing a successor  officer who shall hold such office
for the unexpired term.

If any other office becomes vacant, the Board may, in its discretion, leave such
office  unfilled  for such  period  as it may  determine,  or it may  appoint  a
successor  officer to fill such  vacancy in the  manner  specified  in section 3
hereof.


Section 5.  Removal and Resignation of Officers

Subject to the rights,  if any, of an officer under any contract of  employment,
any  officer may be removed,  either with or without  cause,  by the vote of the
Board at any regular or special meeting of the Board or by the unanimous written
consent of the  Directors  then in office  without a meeting,  or, except in the
case of an officer  chosen by the Board,  by any officer upon whom such power of
removal may be conferred by the Board.

Any  officer  may  resign at any  time,  without  prejudice  to the  rights  the
Corporation  may have under any  contract  to which the  officer is a party,  by
giving  written  notice  to the  Chairperson  of the  Board,  if any,  or to the
President or Secretary.  Resignation from office does not,  however,  ipso facto
constitute resignation from the Board. Any such resignation shall take effect on
the date such notice is received or at such later date as is specified  therein.
Unless otherwise specified therein, the acceptance of any such resignation shall
not be necessary to make it effective.


Section 6.  Compensation of Officers

Officers  shall  receive  such  salaries  and  other  compensation  as  shall be
determined from time to time by the Board.


Section 7.  Chairperson of the Board

The  Chairperson of the Board,  if any, shall if present  preside at meetings of
the Board and shall  exercise  and perform  such other  powers and duties as may
from time to time be  assigned to him or her by the Board or  prescribed  by the
Code or these Bylaws.


Section 8.  President

Subject  to  such  supervisory  powers  as may be  given  by  the  Board  to the
Chairperson  of the Board,  if any, the President  shall be the chief  executive
officer of the Corporation and shall,  subject to the control of the Board, have
general supervision,  direction,  and control of the business and affairs and of
the officers of the Corporation.  He or she shall preside at all meetings of the
shareholders  and in the absence of the Chairperson of the Board, if any, at all
meetings  of the Board.  He or she shall have the  general  powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other  powers and  duties as may be  prescribed  by the Board or these
Bylaws.


Section 9.  Vice Presidents

In the absence or disability of the President,  the Vice Presidents,  if any, in
order of their rank as fixed by the Board or, if not ranked,  the Vice President
designated  by the Board  shall  perform all the duties of the  President.  When
acting as  President,  such Vice  President  shall have all the powers of and be
subject to all the restrictions  upon the President.  Vice Presidents shall have
such other  powers  and  perform  such other  duties as from time to time may be
prescribed  for  them  respectively  by the  Board or  these  Bylaws  and by the
President or the Chairperson of the Board, if any.


Section 10.  Secretary

The Secretary shall keep or cause to be kept, at the principal  executive office
or such other place as the Board may direct,  a book of minutes of all  meetings
and actions of  Directors,  committees  of  Directors,  and  shareholders.  Such
minutes shall include the time and place of holding meetings, whether regular or
special,  and, if special, how authorized,  the notice given, the names of those
present at  Directors'  meetings  or  committee  meetings,  the number of shares
present or  represented  at  shareholders'  meetings,  and a description  of the
proceedings.

The Secretary shall keep, or cause to be kept, at the principal executive office
or at the office of the Corporation's transfer agent or registrar, as determined
by  resolution  of the Board,  a share  register or  duplicate  share  register,
showing  the name and  address  of every  shareholder,  the  number and class of
shares held by each shareholder, the number and date of every certificate issued
for  shares,  and the  number  and date of  cancellation  of  every  certificate
surrendered for cancellation.

The Secretary  shall give,  or cause to be given,  notice of all meetings of the
shareholders  and of the  Board  required  by these  Bylaws or by the Code to be
given,  shall keep the seal of the  Corporation,  if any, in safe  custody,  and
shall have such other powers and perform such other duties as may be  prescribed
by the Board or these Bylaws.


Section 11.  Chief Financial Officer

The Chief  Financial  Officer shall keep and  maintain,  or cause to be kept and
maintained,  the  financial,  accounting,  and  tax  books  and  records  of the
Corporation, including of its assets, liabilities, shareholders' equity, income,
expenses,   receipts,   disbursements,   gains,  losses,  properties,   business
transactions,  and shares.  Said books and records shall at all reasonable times
be open to inspection by any Director.

The Chief Financial Officer shall deposit, or cause to be deposited,  all moneys
and other valuables in the name and to the credit of the  Corporation  with such
depositaries  as may be designated by the Board.  He or she shall  disburse,  or
cause to be  disbursed,  the funds of the  Corporation  as may be ordered by the
Board,  shall render,  or cause to be rendered,  to the  President  upon request
appropriate  accounts and reports of his or her  transactions as Chief Financial
Officer and of the financial  condition of the Corporation,  and shall have such
other powers and perform such other duties as may be  prescribed by the Board or
these Bylaws.


                                   ARTICLE VI

                         RECORDS, REPORTS, AND DOCUMENTS


Section 1.  Checks, Drafts, Evidences of Indebtedness

All checks,  drafts,  and other  orders for payment of money,  notes,  and other
evidences of indebtedness,  issued in the name of or payable to the Corporation,
shall be signed or endorsed by such person or persons and in such manner as from
time to time shall be determined by resolution of the Board.


Section 2.  Representation of Shares of Other Corporations

The Chairperson of the Board, if any, the President,  any Vice President, or any
other person  authorized  by  resolution of the Board or by any of the foregoing
designated officers,  is authorized to vote on behalf of the Corporation any and
all  shares of any other  corporation  or  corporations,  foreign  or  domestic,
standing in the name of the  Corporation.  Such  authority  may be  exercised in
person or by proxy.


Section 3.  Corporate Contracts and Instruments; How Executed

The Board,  except as otherwise  provided in these  Bylaws,  may  authorize  any
officer or  officers,  or other agent or agents,  to enter into any  contract or
execute any  instrument  in the name of and on behalf of the  Corporation.  Such
authority may be general or confined to specific  instances.  Unless such action
is authorized or ratified by the Board,  or unless such  authority is within the
agency power of such officer or agent, no officer, agent, or employee shall have
any power or  authority  to bind the  Corporation  in any way by any contract or
engagement,  or to pledge its credit,  or to render it liable for any purpose or
for any amount.

The corporate seal, if any, shall not be required to be affixed to any document.


Section 4.  Certificates For Shares

A certificate or certificates for shares of the capital stock of the Corporation
shall be issued to each  shareholder  when such shares are fully paid. The Board
may  authorize the issuance of  certificates  for shares as partly paid provided
that such  certificates  shall state the amount of the  consideration to be paid
therefor and the amount paid.

All certificates for shares of capital stock of the Corporation  shall state the
number of shares  and the class or series of such  shares and shall be signed in
the name of the  Corporation  by the  Chairperson  of the Board,  if any, or the
President  or any  Vice  President  and by the  Chief  Financial  Officer  or an
Assistant  Treasurer or the Secretary or an Assistant  Secretary.  Any or all of
such  signatures  may be  facsimile.  In case any officer,  transfer  agent,  or
registrar  who has  signed or whose  facsimile  signature  has been  placed on a
certificate  shall have ceased to hold such office  prior to the issuance of the
certificate,  such  certificate may be issued by the  Corporation  with the same
effect as if such officer,  transfer agent, or registrar held such office on the
date of issue.


Section 5.  Lost Certificates

Except as otherwise  provided  herein,  no new  certificate  for shares shall be
issued to replace an old  certificate  unless the latter is  surrendered  to the
Corporation and cancelled.

In case any share  certificate  or  certificate  for any other security is lost,
stolen,  or  destroyed,  the Board may  authorize  the issuance of a replacement
certificate on such terms and  conditions as the Board may require,  including a
provision  for  indemnification  of the  Corporation  secured by a bond or other
adequate security  sufficient to protect the Corporation  against any claim that
may be made against it,  including any expense or  liability,  on account of the
alleged loss,  theft,  or destruction of the  certificate or the issuance of the
replacement certificate.


Section 6.  Maintenance Of Share Register

The Corporation  shall keep at its principal  executive office, or at the office
of its transfer agent or registrar,  if either be appointed and as determined by
resolution of the Board, a record of its  shareholders,  including the names and
addresses  of all  shareholders  and the number and class of shares held by each
shareholder.


Section 7.  Maintenance of Bylaws

The  Corporation  shall  keep  at  its  principal  executive  office,  or if its
principal  executive office is not in the State of California,  at its principal
business  office in the State of  California,  the  original  or a copy of these
Bylaws as amended to date, which shall be open to inspection by the shareholders
at all reasonable  times during normal office hours. If the principal  executive
office of the Corporation is outside the State of California and the Corporation
has no  principal  business  office in the State of  California,  the  Secretary
shall, upon the written request of any shareholder,  furnish to such shareholder
a copy of these Bylaws as amended to date.


Section 8.  Maintenance of Other Corporate Records

The  accounting  books and  records and the  minutes of the  proceedings  of the
shareholders  and of the Board and of any  committee or  committees of the Board
shall be kept at such place or places as  designated  by the  Board,  or, in the
absence  of  such  designation,   at  the  principal  executive  office  of  the
Corporation.  The minutes shall be kept in written form and the accounting books
and records  shall be kept in written form or in any other form capable of being
converted into written form.


Section 9.  Annual Report to Shareholders

The annual  report to  shareholders  referred to in section  1501 of the Code is
expressly dispensed with, but nothing herein shall be interpreted as prohibiting
the Board from issuing annual or other periodic  reports to the  shareholders of
the Corporation as the Board may consider appropriate.


Section 10.  Annual Statement of General Information

The  Corporation  shall,  during  the month of XX5 in each  year,  file with the
Secretary  of  State  of  the  State  of   California  a  statement  of  general
information, in compliance with the provisions of section 1502 of the Code.


                                   ARTICLE VII

                                   FISCAL YEAR


The fiscal year of the  Corporation  shall begin on the first day of January and
end on the last day of December of each year.


                                  ARTICLE VIII

                                   AMENDMENTS


Section 1.  Amendment By Shareholders

Subject  to the  provisions  of  section  2 of  article  IV hereof  regarding  a
reduction in the  authorized  number of Directors,  new bylaws may be adopted or
these  Bylaws  may be  amended or  repealed  by the vote or  written  consent of
holders of a majority of the outstanding shares entitled to vote.


Section 2.  Amendment By Directors

Subject  to the  rights of the  shareholders  as  provided  in section 1 hereof,
bylaws,  other than a bylaw or an  amendment  thereto  changing  the  authorized
number of Directors, may be adopted, amended, or repealed by the Board.

<PAGE>

                                                                      EXHIBIT C





                    CONTRIBUTION AND JOINT VENTURE AGREEMENT

                                  By and Among

                    THE FIRST AMERICAN FINANCIAL CORPORATION,

             FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC.,

                    FIRST AMERICAN REAL ESTATE SOLUTIONS LLC,

                               R. SQUARED LIMITED

                                       and

                                HARISH K. CHOPRA



                                 _____ __, 1998



<PAGE>



                               TABLE OF CONTENTS<F1>

<F1> This Table of Contents is provided for convenience  only, and does not form
a part of the attached Contribution and Joint Venture.

<TABLE>
                                                                                               Page

<S>              <C>                                                                           <C>

SECTION 1.  DEFINITIONS....................................................................... 2
         1.01.    Defined Terms............................................................... 2
         1.02.    Principles of Construction.................................................. 10

SECTION 2.  ORGANIZATION OF NEWCO; CLOSING; SCOPE OF BUSINESS................................. 10
         2.01.    Organization................................................................ 10
         2.02.    Contributions............................................................... 11
         2.03.    Effective Time.............................................................. 12
         2.04.    Instruments of Transfer and Conveyance...................................... 12

SECTION 3.  REPRESENTATIONS AND WARRANTIES.................................................... 12
         3.01.    Authorization and Validity of the Agreement................................. 12
         3.02.    DTI......................................................................... 13

SECTION 4.  COVENANTS......................................................................... 13
         4.01.    Best Efforts................................................................ 13
         4.02.    Consents; Further Assurances................................................ 14
         4.03.    Notices of Certain Events................................................... 14
         4.04.    DTI......................................................................... 15

SECTION 5.  PUTS AND CALLS.................................................................... 15
         5.01.    R2 Put Option............................................................... 15
         5.02.    FAFCO Call Option........................................................... 17
         5.03.    General Put/Call Provisions................................................. 19
         5.04.    Dispute Resolution.......................................................... 19

SECTION 6.  DTI; FINANCING.................................................................... 20
         6.01.    DTI......................................................................... 20
         6.02.    Loans to NEWCO.............................................................. 21

SECTION 7.  TERMINATION....................................................................... 21
         7.01.    Events of Termination....................................................... 21
         7.02.    Effect of Termination....................................................... 21

SECTION 8.  MISCELLANEOUS..................................................................... 22
         8.01.    Fees and Expenses........................................................... 22
         8.02.    Extension; Waiver........................................................... 22
         8.03.    Confidentiality............................................................. 22
         8.04.    Public Announcements........................................................ 22
         8.05.    Records Retained by FAFCO, R2 and NEWCO..................................... 22
         8.06.    Notices..................................................................... 23
         8.07.    Entire Agreement............................................................ 24
         8.08.    Binding Effect; Benefit; Assignment......................................... 24
         8.09.    Amendment and Modification.................................................. 24
         8.10     Effect of Termination....................................................... 25
         8.11     Counterparts................................................................ 25
         8.12     Applicable Law; Submission to Jurisdiction.................................. 25
         8.13     Severability................................................................ 25
         8.14     Access to Records........................................................... 25

</TABLE>

                                                                    
<PAGE>

          CONTRIBUTION AND JOINT VENTURE AGREEMENT, made as of ___________, 1998
(this  "Agreement"),  by and among THE FIRST AMERICAN FINANCIAL  CORPORATION,  a
California  corporation  ("FAFCO"),   FIRST  AMERICAN  REAL  ESTATE  INFORMATION
SERVICES,  INC., a California  corporation,  ("FAREISI"),  FIRST  AMERICAN  REAL
ESTATE SOLUTIONS LLC, a California  limited  liability  company ("FARES") and R.
SQUARED LIMITED,  an Irish company ("R2"),  and HARISH K. CHOPRA,  an individual
residing in Rancho Santa Fe, California ("CHOPRA").

                              W I T N E S S E T H :


          WHEREAS,  FARES owns and operates  the  Digistar  Business (as defined
below);

          WHEREAS, Data Tree Corporation, a California corporation ("Data Tree")
owns and operates the Data Tree Business (as defined below);

          WHEREAS,  CHOPRA is the President and Chief Executive  Officer of Data
Tree and CHOPRA,  together  with R2, an Irish company owns  approximately  a 44%
interest in Data Tree;

          WHEREAS,  FAFCO, Image Acquisition Corp.  ("FAFCOSUB"),  Data Tree and
CHOPRA have entered into an Agreement and Plan of Merger,  dated as of March 27,
1998 (the  "Merger  Agreement"),  pursuant  to  which,  at the  Effective  Time,
FAFCOSUB  will merge with and into Data Tree (the  "Merger")  whereby  Data Tree
will become a  wholly-owned  subsidiary of FAFCO (Data Tree, as the  post-Merger
subsidiary of FAFCO, the "Surviving Corporation");

          WHEREAS,  FAFCO desires to contribute  $_________<F1> to FAFCOSUB (the
"Cash Contribution");

<F1> Amount to be inserted shall be the sum of the Surplus  Expenses (as defined
in the Merger Agreement) and $486,627 (which represents the key employee bonuses
and  the  put  payment  on the  Imperial  Warrants  (as  defined  in the  Merger
Agreement).


          WHEREAS,  FAFCO  desires to loan to FAFCOSUB  (the  "FAFCO  Loan") and
FAFCOSUB  desires to borrow  from FAFCO a certain  sum, to be  specified  at the
Closing;<F2>

<F2> The sum shall be $1,000,000 less the amount,  if any, by which the Imperial
Bank facility is increased prior to Closing.


          WHEREAS,  FAFCO desires to contribute  all of the capital stock of the
Surviving Corporation to FAREISI;

          WHEREAS,  FAREISI  desires  to  cause  the  Surviving  Corporation  to
contribute the Data Tree Business,  the Cash  Contribution and the FAFCO Loan to
FARES; 

          WHEREAS,  FARES  desires that R2 and CHOPRA agree not to compete with,
or against, the Data Tree Business following FARES' acquisition of the Data Tree
Business;

          WHEREAS,  FARES  and  R2  desire  to  become  the  joint  owners  of a
California  limited  liability  company to be formed pursuant to Section 2.01 of
this  Agreement to own and operate the combined  Data Tree Business and Digistar
Business;

          WHEREAS, to effectuate their intent FAFCO, FAREISI,  FARES and R2 deem
it advisable to make the contributions set forth in this Agreement; and

          WHEREAS, in order to set forth certain terms and conditions upon which
NEWCO  will be owned  and  operated,  the  Parties  desire  to enter  into  this
Agreement.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
covenants hereinafter set forth, the Parties agree as follows:


                                   SECTION 1.
                                   DEFINITIONS

          1.01.  Defined Terms. As used in this  Agreement,  the following terms
shall have the following  meanings  (such  meanings to be equally  applicable to
both the singular and plural forms of the terms defined):

          "Adjusted  Earnings"  means,  with respect to an Exercise  Date or the
Option  Termination  Date, the profits of NEWCO for the 12 consecutive  complete
calendar  month  period  ended  prior  to  said  Exercise  Date,  or the  Option
Termination  Date,  as the case may be,  assuming an  effective  tax rate of 40%
(which percentage the Parties may from time to time hereafter agree to adjust to
reflect material changes in tax rates), as determined in accordance with US GAAP
and  excluding  (i)  the  effect,  if  any,  on  the  profits  of  NEWCO  of any
amortization  of  goodwill  resulting  from  the  acquisition  of  Data  Tree in
accordance with the Merger Agreement and (ii) Excluded Interest.

          "Affiliate" shall mean and include,  with reference to any Person, any
other  Person,  other than NEWCO,  Controlling,  Controlled  by or under  common
Control with such Person.

          "Agreement" shall mean this Contribution and Joint Venture  Agreement,
as the same may be amended, modified and/or supplemented from time to time.

          "Business"  shall  mean the Data Tree  Business  and/or  the  Digistar
Business, as the context may require.

          "Business Day" shall mean any day, excluding  Saturday,  Sunday or any
day which shall be a legal holiday in the State of California.

          "Business Records" shall have the meaning set forth in Section 8.05.

          "Call  Exercise  Date" means the day on which FAFCO  delivers the Call
Exercise Notice.

          "Call  Exercise  Notice"  has the  meaning  given  thereto  in Section
5.02(b) hereof.

          "Call Option"  means either of the First Call Option,  the Second Call
Option or the Third Call Option, or all of them, as the context requires.

          "Call  Payment  Date"  shall  have the  meaning  set forth in  Section
4.02(c).

          "Capital  Account"  shall have the meaning  given thereto in the NEWCO
Operating Agreement.

          "Cash  Contribution"  shall have the  meaning set forth in the seventh
WHEREAS clause hereto.

          "CHOPRA"  shall  have  the  meaning  set  forth  in  the  introductory
paragraph to this Agreement.

          "Closing" shall have the meaning set forth in the Merger Agreement.

          "Closing  Date"  shall  have  the  meaning  set  forth  in the  Merger
Agreement.

          "Control"  shall  mean the power to vote  more than 50% of the  Voting
Interests of an Entity or to  otherwise  control the  management  and affairs of
such  Entity  (including  by  way of the  power  to  veto  any  material  act or
decision).

          "Data Tree"  shall have the  meaning  set forth in the fourth  WHEREAS
clause hereto.

          "Data Tree Business" shall mean the business and operations  conducted
by Data Tree immediately prior to the Effective Time.

          "Digistar  Business" shall mean the business and operations  conducted
by the "Digistar" division of FARES immediately prior to the Effective Time.

          "DTI"  shall  mean   Datatree   India  Private   Limited,   an  Indian
corporation.

          "DTI  Option  Period"  shall  have the  meaning  set forth in  Section
6.01(a).

          "DTI  Purchase  Option"  shall have the  meaning  set forth in Section
6.01(a).

          "Effective  Date" shall mean the day during which the  Effective  Time
occurs.

          "Effective  Time"  shall  have  the  meaning  provided  in the  Merger
Agreement.

          "Employment  Agreement" shall mean that certain  Employment  Agreement
dated the Closing Date by and between CHOPRA and NEWCO.

          "Encumbrances"  shall mean all liens,  encumbrances,  restrictions and
claims of every kind and character.

          "Enterprise  Value" shall mean,  as of any date of  determination,  an
amount in dollars equal to product of the Adjusted  Earnings as of such date and
15.

          "Entity" shall mean any Person that is not a natural Person.

          "Excess  Working Capital Debt" shall mean Working Capital Debt between
the date of this Agreement and the Option  Termination Date,  incurred from time
to time by NEWCO,  to the extent the amount of such Working Capital Debt exceeds
$2,000,000.

          "Excess  Working  Capital Period" means each period during which there
is any Excess Working Capital Debt.

          "Excluded Interest" shall mean an amount equal to the product of:

               (A)  the total interest  costs/accruals  on Working  Capital Debt
                    (for the period for which  Adjusted  Earnings are  measured)
                    for the Excess Working  Capital  Period,  or portion thereof
                    included  in the  period  for which  Adjusted  Earnings  are
                    measured, and

               (B)  a fraction,  the numerator of which is the Objected Debt and
                    the denominator of which is the Working Capital Debt;

provided, however that (i) the numerator described in paragraph (B) above cannot
be a number less than zero and (ii) any pay-downs of Working  Capital Debt shall
decrease the Objected Debt (which,  for the avoidance of doubt, is the numerator
in the fraction  described in paragraph (B) immediately  above) (attached hereto
as Exhibit B are examples  illustrating  the  calculation of Excluded  Interest;
Exhibit B is included for purposes of illustration only and shall not affect the
construction hereof).

          "Exercise  Date" means a Put Exercise  Date, a Call Exercise  Date, or
both.

          "FAFCO" shall have the meaning set forth in the introductory paragraph
of this Agreement.

          "FAFCO Interest" shall have the meaning set forth in Section 2.02(b).

          "FAFCO  Loan" shall have the  meaning set forth in the eighth  WHEREAS
clause hereto.

          "FAFCO Note" shall have the meaning set forth in Section 2.02(a).

          "FAREISI"  shall  have  the  meaning  set  forth  in the  introductory
paragraph of this Agreement.

          "FAREISI  Interest"  shall  have the  meaning  set  forth  in  Section
2.02(c).

          "FARES" shall have the meaning set forth in the introductory paragraph
of this Agreement.

          "FARES Interest" shall have the meaning set forth in Section 2.02(d).

          "First  Call  Notice"  shall  have the  meaning  set forth in  Section
5.02(b).

          "First  Call  Option"  shall  have the  meaning  set forth in  Section
5.02(a)(i).

          "First Put/Call Period" shall mean the period  commencing on the First
Trigger Date and ending on the day preceding the Second Trigger Date.

          "First  Put  Notice"  shall  have the  meaning  set  forth in  Section
5.01(b).

          "First  Put  Option"  shall  have the  meaning  set  forth in  Section
5.01(a)(i).

          "First Trigger Date" shall mean March 31, 2001.

          "Forced   Call"   shall  have  the   meaning   set  forth  in  Section
5.02(a)(iii).

          "Forced  Call  Notice"  shall  have the  meaning  set forth in Section
5.02(d).

          "Forced Call Payment Date" shall have the meaning set forth in Section
5.02(d).

          "Forced  Call  Price"  means  the  Enterprise  Value as of the  Option
Termination  Date  multiplied by the Membership  Interest of R2,  expressed as a
decimal.

          "Interests"  shall mean the FAFCO Interest,  the FARES Interest and/or
the FAREISI Interest, as the context may require.

          "Major  Exchange"  shall  mean  any  one of the  following  securities
exchanges or quotation systems: New York Stock Exchange,  NASDAQ, American Stock
Exchange or Pacific Stock Exchange.

          "Mean  Price" means the  arithmetic  mean of the last  reported  sales
price of one FAFCO common  share as reported on the New York Stock  Exchange for
the twenty consecutive Trading Days ending prior to the date that is two Trading
Days before the Exercise  Date or ending on such earlier date as may be required
by the Securities and Exchange Commission.

          "Membership  Interest"  shall have the  meaning set forth in the NEWCO
Operating Agreement.

          "Merger"  shall have the meaning set forth in the sixth WHEREAS clause
hereto.

          "Merger  Agreement"  shall  have the  meaning  set  forth in the sixth
WHEREAS clause hereto.

          "NEWCO"  shall mean the  California  limited  liability  company to be
formed pursuant to Section 2.

          "NEWCO  Business"  shall mean the business owned and operated by NEWCO
after the Closing which shall include, without limitation, the combined Digistar
Business and the Data Tree Business.

          "NEWCO  Operating   Agreement"  shall  mean  that  certain   Operating
Agreement, dated the Closing Date, by and between FARES and R2.

          "Noncompetition  Agreement"  shall  mean that  certain  Noncompetition
Agreement, dated the Closing Date by and among NEWCO, R2 and CHOPRA.

          "Note" shall have the meaning provided in Section 2.02(f).

          "Objected  Debt"  shall  mean an amount  equal to the  Excess  Working
Capital Debt to which an Objection has been made.

          "Objection"  shall mean the written  objection of CHOPRA  delivered to
NEWCO,  with a copy to FAFCO,  within five business days of NEWCO's  delivery to
the  CHOPRA of  notice  of its  intent to incur  Excess  Working  Capital  Debt;
provided,  however,  that (1) CHOPRA's  failure to deliver an  objection  notice
shall be deemed to be  CHOPRA's  approval  of NEWCO's  incurring  of such Excess
Working  Capital  Debt and (2)  CHOPRA's  approval  of/failure  to  object to or
objection to, as the case may be, the total  commitment under a revolving credit
facility shall  constitute  approval of or objection to, as the case may be, all
draw-downs  under such  facility  up to the  maximum  amount  permitted  by that
facility, irrespective of the repayment of any principal under such facility and
irrespective of whether or not such draw-downs exceed $2,000,000.

          "Option" or "Options"  means either a Put Option or a Call Option,  or
both, as the case may be.

          "Option Price" means, with respect to the exercise of an Option:

               (A) if CHOPRA is employed by NEWCO or any  Affiliates of NEWCO at
          the time such Option is exercised, an amount equal to the product of:

               (x)  the Enterprise Value on the applicable Exercise Date and

               (y)  the  Membership  Interest  of R2,  that is  being  sold  and
                    purchased pursuant to such Option, expressed as a decimal;

               (B) if CHOPRA's employment with NEWCO and all Affiliates of NEWCO
          has been  terminated  by NEWCO  "without  cause"  (as  defined  in the
          Employment  Agreement) prior to the time such Option is exercised,  an
          amount equal to the greater of:

               (i)  the product of:

                    (x)  the Enterprise  Value on the  applicable  Exercise Date
                         and

                    (y)  the  Membership  Interest  of R2 that is being sold and
                         purchased  pursuant  to  such  Option,  expressed  as a
                         decimal; and

               (ii) the product of:

                    (x)  $5,000,000 and

                    (y)  that portion of R2's Membership  Interest that is being
                         sold and purchased  pursuant to such Option,  expressed
                         as a decimal; and

               (C) if CHOPRA's employment with NEWCO and all Affiliates of NEWCO
          has been terminated by NEWCO for "cause" (as defined in the Employment
          Agreement)  prior to the time such  Option is  exercised  or if CHOPRA
          resigns, retires, is disabled or dies prior to the time such Option is
          exercised,  an amount equal to the product of (x) the Enterprise Value
          on the applicable  Exercise Date and (y) the Membership Interest of R2
          that is being sold and purchased pursuant to such Option, expressed as
          a decimal;  provided,  however, that in no such event shall the Option
          Price be less than the lesser of:

               (i)  the product of:

                    (x)  $5,000,000 and 

                    (y)  that portion of R2's Membership  Interest that is being
                         sold and purchased  pursuant to such Option,  expressed
                         as a decimal; and

               (ii) the product of:

                    (x)  the  Enterprise  Value on the date CHOPRA's  employment
                         terminated  and 

                    (y)  that portion of R2's Membership  Interest that is being
                         sold and purchased  pursuant to such Option,  expressed
                         as a decimal.

          "Option Termination Date" shall mean March 31, 2005.

          "Panel" shall have the meaning set forth in Section 5.03(b).

          "Panel Date" shall have the meaning set forth in Section 5.03(b).

          "Party" and  "Parties"  means  FAFCO,  FAREISI,  FARES,  R2 and CHOPRA
individually and collectively, as the context requires.

          "Permitted Encumbrances" shall mean, with respect to any Entity or any
Interest,   Encumbrances  which  (i)  are  for  current  taxes,  assessments  or
governmental charges not yet due or (ii) were incurred in the ordinary course of
business and which do not in the aggregate  materially detract from the value of
the Entity,  the Interest  associated  with such Entity,  if any, or which could
reasonably be expected to materially  impair the use thereof in the operation of
the Business.

          "Person"   shall  mean  and  include  any   individual,   partnership,
association,  joint stock company,  joint venture,  corporation,  trust, limited
liability company, unincorporated organization,  government, agency or political
subdivision thereof.

          "Prime Rate"  means,  as of any date of  determination,  the per annum
rate of  interest  specified  as the  Prime  Rate  in the  Wall  Street  Journal
published  on such  date,  provided  that for any date on which the Wall  Street
Journal is not  published,  "Prime  Rate"  means the per annum rate of  interest
specified  as the Prime Rate in the Wall Street  Journal last  published  before
such date.

          "Put Consideration  Notice" shall have the meaning provided in Section
5.01(c).

          "Put Exercise Notice" has the meaning given thereto in Section 5.01(b)
hereof.

          "Put  Exercise  Date"  means  the date on which  R2  delivers  the Put
Exercise Notice.

          "Put Payment Date" shall have the meaning provided in Section 5.01(c).

          "Put Option" means either the First Put Option,  the Second Put Option
or the Third Put Option, or all of them, as the context requires.

          "R2" shall have the meaning set forth in the introductory paragraph to
this Agreement.

          "Second  Call  Notice"  shall  have the  meaning  set forth in Section
5.02(b).

          "Second  Call  Option"  shall  have the  meaning  set forth in Section
5.02(a)(ii).

          "Second  Put/Call  Period"  shall  mean the period  commencing  on the
Second Trigger Date and ending on the day preceding the Third Trigger Date.

          "Second  Put  Notice"  shall  have the  meaning  set forth in  Section
4.01(b).

          "Second  Put  Option"  shall  have the  meaning  set forth in  Section
5.01(a)(ii).

          "Second Trigger Date" shall mean March 31, 2002.

          "Supply  Agreement"  means that certain  Supply  Agreement,  dated the
Closing Date between NEWCO and R2.

          "Third  Call  Notice"  shall  have the  meaning  set forth in  Section
5.02(b).

          "Third  Call  Option"  shall  have the  meaning  set forth in  Section
5.02(a)(iii).

          "Third Put/Call Period" shall mean the period  commencing on the Third
Trigger Date and ending on the Option Termination Date.

          "Third  Put  Notice"  shall  have the  meaning  set  forth in  Section
5.01(b).

          "Third  Put  Option"  shall  have the  meaning  set  forth in  Section
5.01(a)(iii).

          "Third Trigger Date" shall mean March 31, 2003.

          "Trading Day" means a day on which the New York Stock Exchange is open
for at least one-half of its normal business hours.

          "Transactional  Taxes"  shall  have the  meaning  set forth in Section
2.01(b)(ii).

          "Trigger  Date" means either the First Trigger Date,  the Trigger Date
or the Third Trigger Date, or all of them, as the context requires.

          "US GAAP" means United States generally accepted accounting principles
applied on a consistent basis.

          "Voting  Interest"  shall mean with respect to any Entity,  any equity
interest of such Entity having general voting power under ordinary circumstances
to  participate  in the  election  of a majority of the  governing  body of such
Entity (irrespective of whether at the time any other class or classes of equity
interest of such Entity  shall have or might have voting  power by reason of the
happening of any contingency).

          "Working Capital Debt" shall mean indebtedness for borrowed money that
is  incurred  by NEWCO  after the date of this  Agreement  and on or before  the
Option Termination Date for working capital purposes.

          1.02. Principles of Construction.

          (a) All  references  to Sections and  subsections  are to Sections and
subsections in this Agreement  unless otherwise  specified.  The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular  provision of
this  Agreement.  The term  "including"  is not  limiting  and means  "including
without limitation."

          (b) All  accounting  terms not  specifically  defined  herein shall be
construed in accordance with US GAAP.

          (c) In the  computation  of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but  excluding";  and the word "through" means "to and
including."

          (d) The Table of Contents  hereto and the Section  headings herein are
for convenience only and shall not affect the construction hereof.

          (e) This Agreement is the result of  negotiations  among and have been
reviewed  by  counsel  to the  Parties  and are  the  products  of all  Parties.
Accordingly,  this  Agreement  shall not be  construed  against any Party merely
because of such Party's involvement in the preparation of this Agreement.


                                   SECTION 2.
                             ORGANIZATION OF NEWCO;
                           CLOSING; SCOPE OF BUSINESS

          2.01. Organization.

          (a) NEWCO shall be a limited liability  company  established under the
laws of the State of California,  (i) having as its registered name such name as
from time to time is set forth in  NEWCO's  Articles  of  Organization  and (ii)
having its principal  offices located in San Diego,  California or such location
as from time to time is set forth in NEWCO's Articles of Organization.

          (b) (i) All  out-of-pocket  costs of the  establishment  of NEWCO as a
limited  liability  company  as  contemplated  by  Section  2.01(a)   (including
organizational  changes and amendments to  organizational  documents that may be
made on or before the Effective Date) shall be borne by FARES.

          (ii) Except as  otherwise  provided  in Section  11.2(a) of the Merger
Agreement,  each Party shall bear its own (A) costs  incurred as a result of the
transfer of any Interests to NEWCO, including payments to third parties, if any,
to obtain their  consent to such transfer (it being  understood  and agreed that
each Party shall determine, in its sole discretion, whether or not to obtain any
such  consent),  (B)  attorneys'  fees  and  related  costs  incurred  by  it in
connection  with the  preparation,  execution and delivery of this Agreement and
the  transactions  contemplated  hereby  or  thereby,  except  as may  otherwise
expressly  be  provided  herein  or  therein  and  (C)  sales,  use,   transfer,
conveyance, bulk transfer, business and occupation, value added or income taxes,
or other taxes,  duties,  excises or governmental  charges imposed by any taxing
jurisdiction  with respect to the  transfer,  assignment  or  conveyance  of its
Interests  or  otherwise  on  account  of  this  agreement  or the  transactions
contemplated  hereby  including,  without  limitation,  those  arising  from its
corporate reorganizations and intercompany transactions in contemplation of such
transactions (the foregoing taxes described in this clause (C) being hereinafter
referred to as "Transactional Taxes").

          2.02. Contributions.

          (a) Prior to the  Effective  Time,  FAFCO  shall  contribute  the Cash
Contribution  to the  capital of  FAFCOSUB.  Concurrently,  FAFCO shall make the
FAFCO Loan to FAFCOSUB and FAFCOSUB shall deliver to FAFCO a promissory note, in
the  principal  amount of the FAFCO Loan bearing  interest at the Prime Rate, in
the form  attached  hereto as Exhibit A, duly  executed by FAFCOSUB  (the "FAFCO
Note").

          (b) Immediately  following the Effective Time,  FAFCO shall contribute
to the  capital  of  FAREISI,  free and  clear of all  encumbrances,  all of the
capital  stock of the  Surviving  Corporation  held by FAFCO as a result  of the
Merger (the "FAFCO Interest").

          (c) Immediately  following the transaction described in subsection (b)
above,  FAREISI  shall cause the  Surviving  Corporation  to  contribute  to the
capital  of  FARES,  free  and  clear  of  all  encumbrances,  except  Permitted
Encumbrances,  the Cash Contribution,  the proceeds of the FAFCO Loan and all of
the assets,  properties,  rights,  services and interests  constituting the Data
Tree Business,  together with the FAFCO Note and all liabilities and obligations
of any nature  comprising the Data Tree  Business,  whether  absolute,  accrued,
contingent  or  otherwise,  and whether due or to become due,  arising out of or
relating to such assets,  properties,  rights,  services and interests (all such
assets,  properties,  rights, services,  liabilities,  obligations and interests
being  transferred  are  hereinafter  collectively  referred to as the  "FAREISI
Interest").

          (d) Immediately following the transactions described in subsection (c)
above,  FARES shall contribute to NEWCO, (i) free and clear of all Encumbrances,
other than  Permitted  Encumbrances,  the FAREISI  Interest  and (ii) all of the
assets,  properties,  rights,  services and interests  constituting the Digistar
Business,  together with all  liabilities and obligations of any nature of FARES
(other than debt for borrowed  money) in respect of the Digistar  Business  (all
such  assets,  properties,  rights,  services,   liabilities,   obligations  and
interests being transferred  hereunder are hereinafter referred to as the "FARES
Interest").  In consideration of such  contribution,  NEWCO shall, in accordance
with the NEWCO  Operating  Agreement,  credit the  Capital  Account of FARES and
issue to  FARES a  Membership  Interest  in  NEWCO  equal to 80% of the  initial
Membership Interests.

          (e)  Immediately  following the  Effective  Time,  the  Noncompetition
Agreement  entered  into  between R2 and CHOPRA on the Closing Date shall become
effective.  Concurrent with the transactions  described in subsection (d) above,
in consideration of R2 entering into the Noncompetition Agreement,  NEWCO shall,
in accordance with the NEWCO Operating Agreement,  credit the Capital Account of
R2 and shall issue to R2 a  Membership  Interest in NEWCO equal to 1.893% of the
initial Membership Interests.

          (f) Concurrent with the transactions  described in subsections (d) and
(e) above,  R2 shall  deliver to NEWCO a promissory  note,  dated the  effective
date, in the principal  amount of $11,000,000,  bearing interest at a fixed rate
of 8% per annum, in the form attached as Exhibit H to the Merger Agreement, duly
executed by R2 (the "Note").  In  consideration of R2 delivering the Note, NEWCO
shall  issue to R2 a  Membership  Interest  in NEWCO  equal  to  18.107%  of the
Membership Interests.

          2.03.  Effective  Time. If the closing  under the Merger  Agreement is
consummated,  the transactions  referred to in Sections 2.02(b),  (c), (d), (e),
(f) and  (g)  shall  be  deemed,  as  between  the  Parties,  to  have  occurred
immediately  after  the  Effective  Time in the order of  priority  set forth in
Section 2.02.

          2.04.  Instruments of Transfer and Conveyance.  The sale, transfer and
conveyance  of the  Interests  shall be  effected by delivery on or prior to the
Effective  Date by each Party  hereto of such deeds,  transfers  in  registrable
form, endorsements,  assurances, conveyances, releases, discharges, assignments,
certificates,  drafts,  checks or other  instruments of transfer and conveyance,
duly  executed  by such Party or such other  Person,  as the case may be, as any
other Party  reasonably  deems  necessary to vest in NEWCO all right,  title and
interest in and to the Interests, free and clear of any Encumbrance of any kind,
except Permitted Encumbrances.


                                   SECTION 3.
                         REPRESENTATIONS AND WARRANTIES

          3.01. Authorization and Validity of the Agreement. Each of the Parties
represents and warrants to each of the other Parties as follows:

          (a) He or it,  as the case may be,  has full  power and  authority  to
execute and deliver this Agreement,  to perform his or its obligations hereunder
and to consummate the transactions contemplated hereby. The execution,  delivery
and  performance  by such Party of this  Agreement and the  consummation  of the
transactions  contemplated hereby,  have, where necessary,  been duly authorized
and approved by its Board of Directors,  if applicable,  and shareholder(s),  if
applicable,  and no other  corporate  or  shareholder  action  is  necessary  to
authorize  the  execution,  delivery  and  performance  by  such  Party  of this
Agreement and the consummation of the  transactions  contemplated  hereby.  This
Agreement has been duly  executed and delivered by such Party and,  assuming the
due  execution of this  Agreement by the other  Parties  hereto,  is a valid and
binding  obligations of such Party enforceable  against such Party in accordance
with its  terms,  except to the  extent  that  enforceability  may be subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  to  general
equitable principles.

          (b)  Each   document  and   instrument   executed  by  such  Party  as
contemplated  by this  Agreement,  when  executed and delivered by such Party in
accordance with the terms hereof, shall have been duly executed and delivered by
such Party  and,  assuming  due  execution  and  delivery  by the other  Parties
thereto, shall be valid and binding upon such Party and enforceable against such
Party in accordance with its terms, except to the extent that its enforceability
may be subject to applicable bankruptcy, insolvency, reorganization,  moratorium
and similar laws affecting the enforcement of creditors' rights generally and to
general equitable principles.

          3.02. DTI. CHOPRA further represents and warrants as follows:

          (a)  Ownership of Stock.  As of the Closing  Date,  CHOPRA will be the
lawful  owner of all the  capital  stock of DTI,  other than less than 5% of the
capital stock of DTI owned by resident Indian  directors,  free and clear of all
liens,  pledges,  charges,  security interests,  encumbrances,  restrictions and
claims of every kind.

          (b)  Options.  There are no  outstanding  options,  warrants,  rights,
calls,  commitments,  conversion  rights,  rights  of  exchange,  plans or other
agreement of any character  providing for the purchase,  issuance or sale of any
of the capital stock of DTI, any other  securities of DTI or any interest in DTI
or its business.


                                   SECTION 4.
                                   COVENANTS

          4.01.  Best  Efforts.  Except to the extent  specifically  provided in
Section 4.02,  each Party shall,  and shall cause its respective  Affiliates to,
cooperate and use its respective reasonable best efforts to take, or cause to be
taken,  all  appropriate  action and to make,  or cause to be made,  all filings
necessary,  proper  or  advisable  under  applicable  laws  and  regulations  to
consummate and make effective the  transactions  contemplated by this Agreement,
including, without limitation, its respective reasonable best efforts to obtain,
prior to the Effective Time, all licenses, consents, approvals,  authorizations,
qualifications  and orders of governmental  authorities and parties to contracts
with or  affecting  the Data Tree  Business  and the  Digistar  Business  as are
necessary for consummation of the  transactions  contemplated by this Agreement;
provided,  that, except as otherwise specifically required by this Agreement, no
loan  agreement  or  contract  for  borrowed  money  shall be  repaid  except as
currently  required by its terms,  in whole or in part, and no contract shall be
amended to  increase  the amount  payable  thereunder  or  otherwise  to be more
burdensome to the Data Tree Business or the Digistar Business in order to obtain
any such consent,  approval or authorization without first obtaining the written
approval  of the other  Parties  and no Party shall be required to make any cash
payment,  provide any guaranty or relinquish any property or contractual  rights
to obtain any such consent,  approval or  authorization  (except for filing fees
and fees and expenses of attorneys,  accountants and other professional advisors
and  payments in  accordance  with the terms of contracts in existence as of the
date hereof).

          4.02. Consents; Further Assurances.

          (a) Subject to the proviso to Section 4.01,  FAFCO,  FAREISI and FARES
agree that they will use their best efforts to obtain the written consent of any
other  necessary  party to the  assignment of any contract,  lease,  commitment,
sales order,  purchase order or undertaking  constituting a part of any Interest
to be transferred  hereunder  and, to the extent that any such contract,  lease,
commitment, sales order, purchase order or undertaking requiring such consent is
transferred  or assigned  pursuant to the terms of this  Agreement  without such
consent,  FAFCO, FAREISI and FARES will cooperate with each other and with NEWCO
in any lawful arrangement  designed to provide each Party and NEWCO the benefits
under any such Interest. Notwithstanding Section 4.01 and any other provision of
this Section 4.02(a) to the contrary,  none of FAFCO,  FAREISI or FARES shall be
required to seek the consent to the transfer of the FAFCO Interest,  the FAREISI
Interest or the FARES  Interest,  as the case may be, of any party to a contract
with FAFCO,  FAREISI or FARES pursuant to which a consent is required,  provided
that, in lieu of seeking and obtaining any such required consent, FAFCO, FAREISI
or FARES,  as the case may be, agrees to indemnify and hold NEWCO  harmless from
all  claims,  expenses,  obligations,  damages,  costs,  payments,  liabilities,
losses, interest, fines and penalties (including,  without limitation, costs and
expenses of litigation,  reasonable attorneys' fees and reasonable  consultants'
fees, but excluding any special or consequential or indirect  damages)  suffered
or paid,  directly  or  indirectly,  through  application  of NEWCO's  assets or
otherwise,  as a result of or arising  out of the  failure of FAFCO,  FAREISI or
FARES, as the case may be, to seek or obtain any such required consent.

          (b) Subject to the proviso to Section  4.01, on or after the Effective
Date and without further  consideration,  FAFCO,  FAREISI and FARES shall,  from
time to time,  execute and  deliver  such  further  instruments  of  conveyance,
assignment and transfer and shall take, or cause to be taken,  such other action
as NEWCO or any  other  Party  may  reasonably  request  for the more  effective
conveyance, assignment and transfer to NEWCO of any of the Interests, and FAFCO,
FAREISI and FARES shall lend its  assistance  to NEWCO or any other Party in the
collection  and  reduction to possession  of the  Interests,  in the exercise of
rights with respect thereto and otherwise in the  effectuation of the intentions
and purposes of this Agreement.

          4.03.  Notices of Certain  Events.  Each Party hereto  shall  promptly
notify the other Parties of:

          (a) any notice or other  communication  from any Person  alleging that
     the consent of such Person is or may be  required  in  connection  with the
     transactions contemplated by this Agreement;

          (b) any notice or other  communication from any governmental entity in
     connection with the transactions contemplated by this Agreement;

          (c) any actions,  suits, claims (or to its knowledge,  investigations)
     or proceedings commenced or, to its knowledge threatened against,  relating
     to or involving or otherwise affecting the consummation of the transactions
     contemplated by this Agreement; and

          (d) such Party's obtaining knowledge of the occurrence,  or failure to
     occur, of any event which  occurrence or failure to occur will be likely to
     cause (i) any  representation or warranty contained in this Agreement to be
     untrue and inaccurate in any material respect, or (ii) any material failure
     of any Party to comply with or satisfy any covenant, condition or agreement
     to be complied with or satisfied by it under this Agreement; provided, that
     no such  notification  shall  affect  the  representations,  warranties  or
     obligations  of the Parties or the  conditions  to the  obligations  of the
     Parties hereunder or thereunder.

          4.04. DTI.

          (a) During the DTI Option Period,  Chopra shall not permit DTI to wind
up, liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation,  or convey,  sell, lease or otherwise  dispose of (or agree to do
any of the  foregoing  at any future  time) all or any part of its  property  or
assets,  or  purchase  or  otherwise  acquire  (in one or a  series  of  related
transactions)  any part of the property or assets (other than purchases or other
acquisitions  of inventory,  materials  and equipment in the ordinary  course of
business) of any Person.

          (b)  During  the DTI  Option  Period,  Chopra  shall not permit DTI to
create  or  suffer  to  exist  any  lien,  pledge,  charge,  security  interest,
encumbrance,  restriction or claim of any kind upon any of DTI's assets, whether
now owned or hereafter acquired, to secure any debt or other obligation.


                                   SECTION 5.
                                 PUTS AND CALLS

          5.01. R2 Put Option.

          (a) (i) During the First Put/Call Period,  R2 shall,  unless FAFCO has
delivered the First Call Notice, have the right (the "First Put Option") to sell
to FAFCO 33-1/3% (but not less than 33-1/3%) of the Membership Interest owned by
R2 on the First Trigger Date.

               (ii) If by the Second  Trigger  Date,  R2 has not sold any of its
Membership Interest to FAFCO, during the Second Put/Call Period R2 shall, unless
FAFCO has  delivered  the Second  Call  Notice,  have the right to sell to FAFCO
66-2/3% (but not less than 66-2/3%) of the  Membership  Interest  owned by R2 on
the Second  Trigger Date. If by the Second  Trigger Date, R2 has sold 33-1/3% of
the Membership  Interest owned by R2 on the First Trigger Date to FAFCO,  during
the Second Put/Call Period R2 shall,  unless FAFCO has delivered the Second Call
Notice,  have  the  right to sell to FAFCO  50% (but not less  than  50%) of the
Membership Interest owned by R2 on the Second Trigger Date. R2's right to sell a
portion of its Membership  Interest  pursuant to this clause (ii) is hereinafter
referred to as the "Second Put Option".

               (iii) During the Third Put/Call  Period,  R2 shall,  unless FAFCO
has delivered the Third Call Notice,  have the right (the "Third Put Option") to
sell to FAFCO 100% (but not less than 100%) of the Membership  Interest owned by
R2 on the Third Trigger Date.

          (b) If R2 elects to exercise  the First Put Option,  R2 shall  deliver
written notice of such election (the "First Put Notice") to FAFCO no sooner than
the First Trigger Date and no later than 5:00 P.M.,  Pacific  Standard  Time, on
the Business Day immediately  preceding the Second Trigger Date. If R2 elects to
exercise the Second Put Option, R2 shall deliver written notice of such election
(the "Second Put Notice") to FAFCO no sooner than the Second Trigger Date and no
later than 5:00 P.M.,  Pacific  Standard  Time, on the Business Day  immediately
preceding the Third Trigger Date. If R2 elects to exercise the Third Put Option,
R2 shall  deliver  written  notice of such  election (the "Third Put Notice") to
FAFCO no sooner than the Third Trigger Date and no later than 5:00 P.M., Pacific
Standard Time, on the Business Day immediately  preceding the Option Termination
Date. Any written notice  delivered to FAFCO pursuant to this  subsection (b) is
hereinafter referred to as a "Put Exercise Notice".

          (c) If FAFCO receives a Put Exercise  Notice,  FAFCO shall,  within 30
days of its receipt of such Put Exercise Notice, deliver written notice to R2 (a
"Put Consideration  Notice")  specifying (i) the date, which shall be a Business
Day no later than 30 days (or, if the Option  Price is to be paid by delivery of
unrestricted  registered FAFCO common shares, as soon as practicable thereafter,
but no later than 120 days) after the date of such Put Consideration  Notice, on
which the Put Option  described in such Put  Exercise  Notice shall be paid (the
"Put Payment Date"),  (ii) the Option Price and (iii) FAFCO's  election,  in its
sole and  unfettered  discretion,  to pay the Option  Price (A) in cash,  (B) by
delivering to R2 an unsecured promissory note of FAFCO in an aggregate principal
amount equal to the Option Price,  which promissory note shall have a three year
maturity from the Put Payment Date, shall bear interest at the Prime Rate, shall
be payable in equal quarterly  installments of principal,  together with accrued
interest  thereon,  shall be  subject to  acceleration  upon  default  and shall
otherwise be in a form reasonably acceptable to R2, (C) by delivering to R2 that
number of unrestricted registered FAFCO common shares listed on a Major Exchange
equal to the  quotient  resulting  from the  division of the Option Price by the
Mean Price (provided that in lieu of delivering a fractional common share, FAFCO
shall  pay  cash in  amount  equal to the  product  of the  Mean  Price  and the
fractional  interest  (expressed as a decimal)) or (D) any  combination of cash,
promissory  notes and FAFCO common shares in accordance  with the foregoing.  In
the event that FAFCO fails to timely deliver a Put Consideration Notice, the Put
Payment Date shall occur on the date which is 35 days  following the date of the
applicable Put Exercise  Notice and FAFCO shall be deemed to have elected to pay
the Option Price in cash.

          (d) On each Put Payment Date,

               (i) R2 shall deliver to FAFCO the certificates,  if any, properly
endorsed,  representing  that portion of R2's Membership  Interest that is to be
sold to FAFCO on such Put Payment  Date,  together with such other duly executed
instruments  of  transfer  reasonably  requested  by FAFCO to give effect to the
purchase and sale of the applicable portion of R2's Membership Interest pursuant
to this Section 5.01 and

               (ii) FAFCO shall deliver to R2, in immediately available funds or
as otherwise permitted in paragraph (c) above, the Option Price.

          5.02. FAFCO Call Option.

          (a) Except as otherwise provided in 5.02(f):

               (i) During the First Put/Call Period,  FAFCO shall, unless R2 has
delivered  the First Put Notice,  have the right (the  "First  Call  Option") to
purchase from R2 33-1/3% (but not less than 33-1/3%) of the Membership  Interest
owned by R2 on the First Trigger Date.

               (ii) If by the Second  Trigger  Date,  R2 has not sold any of its
Membership  Interest to FAFCO,  during the Second Put/Call Period,  FAFCO shall,
unless R2 has delivered  the Second Put Notice,  have the right to purchase from
R2 66-2/3% (but not less than 66-2/3%) of the Membership Interest owned by R2 on
the Second  Trigger Date. If by the Second  Trigger Date, R2 has sold 33-1/3% of
the Membership  Interest owned by R2 on the First Trigger Date to FAFCO,  during
the Second Put/Call  Period FAFCO shall,  unless R2 has delivered the Second Put
Notice,  have the right to  purchase  from R2 50% (but not less than 50%) of the
Membership  Interest  owned by R2 on the Second  Trigger Date.  FAFCO's right to
purchase a portion of R2's Membership  Interest  pursuant to this clause (ii) is
hereinafter referred to as the "Second Call Option".

               (iii) During the Third Put/Call  Period,  FAFCO shall,  unless R2
has delivered the Third Put Notice,  have the right (the "Third Call Option") to
purchase from R2 100% (but not less than 100%) of the Membership  Interest owned
by R2 on the Third  Trigger  Date.  If FAFCO  does not  exercise  the Third Call
Option at or  before  5:00  P.M.,  Pacific  Standard  Time on the  Business  Day
immediately preceding the Option Termination Date, FAFCO shall be deemed to have
exercised  the Third Call  Option on the Option  Termination  Date (the  "Forced
Call").

          (b) If FAFCO  elects to exercise  the First Call  Option,  FAFCO shall
deliver  written  notice of such  election  (the "First  Call  Notice") to R2 no
sooner than the First Trigger Date and no later than 5:00 P.M., Pacific Standard
Time,  on the Business Day  immediately  preceding  the Second  Trigger Date. If
FAFCO  elects to exercise the Second Call Option,  FAFCO shall  deliver  written
notice of such  election  (the  "Second  Call  Notice") to R2 no sooner than the
Second Trigger Date and no later than 5:00 P.M.,  Pacific  Standard Time, on the
Business Day  immediately  preceding  the Third Trigger Date. If FAFCO elects to
exercise  the Third Call  Option,  FAFCO shall  deliver  written  notice of such
election  (the "Third Call  Notice") to R2 no sooner than the Third Trigger Date
and no later  than  5:00  P.M.,  Pacific  Standard  Time,  on the  Business  Day
immediately  preceding the Option Termination Date. Any written notice delivered
to R2  pursuant to this  subsection  (b) is  hereinafter  referred to as a "Call
Exercise Notice".

          (c) Each Call Exercise Notice shall specify (i) the date,  which shall
be a Business  Day no later than 30 days (or, if the Option  Price is to be paid
by  delivery  of  unrestricted  registered  FAFCO  common  shares,  as  soon  as
practicable thereafter,  but no later than 120 days) after the date of such Call
Exercise Notice, on which the Call Option described in such Call Exercise Notice
shall be paid (the "Call Payment Date"), (ii) the Option Price and (iii) FAFCO's
election, in its sole and unfettered discretion,  to pay the Option Price (A) in
cash,  (B) by  delivering  to R2 that number of  unrestricted  registered  FAFCO
common shares listed on a Major  Exchange  equal to the quotient  resulting from
the  division of the Option  Price by the Mean Price  (provided  that in lieu of
delivering a fractional  common  share,  FAFCO shall pay cash in amount equal to
the  product  of the Mean  Price and the  fractional  interest  (expressed  as a
decimal)) or (C) any  combination of cash, and FAFCO common shares in accordance
with the foregoing.

          (d) In the event of a Forced Call,  FAFCO shall deliver to R2 no later
than 30 days after the Option  Termination  Date a written  notice (the  "Forced
Call Notice")  specifying  (i) the date,  which shall be a Business Day no later
than 30 days  (or,  if the  Forced  Call  Price  is to be  paid by  delivery  of
unrestricted  registered FAFCO common shares, as soon as practicable thereafter,
but no later than 120 days) after the date of such Forced Call Notice,  on which
the Forced Call  described in such Forced Call Notice shall be paid (the "Forced
Call Payment Date"),  (ii) the Forced Call Price and (iii) FAFCO's election,  in
its sole and  unfettered  discretion,  to pay the Forced Call Price (A) in cash,
(B) by  delivering  to R2 that number of  unrestricted  registered  FAFCO common
shares  listed on a Major  Exchange  equal to the  quotient  resulting  from the
division  of the Forced Call Price by the Mean Price  (provided  that in lieu of
delivering a fractional  common  share,  FAFCO shall pay cash in amount equal to
the  product  of the Mean  Price and the  fractional  interest  (expressed  as a
decimal)) or (C) any  combination of cash, and FAFCO common shares in accordance
with the foregoing (the "Forced Call Notice").

          (e) On each Call Payment  Date,  if any, or on the Forced Call Payment
Date, if  applicable,  (i) R2 shall deliver to FAFCO the  certificates,  if any,
properly endorsed, representing that portion of R2's Membership Interest that is
to be purchased by FAFCO on such Call Payment Date or Forced Call Payment  Date,
as the case may be,  together  with such  other  duly  executed  instruments  of
transfer  reasonably  requested by FAFCO to give effect to the purchase and sale
of the applicable  portion of R2's Membership  Interest pursuant to this Section
5.02 and (ii) FAFCO shall deliver to R2, in  immediately  available  funds or as
otherwise  permitted in  paragraphs  (c) and (d) above,  the Option Price or the
Forced Call Price, as the case may be.

          (f) FAFCO may not exercise its:

               (i) First Call Option if, at the time of its exercise, the Option
Price would be less than the product of $16,500,000 and the Membership  Interest
of R2, expressed as a decimal;

               (ii) Second Call Option if at the time of its exercise:

                    (x)  R2 has not sold any of its Membership Interest to FAFCO
                         and the Option  Price would be less than the product of
                         $33,000,000   and  the   Membership   Interest  of  R2,
                         expressed  as a decimal  or

                    (y)  R2 has sold 33-1/3% of its Membership Interest to FAFCO
                         and the Option  Price would be less than the product of
                         $16,500,000   and  the   Membership   Interest  of  R2,
                         expressed as a decimal;

               (iii) Third Call Option if at the time of its exercise:

                    (x)  R2 has not sold any of its Membership Interest to FAFCO
                         and the Option  Price would be less than the product of
                         $49,500,000   and  the   Membership   Interest  of  R2,
                         expressed  as a decimal or 

                    (y)  R2 has sold 66-2/3% of its Membership Interest to FAFCO
                         and the Option  Price would be less than the product of
                         $16,500,000   and  the   Membership   Interest  of  R2,
                         expressed as a decimal.

          5.03. General Put/Call Provisions.

          (a) In the event  NEWCO is subject  to any  voluntary  or  involuntary
bankruptcy  proceeding at any time after the applicable Trigger Date (unless, in
the case of any involuntary  proceeding,  such proceeding is dismissed within 60
days), the Options shall terminate.

          (b) The place of payment of the Option Price or the Forced Call Price,
as the case may be,  shall be the  principal  offices  of NEWCO or at such other
location  as shall be agreed  upon in  writing  by FAFCO and R2 no later  than 3
Business Days prior to the time of payment.

          5.04. Dispute Resolution.

          (a) In the event of any  dispute  arising  out of or  relating to this
Section  5   (including,   without   limitation,   any  dispute   involving  the
determination  of the Option  Price or the Forced Call Price or any other amount
(including,  without  limitation,  the Adjusted  Earnings  upon which the Option
Price or the Forced Call Price or any such other  amount is based) to be paid in
connection  with  the  purchase  of R2's  Membership  Interest  pursuant  to any
provision of this  Section 5),  FAFCO or R2, as the case may be,  shall  provide
written notice to the other party of the dispute, which notice shall specify the
notifying party's position.  Each of FAFCO and R2 agree to attempt in good faith
to resolve any such dispute  within 30 days following the receipt of the written
notice thereof.

          (b) If  the  dispute  cannot  be  resolved  within  the 30 day  period
described  in Section  5.04(a)  above,  either  FAFCO or R2 may,  by  delivering
written notice to the other, submit any such dispute to the following resolution
procedure.  A panel (the  "Panel")  shall be created to resolve  the dispute and
shall be composed of three  members who shall be appointed  as follows:  (i) one
Panel member shall be appointed by each of FAFCO and R2 as designated by written
notice to the other within 15 days after  receipt of the notice  submitting  the
disputes  to the  resolution  procedure  and (ii) the third,  who shall serve as
chairperson,  shall be appointed by the two Panel members so appointed  pursuant
to preceding clause (i) within 10 days after the second appointment  pursuant to
such  clause (i). If a Person,  or Persons,  entitled to appoint a Panel  member
fails to appoint such Panel member  within the time period  permitted  therefor,
such Panel member  shall at the written  request of either Party be appointed by
the American Arbitration Association.  The date on which all Panel members shall
have been selected is hereinafter  referred to as the "Panel Date". The place of
the dispute resolution proceedings and all other matters to be determined by the
Panel will be determined  by the majority vote of the Panel.  Except as provided
in Section 5.04(c) below, each of FAFCO and R2 shall bear their respective costs
and  expenses  (including  attorneys'  fees)  in  connection  with  the  dispute
resolution  proceedings and shall be responsible for one-half of the fees, costs
and expenses of the Panel.

          (c) The Panel shall render a written  decision  with reasons  therefor
within 30 days of the Panel Date.  The Panel may award fees,  costs and expenses
(including  attorneys'  fees and Panel  costs) to the  prevailing  Party and may
award interest on any amount  determined to be owing.  Any  determination by the
Panel  shall be final and  binding  upon the  Parties and may be enforced by any
court of competent jurisdiction in the same manner as a judgment in such court.

          (d) Notwithstanding anything to the contrary contained in this Section
5.04,  each of FAFCO and R2 hereby  covenant  and agree that,  in the event of a
dispute involving the determination of the Option Price or the Forced Call Price
or any  other  amount  to be  paid  in  connection  with  the  purchase  of R2's
Membership  Interest  pursuant to any provision of this Section 5, (i) each such
Party  shall,  within the time limit  prescribed  in Section  5.04(b)(i)  above,
appoint a representative  from its independent  certified public  accountants as
its Panel  member and (ii) the third Panel member  shall,  within the time limit
prescribed in Section  5.04(b)(ii)  above, be appointed by the two Panel members
appointed by the Parties  pursuant to clause (i) of this Section  5.04(d) from a
firm of  independent  certified  public  accountants  of  nationally  recognized
standing.  If a Person, or Persons,  entitled to appoint a Panel member pursuant
to this  Section  5.04(d)  fails to appoint  such Panel  member  within the time
period  permitted  therefor,  such Panel member shall at the written  request of
either Party be appointed by the American Arbitration Association.


                                   SECTION 6.
                                 DTI; FINANCING

          6.01. DTI.

          (a) From and after the date  NEWCO  purchases  all of the images it is
required to purchase  from R2 pursuant to the Supply  Agreement to and including
the date that is six months  thereafter (the "DTI Option  Period"),  NEWCO shall
have the right (i) to  purchase  the  capital  stock of, or merge  with DTI,  or
purchase the assets of DTI or otherwise acquire DTI or its assets for a purchase
price  of  $200,000  or (ii) so long as  CHOPRA  is  employed  by  NEWCO  or any
affiliate  thereof at the time NEWCO makes its election,  to enter into a supply
agreement  providing  (A)  for a term no  less  than  the  greater  of:  (x) the
remainder of the Term (as defined in the Employment Agreement) and (y) two years
from the commencement of such supply agreement, (B) that NEWCO will purchase all
of DTI's  output at cost,  (C) that if  CHOPRA's  employment  with NEWCO and all
Affiliates of NEWCO terminates,  NEWCO will have sixty days to decide whether to
purchase the capital  stock of, merge with,  purchase the assets of or otherwise
acquire DTI or its assets for a purchase price of $200,000,  (D) that NEWCO may,
directly  or  through  its  representatives,  review the  properties,  books and
records of DTI and its financial  and legal  condition to the extent NEWCO deems
necessary or  advisable to  familiarize  itself with such  properties  and other
matters  and (E) for  terms  otherwise  acceptable  to  FARES  (as the  Majority
Interest of NEWCO under the NEWCO Operating Agreement) and R2 (the "DTI Purchase
Option").  Any  amounts  paid  pursuant  to the DTI  Purchase  Option or Section
6.01(a)(C) shall be paid in cash in immediately available funds.

          (b) If NEWCO elects to exercise the DTI Purchase  Option,  FAFCO shall
deliver  written  notice of such election to CHOPRA no sooner than the first day
the DTI Option Period and no later than 5:00 P.M., Pacific Standard Time, on the
last  day  of the  DTI  Option  Period.  As  soon  as  practicable,  thereafter,
documents, in a form acceptable to NEWCO and CHOPRA, shall be prepared to effect
the acquisition of DTI.

          (c) CHOPRA agrees to use his best effort,  to a reasonable  extent, to
(i) assist NEWCO in  completing  its due  diligence  review of DTI,  (ii) assist
NEWCO in structuring  the  acquisition of DTI in a tax and accounting  efficient
manner,  (iii) convert DTI into the corporate form, or equivalent,  or any other
form  satisfactory  to NEWCO and (iv) cause DTI to cooperate  in  obtaining  any
consents,  licenses, approvals or equivalent necessary to effect the acquisition
of DTI.

     (d) On or before the  commencement  of the DTI Option  Period CHOPRA agrees
to, and agrees to use his best efforts to cause any Person to, sell,  convey and
transfer  to DTI (i) all of the  assets  and  liabilities  of Data Tree  (India)
Corporation  and (ii),  to the extent  such assets and  liabilities  are used to
provided the products and services described in the Supply Agreement, the assets
and liabilities of any other Entity  controlled by CHOPRA and/or R2 providing to
NEWCO and/or R2 the products and services described in the Supply Agreement.

          6.02.  Loans to NEWCO.  To the extent that any Party lends or advances
funds to NEWCO,  the Parties  agree that the Party  lending or  advancing  funds
shall be entitled to receive  interest thereon at a rate per annum not to exceed
the Prime Rate.


                                   SECTION 7.
                                  TERMINATION

          7.01. Events of Termination.  This Agreement may be terminated and the
transactions  contemplated  hereby  may be  abandoned  at any time  prior to the
Closing by mutual consent of the Parties or in the event the Merger Agreement is
terminated pursuant to Section 9 of the Merger Agreement.

          7.02. Effect of Termination. In the event that this Agreement shall be
terminated  pursuant to Section  7.01,  all further  obligations  of the Parties
hereto  under this  Agreement  shall  terminate  without  further  liability  or
obligation of either Party to the other Parties  hereunder;  provided,  however,
that no Party shall be released from  liability  hereunder if this  Agreement is
terminated and the  transactions  abandoned by reason of (i) willful  failure of
such Party to have  performed  its  obligations  hereunder  or (ii) any  knowing
misrepresentation made by such Party of any matter set forth herein.


                                   SECTION 8.
                                  MISCELLANEOUS

          8.01. Fees and Expenses.  Except as provided in Section 2.01(b) above,
all costs and  expenses  incurred  in  connection  with this  Agreement  and the
consummation of the transactions  contemplated hereby shall be paid by the Party
incurring such costs and expenses.

          8.02. Extension;  Waiver. At any time prior to the Effective Date, the
Parties  hereto,  by action  taken by or on behalf of the  respective  Boards of
Directors or other  governing body of such Parties,  may (i) extend the time for
the  performance  of any of the  obligations  or other acts of the other Parties
hereto,  (ii)  waive any  inaccuracies  in the  representations  and  warranties
contained herein of the other Parties or in any document, certificate or writing
delivered  pursuant  hereto or  thereto  by the  other  Parties  or (iii)  waive
compliance  with any of the  agreements  or  conditions  contained  herein.  Any
agreement  on the part of any Party to any such  extension  or  waiver  shall be
valid only if set forth in an  instrument  in  writing  signed on behalf of such
Party.

          8.03. Confidentiality.  Subject to the requirements of applicable law,
each Party shall maintain in confidence all information (i) transferred to NEWCO
by reason of the transfer of Interests  and (ii) all  information  received from
the  other  Party  as a  result  of any due  diligence  investigation  conducted
relative to the execution of the Agreement and shall use such  information  only
for the  benefit  of NEWCO  and,  except  in  accordance  with  the  immediately
succeeding sentence, shall not disclose any such information to a third party or
make any unauthorized use thereof. The obligation of confidentiality and non-use
shall not apply to any information which (a) is or becomes  generally  available
to the public  through no fault of the  receiving  party,  (b) is  independently
developed  by the  receiving  party,  (c) is received in good faith from a third
party who is lawfully in possession of such information and has the lawful right
to  disclose  or use it,  (d) is  required  by a court  order or  regulatory  or
governmental  agency to be disclosed or (e) the  delivering  Party in good faith
believes it is required by law or  regulatory  authority to disclose;  provided,
however,  that the other  Parties  shall  first be  notified  of such good faith
belief,  and the delivering  Party shall not make any such disclosure if a Party
provides an opinion  prepared by independent  counsel that the disclosure is not
so required.

          8.04. Public Announcements. The Parties agree to consult promptly with
each other prior to issuing  any press  release or  otherwise  making any public
statement  with respect to the  transactions  contemplated  hereby and shall not
issue any such press  release or make any such  public  statement  prior to such
consultation  and  review  by the  other  Party  of a copy  of such  release  or
statement, unless required by applicable law.

          8.05. Records Retained by FAFCO, R2 and NEWCO. Except as may otherwise
be provided in this Agreement,  FAFCO, FAREISI,  FARES and R2 shall transfer and
deliver, or cause to be transferred and delivered, and FAFCO, FAREISI, FARES and
R2 shall  cause  their  Affiliates  to  transfer  and deliver to NEWCO after the
Closing all data,  records and other information which pertain to its respective
Interests  (with  the  exception  of  documents  created  for this  transaction)
including,  without limitation,  tax records and personnel records necessary for
NEWCO to conduct the NEWCO  Business  (all of the  foregoing  being  hereinafter
called the "Business  Records").  To the extent that the original  copies of any
such Business Records also contain  information  relating to any Party or any of
its Affiliates  not relating to its  Interests,  said Party may deliver to NEWCO
copies  deleting such  information  but shall not destroy the original  Business
Records except in accordance with normal record retention policies (or otherwise
take action to make such original  Business Records  unavailable to NEWCO).  Any
Business  Records  which  any Party  requires  in  connection  with  pending  or
threatened litigation, or which are otherwise subject to hold orders as provided
in said Party's  record  retention and protection  policies,  may be retained by
said Party and copies thereof delivered to NEWCO.

          8.06.  Notices.  All  notices,  requests,  demands,  waivers and other
communications  required or permitted to be given under this Agreement  shall be
in writing and shall be deemed to have been duly given if delivered in person or
by mail, postage prepaid, sent by telecopier, as follows:

          (a) if to R2, to it at:

              R. Squared Limited
              c/o Royal Bank of Canada Trust Co. (Cayman) Limited
              P.O. Box 1586, George Town, Grand Cayman
              Cayman Islands, British West Indies
              Telephone:  345-949-0253
              Telecopier: 345-949-5777
              Attention:  Piers Strandling

          (b) if to CHOPRA at:

              Harish K. Chopra
              P.O. Box 9360
              Rancho Santa Fe, California  92067
              Telephone:  619-759-9959
              Telecopier: 619-759-1747

          (c) if to FAFCO, FAREISI or FARES, to it at:

              The First American Financial Corporation
              114 East Fifth Street
              Santa Ana, California  92702
              Telephone:  (714) 558-3211
              Telecopier: (714) 647-2242
              Attention:  Parker S. Kennedy

              with a copy to:

              White & Case
              633 West Fifth Street, 19th Floor
              Los Angeles, California  90071
              Telephone:   (213) 620-7700
              Telecopier:  (213) 687-0758
              Attention:  Neil W. Rust


or to such  other  Person or  address  as any Party  shall  specify by notice in
writing  to each of the  other  Parties.  Except  for a notice  of a  change  of
address,  which shall be effective only upon receipt thereof,  all such notices,
requests,  demands,  waivers  and  communications  properly  addressed  shall be
effective and deemed  delivered:  (i) if sent by U.S. mail,  three Business Days
after deposit in the U.S. mail, postage prepaid;  (ii) if sent by FedEx or other
overnight  delivery  service,  two Business Days after delivery to such service;
(iii) if sent by personal courier,  upon receipt; and (iv) if sent by facsimile,
upon receipt.

          8.07.  Entire  Agreement.  This  Agreement  and  the  other  documents
referred to herein or delivered pursuant hereto, collectively contain the entire
understanding of the Parties hereto with respect to the subject matter contained
herein and supersede all prior agreements and understandings,  oral and written,
with respect thereto unless specifically set forth to the contrary herein.

          8.08. Binding Effect; Benefit; Assignment.

          (a) This  Agreement  shall inure to the benefit of and be binding upon
the Parties hereto and their respective  successors and permitted  assigns,  but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the Parties hereto without the prior written consent
of each other  Party.  Nothing  in this  Agreement,  expressed  or  implied,  is
intended  to  confer  on any  Person  other  than the  Parties  hereto  or their
respective successors and permitted assigns, any rights,  remedies,  obligations
or liabilities under or by reason of this Agreement.

          (b)  Notwithstanding  anything stated in the foregoing  paragraph (a),
upon acknowledging this Agreement by its execution of the signature page hereto,
NEWCO  will be, for all  purposes,  treated as third  party  beneficiary  to the
representations and warranties of each Party in this Agreement.

          8.09.  Amendment and  Modification.  Subject to  applicable  law, this
Agreement may be amended,  modified and  supplemented  in writing by the Parties
hereto in any and all respects  before the Effective Date  (notwithstanding  any
shareholder approval),  by action taken by the respective Boards of Directors of
such  Parties,  or by the  respective  officers  authorized  by such  Boards  of
Directors,  provided, that after any such shareholder approval, no amendment may
be made which by law requires further approval by such shareholders without such
further approval.

          8.10. Effect of Termination. In the event that this Agreement shall be
terminated  pursuant to Section 7, all further obligations of the parties hereto
under this Agreement (other than pursuant to Sections 8.01, 8.03 and 8.06) shall
terminate  without further  liability or obligation of either party to the other
party  hereunder;  provided,  however,  that no  party  shall be  released  from
liability  hereunder  if this  Agreement  is  terminated  and  the  transactions
abandoned by reason of (i) willful  failure of such party to have  performed its
obligations hereunder or (ii) any knowing  misrepresentation  made by such party
of any matter set forth herein.

          8.11.  Counterparts.   This  Agreement  may  be  executed  in  several
counterparts,  each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.

          8.12. Applicable Law; Submission to Jurisdiction.

          (a) This Agreement and the legal relations  between the Parties hereto
shall be governed by and construed in  accordance  with the laws of the State of
California, without regard to the conflict of laws rules thereof.

          (b) Except in the case of  disputes  in relation to Section 5, each of
the Parties  agrees that any legal  action or  proceeding  with  respect to this
Agreement  may be brought in the Courts of the State of California or the United
States  District Court for the Central  District of California and, by execution
and delivery of this Agreement,  each Party hereby irrevocably submits itself in
respect of its property,  generally  and  unconditionally  to the  non-exclusive
jurisdiction of the aforesaid  courts in any legal action or proceeding  arising
out of this  Agreement.  Each  of the  Parties  hereby  irrevocably  waives  any
objection  which it may now or  hereafter  have to the laying of venue of any of
the aforesaid  actions or proceedings  arising out of or in connection with this
Agreement  brought in the courts  referred to in the  preceding  sentence.  Each
Party  consents to process  being served in any such action or proceeding by the
mailing of a copy  thereof to the address for notices to it set forth in Section
8.06 and  agrees  that such  service  upon  receipt  shall  constitute  good and
sufficient service of process or notice thereof. Nothing in this paragraph shall
affect or eliminate any right to serve process in any other matter  permitted by
law.

          8.13  Severability.  If any term,  provision,  covenant or restriction
contained  in this  Agreement is held by a court of  competent  jurisdiction  or
other  authority to be invalid,  void,  unenforceable  or against its regulatory
policy,  the  remainder of the terms,  provisions,  covenants  and  restrictions
contained in this  Agreement  shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

          8.14 Access to Records. At all times that R2 is a member of NEWCO, and
thereafter for the sole purpose of determining  the accuracy of the Option Price
or the Forced  Call  Price,  as the case may be, R2 shall have the right to make
copies of all books  and  records  of  NEWCO;  provided,  however  that R2 shall
maintain in confidence all such books and records of NEWCO.

          IN WITNESS WHEREOF,  the Parties have caused this Agreement to be duly
executed in their respective corporate names by their respective officers,  each
of whom is duly and validly authorized and empowered, all as of the day and year
first above written.


                                   THE FIRST AMERICAN FINANCIAL CORPORATION


                                   By______________________________________
                                     Name:
                                     Title:


                                   FIRST AMERICAN REAL ESTATE
                                     INFORMATION SERVICES, INC.


                                   By_______________________________________
                                     Name:
                                     Title:


                                   FIRST AMERICAN REAL ESTATE SOLUTIONS LLC


                                   By_______________________________________
                                     Name:
                                     Title:


                                   R. SQUARED LIMITED


                                   By_______________________________________
                                     Name:
                                     Title:


                                      ______________________________________
                                      Harish K. Chopra


ACKNOWLEDGED AND AGREED TO:

DATA TREE LLC


By_______________________________
  Name:
  Title:

<PAGE>
                                                                      EXHIBIT A

                                     FORM OF
                                 PROMISSORY NOTE


$__________                                                Santa Ana, California
                                                             _________ __, 1998


          IMAGE  ACQUISITION  CORP., a corporation  organized and existing under
the laws of the State of California  (together  with its successors and assigns,
the  "Payor"),  hereby  promises  to pay  to the  order  of THE  FIRST  AMERICAN
FINANCIAL  CORPORATION  or its assigns  (the  "Payee"),  in lawful  money of the
United States of America in immediately available funds, at such location in the
United  States of America as the Payee  shall  from time to time  designate,  on
______  __,  2000,  the  principal  sum  of  _________   UNITED  STATES  DOLLARS
($__________) or, if less, the then unpaid principal amount of this Note.

          The Payor promises also to pay interest on the unpaid principal amount
from time to time outstanding  hereunder in like money at said location from the
date hereof until repaid in full at the Prime Rate,  said interest to be payable
on any repayment (on the amount  repaid),  at maturity and, after  maturity,  on
demand.  For purposes of this Note,  "Prime Rate" shall mean,  as of any date of
determination, the per annum rate of interest specified as the Prime Rate in the
Wall Street Journal published on such date,  provided that for any date on which
the Wall Street Journal is not published,  "Prime Rate" shall mean the per annum
rate of interest  specified  as the Prime Rate in the Wall Street  Journal  last
published prior to such date.

          This Note is the FAFCO Note referred to in the  Contribution and Joint
Venture Agreement, dated as of ________ __, 1998 (the "Contribution Agreement"),
by and among the Payee, First American Real Estate Information  Services,  Inc.,
First  American  Real Estate  Solutions  LLC, R.  Squared  Limited and Harish K.
Chopra and is entitled to the benefits thereof.

          Upon the commencement of any bankruptcy, reorganization,  arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar  proceeding  of any  jurisdiction  relating  to the  Payor,  the  unpaid
principal  amount  hereof  shall  become  immediately  due and  payable  without
presentment, demand, protest or notice of any kind in connection with this Note.

          This Note may be voluntarily repaid by the Payor prior to maturity, in
whole or in part, without premium or penalty.  The Payee is hereby authorized to
record  all  repayments  hereof  in its books and  records,  and such  books and
records shall constitute prima facie evidence of the accuracy of the information
contained therein.

          The Payor hereby waives presentment,  demand, protest or notice of any
kind in connection with this Note.

          All  payments   under  this  Note  shall  be  made   without   offset,
counterclaim or deduction of any kind.

          THIS NOTE SHALL BE  CONSTRUED IN  ACCORDANCE  WITH AND GOVERNED BY THE
LAW OF THE STATE OF CALIFORNIA.



                                        IMAGE ACQUISITION CORP.



                                        By ___________________________________
                                           Name:
                                           Title:

<PAGE>
                                                                       EXHIBIT B


                           EXCLUDED INTEREST EXAMPLES

Assumptions:

     1.   Working Capital Debt (WCD)- $15,000,000

     2.   Objected Amount (OA) - $8,000,000

     3.   Therefore, approved amount = $1,420,000

     4.   Two loans:  $7,000,000 at 10%, simple interest

                      $8,000,000 at 9%, simple interest

     5.   Therefore, total interest payment (TIP) = $1,420,000


                                            OA
Formula:  Excluded Interest (EI) = (TIP) --------
                                            WCD

Example 1:  with assumptions unchanged.

                         $8,000,000
     EI - ($1,420,000) ------------ = $757,333.33
                        $15,000,000

Example 2:  pay-down of $2,000,000 of the 9% debt, WCD now $13,000,000, OA now
            $6,000,000 (i.e., $8,000,000 minus $2,000,000 pay-down)


     TIP=[($6,000,000)(.09)] + [($7,000,000)(.10)]=$1,240,000

                       $6,000,000
     EI=($1,240,000) ------------  = $572,307.69
                      $13,000,000

Example 3:  continuation of Example 2, with an additional pay-down of $4,000,000
            of the 10% debt, WCD now $9,000,000, OA now $2,000,000.

     TIP = [$6,000,000)(.09)] + [($3,000,000)(.10)]=$840,000

                   $2,000,000
     EI = ($840,000)----------- = $186,666.67
                   $9,000,000


<PAGE>

                                                                       EXHIBIT D



                               OPERATING AGREEMENT
                                       FOR
                                 DATA TREE LLC,
                     A CALIFORNIA LIMITED LIABILITY COMPANY


                                 By and Between

                    FIRST AMERICAN REAL ESTATE SOLUTIONS LLC

                                       and

                               R. SQUARED LIMITED


                           Dated as of _____ __, 1998

<PAGE>

                              TABLE OF CONTENTS<F1>

<F1> This Table of Contents is provided for convenience only and does not form a
part of the attached Operating Agreement.
<TABLE>
<S>                <C>                                                                      <C>
                                                                                            Page

SECTION 1.      DEFINED TERMS; CONSTRUCTION.................................................  1
         1.01   Defined Terms...............................................................  1
         1.02   Construction................................................................  5

SECTION 2.      ORGANIZATIONAL MATTERS......................................................  5
         2.01   Formation of the Company....................................................  5
         2.02   Name of the Company.........................................................  5
         2.03   Term........................................................................  5
         2.04   Principal Office and Registered Agent.......................................  6
         2.05   Addresses of the Members....................................................  6
         2.06   Purpose and Business of the Company.........................................  6

SECTION 3.      CAPITAL CONTRIBUTIONS.......................................................  6
         3.01   Initial Capital Contributions...............................................  6
         3.02   Capital Accounts............................................................  6
         3.03   Revaluation of Capital Accounts.............................................  7
         3.04   No Interest.................................................................  7
         3.05   Return of Capital Account...................................................  7
         3.06   Percentage Interests........................................................  7

SECTION 4.      THE MEMBERS.................................................................  7
         4.01   Limited Liability...........................................................  7
         4.02   Admission of Additional Members.............................................  7
         4.03   Withdrawals.................................................................  8
         4.04   Transactions With The Company...............................................  8
         4.05   Termination of Membership Interest..........................................  8
         4.06   Unanimous Consent of Members................................................  8
         4.07   Approval by the Majority Interest...........................................  9
         4.08   Meetings of the Members.....................................................  9

SECTION 5.      MANAGEMENT AND CONTROL OF THE COMPANY....................................... 11
         5.01   Management and Powers....................................................... 11
         5.02   Officers.................................................................... 11

SECTION 6.      ALLOCATIONS OF NET PROFITS AND NET LOSSES;
                DISTRIBUTIONS............................................................... 14
         6.01   Allocations of Net Profit and Net Loss...................................... 14
         6.02   Special Allocations......................................................... 14
         6.03   Code Section 704(c) Allocations............................................. 16
         6.04   Allocations of Net Profits and Losses and Distributions in
                Respect of a Transferred Interest........................................... 16
         6.05   Distributions of Distributable Cash by the Company.......................... 16
         6.06   Form of Distribution........................................................ 17
         6.07   Restriction on Distributions................................................ 17
         6.08   Return of Distributions..................................................... 18

SECTION 7.      MEMBERSHIP INTEREST TRANSFER RESTRICTIONS................................... 18
         7.01   Transfer Restrictions....................................................... 18
         7.02   Void Transfer............................................................... 18
         7.03   New Members................................................................. 18

SECTION 8.      CONSEQUENCES OF DISSOLUTION EVENTS; TERMINATION OF MEMBERSHIP INTEREST...... 18
         8.01   Dissolution Event........................................................... 18
         8.02   Winding Up the Company...................................................... 19
         8.03   Final Statement............................................................. 19

SECTION 9.      BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS........................... 19
         9.01   Company Books and Records................................................... 19
         9.02   Tax Returns................................................................. 20
         9.03   Inspection, Audit and Copies of Records..................................... 21
         9.04   Access...................................................................... 21

SECTION 10.     INDEMNIFICATION AND INSURANCE............................................... 22
         10.01  Indemnification of Agents................................................... 22
         10.02  Insurance................................................................... 22

SECTION 11.     MISCELLANEOUS............................................................... 22
         11.01  FAFCO Overhead Fee.......................................................... 22
         11.02  Specific Performance........................................................ 22
         11.03  Amendments and Modifications................................................ 22
         11.04  Notices..................................................................... 23
         11.05  Counterparts................................................................ 23
         11.06  Governing Law............................................................... 24
         11.07  Successors.................................................................. 24
         11.08  Severability................................................................ 24
         11.09  Entire Agreement............................................................ 24

</TABLE>
<PAGE>
                                                                    

                               OPERATING AGREEMENT



     This OPERATING AGREEMENT (this "Agreement") for Data Tree LLC, a California
limited  liability  company  (the  "Company"),  dated as of _____ __,  1998,  is
entered  into by and  between  the First  American  Real  Estate  Solutions  LLC
("FARES") and R. Squared Limited ("R2").

                                   SECTION 1.
                           DEFINED TERMS; CONSTRUCTION

     1.01 Defined Terms.  As used in this  Agreement,  the following terms shall
have the following meanings:

     "ACT" means the  Beverly-Killea  Limited Liability Company Act, codified in
the  California  Corporations  Code,  Section  17000 et seq., as the same may be
amended from time to time.

     "ADJUSTED CAPITAL ACCOUNT DEFICIT" means,  with respect to any Member,  the
deficit  balance,  if any, in such Member's Capital Account as of the end of the
applicable Fiscal Year after (i) crediting thereto any amounts which such Member
is, or is deemed to be,  obligated to restore  pursuant to Treasury  Regulations
ss.  1.704-2(g)(1) and ss.  1.704-2(i)(5) and (ii) debiting such Capital Account
by  the   amount  of  the  items   described   in   Treasury   Regulations   ss.
1.704-1(b)(2)(ii)(d)(4),  (5) and (6).  The  foregoing  definition  of  Adjusted
Capital  Account  Deficit is intended to comply with the  provisions of Treasury
Regulation  ss.  1.704-1(b)(2)(ii)(d)  and  shall  be  interpreted  consistently
therewith.

     "ARTICLES"  means the Articles of Organization  for the Company  originally
filed with the California Secretary of State and as amended from time to time.

     "BANKRUPTCY"  means,  with respect to any Person,  the occurrence of one or
more of the  following  events:  (i) such  Person  commences  a  voluntary  case
concerning   itself  under  Title  11  of  the  United   States  Code   entitled
"Bankruptcy,"  as now or  hereafter  in effect,  or any  successor  thereto (the
"Bankruptcy  Code");  (ii) an involuntary case is commenced  against such Person
and the petition is not controverted  within 10 days, or is not dismissed within
60 days,  after  commencement of the case;  (iii) a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially  all
of the property of, such Person; (iv) such Person commences any other proceeding
under any  reorganization,  arrangement,  adjustment of debt, relief of debtors,
dissolution,  insolvency  or  liquidation  or  similar  law of any  jurisdiction
whether now or hereafter in effect;  (v) there is commenced  against such Person
any such proceeding which remains undismissed for a period of 60 days; (vi) such
Person is  adjudicated  insolvent  or  bankrupt  or any order of relief or other
order approving any such case or proceeding is entered; (vi) such Person suffers
the appointment of a custodian or the like for it or any substantial part of its
property to continue  undischarged  or unstayed  for a period of 60 days;  (vii)
such Person makes a general  assignment for the benefit of creditors;  or (viii)
any corporate or  partnership  action is taken by such Person for the purpose of
effecting any of the foregoing.

     "BUSINESS DAY" means any day, excluding  Saturday,  Sunday or any day which
shall be a legal holiday in the State of California.

     "CAPITAL  ACCOUNT" means,  with respect to any Member,  the capital account
which the Company  establishes and maintains for such Member pursuant to Section
3.02.

     "CAPITAL  CONTRIBUTION" means, with respect to any Member, the total amount
of cash and the fair market value of property  contributed  (net of  liabilities
secured by such  contributed  property  that the Company is considered to assume
under Section 752 of the Code) to the Company by such Member.

     "CODE" means the U.S.  Internal  Revenue Code of 1986, as amended from time
to time, and the provisions of any succeeding law.

     "COMPANY  MINIMUM  GAIN"  has the  meaning  given to the term  "partnership
minimum gain" in the Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

     "CONTRIBUTION  AGREEMENT" means that certain Contribution and Joint Venture
Agreement,  dated as of even date herewith,  by and among FAFCO,  First American
Real Estate Information Services,  Inc., FARES, Experian Information  Solutions,
Inc., R2 and Harish K. Chopra.

     "CORPORATIONS CODE" means the California Corporations Code, as amended from
time to time, and the provisions of any succeeding law.

     "DISSOLUTION  EVENT" means, with respect to any Member, the withdrawal from
this Agreement by, the Bankruptcy of, or the dissolution of such Member.

     "DISTRIBUTABLE  CASH" means the amount of cash which the Majority Interest,
in  consultation  with the President,  deems  available for  distribution to the
Members,  taking into account all debts,  liabilities,  and  obligations  of the
Company  then due,  and working  capital and other  amounts  which the  Majority
Interest  deems  necessary for the Company's  business or to place into reserves
for customary and usual claims with respect to such business.

     "EMPLOYMENT AGREEMENT" means that certain Employment Agreement, dated as of
even date herewith between the Company and Harish K. Chopra.

     "FAFCO" means The First American Financial Corporation.

     "FAFCO OVERHEAD FEE" has the meaning given thereto in Section 11.01.

     "FISCAL YEAR" means the Company's  fiscal year, which shall be the calendar
year.

     "FORMER MEMBER" has the meaning given thereto in Section 8.01.

     "GAAP" means generally accepted accounting  principles in the United States
of America applied on a consistent basis.

     "MAJORITY  INTEREST"  means  those  Members  who  hold  a  majority  of the
Percentage Interests which all Members hold.

     "MEMBER"  means  each  Person  who  (i) is an  initial  signatory  to  this
Agreement or has been admitted to the Company as a Member in accordance with the
Articles or this  Agreement and (ii) has not become the subject of a Dissolution
Event or  ceased to be a Member in  accordance  with  Section 8 or for any other
reason.

     "MEMBER  MINIMUM  GAIN"  means an amount,  determined  in  accordance  with
Regulations  Section  1.704-2(i)(3) with respect to any Member Nonrecourse Debt,
equal to the Company  Minimum Gain that would result if such Member  Nonrecourse
Debt were treated as a Nonrecourse Liability.

     "MEMBER  NONRECOURSE  DEBT"  has the  meaning  given to the  term  "partner
nonrecourse debt" in Regulations Section 1.704-2(b)(4).

     "MEMBER NONRECOURSE  DEDUCTIONS" has the meaning given to the term "partner
nonrecourse deductions" in Regulations Section 1.704-2(i).

     "MEMBERSHIP  INTEREST"  means a Member's  entire  interest in the  Company,
including,  without  limitation,  the  right  to  receive  distributions  of the
Company's assets and allocations of income,  gain, loss,  deduction,  credit and
similar items from the Company pursuant to this Agreement and the Act, the right
to  vote  on or  participate  in  the  management,  and  the  right  to  receive
information concerning the business and affairs, of the Company.

     "NET PROFITS" and "NET LOSSES" mean,  for each Fiscal Year or other period,
an amount equal to the Company's taxable income or loss for such year or period,
determined  in  accordance  with  Code  Section  703(a),  (i)  including  in the
calculation thereof all items of income,  gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1),  (ii) adding any income of
the Company that is exempt from  federal  income tax and (iii)  subtracting  any
nondeductible  expenditures  of the Company not properly  chargeable  to Capital
Accounts  described  in Code  Section  705(a)(2)(B)  or treated as Code  Section
705(a)(2)(B) expenditures pursuant to Regulations Section  1.704-1(b)(2)(iv)(i);
provided, however:

          (1) in the event that for purposes of calculating  Capital Accounts an
asset of the Company is properly reflected on the books of the Company at a book
value other than the  adjusted  tax basis of the asset under the Code,  then (a)
the amount of any adjustment to such a book value shall be taken into account as
gain or loss from the  disposition  of such asset and (b) after such  adjustment
depreciation  with  respect  to such asset and any gain or loss  resulting  from
disposition  of such asset shall be computed by  reference  to the book value of
the asset as so carried; and

          (2) any items that are specially  allocated  pursuant to the Agreement
other than by  allocation as part of Net Profits or Net Losses as such shall not
be taken into account in computing Net Profits and Net Losses.

     "NONRECOURSE  DEDUCTION"  has the meaning given to such term in Regulations
Section 1.704-2(b)(1).

     "NONRECOURSE  LIABILITY" has the meaning set forth in  Regulations  Section
1.752- 1(a)(2).

     "PERCENTAGE  INTEREST" means, with respect to a Member,  the percentage set
forth in Section  3.06 with respect to such Member,  as such  percentage  may be
adjusted from time to time pursuant to the terms of this Agreement.

     "PERSON" means and includes any individual, partnership, association, joint
stock company,  joint venture,  corporation,  trust,  limited liability company,
unincorporated  organization or other  enterprise or any government or political
subdivision or any agency, department or instrumentality thereof.

     "REGULATIONS"  means, unless the context clearly indicates  otherwise,  the
regulations  in force as final or  temporary  that have been  issued by the U.S.
Department  of  Treasury  pursuant  to its  authority  under the  Code,  and any
successor regulations.

     "REMAINING MEMBERS" has the meaning given thereto in Section 8.01.

     "TAX ALLOWANCE AMOUNT" means, with respect to any Member,  for any calendar
quarter,  (i) forty  percent  (40%) of the excess of (a) the  estimated  taxable
income  allocable  to such Member  arising from its  ownership of an  Percentage
Interest in the Company for the Fiscal Year through such  calendar  quarter over
(b) any Losses of the Company for prior  Fiscal  Years and such Fiscal Year that
are  allocable  to  such  Member  that  were  not  previously  utilized  in  the
calculation  of Tax  Allowance  Amounts  minus (ii) prior  distributions  of Tax
Allowance  Amounts for such Fiscal Year,  all as  determined  by the Tax Matters
Member in good faith.  The amount so determined by the Tax Matters  Member shall
be the Tax  Allowance  Amount for such  period and shall be final and binding on
all Members.

     "TAX MATTERS MEMBER" has the meaning given thereto in Section 9.02(b).

     "TRANSFER"  means  any  sale,  transfer,  assignment,  donation,  exchange,
charge,   gift,  pledge,   hypothecation,   conveyance,   encumbrance  or  other
disposition in any manner whatsoever,  voluntarily or involuntarily,  including,
without limitation,  any attachment,  assignment for the benefit of creditors or
transfer by operation of law or otherwise.

     1.02 Construction.  (a) To the fullest extent permissible,  each Member and
the Company hereby waives such provisions of the California Corporations Code as
are inconsistent with the terms hereof.

     (b) The words  "hereof",  "herein"  and  "hereunder"  and words of  similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any particular provision of this Agreement,  and Section,  subsection and
Schedule references are to this Agreement unless otherwise specified.

     (c) All accounting terms not specifically defined herein shall be construed
in accordance with GAAP.

     (d) The meanings given to terms used herein shall be equally  applicable to
both the singular and plural forms of such terms.

     (e) The Table of Contents  hereto and the Section  headings  herein are for
convenience only and shall not affect the construction hereof.


                                   SECTION 2.
                             ORGANIZATIONAL MATTERS

     2.01 Formation of the Company. The Members have formed a California limited
liability  company  under the laws of the  State of  California  by  filing  the
Articles  with  the  California  Secretary  of  State  and  entering  into  this
Agreement, which Agreement shall be deemed effective as of the date the Articles
were so filed.  The rights and  liabilities  of the Members  shall be determined
pursuant  to the Act and  this  Agreement.  To the  extent  that the  rights  or
obligations  of any  Member are  different  by reason of any  provision  of this
Agreement  than they would be in the absence of such  provision,  this Agreement
shall, to the extent permitted by the Act, control.

     2.02 Name of the Company. The name of the Company shall be "Data Tree LLC."
The business of the Company may be conducted under that name or, upon compliance
with  applicable  laws,  any  other  name  that  the  Majority   Interest  deems
appropriate  or  advisable.   The  Company  shall  file  any   fictitious   name
certificates and similar filings,  and any amendments thereto,  that the Company
or the Majority Interest considers appropriate or advisable.

     2.03  Term.  The term of this  Agreement  commenced  on the  filing  of the
Articles and shall  continue  until the date of  dissolution  of the Company set
forth in the  Articles,  unless  extended or sooner  terminated  as  hereinafter
provided.

     2.04 Principal Office and Registered Agent. The Company shall  continuously
maintain  an  office  and  registered  agent  in the  State of  California.  The
principal office of the Company shall be located at San Diego,  California or as
the Members unanimously may otherwise determine.  The Company may also have such
offices,  anywhere  within and without the State of California,  as the Majority
Interest  may  determine  from time to time,  or the business of the Company may
require. The registered agent shall be as stated in the Articles or as otherwise
determined by the Majority Interest.

     2.05 Addresses of the Members.  The respective addresses of the Members are
as set forth in Section 11.03.

     2.06 Purpose and Business of the Company.  The purpose of the Company is to
engage in any  lawful  activity  for which a limited  liability  company  may be
organized under the Act. Without limiting the foregoing, the primary business of
the  Company  shall be to  engage  in the Data Tree  Business  and the  Digistar
Business (as those terms are defined in the Contribution Agreement).


                                   SECTION 3.
                              CAPITAL CONTRIBUTIONS

     3.01  Initial  Capital  Contributions.  Initially  each  Member  shall make
Capital  Contributions  to the  Company  in the  amount  and form  set  forth in
Schedule 3.01 hereof. No Member shall be required to make any additional Capital
Contributions.

     3.02 Capital Accounts.  The Company shall establish and maintain a separate
Capital  Account  for  each  Member  in  accordance  with  Regulations   Section
1.704-1(b)(2)(iv).  Each Member shall receive a credit to its Capital Account in
the amount of (i) the amount of any Capital  Contribution made in cash, (ii) the
fair market value (net of liabilities  that the Company is considered to assume,
or take subject to, under  Section 752 of the Code) of any Capital  Contribution
made in property  other than cash,  and (iii)  allocations to such Member of Net
Profits.  Each Member's  Capital Account shall be debited with (i) the amount of
any cash and the fair market value of property  distributed  to such Member (net
of  liabilities  that such  Member is  considered  to assume or take  subject to
Section  752 of the Code),  all as may be  determined  in  accordance  with this
Agreement,  and (ii)  allocations of Net Losses.  If a Member transfers all or a
part of its Membership Interest in accordance with this Agreement, such Member's
Capital Account attributable to the transferred  Membership Interest shall carry
over to the new  owner  of such  Membership  Interest  pursuant  to  Regulations
Section 1.704-1(b)(2)(iv)(l).  If any property other than cash is distributed to
a Member,  the  Capital  Accounts  of the  Members  shall be  adjusted as if the
property  had  instead  been sold by the  Company  for a price equal to its fair
market value and the proceeds  distributed.  Upon  liquidation and winding-up of
the Company,  any unsold Company  property shall be valued to determine the gain
or loss which would result if such  property  were sold at its fair market value
at the time of such  liquidation.  The Capital  Accounts of the Members shall be
adjusted  to reflect how any such gain or loss would have been  allocated  under
Section 6 if such property had been sold at the assigned values.

     3.03 Revaluation of Capital  Accounts.  The Capital Accounts of the Members
shall  be  increased  or  decreased  in  accordance  with  Regulations   Section
1.704-1(b)(2)(iv)(f)  to reflect a revaluation of the property of the Company on
the  Company's  books  as of the  following  times:  (i) the  acquisition  of an
additional interest in the Company by any new or existing Member in exchange for
more  than a de  minimis  capital  contribution;  (ii) the  distribution  by the
Company to a Member of more than a de minimis  amount of money or other property
as  consideration  for an interest in the Company;  and (iii) the liquidation of
the Company  within the  meaning of  Regulations  Section  1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (i) and (ii) above shall
be  made  only  if  the  Majority  Interest  reasonably   determines  that  such
adjustments  are  necessary  or  appropriate  to reflect the  relative  economic
interests of the Members in the Company.

     3.04 No Interest. Except as provided herein, no Member shall be entitled to
receive any interest or other earnings on its Capital Contributions.

     3.05 Return of Capital Account.  Except upon the dissolution of the Company
or as may be specifically  provided in this Agreement,  no Member shall have the
right to demand or receive the return of all or any part of its Capital  Account
or its capital contributions to the Company.

     3.06 Percentage  Interests.  The Percentage Interests of the Members on the
date of this  Agreement  shall be 20% with respect to R2 and 80% with respect to
FARES.  Immediately  following any additional Capital  Contributions,  including
those made by a new Member,  the Percentage  Interests  shall be adjusted by the
Company to reflect the new relative  proportions of the Capital  Accounts of the
Members.  The Percentage  Interests of the Members shall also be adjusted by the
Company  in the  event of a  continuation  of the  Company  notwithstanding  the
termination of a Membership Interest pursuant to Section 4.05 of this Agreement.


                                   SECTION 4.
                                  THE MEMBERS

     4.01 Limited Liability.  Except as expressly set forth in this Agreement or
required by law, no Member shall be personally liable for any debt,  obligation,
or liability of the Company,  whether  that  liability or  obligation  arises in
contract, tort, or otherwise.

     4.02 Admission of Additional Members. The Company, with the approval of all
the Members, may admit to the Company additional Members. Any additional Members
shall obtain  Membership  Interests and will participate in the management,  Net
Profits,  Net  Losses,  and  distributions  of the  Company on such terms as are
determined unanimously by the Members.

     4.03 Withdrawals.  Any Member who is under obligation to render services to
the Company may  withdraw or resign as a Member at any time upon sixty (60) days
prior written notice to the Company,  without prejudice to the rights if any, of
the Company or other Members under any contract to which the withdrawing  Member
is a party.  Except as  provided  in the  preceding  sentence,  no other  Member
(including R2 and FARES) may withdraw or resign as a Member of the Company.

     4.04 Transactions With The Company. Subject to any limitations set forth in
this Agreement,  a Member may lend money to and transact other business with the
Company.  Subject to other  applicable  law, such Member has the same rights and
obligations with respect thereto as a Person who is not a Member.

     4.05  Termination  of  Membership  Interest.  Upon  (i) the  transfer  of a
Member's Membership Interest in violation of Section 7 or (ii) the occurrence of
a Dissolution  Event as to such Member which does not result in the  dissolution
of the Company  under  Section 8, the  Membership  Interest of a Member shall be
terminated by the Company and  thereafter  that Member shall be entitled only to
an economic interest with respect to such Member's withdrawn Membership Interest
and not a return of such Member's Capital Account.  Each Member acknowledges and
agrees that such  termination upon the occurrence of any of the foregoing events
is not unreasonable under the circumstances existing as of the date hereof.

     4.06 Unanimous Consent of Members.  Notwithstanding  any other provision of
this  Agreement,  the following  matters shall require the unanimous vote of the
Members in favor thereof:

     (a) any amendment of the Articles or this Agreement;

     (b) a decision to compromise  the  obligation of a Member to make a Capital
Contribution or return money or property paid or distributed in violation of the
Act;

     (c)  selecting or changing  accounting  methods and making other  decisions
with  respect  to  treatment  of items for  accounting  or  financial  reporting
purposes;

     (d) the sale, lease or other  conveyance or transfer,  or mortgaging or the
placing or suffering of any easement,  right of way, security interest,  deed of
trust,  mortgage,  option or other  encumbrance  of any kind on any  substantial
portion of the property or other  assets of the Company,  except in the ordinary
course of business;

     (e) the  incurring  of any debt for working  capital  purposes in excess of
$2,000,000 or any other debt in excess of $250,000;

     (f) the  determination  to make  prepayment  on any debt of the  Company in
excess of $250,000 other than in accordance with the instruments evidencing such
debt;

     (g) determining whether to terminate or dissolve the Company;

     (h) the acquisition of any real property or any leasehold or other interest
therein,  other than in the ordinary course of business, so long as the purchase
price is not less than $250,000;

     (i) lending of any sum of money by the Company,  the extension of credit or
becoming a surety, guarantor, endorser or accommodation maker;

     (j) commencement,  settlement, assignment, transfer, compromise, release or
other  action with  respect to any claim of the Company or any legal,  judicial,
arbitral  or  administrative  proceedings,  so long as the  amount  involved  in
connection therewith is not less than $50,000;

     (k) any other action which under the terms of this  Agreement  requires the
consent or approval of the Members,  not including,  for the avoidance of doubt,
actions requiring the consent or approval of a Majority Interest;

     (l) making a general  assignment  for the  benefit of  creditors,  filing a
voluntary petition under the federal bankruptcy law, filing a petition or answer
seeking   for  the   Company   a   reorganization,   arrangement,   composition,
readjustment,  liquidation, dissolution or similar relief under any statute, law
or regulation, or seeking,  consenting to or acquiescing in the appointment of a
trustee or liquidator of the Company;

     (m) any decision the result of which would  constitute a default  under the
terms of any agreement or instrument evidencing any of the debts of the Company;

     (n) engaging in any business other than the primary  business  specified in
Section 2.06 hereof or any business incidental thereto; or

     (o) making any Capital Contribution to the Company,  other than the initial
Capital Contributions specified on Schedule 3.01.

     4.07 Approval by the Majority Interest.  Unless otherwise set forth in this
Agreement,  in all other  matters  in which a vote,  approval  or consent of the
Members is required,  a vote, consent, or approval of the Majority Interest (or,
in instances in which there are defaulting or remaining Members,  non-defaulting
or remaining  Members who hold a majority of  Percentage  Interests  held by all
non-defaulting or remaining Members) shall be sufficient to authorize or approve
such acts.

     4.08 Meetings of the Members.

     (a) Date,  Time and Place of Meetings of  Members;  Secretary.  Meetings of
Members may be held at such date,  time and place within or without the State of
California  as the  Majority  Interest  may fix from time to time.  No annual or
regular  meetings of Members are required.  However,  if such meetings are held,
such meetings shall be noticed,  held and conducted  pursuant to the Act, except
as  otherwise  provided in this  Section  4.08.  At any  Members'  meeting,  the
Majority  Interest shall appoint a person to preside at the meeting and a person
to act as secretary of the meeting.  The  secretary of the meeting shall prepare
minutes of the meeting which shall be placed in the minute books of the Company.

     (b) Quorum.  The  presence in person or by proxy of the  Majority  Interest
shall  constitute a quorum at a meeting of Members.  If there is no such quorum,
the Majority Interest present in person or by proxy may adjourn the meeting from
time to time until a quorum shall have been obtained.

     (c) Action by Written  Consent  without a Meeting.  Any action  that may be
taken at a meeting of Members  may be taken  without a meeting,  if a consent in
writing  setting  forth the  action so taken,  is signed  and  delivered  to the
Company  within  sixty (60) days of the record  date for that  action by Members
having not less than the  minimum  number of votes that  would be  necessary  to
authorize or take that action at a meeting at which all Members entitled to vote
on that action at a meeting were present and voted.  All such consents  shall be
filed with the secretary of the Company,  and shall be maintained in the Company
records. Any Member giving a written consent, or the Member's proxy holders, may
revoke the consent by a writing  received by the secretary of the Company before
written  consents of the number of votes  required  to  authorize  the  proposed
action have been filed.

     (d) Telephonic Participation by Member at Meetings. Members may participate
in any Members' meeting through the use of any means of conference telephones or
similar  communications  equipment as long as all Members participating can hear
one another.  A Member so participating is deemed to be present in person at the
meeting.

     (e) Proxies.  Every  Member  entitled to vote shall have the right to do so
either in person or by one or more agents  authorized  by a written proxy signed
by the person and filed with the  secretary  of the  Company.  A proxy  shall be
deemed  signed if the  Member's  name is placed on the proxy  (whether by manual
signature,  typewriting,  telegraphic  transmission,  electronic transmission or
otherwise)  by the  Member  or the  Member's  attorney  in fact.  A proxy may be
transmitted  by  an  oral  telephonic  transmission  if  it  is  submitted  with
information from which it may be determined that the proxy was authorized by the
Member or the Member's attorney-in-fact. A validly executed proxy which does not
state that it is irrevocable  shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing  delivered  to the Company  stating  that the proxy is revoked,  or by a
subsequent  proxy executed by, or attendance at the meeting and voting in person
by,  the  person  executing  the  proxy or (ii)  written  notice of the death or
incapacity of the maker of that proxy is received by the Company before the vote
pursuant to that proxy is  counted;  provided,  however,  that no proxy shall be
valid  after the  expiration  of eleven  (11) months from the date of the proxy,
unless otherwise  provided in the proxy. The revocability of a proxy that states
on its face  that it is  irrevocable  shall be  governed  by the  provisions  of
Corporations Code Sections 705(e) and 705(f).


                                   SECTION 5.
                      MANAGEMENT AND CONTROL OF THE COMPANY

     5.01 Management and Powers. In entering into this Agreement,  the intent of
each Member is to actively  engage in the  management of the Company;  except as
provided in Section 4.06, the Majority  Interest  shall have full,  complete and
exclusive  authority,  power and  discretion to manage and control the business,
property  and affairs of the  Company,  to make all  decisions  regarding  those
matters  and to  perform  any and all  other  acts or  activities  customary  or
incident to the  management  of the  Company's  business,  property and affairs,
except, to the extent desired by the Majority Interest, insomuch as the Majority
Interest  delegates  to the officers  described in Section 5.02 such  authority,
power and discretion,  which delegation may at any time be revoked or limited by
the Majority Interest.

     5.02 Officers.

     (a) Appointment of Officers.  The Majority Interest may appoint officers at
any time.  The  officers of the  Company,  if deemed  necessary  by the Majority
Interest, may include a chairperson,  president,  vice-president,  secretary and
chief  financial  officer.  The  officers  shall  serve at the  pleasure  of the
Majority  Interest,  subject to all  rights,  if any,  of an  officer  under any
contract  of  employment.  Any  individual  may hold any number of  offices.  No
officer need be a resident of the State of  California  or citizen of the United
States.  The  officers  shall  exercise  such powers and perform  such duties as
specified in this Agreement and as shall be determined  from time to time by the
Majority Interest.

     (b) Removal, Resignation and Filling of Vacancy of Officers. Subject to the
rights, if any, of an officer under a contract of employment, any officer may be
removed, either with or without cause, by the Majority Interest at any time.

     Any officer may resign at any time by giving written notice to the Company.
Any  resignation  shall take effect at the date of the receipt of that notice or
at any later time specified in that notice;  and, unless otherwise  specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective.  Any resignation is without  prejudice to the rights,  if any, of the
Company under any contract to which the officer is a party.

     A  vacancy  in  any  office   because  of  death,   resignation,   removal,
disqualification  or any other cause shall be filled in the manner prescribed in
this Agreement for regular appointments to that office.

     (c)  Salaries of  Officers.  The salaries of all officers and agents of the
Company shall be fixed by the Majority Interest.

     (d)  Duties  and  Powers of the  Chairperson.  The  chairperson  shall,  if
present,  preside at meetings of the Members and exercise and perform such other
powers  and  duties  as may be from time to time  assigned  to him or her by the
Majority Interest or prescribed by this Agreement. If there is no president, the
chairperson  shall in addition be the chief executive officer of the Company and
shall have the powers and duties  prescribed  in Section  5.09(e).  The  initial
chairperson shall be Dennis Gilmore.

     (e) Duties  and  Powers of the  President.  Subject  to  Sections  5.01 and
5.02(i) and to such supervisory  powers as may be given by the Majority Interest
to the  chairperson,  if there be such an officer,  the  president  shall be the
chief executive officer of the Company, and shall, subject to the control of the
Majority  Interest,  have general and active  management  of the business of the
Company and shall see that all orders of the Majority  Interest are carried into
effect. He or she shall have the general powers and duties of management usually
vested in the office of president or chief  executive  officer of a corporation,
and shall have such other powers and duties as may be prescribed by the Majority
Interest or this Agreement.  He or she alone shall submit all operating  budgets
relating to the Company to the Members for their approval. The initial president
shall be Harish Chopra.

     Subject to Sections 5.01 and 5.02(i) and to such  supervisory  power as may
be given by the  Majority  Interest to the  chairperson,  if there shall be such
officer,  the president  shall  execute  bonds,  mortgages and other  contracts,
except where  required or permitted by law to be otherwise  signed and executed,
and except where the signing and execution thereof shall be expressly  delegated
by the Majority Interest or this Agreement to some other officer or agent of the
Company.

     (f) Duties and Powers of Vice-President.  The  vice-president,  or if there
shall be more than one,  the  vice-presidents  in the  order  determined  by the
Majority Interest, shall, in the absence or disability of the president, perform
the duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the President and/or the Majority  Interest
may from time to time prescribe.

     (g) Duties and Powers of Secretary. The secretary shall attend all meetings
of the Members and shall record all the proceedings of the meetings in a book to
be kept for that  purpose,  and  shall  perform  like  duties  for the  standing
committees when required. The secretary shall give, or cause to be given, notice
of all  meetings of the Members and shall  perform  such other  duties as may be
prescribed by the President  and/or the Majority  Interest.  The secretary shall
have custody of the seal,  if any,  and the  secretary  shall have  authority to
affix the same to any  instrument  requiring it, and when so affixed,  it may be
attested  by his or her  signature.  The  Majority  Interest  may  give  general
authority to any other officer to affix the seal of the Company,  if any, and to
attest the affixing by his or her signature.

     The secretary  shall keep, or cause to be kept, at the principal  executive
office  or at the  office  of the  Company's  transfer  agent or  registrar,  as
determined  by the  Majority  Interest,  a register,  or a  duplicate  register,
showing  the  names  of all  Members,  their  addresses  and a  record  of their
Percentage  Interests.  The secretary shall also keep all documents described in
Section 9 of this  Agreement and such other  documents as may be required  under
the Act.  The  secretary  shall  perform  such other  duties and have such other
authority as may be  prescribed  elsewhere in this  Agreement,  or, from time to
time, by the Majority  Interest.  The secretary  shall have the general  duties,
powers and responsibilities of a secretary of a corporation.

     If the  Majority  Interest  chooses to appoint an  assistant  secretary  or
assistant  secretaries,  the  assistant  secretaries,  in  the  order  of  their
seniority,  in the absence,  disability  or  inability to act of the  secretary,
shall  perform the duties and  exercise the powers of the  secretary,  and shall
perform  such  other  duties  as the  Majority  Interest  may from  time to time
prescribe.

     (h) Duties  and  Powers of Chief  Financial  Officer.  The chief  financial
officer shall keep and maintain,  or cause to be kept and  maintained,  adequate
and  correct  books and  records of  accounts  of the  properties  and  business
transactions  of the  Company,  including  accounts of its assets,  liabilities,
receipts,  disbursements,  gains, losses, capital and Membership Interests.  The
books of account  shall at all  reasonable  times be open to  inspection  by any
Member.

     The  chief  financial  officer  shall  have the  custody  of the  funds and
securities of the Company, and shall keep full and accurate accounts of receipts
and  disbursements  in books  belonging  to the Company,  and shall  deposit all
moneys and other  valuable  effects in the name and to the credit of the Company
in such depositories as may be designated by the Majority Interest.

     The chief financial  officer shall disburse the funds of the Company as may
be  ordered  by  the  Majority   Interest,   taking  proper  vouchers  for  such
disbursements,  and shall,  if so  requested,  render to the  president  and the
Majority  Interest an account of all his or her  transactions as chief financial
officer and of the financial condition of the Company.

     The chief financial  officer shall perform such other duties and shall have
such other  responsibility and authority as may be prescribed  elsewhere in this
Agreement or from time to time by the  President  and/or the Majority  Interest.
The  chief  financial  officer  shall  have  the  general  duties,   powers  and
responsibility of a chief financial  officer of a corporation,  and shall be the
chief financial and accounting officer of the Company.

     If the Majority Interest chooses to elect an assistant financial officer or
assistant financial  officers,  the assistant financial officers in the order of
their  seniority  shall,  in the absence,  disability or inability to act of the
chief financial officer, perform the duties and exercise the powers of the chief
financial  officer,  and shall perform such other duties as the President and/or
the Majority Interest shall from time to time prescribe.

     (i)  Signing  Authority  of  Officers.  Subject  to  restrictions  in  this
Agreement,  including,  for the  avoidance of doubt,  the  restrictions  in this
Section 5.02(i),  and any  restrictions  imposed by the Majority  Interest,  any
officer,  acting alone is authorized (i) to endorse  checks,  drafts,  and other
evidences of indebtedness made payable to the order of the Company, but only for
the purpose of deposit  into the  Company's  accounts,  and (ii),  except as set
forth below,  to sign contracts and  obligations on behalf of the Company and to
sign all checks, drafts and other evidences of indebtedness.  All checks, drafts
and  other  instruments  obligating  the  Company  to pay  money in an amount of
$50,000 or more must be signed on behalf of the  Company by any one  officer and
the chairperson (or any other individual  designated by the Majority  Interest),
acting together or the chairperson acting alone.


                                   SECTION 6.
            ALLOCATIONS OF NET PROFITS AND NET LOSSES; DISTRIBUTIONS

     6.01  Allocations of Net Profit and Net Loss.  Subject to the prior special
allocations  set forth in Section 6.02 hereof,  Net Losses and Net Profits shall
be allocated as follows:

     (a) Net Loss.  Net Loss shall be allocated to the Members in  proportion to
their  Percentage  Interests.  Notwithstanding  the  previous  sentence,  losses
allocated to a Member shall not exceed the maximum  amount of losses that can be
allocated  without causing a Member to have an Adjusted  Capital Account Deficit
at the end of any  Fiscal  Year.  In the event  that any  Member  would  have an
Adjusted  Capital Account Deficit as a consequence of an allocation of losses in
proportion to Percentage Interests, the amount of losses that would be allocated
to such Member but for such  allocation  shall be allocated to the other Members
to the extent that such  allocations  would not cause such other Members to have
an Adjusted  Capital  Account  Deficit and allocated among such other Members in
proportion  to  their  Percentage  Interests.  Any  allocation  of items of loss
pursuant  to this  Section  6.01(a)  shall be taken into  account  in  computing
subsequent  allocations  pursuant to this Section 6, and prior to any allocation
of items in such  Section so that the net amount of any items  allocated to each
Member pursuant to this Section 6 shall, to the maximum extent  practicable,  be
equal to the net amount that would have been  allocated to each Member  pursuant
to this Section 6 if no  reallocation  of losses had occurred under this Section
6.01(a).

     (b) Net Profit.  Net Profit shall be allocated to the Members in proportion
to their Percentage Interests.

     6.02 Special  Allocations.  Notwithstanding  Section  6.01,  the  following
special allocations shall be made in the following order:

     (a) Minimum Gain Chargeback.  If there is a net decrease in Company Minimum
Gain during any Fiscal Year,  each Member shall be specially  allocated items of
Company  income and gain for such Fiscal Year (and, if necessary,  in subsequent
Fiscal  Years) in an amount equal to the portion of such  Member's  share of the
net decrease in Company  Minimum Gain that is  allocable to the  disposition  of
Company  property  subject to a Nonrecourse  Liability,  which share of such net
decrease   shall  be   determined  in  accordance   with   Regulations   Section
1.704-2(g)(2).  Allocations  pursuant to the previous  sentence shall be made in
proportion  to the  respective  amounts  required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).  This Section 6.02(a)
is intended to comply with the minimum gain chargeback  requirement contained in
Regulations Section 1.704-2(f) and shall be interpreted  consistently therewith.
To the extent  permitted  by such  Regulations  and for purposes of this Section
6.02(a)  only,  each  Member's  net  decrease in Company  Minimum  Gain shall be
determined  prior to any  other  allocations  pursuant  to this  Section  6 with
respect to such Fiscal Year and  without  regard to any net  decrease in Company
Minimum Gain during such Fiscal Year.

     (b) Chargeback of Minimum Gain Attributable to Member  Nonrecourse Debt. If
there  is  a  net  decrease  in  Member  Minimum  Gain  attributable  to  Member
Nonrecourse  Debt,  during any Fiscal  Year,  each member who has a share of the
Member Minimum Gain  attributable to such Member  Nonrecourse  Debt (which share
shall be determined in accordance with Regulations Section  1.704-2(i)(5)) shall
be  specially  allocated  items of Company  income and gain for such Fiscal Year
(and,  if  necessary,  in  subsequent  Fiscal  Years) in an amount equal to that
portion  of such  Member's  share of the net  decrease  in Member  Minimum  Gain
attributable  to  such  Member   Nonrecourse  Debt  that  is  allocable  to  the
disposition of Company property  subject to such Member  Nonrecourse Debt (which
share of such net decrease  shall be determined in accordance  with  Regulations
Section 1.704- 2(i)(5)).  Allocations pursuant to the previous sentence shall be
made in proportion to the  respective  amounts  required to be allocated to each
Member  pursuant  thereto.  The items to be so allocated  shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and  1.704-2(j)(2)(ii).  This
Section  6.02(b)  is  intended  to  comply  with  the  minimum  gain  chargeback
requirement   contained  in  Regulations  Section  1.704-2(i)(4)  and  shall  be
interpreted consistently therewith.  Solely for purposes of this Section 6.02(b)
each Member's net decrease in Member  Minimum Gain shall be determined  prior to
any other  allocations  pursuant to this  Section 6 with  respect to such Fiscal
Year, other than allocations pursuant to Section 6.02(a).

     (c)  Qualified  Income  Offset.  If  a  Member  unexpectedly  receives  any
adjustments,  allocations,  or  distributions  described in Regulations  Section
1.704-1(b)(2)(ii)(d)(4),  (5) or (6),  items of Company income and gain shall be
specifically  allocated  to such  Member in an amount and manner  sufficient  to
eliminate such excess deficit  balance as quickly as possible,  provided that an
allocation  pursuant to this  Section  6.02(c)  shall be made if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other  allocations  provided for in this Section 6 have been tentatively made as
if this Section 6.02(c) were not in this Agreement.  The foregoing  provision is
intended to comply with Regulations  Section  1.704-1(b)(2)(ii)(d)  and shall be
interpreted and applied in a manner consistent with such Regulations.

     (d) Gross Income  Allocation.  In the event that any Member has an Adjusted
Capital  Account  Deficit at the end of any Fiscal  Year,  then each such Member
shall be  specially  allocated  items of income in the amount of such  excess as
quickly as  possible,  provided  that an  allocation  pursuant  to this  Section
6.02(d)  shall be made if and only to the extent that such Member  would have an
Adjusted  Capital  Account  Deficit  in  excess  of such  sum  after  all  other
allocations provided for in this Section 6 have been tentatively made as if this
Section 6.02(d) were not in this Agreement.

     (e)  Nonrecourse  Deductions.  Any  nonrecourse  deductions  (as defined in
Regulations Section  1.704-2(b)(1)) for any Fiscal Year or other period shall be
specially  allocated  to the  Members in  proportion  to their  then  respective
Percentage Interests.

     (f) Member Nonrecourse Deductions.  Those items of Company loss, deduction,
or Code  Section  705(a)(2)(B)  expenditures  which are  attributable  to Member
Nonrecourse  Debt  for any  Fiscal  Year or  other  period  shall  be  specially
allocated to the Member who bears the economic  risk of loss with respect to the
Member  Nonrecourse Debt to which such items are attributable in accordance with
Regulations Section 1.704-2(i).

     (g) Section 754  Adjustments.  To the extent an  adjustment to the adjusted
tax  basis  of any  Company  asset  is  required  to be taken  into  account  in
determining     Capital    Accounts    pursuant    to    Regulations     Section
1.704-1(b)(2)(iv)(m), the amount of such adjustment to the Capital Account shall
be  treated  as an item of gain (if the  adjustment  increases  the basis of the
asset) or loss (if the adjustment  decreases such basis),  and such gain or loss
shall be  specially  allocated  to the Members in a manner  consistent  with the
manner in which their Capital  Accounts are required to be adjusted  pursuant to
such Regulations Section.

     (h) Subsequent  Allocations.  Any special  allocation of items of income or
gain  pursuant to Section  6.02(a),  6.02(b),  6.02(c) or 6.02(d) shall be taken
into account in computing subsequent  allocations pursuant to this Section 6, so
that the net amount of any items  allocated to each Member shall,  to the extent
practicable,  be equal to the net amount that would have been  allocated to each
such  Member  pursuant  to the  provisions  of this  Section  6 if such  special
allocations under this Section 6.02 had not occurred.

     6.03 Code Section 704(c)  Allocations.  Notwithstanding any other provision
in this Section 6, in accordance  with Code Section  704(c) and the  Regulations
promulgated  thereunder,  income,  gain, loss, and deduction with respect to any
property  contributed  to the  capital  of the  Company  shall,  solely  for tax
purposes,  be allocated among the Members so as to take account of any variation
between the adjusted  basis of such  property to the Company for federal  income
tax purposes and its fair market value on the date of contribution.  Allocations
pursuant to this  Section  6.03 are solely for  purposes  of federal,  state and
local taxes.  As such, they shall not affect or in any way be taken into account
in computing a Member's  Capital Account or share of profits,  losses,  or other
items of distributions pursuant to any provision of this Agreement.

     6.04 Allocations of Net Profits and Losses and  Distributions in Respect of
a Transferred  Interest.  If any  Membership  Interest is increased or decreased
during any Fiscal  Year of the  Company,  Net Profit or Net Loss for such Fiscal
Year shall be  assigned  pro rata to each day in the  particular  period of such
Fiscal Year to which such item is attributable (i.e., the day on or during which
it is  accrued  or  otherwise  incurred)  and the  amount  of each  such item so
assigned  to any such day  shall  be  allocated  to the  Member  based  upon its
respective Membership Interest at the close of such day.

     6.05 Distributions of Distributable Cash by the Company.

     (a) Ordinary  Distributions.  Subject to the provisions of Sections 6.05(b)
and (c),  upon the  approval  of the  Majority  Interest,  the  Company may make
ordinary distributions (in amounts to be determined by the Majority Interest) to
the Members pro rata in accordance with their respective Percentage Interests.

     (b) Distribution of Tax Allowance Amounts.  Notwithstanding Section 6.05(a)
above, as soon as reasonably practicable after the end of each calendar quarter,
the Tax Matters Member shall determine the Tax Allowance Amount for every Member
in  respect  of  such  quarter.  Upon  such  determination,  the  Company  shall
distribute each Member's Tax Allowance  Amount to such Member provided that such
distribution  is not  prohibited by any agreement to which the Company is then a
party or is otherwise bound. All such distributions shall have priority over any
distributions  pursuant  to  Section  6.05(a)  above.  To the  extent  that  the
cumulative  distributions of Tax Allowance  Amounts to a Member pursuant to this
Section  6.05(b) for a Fiscal Year exceed an amount equal to the  cumulative Tax
Allowance  Amount  calculated  with  respect  to such  Member at the end of such
Fiscal Year as if no prior distributions of Tax Allowance Amounts had been made,
the excess shall not be treated as a Tax  Allowance  Amount and shall reduce the
amount otherwise distributable to such Member under Section 6.05(a).

     (c) Withholding.  The Company is authorized to withhold from  distributions
to a Member,  or with respect to allocations  to a Member,  and to pay over to a
Federal, foreign, state or local government, any amounts required to be withheld
pursuant to the Code, or any provisions of any other Federal,  foreign, state or
local law.  Any  amounts  withheld in  accordance  with the  foregoing  shall be
treated as having been distributed pursuant to this Section 6 to such Member for
all purposes of this Agreement,  and shall be offset against the current or next
amounts otherwise distributable to such Member.

     6.06  Form of  Distribution.  A  Member,  regardless  of the  nature of the
Member's  Capital  Contribution,   has  no  right  to  demand  and  receive  any
distribution  from the  Company in any form other than  money.  No Member may be
compelled to accept from the Company a distribution of any asset in kind in lieu
of a proportionate distribution of money being made to other Members.

     6.07 Restriction on  Distributions.  (a) No distribution  shall be made if,
after giving effect to the distribution:

          (i) The Company  would not be able to pay its debts as they become due
     in the usual course of business; or

          (ii) The  Company's  total  assets  would be less  than the sum of its
     total  liabilities  plus,  unless this Agreement  provides  otherwise,  the
     amount that would be needed,  if the Company  were to be  dissolved  at the
     time of the  distribution,  to  satisfy  the  preferential  rights of other
     Members,  if any, upon  dissolution  that are superior to the rights of the
     Member receiving the distribution.

     (b)  The  Company  may  base a  determination  that a  distribution  is not
prohibited on any of the following:

          (i) financial statements prepared in accordance with GAAP;

          (ii) a fair valuation; or

          (iii) any other method that is reasonable in the circumstances.

     6.08 Return of  Distributions.  Members who receive  distributions  made in
violation of the Act or this Agreement  shall return such  distributions  to the
Company.  Except for those  distributions  made in  violation of the Act or this
Agreement,  no Member  shall be  obligated  to return  any  distribution  to the
Company or pay the amount of any  distribution for the account of the Company or
to any creditor of the Company.  The amount of any distribution  returned to the
Company by a Member or paid by a Member for the  account of the  Company or to a
creditor of the Company  shall be added to the account or accounts from which it
was subtracted when it was distributed to the Member.


                                   SECTION 7.
             MEMBERSHIP INTEREST TRANSFER RESTRICTIONS; NEW MEMBERS

     7.01  Transfer  Restrictions.  A Transfer of a  Membership  Interest or any
portion  thereof shall  require the vote or consent of the Majority  Interest in
favor of such Transfer.

     7.02 Void  Transfer.  Any  purported  Transfer of any  Member's  Membership
Interest in violation  of Section  7.01 shall be void and the Company  shall not
give effect to any such  purported  Transfer  or  recognize  any such  purported
transferee.  In the event of any such  purported  Transfer,  the  Company  shall
continue to recognize as a Member only those  persons  whose names appear in the
records of the Company.

     7.03 New  Members.  Additional  Persons may be admitted as Members upon the
approval of the Members.


                                   SECTION 8.
                       CONSEQUENCES OF DISSOLUTION EVENTS;
                       TERMINATION OF MEMBERSHIP INTEREST

     8.01  Dissolution  Event.  Upon the occurrence of a Dissolution  Event, the
Company  shall  dissolve  unless the  remaining  Members  ("Remaining  Members")
holding a majority of the Percentage Interests which all Remaining Members hold,
consent within ninety (90) days of the Dissolution  Event to the continuation of
the  business  of  the  Company.   If  the  Remaining  Members  consent  to  the
continuation  of the business of the  Company,  the  Membership  Interest of the
Member or Members whose  actions or conduct  resulted in the  Dissolution  Event
("Former  Member") shall  terminate and thereafter such Members or Members shall
be  entitled  only to an  economic  interest  with  respect to such  Member's or
Members'  terminated  Membership  Interest  and not a  return  of such  Member's
Capital Account.

     8.02  Winding Up the  Company.  If, upon the  occurrence  of a  Dissolution
Event, the Remaining Members fail to consent to the continuation of the business
of  the  Company,  the  Company  shall  promptly  notify  the  Members  of  such
dissolution  and shall wind up the  affairs of the  Company  and  liquidate  the
Company assets. Such winding up and liquidation shall be accomplished as soon as
practicable giving due regard to the prudent liquidation of the Company's assets
in such a manner as to preserve the value of the Company's  assets to the extent
that the Majority Interest deems practicable. Distributions made with respect to
the liquidation of the Company shall be made to the Members no later than ninety
days following  completion of the liquidation.  The proceeds of such liquidation
shall be paid in the following order:

     (a) first,  in payment of the debts and  liabilities of the Company and the
expenses of liquidation or distribution;

     (b) then, to the establishment of such reserves as may be deemed reasonably
necessary  by  the  Majority  Interest  for  any  contingent,   unliquidated  or
unforeseen  liabilities or obligations of the Company or the Members arising out
of or in connection with the Company; and

     (c) then,  after  making  all  allocations  required  by Section  6.01,  to
Members,  in  proportion  to the  positive  balance in the  Members'  respective
Capital Accounts after satisfaction of each Member's obligation to the Company.

     8.03  Final  Statement.  Each of the  Members  shall  be  furnished  with a
statement which shall set forth the assets and liabilities of the Company (as of
the date of complete  liquidation)  and an accounting of the manner in which the
assets of the Company were distributed.


                                   SECTION 9.
                BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS

     9.01 Company  Books and Records.  Proper and complete  records and books of
account  of the  Company  business  shall  be  kept  by the  Company  under  the
supervision  of the  Majority  Interest and shall,  if the Majority  Interest so
determines,  be audited by certified public accountants selected by the Majority
Interest.  The financial  books of the Company shall be maintained in accordance
with GAAP. The  allocation of the income of the Company for financial  reporting
purposes shall be in accordance  with each  respective  Membership  Interest and
shall be calculated in accordance with GAAP.

     The Company shall maintain at its principal office all of the following:

     (a) A current  list of the full name and last known  business or  residence
address of each Member, together with the Capital Contributions, Capital Account
and Percentage Interest of each Member;

     (b) A copy of the Articles and any and all amendments thereto together with
executed copies of any powers of attorney  pursuant to which the Articles or any
amendments thereto have been executed;

     (c)  Copies  of the  Company's  federal,  state,  and local  income  tax or
information  returns and reports,  if any,  for the six (6) most recent  taxable
years;

     (d) A copy of this  Agreement and any and all amendments  thereto  together
with executed copies of any powers of attorney  pursuant to which this Agreement
or any amendments thereto have been executed;

     (e) Copies of the financial  statements of the Company, if any, for the six
(6) most recent Fiscal Years; and

     (f) The Company's books and records as they relate to the internal  affairs
of the Company for at least the current and past four (4) Fiscal Years.

     9.02 Tax Returns.

     (a) Preparation;  Filing. At the expense of the Company,  federal and state
Company tax returns shall be prepared. Except as otherwise expressly provided in
this Agreement, all positions and elections reflected on all Company tax returns
shall be  taken,  and all  Company  tax  returns  shall  be  filed,  only  after
consultation  with all the Members.  For federal  income tax purposes  only, the
Members agree that their  relationship  under this Agreement shall  constitute a
partnership  within the meaning of Section 761(a) of the Code.  Tax  allocations
shall be made in accordance with Section 6 hereof. The Members agree to take all
action,  including  the  amendment of this  Agreement and the execution of other
documents  as may be  required to qualify  for such tax  treatment.  Each Member
shall bear the sole expense and cost of preparing its separate tax return.  Each
Member shall agree to file its separate  federal  income tax returns in a manner
consistent  with  the  provisions  of  this  Agreement  and in  accordance  with
applicable  federal  income tax law. The Members  shall  provide each other with
copies of all  correspondence  or  summaries  of other  communications  with the
Internal  Revenue  Service  or U.S.  Treasury  regarding  any aspect of items of
Company  income,  gain,  loss  or  deduction  and no  Member  shall  enter  into
settlement  negotiations with the Internal Revenue Service or U.S. Treasury with
respect to the federal income tax treatment of any Company item of income, gain,
loss or deduction without first giving reasonable written advance notice of such
intended action to the other Member(s).

     (b) Tax Matters  Member.  FARES is hereby  designated  as the "tax  matters
partner",  as that term is defined in Section  6231(a)(7)  of the Code (the "Tax
Matters Member").  The Tax Matters Member shall furnish promptly to the Internal
Revenue  Service a written  statement,  in accordance  with  Temporary  Treasury
Regulations ss.  301.6223(c)-IT (or any successor thereto) in order to cause the
Internal Revenue Service to mail to each Member all notices described in Section
6223(a) of the Code or any  corresponding  provision  of any  successor  federal
internal  revenue law (and  comparable  provisions of state and local income tax
laws).

     (c)  Duties  of the Tax  Matters  Member.  The  Tax  Matters  Member  shall
cooperate  with the other Members and shall  promptly  provide the other Members
with copies of notices or other  materials  from, and inform the other Member of
discussions  engaged in with, the Internal Revenue Service and shall provide the
other Members with notice of all scheduled administrative proceedings, including
meetings with Internal Revenue Service agents,  technical advice conferences and
appellate hearings, as soon as possible after receiving notice of the scheduling
of such proceedings.  The Tax Matters Member will schedule such proceedings only
after  consulting  all  the  other  Members  with a view  to  accommodating  the
reasonable convenience of both the Tax Matters Member and all the other Members.
The Tax  Matters  Member  shall  not take any  action of any  nature  whatsoever
including, without limitation,  agreeing to extend the period of limitations for
assessments,  filing a petition or complaint in any court,  filing a request for
an  administrative  adjustment of Company items after any return has been filed,
or entering into any settlement  agreement with the Internal  Revenue Service or
U.S. Treasury with respect to Company items of income,  gain, loss or deduction,
in any such case without first  consulting  each other  Member.  The Tax Matters
Member  may  request  extensions  to file any tax  return or  statement  without
consulting with, but shall so inform, the other Members.  The provisions of this
Agreement  regarding the Company's tax returns shall survive the  termination of
the  Company and the  transfer of any  Member's  Membership  Interest  and shall
remain in effect for the period of time necessary to resolve any and all matters
regarding  the  federal  income  taxation  of the  Company  and items of Company
income, gain, loss and deduction.

     9.03  Inspection,  Audit and Copies of Records.  Each Member shall have the
right to inspect, make a separate audit and make copies of the books and records
of the  Company.  The  Member  exercising  such right  shall  bear all  expenses
incurred in the exercise of these rights.

     9.04  Access.  Each Member shall have access at  reasonable  times and upon
reasonable  notice,  without undue  disruption of the business and operations of
the  Company,  to  such  properties,   employees,  agents,  representatives  and
information of the Company as it deems  reasonably  necessary in connection with
the ownership of its Membership Interest.


                                   SECTION 10.
                          INDEMNIFICATION AND INSURANCE

     10.01 Indemnification of Agents. The Company shall defend and indemnify any
Member,  and Harish K. Chopra in his capacity as an officer,  and may  indemnify
any other  Person who was or is a party or is  threatened  to be made a party to
any threatened, pending or completed action, suit or proceeding by reason of the
fact that he or she or it is or was a Member,  officer,  employee or other agent
of the Company or that, being or having been such a Member, officer, employee or
agent,  he or she or it is or was  serving at the  request  of the  Company as a
manager, director, officer, employee or other agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise (all
such persons being referred to hereinafter as an "agent"), to the fullest extent
permitted  by  applicable  law in effect on the date hereof and to such  greater
extent as applicable law may hereafter from time to time permit.

     10.02 Insurance.  The Company shall have the power to purchase and maintain
insurance on behalf of any Person who is or was an agent of the Company  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 an agent,  whether or
not the  Company  would have the power to  indemnify  such Person  against  such
liability under the provisions of Section 10.01 or under applicable law.


                                   SECTION 11.
                                  MISCELLANEOUS

     11.01 FAFCO Overhead Fee. The Company shall pay to FAFCO one percent (1.0%)
of each  month's (or portion  thereof)  operating  revenues of the Company  (the
"FAFCO Overhead Fee") as compensation for overhead expenses incurred by FAFCO on
behalf of the Company. The FAFCO Overhead Fee due in respect of each month shall
be paid within 30 days  following  the end of the month in respect of which such
fee is due.

     11.02 Specific Performance. Due to the fact that the parties hereto will be
irreparably  damaged  in the  event  that  this  Agreement  is not  specifically
enforced, in the event of a breach or threatened breach of the terms,  covenants
and/or  conditions  of this  Agreement by any of the parties  hereto,  the other
parties shall, in addition to all other remedies,  be entitled to a temporary or
permanent  injunction,  without  showing any actual damage,  and/or a decree for
specific performance, in accordance with the provisions hereof.

     11.03 Amendments and Modifications. The provisions of this Agreement may be
waived,  altered,  amended,  modified, or repealed, in whole or in part, only on
the written consent of all parties to this Agreement.  Any oral  representations
or  modifications  concerning  this  instrument  shall be of no force or  effect
unless contained in a subsequent written  modification  signed by all parties to
this Agreement.

         11.04  Notices.  All  notices,  requests,  demands,  waivers  and other
communications  required or permitted to be given under this Agreement  shall be
in writing and shall be addressed as follows:

                If to the Company:

                Data Tree LLC
                550 W. C Street, Suite 2040
                San Diego, California  92101
                Attn:    President
                Telephone:  619-231-3300
                Facsimile:  619-231-3301

                If to FARES:

                First American Real Estate Solutions LLC
                150 Second Avenue, Suite 1600
                St. Petersburg, Florida 33701
                Attn:  John Long
                Telephone: 800-449-8732
                Facsimile:  813-895-3619

                If to R2:

                R. Squared Limited
                c/o Royal Bank of Canada Trust Co. (Cayman) Limited
                P.O. Box 1586, George Town, Grand Cayman
                Cayman Islands, British West Indies
                Attention:  Piers Strandling
                Telephone:  345-949-0253
                Telecopier: 345-949-5777

or to such  other  Person or  address  as any party  shall  specify by notice in
writing to each of the other parties hereto.  Except for a notice of a change of
address,  which shall be effective only upon receipt thereof,  all such notices,
requests,  demands,  waivers  and  communications  properly  addressed  shall be
effective:  (i) if sent by U.S.  mail,  three Business Days after deposit in the
U.S. mail,  postage prepaid;  (ii) if sent by FedEx or other overnight  delivery
service,  two Business  Days after  delivery to such  service;  (iii) if sent by
personal courier, upon receipt; and (iv) if sent by facsimile, upon receipt.

     11.05 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.

     11.06  Governing Law. This  Agreement,  including its existence,  validity,
construction and operating effect, and the rights of each of the parties hereto,
shall be governed by and construed in  accordance  with the internal laws of the
State of California.

     11.07  Successors.  Subject to the restrictions  against Transfer as herein
contained,  the provisions of this  Agreement  shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each of
the parties hereto. Nothing in this Agreement, expressed or implied, is intended
to  confer on any  Person  other  than the  parties  hereto or their  respective
successors  and  permitted  assigns,  any  rights,   remedies,   obligations  or
liabilities under or by reason of this Agreement.

     11.08 Severability. If any term, provision,  covenant, or condition of this
Agreement is held by a court of competent  jurisdiction to be invalid,  void, or
unenforceable,  the rest of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired, or invalidated.

     11.09 Entire Agreement.  This Agreement,  including all Schedules  attached
hereto,  constitutes  the entire  agreement  of the  parties  pertaining  to the
subject matter  hereof,  and fully  supersedes  any and all prior  agreements or
understandings between the parties pertaining to the subject matter hereof.

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



                                    FIRST AMERICAN REAL ESTATE SOLUTIONS LLC


                                    By_________________________
                                      Name:
                                      Title:


                                    R. SQUARED LIMITED


                                    By_________________________
                                      Name:
                                      Title:

<PAGE>


                                  SCHEDULE 3.01

                          INITIAL CAPITAL CONTRIBUTIONS

R. SQUARED LIMITED:

     R. Squared Limited shall contribute:

          1.   a Noncompetition Agreement valued at $1,150,000; and

          2.   a Promissory Note,  bearing interest at 8.0% and in the principal
               amount of $11,000,000, valued at $11,000,000.

FIRST AMERICAN REAL ESTATE SOLUTIONS LLC

     First American Real Estate Solutions LLC shall contribute:

          1.   the assets and liabilities of those business  operations commonly
               known as the "Data Tree"  business and the  "Digistar"  business.
               These businesses are valued at $48,600,000.


<PAGE>


                                                                       EXHIBIT E


                              EMPLOYMENT AGREEMENT


         EMPLOYMENT  AGREEMENT ("this  Agreement"),  dated as of _____ __, 1998,
between DATA TREE LLC a California limited liability company (the "Company") and
HARISH K. CHOPRA,  an individual  residing in Rancho Santa Fe,  California  (the
"Executive").

                              W I T N E S S E T H:

         WHEREAS,  the Executive is willing to serve as President of the Company
and the Company  desires to retain the  Executive in such  capacity on the terms
and conditions herein set forth;

         NOW  THEREFORE,   in  consideration  of  the  mutual  covenants  herein
contained, the Company and the Executive hereby agree as follows:


         1.       EMPLOYMENT

         The Company agrees to employ the Executive, and the Executive agrees to
be employed by and serve the Company, upon the terms and conditions  hereinafter
provided  for a period  of five  years  commencing  as of the date  first  above
referenced (the "Start Date") and continuing until the fifth  anniversary of the
Start Date (such period,  the "Term"),  unless  earlier  terminated  pursuant to
Section 5. The Executive  hereby  represents  and warrants that he has the legal
capacity to execute and perform this  Agreement,  that it is a valid and binding
agreement  against  him  according  to its  terms,  and that its  execution  and
performance  by him does not  violate  the terms of any  existing  agreement  or
understanding  to which the  Executive  is a party or any  judgment or decree to
which the  Executive  is subject.  In addition,  the  Executive  represents  and
warrants that he knows of no reason why he is not physically or legally  capable
of performing his obligations under this Agreement in accordance with its terms.

         2.       POSITION AND DUTIES

         During the Term,  the  Executive  agrees to serve as  President  of the
Company  and will have such  powers  and  duties as are  commensurate  with such
position  and as  reasonably  may be  conferred  upon or delegated to him by the
Majority Interest (as that term is defined in that certain  Operating  Agreement
dated as of even date herewith  among First  American Real Estate  Solutions LLC
("FARES") and R. Squared  Limited,  the  "Operating  Agreement") of the Company,
including without  limitation,  day-to-day  responsibility for the management of
the  Company.  The  Executive  shall at all  times be  subject  to the  policies
established by the Majority Interest. In addition, the Executive agrees to serve
from time to time in such other  positions with the Company as reasonably may be
requested by the Majority  Interest,  and  thereafter  approved by the governing
body of the  applicable  entity.  During the Term,  the  Executive  shall devote
substantially  all of his  business  time,  effort  and  skill as is  reasonably
necessary to  accomplish  the duties for which the Executive is  responsible  in
accordance  with  the  terms  hereof  and  shall  not  take  part in  activities
detrimental to the best interests of the Company. The Executive will be based in
San Diego, California.

         3.       COMPENSATION

         For all services  rendered by the  Executive  in any capacity  required
hereunder  during  the  Term,  including,  without  limitation,  services  as an
executive,  officer,  director  or member of any  committee  of the  Company  or
division thereof, the Executive shall be compensated as follows:

         (a) Base Salary.  The Company  shall pay the  Executive a salary of two
hundred-fifty  thousand U.S.  dollars  ($250,000) per annum (the "Base Salary").
The Base  Salary  shall be  payable in  accordance  with the  customary  payroll
practices of the Company, but in no event less frequently than monthly.

         (b) Bonus. The Executive shall be entitled to receive an annual formula
bonus during the Term (the "Bonus") equal to two percent (2.0%) of the Company's
pre-tax earnings for each fiscal year, or portion thereof, which are or shall be
described in that line item entitled  "Income before provision for income taxes"
on the Company's Statements of Income for each fiscal year (the "Earnings").

         The annual Bonus shall be paid in quarterly installments,  based on two
percent (2.0%) of Earnings for each quarter during the fiscal year, or a portion
thereof.  Each  quarterly  installment of the Bonus shall be paid within 45 days
following the end of each quarter.  The annual Bonus shall be determined  within
60 days after the end of each fiscal year during the Term.  If the annual  Bonus
for a fiscal year  determined  in accordance  with the  preceding  paragraph (as
prorated for the number of quarters for which quarterly Bonus payments were made
to the  Executive in respect of such fiscal year) is greater than the sum of the
quarterly-paid Bonuses paid to the Executive in respect of such fiscal year, the
excess  shall  be  paid  to the  Executive  at the  time  the  annual  Bonus  is
determined.  If the annual  Bonus so  determined  (as prorated for the number of
quarters  for which  quarterly  Bonus  payments  were made to the  Executive  in
respect of such fiscal year) is less than the sum of the quarterly-paid  Bonuses
paid to the Executive in respect of such fiscal year,  the  deficiency  shall be
reimbursed  by the  Executive  within five days after the  determination  of the
annual Bonus.

         The  Company's  fiscal year shall end on  December 31 of each  calendar
year. For purposes of this Agreement only, the Company's first fiscal year shall
commence on March 31, 1998 and shall end on December 31, 1998. Should the annual
Bonus to which the  Executive is entitled at the end of the first fiscal year of
the Company  during the Term based upon the above formula be less than $250,000,
the Company shall pay to the Executive a Bonus of $250,000; accordingly, for the
first fiscal year,  quarterly Bonus payments shall in all events be no less than
$62,500.

         The  Earnings  shall  be  calculated  by the  Company's  accountant  in
accordance with United States generally accepted  accounting  principles applied
on a consistent basis. For the purpose of determining the Bonus,  Earnings shall
be  calculated  without  taking into  account (i) any  amortization  of goodwill
arising out of or in connection with the Merger (as that term is defined in that
certain  Agreement  and Plan of Merger,  dated  March 27,  1998 by and among The
First American Financial  Corporation  ("FAFCO"),  Image Acquisition Corp., Data
Tree Corporation and the Executive (the "Merger Agreement") and (ii) the payment
or accrual of Excluded Interest (as defined below).

         "Excluded Interest" means an amount equal to the product of:

                  (A)      the total interest  costs/accruals on Working Capital
                           Debt (for the period for which Earnings are measured)
                           for the Excess  Working  Capital  Period (as  defined
                           below) or portion thereof  included in the period for
                           which Earnings are measured, and

                  (B)      a fraction,  the  numerator  of which is the Objected
                           Debt and the  denominator  of  which  is the  Working
                           Capital Debt;

provided, however that (i) the numerator described in paragraph (B) above cannot
be a number less than zero and (ii) any pay-downs of Working  Capital Debt shall
decrease the Objected Debt (which,  for the avoidance of doubt, is the numerator
in the fraction  described in paragraph (B) immediately  above) (attached hereto
as Exhibit A are examples  illustrating  the  calculation of Excluded  Interest;
Exhibit A is included for purposes of illustration only and shall not affect the
construction hereof).

         For  the  purpose  of  determining  Excluded  Interest,  the  following
definitions apply:

         "Excess  Working Capital Debt" means Working Capital Debt incurred from
time to time by the  Company  during the Term,  to the extent the amount of such
Working Capital Debt exceeds $2,000,000.

         "Excess  Working  Capital  Period"  means each  period  during the Term
during which there is any Excess Working Capital Debt;

         "Objected  Debt" means an amount  equal to the Excess  Working  Capital
Debt to which an Objection has been made;

         "Objection" means the written  objection of the Executive  delivered to
the Company (in  accordance  with Section 9 hereof) within five business days of
the Company's  delivery to the Executive of notice of its intent to incur Excess
Working Capital Debt;  provided,  however,  that (1) the Executive's  failure to
deliver an objection  notice shall be deemed to be the  Executive's  approval of
the  Company's  incurring  of  such  Excess  Working  Capital  Debt  and (2) the
Executive's  approval  of/failure  to object to or objection to, as the case may
be, the total  commitment  under a revolving  credit  facility shall  constitute
approval  of or  objection  to, as the case may be,  all  draw-downs  under such
facility up to the maximum amount  permitted by that facility,  irrespective  of
the repayment of any principal  under such facility and  irrespective of whether
or not such draw-downs exceed $2,000,000.

         "Working  Capital Debt" means  indebtedness  for borrowed money that is
incurred by the Company during the Term for working capital purposes.


         For the  avoidance  of doubt,  the  Earnings  shall be net of  interest
expense,  the FAFCO  Overhead  Fee (as that  term is  defined  in the  Operating
Agreement) and all other expenses used to calculate  earnings in accordance with
generally accepted accounting principles.

         (c) Medical and Dental Health Benefits.  During the Term, the Executive
shall be entitled to medical and dental health  benefits in accordance  with the
practices established by FAFCO with respect to its and their key employees.

         (d)  Vacation;  Sick  Leave.  During the Term,  the  Employee  shall be
entitled to vacation and sick leave in accordance with the practices established
by FAFCO with respect to its key employees.

         (e) Pension Plan.  During the Term, the Executive shall  participate in
FAFCO's pension plans in accordance with the practices established by FAFCO with
respect to its key employees.

         (f) Deferred  Compensation  Plan. The Executive may  participate in the
FAFCO deferred compensation plan in accordance with the practices established by
FAFCO with respect to its key employees.

         (g) Supplemental  Benefit Plans. The Executive shall not be entitled to
participate in any  supplemental  benefit plan offered to executive  officers of
FAFCO and its  subsidiaries.  For the avoidance of doubt,  supplemental  benefit
plans in effect on the date hereof include the Executive  Supplemental  Plan and
the Management Supplemental Plan.


         4.       BUSINESS EXPENSES

         The Company shall pay or reimburse  the  Executive  for all  reasonable
travel and  out-of-pocket  expenses incurred by the Executive in connection with
the performance of his duties and obligations  under this Agreement,  subject to
the  Executive's  presentation  of appropriate  vouchers in accordance with such
procedures as the Company may from time to time  establish  for senior  officers
and to preserve any deductions for federal income taxation purposes to which the
Company may be entitled.  During the DTI Option  Period (as that term is defined
in the  Contribution  Agreement,  which  in turn  is  defined  in the  Operating
Agreement),  the Company  shall not  reimburse the Executive for any expenses of
any nature  related to Data Tree  (India)  Corporation;  thereafter,  and in the
event the DTI Purchase Option is exercised, such expenses shall be reimbursable.

         5.       TERMINATION OF EMPLOYMENT

         (a) Termination.  The Executive's  employment hereunder shall terminate
prior to the last day of the Term (i) upon the death of the Executive, (ii) upon
the Permanent  Disability of the  Executive,  (iii) at the option of the Company
for Cause (as  defined  below)  upon  written  notice  from the  Company  to the
Executive,  (iv) at the option of the Company  Without Cause (as defined  below)
upon 30 days prior  written  notice from the Company to the Executive and (v) at
the option of the Executive upon 30 days prior written notice from the Executive
to the Company.

         (b) Payments.  In the event the Executive's  employment hereunder shall
terminate  prior to the last day of the Term as a result of the  exercise by the
Company of its option to terminate the Executive's employment Without Cause, the
Company shall, as liquidated damages or severance, or both, continue, subject to
compliance by the Executive with the  provisions of Section 6 below,  to pay the
Executive's  Base Salary and Bonus as in effect at the time of such  termination
at the times and in the manner such Base Salary and Bonus would  otherwise  have
become due and payable  until the earlier of (i) the  expiration of the Term had
such  termination  not  occurred,  (ii) the death of the  Executive or (iii) the
Disability of the Executive.

         In the event the Executive's employment hereunder shall terminate prior
to the last day of the Term as a result of (i) the  exercise  by the  Company of
its  option  to  terminate  the  Executive's  employment  for  Cause or (ii) the
exercise by the  Executive  of his option to  terminate  employment  (whether by
retirement  or  otherwise),  all earned but unpaid Base Salary as of the date of
termination  of  employment  shall be  payable in full to the  Executive  by the
Company. In addition, all quarterly Bonus amounts due but not yet paid as of the
date of  termination  shall be  payable,  provided  that if the annual  Bonus as
determined  following the end of the fiscal year in which termination occurs, as
pro rated for the number of quarters for which  quarterly  Bonus  payments  were
made to the Executive in respect of such fiscal year, is less than the quarterly
Bonus payments made, the Executive  shall reimburse the Company in the amount of
the  difference  within  five  days of the date of such  determination;  if such
amount is greater than the quarterly  Bonus payments made, the Company shall pay
the  difference  within five days of the date of such  determination.  Except as
provided  in the  preceding  two  sentences,  no other  payments  of any  nature
whatsoever,  including  any Bonus or unearned  Base  Salary,  shall be made,  or
benefits provided, by the Company under this Agreement.

         (c)  Definitions.  For purposes of this Agreement,  the following terms
have the following meanings:

                  (i)  "Cause"  means  (A) the  Executive's  failure  to  devote
substantially  all of his  business  time,  effort  and  skill as is  reasonably
necessary to  accomplish  the duties for which the Executive is  responsible  in
accordance with the terms hereof or the taking part in activities detrimental to
the best interests of the Company, (B) a material breach by the Executive of any
material term of this Agreement,  other than the provisions of Section 2 hereof,
(C)  abuse  of  office  or  malfeasance  by the  Executive  (including,  without
limitation, acts or omissions by the Executive that could reasonably be expected
to have a material  adverse  effect on the business,  operations,  conditions or
prospects of the Company), (D) conviction of the Executive of a felony which the
Majority  Interest  reasonably  deems to be an "abuse of office" or a crime, (E)
the  Executive's  gross  negligence in  performance  or  non-performance  of any
material  duty owed by the  Executive  in the course of his  employment,  or the
Executive's  habitual  neglect  of his  duty,  all only  after the  Company  has
provided the Executive written warning and 30 days opportunity to improve or (F)
any  chemical  dependence  which  materially  affects  the  performance  of  the
Executive's duties and responsibilities to the Company.

                  (ii)  "Permanent   Disability"  means  the  inability  of  the
Executive,  as reasonably  determined by the Majority  Interest and confirmed by
competent medical evidence, to work for any period of 90 consecutive days or any
120 non-consecutive days during any twelve consecutive calendar month period due
to illness  or injury of a  physical  or mental  nature.  In order to  determine
issues of disability,  the Executive  agrees to submit  himself for  appropriate
medical examination to physicians  reasonably  acceptable to the Company and the
Executive.

                  (iii) "Without  Cause" means  termination  of the  Executive's
employment by the Company for any reason other than (A) death of the  Executive,
(B) Permanent  Disability,  (C)  expiration  of the Term or (D) Cause;  "Without
Cause" shall not include retirement or resignation by the Executive.

         6.       OTHER DUTIES OF THE EXECUTIVE DURING AND AFTER TERM

         (a) Confidential Information. The Executive recognizes and acknowledges
that all information pertaining to the affairs,  business,  clients,  customers,
vendors,  plans or  prospects  of the  Company  (collectively,  the  "Business")
(including,   without   limitation,   all  customer  lists,   pricing  policies,
projections,  product  development,  trade  secrets  and  other  privileged  and
confidential  information  essential to the Business),  as such  information may
exist from time to time,  other than information that the Company has previously
made  publicly  available,  is  confidential  information  and is a  unique  and
valuable  asset of the Business,  access to and knowledge of which are essential
to the performance of the Executive's duties under this Agreement. The Executive
shall  not at any  time  (during  or  after  the  Term),  except  to the  extent
reasonably  necessary in the  performance  of his duties  under this  Agreement,
divulge to any person,  firm,  association,  corporation,  partnership,  limited
liability  company  or  governmental  agency,  any  information  concerning  the
Business  (except  such  information  as is  required by law to be divulged to a
government  agency  or  pursuant  to  lawful  process),  or make use of any such
information  for his own  purposes.  All  records,  memoranda,  letters,  books,
reports,  accounting,  experience or other data, and other records and documents
relating to the Business, whether made by the Executive or otherwise coming into
his possession,  are confidential information and are, shall be and shall remain
the  property  of the  Company.  No copies  thereof  shall be made which are not
retained  by the  Company,  and the  Executive  agrees,  on  termination  of his
employment or on demand of the Company, to deliver the same to the Company.

         The obligation of  confidentiality  contained herein shall not apply to
information  which (i) is generally  available to the public through no fault of
the Executive,  (ii) is required by a court order or regulatory or  governmental
authority to be disclosed or (iii) is believed by the Executive in good faith to
be required by a court  order or  regulatory  or  governmental  authority  to be
disclosed,  provided  that before  such  disclosure  the Company  shall first be
notified of any such good faith belief by the Executive and the Executive  shall
not make any such  disclosure  if the Company  provides  an opinion  prepared by
independent counsel that the disclosure is not required.

         (b) Intellectual  Property.  Any software,  delivery systems,  methods,
developments,  inventions,  processes,  techniques,  know-how,  plans, products,
devices and/or  improvements or the like,  whether  registered or filed with any
governmental  authority or agency  (domestic or foreign) or not so registered or
filed,  which  Employee  may conceive or make,  alone or with others,  which are
related to the Company's  business while in its employ,  shall be and remain the
property of the Company,  and the  Executive  hereby  assigns any and all rights
therein to the Company.  Employee  further agrees on request to execute  patent,
trademark,  servicemark  and  copyright  applications  based  on such  software,
delivery  systems,  methods,   developments,   inventions  and/or  improvements,
including  any  other  instruments  deemed  necessary  by the  Company  for  the
prosecution of such patent, trademark,  servicemark and copyright application of
the acquisition.

         (c)  Non-Interference.  For a period of two years after  termination of
the Executive's  employment hereunder,  the Executive agrees not to, directly or
indirectly,  interfere with the employment  relationship between the Company and
its managers,  officers and employees by soliciting  any of such  individuals to
participate  in  independent  business  ventures and agrees not to,  directly or
indirectly,  solicit  business  from any  client  or  prospective  client of the
Company within any of the Company's  markets for the Executive's  benefit or for
the benefit of any entity in which the Executive has an interest or is employed.

         During the term of this Agreement and  thereafter,  the Executive shall
not take any action to disparage  or  criticize to any third  parties any of the
services or products of the Company or to commit any other  action that  injures
or hinders the business of the Company.

         (e) Enforceability. It is the desire and intent of the parties that the
provisions of this Section 6 shall be enforced to the fullest extent permissible
under  the  laws and  public  policies  applied  in each  jurisdiction  in which
enforcement is sought. If any particular  provision or portion of this Section 6
shall be  adjudicated  to be invalid or  unenforceable,  this Section 6 shall be
deemed amended to delete  therefrom such provision or portion  adjudicated to be
invalid or  unenforceable,  such amendment  shall apply only with respect to the
operation  of this  Section  6 in the  particular  jurisdiction  in  which  such
adjudication is made.

         7.       BREACH BY THE EXECUTIVE

         Both  parties  to this  Agreement  recognize  that the  services  to be
rendered  under  this  Agreement  by  the  Executive  are  special,  unique  and
extraordinary in character, and that in the event of the breach by the Executive
of the terms and  conditions of this Agreement to be performed by the Executive,
the Company  shall be  entitled,  if it so elects,  to institute  and  prosecute
proceedings  consistent  with the  provisions of Section 14, either in law or in
equity,  to obtain  damages for any breach of this  Agreement  or to enforce the
specific performance thereof by the Executive.

         8.       WITHHOLDING TAXES

         The Company may directly or indirectly  withhold from any payments made
under  this  Agreement  all  Federal,  state,  city or  other  taxes as shall be
required  to be  withheld  pursuant  to any law or  governmental  regulation  or
ruling.

         9.       NOTICES

         All notices,  requests,  demands and other  communications  required or
permitted  hereunder  shall be given in writing and shall be deemed to have been
duly given if sent by facsimile or delivered or mailed,  postage prepaid by same
day or overnight mail as follows:

                  (a)      If to the Company:

                           Data Tree LLC
                           550 W. C Street, Suite 2040
                           San Diego, California  92101
                           Attention:         President
                           Facsimile:         619-231-3301

                           with a copy to:

                    The First American Financial Corporation
                           14 East Fifth Street
                           Santa Ana, California  92701
                           Attention:  President
                           Facsimile:  714-647-2242

                  (b)      If to the Executive:

                           Harish K. Chopra
                           P.O. Box 9360
                           Rancho Santa Fe, California 92067
                           Facsimile: 619-759-1747

or such other address as either party shall have previously specified in writing
to the other.

         10.      RIGHTS TO PAYMENTS

         The  Executive  shall not under any  circumstances  have any  option or
right to require payments hereunder  otherwise than in accordance with the terms
of this Agreement.

         11.      SOURCE OF PAYMENT

         All payments  provided for under this  Agreement  shall be paid in cash
from the general funds of the Company;  provided, however that to the extent the
Company does not have sufficient  funds to pay the guaranteed  Bonus of $250,000
for the first fiscal year of the Company, FAFCO agrees to make such payment.

         12.      BINDING AGREEMENT

         Except as otherwise  expressly provided herein, this Agreement shall be
binding upon, and shall inure to the benefit of, the Company, its successors and
assigns. This Agreement,  as it relates to the Executive, is a personal contract
and the  rights  and  interest  of the  Executive  hereunder  may  not be  sold,
transferred, assigned, pledged or hypothecated.

         13.      AMENDMENTS

         This Agreement may not be waived,  amended,  modified,  supplemented or
discharged  orally, but only by agreement in writing signed by the party against
whom enforcement of any waiver, amendment, modification, supplement or discharge
is sought.

         14.      DISPUTE RESOLUTION

         Any dispute arising out of or relating to this Agreement,  or breach of
this Agreement,  shall be settled by arbitration in the County of Orange,  State
of  California,  in  accordance  with the  Commercial  Arbitration  Rules of the
American  Arbitration  Association  then  in  effect  and,  as  to  matters  not
specifically  governed  thereby,   shall  comply  with  the  provisions  of  the
California Arbitration Act (Cal. Code Civ. Proc. ss.ss.1280-1294.2). There shall
be three  arbitrators,  one to be chosen by each party directly at will, and the
third  arbitrator to be selected by the two  arbitrators  so chosen.  Each party
shall  pay the fees of the  arbitrator  he or it  selects  and of his or its own
attorneys and the expenses of his or her witnesses, and all other fees and costs
shall be borne  equally by the  parties.  Judgment on any award  rendered by the
arbitrators may be entered in any court having jurisdiction.

         15.      SURVIVAL

         The  covenants set forth in Section 6 of this  Agreement  shall survive
and  shall  continue  to be  binding  upon  the  Executive  notwithstanding  the
termination of this Agreement for any reason whatsoever. The covenants set forth
in  Section  6 of this  Agreement  shall be deemed  and  construed  as  separate
agreements independent of any other provision of this Agreement. It is expressly
agreed  that the remedy at law for the breach of the  covenants  of Section 6 is
inadequate and that  injunctive  relief shall be available to prevent the breach
or any threatened breach thereof.

         16.  EFFECTIVENESS.  This  Agreement  shall  become  effective  at  the
Effective Time under the Merger Agreement.

         17.      GOVERNING LAW

         THE VALIDITY,  INTERPRETATION,  PERFORMANCE,  AND  ENFORCEMENT  OF THIS
AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA  APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED SOLEY
WITHIN SUCH STATE.

         18.      CAPTIONS

         Section headings are for convenience of reference only and shall not be
considered a part of this Agreement.

         19.      COUNTERPARTS

         This Agreement may be executed in any number of  counterparts,  each of
which when executed  shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF,  the parties hereto have executed this Agreement,  on and as
of the day and year first above written.


                                                     DATA TREE LLC



                                                     By:________________________
                                                        Name:


                                                     "EXECUTIVE"



                                                      --------------------------
                                                      Harish K. Chopra



<PAGE>
                                                                       EXHIBIT A

                           EXCLUDED INTEREST EXAMPLES

Assumptions:

     1.   Working Capital Debt (WCD)- $15,000,000

     2.   Objected Amount (OA) - $8,000,000

     3.   Therefore, approved amount = $1,420,000

     4.   Two loans:  $7,000,000 at 10%, simple interest

                      $8,000,000 at 9%, simple interest

     5.   Therefore, total interest payment (TIP) = $1,420,000


                                            OA
Formula:  Excluded Interest (EI) = (TIP) --------
                                            WCD

Example 1:  with assumptions unchanged.

                         $8,000,000
     EI - ($1,420,000) ------------ = $757,333.33
                        $15,000,000

Example 2:  pay-down of $2,000,000 of the 9% debt, WCD now $13,000,000, OA now
            $6,000,000 (i.e., $8,000,000 minus $2,000,000 pay-down)


     TIP=[($6,000,000)(.09)] + [($7,000,000)(.10)]=$1,240,000

                       $6,000,000
     EI=($1,240,000) ------------  = $572,307.69
                      $13,000,000

Example 3:  continuation of Example 2, with an additional pay-down of $4,000,000
            of the 10% debt, WCD now $9,000,000, OA now $2,000,000.

     TIP = [$6,000,000)(.09)] + [($3,000,000)(.10)]=$840,000

                     $2,000,000
     EI = ($840,000)----------- = $186,666.67
                     $9,000,000


<PAGE>

                                                                       EXHIBIT F



                            NONCOMPETITION AGREEMENT


                  This  NONCOMPETITION  AGREEMENT,  dated as of _____  __,  1998
(this "Agreement"),  among DATA TREE LLC, a California limited liability company
(the  "Company"),  R. SQUARED  LIMITED,  an Irish  company  ("R2") and HARISH K.
CHOPRA, an individual residing in Rancho Santa Fe, California ("Chopra").


                              W I T N E S S E T H:


         WHEREAS,  as of  the  date  hereof,  R2  and  Chopra  collectively  own
approximately 42.615% of the issued and outstanding common shares (the "Shares")
of the Data Tree Corporation ("Data Tree");

         WHEREAS, Chopra, Data Tree, The First American Financial Corporation, a
California  corporation  ("FAFCO"),  and Image  Acquisition  Corp., a California
corporation  ("FAFCOSUB"),  have entered  into an Agreement  and Plan of Merger,
dated as of March 27, 1998 (the "Merger  Agreement"),  pursuant to which, at the
Effective Time (as defined in the Merger Agreement) FAFCOSUB will merge with and
into Data Tree (the "Merger") and Data Tree will become, thereby, a wholly-owned
subsidiary of FAFCO;

         WHEREAS,  FAFCO will  contribute  all the capital stock of Data Tree to
the  capital  of  First  American  Real  Estate   Information   Services,   Inc.
("FAREISI");  immediately  thereafter FAREISI will cause Data Tree to contribute
all of its assets and  liabilities  (the "Data Tree Business") to First American
Real  Estate  Solutions  LLC  ("FARES");   immediately   thereafter  FARES  will
contribute  the Data Tree  Business  together  with the  Digistar  Business  (as
defined in that certain  Contribution and Joint Venture  Agreement,  dated as of
the date hereof,  by and among FAFCO,  FAREISI,  FARES,  R2, Chopra and Experian
Information Solutions, Inc.) to the Company;

         WHEREAS,  the Data Tree Business and the Digistar  Business include the
automation and  digitalization  of any public records of county recorders or, in
the absence of a county  recorder,  the  official  recordkeeper  for a county or
equivalent  political  subsidivsion and the providing of that information to any
person or entity (such services being referred to herein as the "DTD Business");

         WHEREAS,  it  is  a  condition  precedent  to  FAFCO's  and  FAFCOSUB's
respective  obligation  to effect the Merger that R2 and Chopra  enter into this
Agreement;

         NOW,  THEREFORE,  in consideration of the agreements  herein contained,
the parties hereto agree as follows:

         1. CONSIDERATION.  As consideration for the agreements of R2 and Chopra
contained  in this  Agreement,  the Company  shall grant R2 a 1.893%  membership
interest in the  Company,  the value of which shall be  reflected in the capital
accounts  of the Company as  $1,150,000,  and the Company  shall  employ  Chopra
pursuant to the  Employment  Agreement of even date  herewith  (the  "Employment
Agreement").

         2. NONCOMPETITION; ENFORCEABILITY.

                  (a) R2 and  Chopra  each  acknowledge  and  agree  that R2 and
Chopra (i) have knowledge of (and will continue to have access to) trade secrets
and  confidential  information  about the Company,  its products,  customers and
methods of doing  business,  (ii) are, in connection  with the execution of this
Agreement,  and as a  resulting  effect of the  Merger,  transferring  all their
Shares in Data Tree to FAFCO and (iii) will obtain substantial  benefit from the
transfer of their Shares in Data Tree to FAFCO.

                  (b) In consideration of the foregoing,  R2 agrees that R2 will
not,  and Chopra  agrees that  neither R2 nor Chopra  will,  during the Term (as
defined in the Employment  Agreement)  and for a period of two years  thereafter
(the "Noncompete Period"), regardless of any early termination thereof under the
Employment Agreement, within any jurisdiction, domestic or foreign, in which the
Company or any subsidiary of the Company is duly  qualified to do business,  and
within any marketing  area in which the Company or any subsidiary of the Company
is doing a substantial  amount of business,  directly or indirectly own, manage,
operate,  control, be employed by, provide consulting services to or participate
in the  ownership,  management,  operation or control of, or be connected in any
manner with, any business of the type and character engaged in and substantially
competitive with the DTD Business.

         3.       ENFORCEABILITY.

                  (a) It is the  desire  and  intent  of the  parties  that  the
provisions  of Section 2 shall be  enforced to the  fullest  extent  permissible
under  the  laws and  public  policies  applied  in each  jurisdiction  in which
enforcement is sought.

         (b) The parties  intend that the  covenants  contained  herein shall be
deemed to be a series of separate  covenants,  one for each county or each state
of the United States, including, if applicable, the District of Columbia, Puerto
Rico and the Virgin  Islands,  one for each  province in Canada and one for each
other state or province or equivalent  political  subdivision of each country in
which the  Company or any  subsidiary  of the  Company is duly  qualified  to do
business or is doing a substantial amount of business;  provided,  however, that
in the event that the Company or any subsidiary of the Company is merged with or
into FAFCO or an affiliate thereof, the covenants described in this Section 3(b)
shall only exist with respect to those countries or political  subdivisions,  as
the case may be,  within which the  surviving  entity is engaged in the document
imaging and database management systems business.

         4. BREACH;  SURVIVAL.  All parties to this Agreement recognize that the
services  to be  rendered  under this  Agreement  by R2 and Chopra are  special,
unique and extraordinary in character,  and that in the event of breach by R2 or
Chopra of the terms and  conditions  of this  Agreement  to be  performed  by R2
and/or  Chopra,  or in the event R2 or  Chopra  materially  breaches  any of the
covenants  of Section 2, the  Company  shall be  entitled,  if it so elects,  to
institute and prosecute proceedings, consistent with the procedures of Section 6
below,  either in law or in  equity,  to obtain  damages  for any breach of this
Agreement, or to enforce the specific performance thereof by R2 or Chopra, or to
enjoin R2 or Chopra,  as the case may be, from performing  services for any such
other person,  firm,  corporation  or other entity  falling  within the scope of
Section 2. The covenants of R2 and Chopra under this Agreement shall survive the
termination of the Term.

         5.  GOVERNING  LAW;  AMENDMENTS;  CAPTIONS.  This  Agreement  shall  be
governed by and construed in accordance with the law of the State of California.
This  Agreement  may not be changed  orally,  but only by  agreement  in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.  Section  headings are for convenience of reference only
and shall not be considered a part of this Agreement.

         6. DISPUTE RESOLUTION. Any dispute arising from or with respect to this
Agreement and other agreements referenced herein shall be decided by arbitration
in the County of Orange, State of California,  in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect and, as
to matters not specifically  governed thereby,  shall comply with the provisions
of the California Arbitration Act (Cal. Code Civ. Proc. ss.ss.1280-1294.2).  The
parties  hereto submit to in personam  jurisdiction  of state and federal courts
located  in the  County of  Orange,  State of  California,  for the  purpose  of
confirming  any award  resulting  from such  arbitration  or entering a judgment
thereon.

         7.  PRIOR  AGREEMENTS.   This  Agreement,  the  Merger  Agreement,  the
Employment Agreement and the other agreements and instruments defined herein and
therein  contain the entire  agreement  between the parties and  supersedes  and
terminates all prior  agreements,  if any,  between the parties  relating to the
subject matter herein addressed.

         8.  NOTICES.  Any notice or other  communication  required or permitted
hereunder  shall be in writing and shall be  sufficiently  given if delivered in
person or sent by telecopy or by registered or certified mail,  postage prepaid,
addressed as follows:


if to R2 and/or Chopra, to:

                           HARISH K. CHOPRA
                           P.O. Box 9360
                           Rancho Santa Fe, California  92067
                           Facsimile:  619-759-1747

if to the Company, to:

                           DATA TREE LLC
                           550 West "C" Street, Suite 2040
                           San Diego, California  92101
                           Attention:  President
                           Facsimile:  619-231-3301

With a copy to:

                           THE FIRST AMERICAN FINANCIAL CORPORATION
                           114 East Fifth Street
                           Santa Ana, California  92701
                           Attention:  President
                           Facsimile:  714-647-2242

or such  other  address  or  number as shall be  furnished  from time to time in
writing  by any party to the other  parties.  Any such  notice or  communication
shall be deemed to have been given as of the date so delivered, sent by telecopy
or mailed.

         9.  EFFECTIVENESS.   This  Agreement  shall  become  effective  at  the
Effective Time under the Merger Agreement.


                  IN WITNESS WHEREOF,  each of the Company and R2 has caused its
name to be hereunto  subscribed by its officer  thereunto  duly  authorized  and
Chopra  has  executed  this  Agreement,  all on and as of the day and year first
above written.

                                                     DATA TREE LLC


                                                     By_________________________
                                                       Name:
                                                       Title:


                                                     R SQUARED LIMITED


                                                     By_________________________
                                                       Name:
                                                       Title:



                                                     ---------------------------
                                                     Harish K. Chopra


<PAGE>



                                                                       EXHIBIT G



________________________________________________________________________________



                                SUPPLY AGREEMENT

                          Dated as of ________ __, 1998


                                     Between


                                  DATA TREE LLC

                                       and


                               R. SQUARED LIMITED



________________________________________________________________________________






<PAGE>



                                SUPPLY AGREEMENT


                  THIS SUPPLY AGREEMENT (this  "Agreement")  dated as of _______
__, 1998 between Data Tree LLC, a California  limited  liability  company ("Data
Tree"), and R Squared Limited, an Irish company ("R2").


                              W I T N E S S E T H :


         WHEREAS,  R2 is engaged in the  business of imaging  real estate  title
records; and

         WHEREAS,  Data Tree  desires to secure a supply of imaged  real  estate
title records;

         NOW,  THEREFORE,  in consideration of the mutual promises and covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:


         1.       TERM

         The  term  of  this  Agreement  shall  commence  upon  the  date  first
above-referenced  and,  unless  earlier  terminated  as provided  herein,  shall
continue  in full  force  and  effect  for a period  of two and  one-half  years
thereafter (the "Term").


         2.       SUPPLY AND COMPENSATION

         2.1 Supply Provided by R2. The parties agree that during the Term, Data
Tree  shall  order,  and R2 shall  scan or caused to be  scanned,  not less than
235,000,000  real estate title records  (each, a "Title Image") in the aggregate
and 23,500,000  Title Images per calendar quarter (the "Quarterly Image Amount")
into a database which Data Tree shall own.

         2.2 Price. In full  compensation to R2 for its undertakings  hereunder,
Data  Tree  shall pay R2 a cost of  $0.055  for each  Title  Image  (the  "Image
Price").  R2 shall send Data Tree a statement of the  compensation due it at the
end of each month and Data Tree shall pay the same within 15 days of its receipt
of each such statement. Any payments due hereunder, and not made by the due date
therefor, shall accrue interest that the rate of 8% per annum from the date said
payment became delinquent until paid in full (such interest shall be treated for
all  purposes  as  part  of  the  amount  due  hereunder).  Notwithstanding  the
foregoing,  the  compensation  due to R2 for each quarter during the term hereof
shall not be less than  $1,292,500  (the "Minimum  Quarterly  Contract  Price");
provided,  however,  that the  Minimum  Quarterly  Contract  Price  shall not be
payable at the end of a calendar  quarter  if the total  number of Title  Images
delivered  during  such  quarter is less than the  Quarterly  Image  Amount as a
direct result of a breach by R2 of its obligations under 6.3(b) hereof.


         3.       TERMINATION

         3.1 Events of Termination. This Agreement may be terminated at any time
by mutual written agreement of Data Tree and R2.

         3.2 Effect of  Termination.  In the event that this Agreement  shall be
terminated  pursuant  to Section  3.1,  all further  obligations  of the parties
hereto  under this  Agreement  shall  terminate  without  further  liability  or
obligation of either party to the other party hereunder; provided, however, that
(a) no party shall be released  from  liability  hereunder if this  Agreement is
terminated and the  transactions  abandoned by reason of the willful  failure of
such party to have performed any material obligation hereunder and (b) Data Tree
shall be  obligated  to pay for those Title  Images  that are of a  commercially
reasonable quality and which have been scanned into a database on behalf of Data
Tree on or prior to the date  this  Agreement  terminates,  to the  extent  such
scanned Title Images and database are delivered to Data Tree.


         4.       REPRESENTATIONS OF DATA TREE

         Data Tree represents, warrants, and agrees as follows:

         4.1  Existence  and Good  Standing.  Data Tree is a  limited  liability
company  duly  organized  and  validly  existing  under the laws of the State of
California.  Data Tree has the requisite  power and authority to own,  lease and
operate its properties and to carry on its business as now being conducted,  and
to enter into,  execute and deliver this  Agreement and perform its  obligations
hereunder.

         4.2 Binding Effect. This Agreement has been duly executed and delivered
by Data  Tree and  constitutes  the  valid and  binding  agreement  of Data Tree
enforceable  against  Data  Tree in  accordance  with its  terms  except as such
enforceability  may be limited by  bankruptcy,  insolvency  or similar  laws and
equitable  principles relating to or affecting the rights of creditors generally
from time to time in effect.


         5.       REPRESENTATIONS OF R2

         R2 represents, warrants and agrees as follows:

         5.1 Existence and Good Standing of R2; Power and Authority. (a) R2 is a
company duly organized,  validly existing and in good standing under the laws of
Ireland.  R2 has the requisite power and authority to own, lease and operate its
properties  and to carry on its  business as now being  conducted,  and to enter
into, execute and deliver this Agreement and perform its obligations hereunder.

         (b) R2 does not  engage  in  business  in the  United  States,  and the
services to be performed  by R2  hereunder  shall not be performed in the United
States. R2 is not subject to United States withholding tax.

         5.2 Binding Effect. This Agreement has been duly executed and delivered
by R2 and constitutes the valid and binding agreement of R2 enforceable  against
R2 in accordance with its terms except as such  enforceability may be limited by
bankruptcy,  insolvency or similar laws and equitable  principles relating to or
affecting the rights of creditors generally from time to time in effect.

         5.3  Ability  and   Capacity  to   Perform.   R2   currently   has  the
understanding,  knowledge  and  ability  to supply,  or  arrange to supply,  the
quantity of Title Images herein described.


         6.       COVENANTS

         6.1  Further  Assurances  and Best  Efforts.  Each of Data  Tree and R2
shall, at its sole cost, on demand do, execute,  acknowledge and deliver all and
every such further acts and assurances as the other party hereto shall from time
to time reasonably  require for carrying out the intention or  facilitating  the
performance of the terms of this Agreement.

         6.2 Confidentiality.  R2 shall not, during the period of this Agreement
or at any  time  thereafter,  divulge  to any  third  party  any  terms  of this
Agreement.

         6.3  Responsibility.  (a) Data Tree shall be solely  responsible at its
own cost for providing or otherwise making available to R2 at the location where
the  services  to be  provided  by R2  hereunder  will  be  performed,  adequate
software,  microfilm and related technical equipment  sufficient to enable R2 to
provide,  or cause to be provided,  to Data Tree each quarter Title Images in an
amount no less than the Quarterly Image Amount.

         (b) R2 shall be responsible at its own cost for providing, or arranging
to have  provided,  all  necessary  personnel  and  non-technical  equipment and
facilitates sufficient to perform its duties hereunder.

         6.4  Withholding  Tax.  Provided  the  representations  and  warranties
contained  in Section  5.1(b)  hereto are true and accurate  under  current law,
there shall be no tax withholding by Data Tree on payments to R2 hereunder.

         7.       RIGHT OF OFFSET.

         If and to the extent  that Data Tree  breaches  its  obligations  under
Section  6.3(a) hereof and/or the last sentence of Section 2.2 hereof,  R2 shall
be  entitled  to offset  against  payments  due to Data Tree under that  certain
Promissory  Note issued by R2 in the original  principal  amount of  $11,000,000
(the  "Promissory  Note"),  for amounts that otherwise  would have been due from
Data  Tree had no breach  occurred.  The  offset  shall be  applied  to the next
payment then due under the Promissory Note, and to each payment thereafter until
such time as this offset  amount shall be reduced to zero. In the event that any
amounts are so offset,  the total number of Title Images  required to be ordered
and scanned pursuant to Section 2.1 hereof shall be reduced by a number equal to
the offset amount divided by the Image Price.  The amount  entitled to be offset
hereunder is referred to herein as the "Offset."


         8.       MISCELLANEOUS

         8.1  Expenses.  The parties  hereto shall pay all of their own expenses
relating to the  transactions  contemplated  by this Agreement and the documents
described herein, including,  without limitation, the fees and expenses of their
respective counsel.

         8.2  Effectiveness.  This  Agreement  shall  become  effective  at  the
Effective  Time under that  certain  Agreement  and Plan of Merger,  dated as of
March 27,  1998 by and among The First  American  Financial  Corporation,  Image
Acquisition Corp., Data Tree Corporation and Harish Chopra.

         8.3  Governing  Law.  The   interpretation  and  construction  of  this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of California applicable to agreements executed and to be performed solely
within such State.

         8.4  Jurisdiction;   Agents  for  Service  of  Process.   Any  judicial
proceeding  brought  against any of the parties to this Agreement on any dispute
arising out of this Agreement or any matter related hereto may be brought in the
courts of the State of  California,  or in the United States  District Court for
the Central  District of  California,  and, by  execution  and  delivery of this
Agreement,  each  of  the  parties  to  this  Agreement  accepts  the  exclusive
jurisdiction of such courts,  and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement.

         8.5  Parties  in  Interest.  This  Agreement  may  not be  transferred,
assigned,  pledged or hypothecated by any party hereto. Any attempted  transfer,
assignment, pledge or hypothecation of this Agreement shall be void ab initio.

         8.6  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, all of which taken together shall constitute one instrument.

         8.7 Entire Agreement.  This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein.  This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

         8.8 Principles of Construction.

         (a) All  references  to Sections  or  subsections  are to Sections  and
subsections in this Agreement  unless otherwise  specified.  The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular  provision of
this  Agreement.  The term  "including"  is not  limiting  and means  "including
without limitation."

         (b) This Agreement is the result of  negotiations  among,  and has been
reviewed by, each party's  counsel.  Accordingly,  this  Agreement  shall not be
construed  against any party merely  because of such party's  involvement in its
preparation.

         8.9 Amendment and  Modification.  This  Agreement may not be amended or
modified orally, but only by an agreement in writing signed by Data Tree and R2.

         8.10 Waiver.  No waiver of a breach,  failure of any condition,  or any
right or remedy  contained  in or granted by the  provisions  of this  Agreement
shall be effective  unless it is in writing and signed by the party  waiving the
breach,  failure,  right or remedy. No waiver of any breach,  failure,  right or
remedy shall be deemed a waiver of any other breach,  failure,  right or remedy,
whether or not similar,  nor shall any waiver  constitute  a  continuing  waiver
unless the writing so specifies.

         8.11  Relationship.  It is expressly  understood  and agreed that at no
time will the  provisions of this Agreement be deemed to create a partnership or
any  other  relationship  between  R2 and Data  Tree  other  than  supplier  and
purchaser.

         8.12 Notices.  Any notice or other communication  required or permitted
under this Agreement shall be sufficiently  given if delivered in person or sent
by facsimile or by registered or certified mail,  postage prepaid,  addressed as
follows:

if to Data Tree, to:

                           Data Tree Corporation
                           550 West "C" Street, Suite 2040
                           San Diego, California  92101
                           Telephone: 619-231-3300
                           Facsimile: 619-231-3301
                           Attention: Harish K. Chopra

with a copy to:

                           The First American Financial Corporation
                           114 East Fifth Street
                           Santa Ana, California  92702
                           Telephone:  714-558-3211
                           Facsimile:                  714-647-2242
                           Attention:  President


if to R2, to:

                           R. Squared Limited
                           c/o Royal Bank of Canada Trust Co. (Cayman) Limited
                           P.O. Box 1586, George Town, Grand Cayman
                           Cayman Islands, British West Indies
                           Telephone:  345-949-0253
                           Facsimile: 345-949-5777
                           Attention:  Piers Strandling

         IN WITNESS  WHEREOF,  each of Data Tree and R2 has caused its corporate
name to be hereunto  subscribed  by its duly  authorized  officer and has signed
this Agreement, all as of the day and year first above written.


                                            DATA TREE LLC


                                            By____________________________
                                              Name:
                                              Title:



                                            R. SQUARED LIMITED


                                            By____________________________
                                              Name:
                                              Title:


<PAGE>



                                                                       EXHIBIT H

                             SECURED PROMISSORY NOTE

$11,000,000                                               San Diego, California
                                                          ___________, 1998


     FOR VALUE RECEIVED,  the undersigned,  R. Squared Limited, an Irish company
("Maker"),  promises  to pay to Data Tree LLC, a  California  limited  liability
company ("Payee"), at _______________, ___________, California ______ or at such
other place reasonably  designated from time to time by Payee, the principal sum
of ELEVEN MILLION DOLLARS  ($11,000,000),  plus interest on the unpaid principal
balance at a fixed rate per annum of eight percent (8%).

     Principal  and interest  under this secured  promissory  note (this "Note")
shall be  payable  in ten (10)  equal  quarterly  payments  in the amount of one
million  two  hundred  twenty-four  thousand  five  hundred  ninety-two  Dollars
($1,224,592) commencing  _____________,  1998 and continuing on the first day of
each calendar quarter  thereafter,  until  __________,  [2000],  when the entire
amount of unpaid  principal  and  accrued but unpaid  interest  shall be due and
payable in full.  Each payment  received  under this Note shall be applied first
against accrued but unpaid interest, and thereafter against unpaid principal.

     Maker may, at its  election,  prepay this Note at any time,  in whole or in
part, without penalty or premium.

     Maker hereby waives presentment,  demand,  protest or notice of any kind in
connection with this Note.

     At its  option,  and at any  time(s)  that Maker may elect,  upon notice to
Payee (the  "Notice"),  Maker may deduct from any amounts due under this Note an
amount equal to all or any portion of the "Offset" (as that term is described in
that certain Supply Agreement, dated as of ___________,  1998, between the Maker
and the  Payee)  up to the full  amount  of such  Offset  as of the date of such
deduction,  but only to the extent  that the Maker has not  previously  deducted
such portion of the Offset from amounts due under this Note. The Offset shall be
applied to the next payment then due under this Note  following  the date of the
Notice from Maker, and to each payment  thereafter until such time as the amount
of the Offset shall be reduced to zero.

     To secure its obligations  under this Note,  Maker hereby grants to Payee a
security interest in 90% of the Membership  Interest (as such term is defined in
the Operating Agreement,  dated as of __________,  1998, between Maker and First
American Real Estate Solutions LLC) owned by Maker in Payee (the  "Collateral").
Payee agrees to release from the  security  interest  granted in this Note 5% of
the Collateral (i.e., a 1% Membership  Interest) upon its receipt of a principal
repayment or prepayment in the aggregate amount of $1,100,000.  To the extent of
each such release,  the  Membership  Interest so release shall not be Collateral
hereunder.  To the extent not previously released,  Payee agrees to release from
the security  interest  granted in this Note all Collateral  once Maker has made
payment in full on all  principal of and  interest on this Note.  For as long as
this Note remains unpaid,  Maker agrees that Maker will not: (i) grant any other
lien or security  interest  with respect to the  Collateral  and (ii)  transfer,
whether by sale,  gift, or otherwise,  any ownership  interest in the Collateral
without Payee's prior written  approval.  Upon the reasonable  request of Payee,
Maker  will take all action  and will  execute  all  documents  and  instruments
necessary or desirable to  consummate  and give effect to the security  interest
granted pursuant to this paragraph.

     Maker  irrevocably  appoints Payee as  attorney-in-fact  and grants Payee a
proxy to do (but Payee shall not be  obligated  and shall incur no  liability to
Maker or any third party for failure to do so), after and during the continuance
of an Event of Default (as defined  below),  any act that Maker is  obligated by
this Note to do and to exercise  such rights and powers as Maker might  exercise
with  respect to the  Collateral.  With respect to voting the  Collateral,  this
paragraph  constitutes  an irrevocable  appointment of a proxy,  coupled with an
interest,  which  shall  continue  until  this  Note is paid in full.  Except as
otherwise  limited  by this  Note,  as long as no Event of  Default  shall  have
occurred,   Maker  shall  be  entitled  to  vote  the   Collateral  and  receive
distributions with respect thereto.

     As used in this Note,  the term "Event of Default" means (i) the failure by
Maker to make any payment  under this Note when due, if such  failure  continues
for a period  of  twenty  (20)  business  days or (ii) the  grant of any lien or
security  interest  (other than the grant provided in this Note) with respect to
the Collateral or (iii) the transfer,  whether by sale, gift, or otherwise,  any
ownership interest in the Collateral without Payee's prior written approval.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
internal  laws of the  State of  California.  Principal  and  interest  shall be
payable in lawful money of the United States of America.

     THIS NOTE IS NOT NEGOTIABLE  AND MAY NOT BE CONVEYED OR ASSIGNED,  IN WHOLE
OR IN PART,  NEGOTIATED  OR ENDORSED IN BLANK BY PAYEE WITHOUT THE PRIOR WRITTEN
CONSENT OF MAKER. ANY ATTEMPTED ASSIGNMENT, BLANK ENDORSEMENT, OR NEGOTIATION OF
THIS NOTE WITHOUT THE PRIOR WRITTEN CONSENT OF MAKER SHALL BE NULL AND VOID.

                                      "MAKER"

                                      R. SQUARED LIMITED,
                                      an Irish Company


                                      By:________________________________
                                      Title:_____________________________

<PAGE>



                                                                       EXHIBIT I


                         PROPOSED FORM OF OPINION LETTER
                              OF COOLEY GODWARD LLP

                [The final legal opinion shall contain customary
                        assumptions and qualifications.]

     1. The  Company  has been duly  incorporated  and is validly  existing as a
corporation in good standing under the laws of the State of California.

     2. The Company has the requisite  corporate power to own, operate and lease
its property  and assets and to conduct its  business as it is  currently  being
conducted.

     3. All corporate action on the part of the Company,  its Board of Directors
and its shareholders necessary for the authorization,  execution and delivery of
the  Merger  Agreement  by the  Company  and the  performance  of the  Company's
obligations  under the Merger Agreement has been taken. The Merger Agreement has
been duly and validly authorized,  executed and delivered by the Company and the
Major  Shareholder and constitutes a valid and binding  agreement of the Company
and the  Major  Shareholder  enforceable  against  the  Company  and  the  Major
Shareholder in accordance  with its terms,  except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting  creditors'  rights,  and subject to general equity
principles and to limitations on  availability  of equitable  relief,  including
specific performance.

     4. The authorized  capital stock of the Company  consists of (i) 10,000,000
shares of Common Stock, no par value, of which 7,039,830 shares have been issued
and are outstanding  immediately prior to the Closing.  To counsel's  knowledge,
except as expressly set forth in the Merger  Agreement  (including the exception
schedules   thereto   relating  to  the  Company  (the   "Company's   Disclosure
Schedules")),  there are no options,  warrants,  conversion privileges, or other
rights  presently  outstanding to purchase any  authorized but unissued  capital
stock of the Company.  There are no voting agreements,  co-sale rights or rights
of first refusal  applicable to any of the Company's  outstanding  capital stock
under the Company's  articles of  incorporation,  bylaws or any written  Company
contract disclosed in Schedule 3.10 to the Company Disclosure Schedules.

     5. The  execution,  delivery and  performance  by the Company of the Merger
Agreement and the  consummation by the Company of the Merger as provided therein
will not violate any provision of the  Company's  articles of  incorporation  or
bylaws,  and do not constitute a material  default (or give rise to any right of
termination,  cancellation or  acceleration)  under any provision of any Company
contract  disclosed in the Company  Disclosure  Schedules  and do not violate or
contravene (A) any governmental  statute,  rule or regulation  applicable to the
Company or (B) any order, writ, judgment,  injunction,  decree, determination or
award which has been entered  against the Company and of which counsel is aware,
the violation or  contravention of which would have a material adverse effect on
the Company's business,  financial condition and results of operations, taken as
a whole.

     6. To counsel's knowledge,  there is no action, proceeding or investigation
pending  or  threatened  in  writing  against  the  Company  before any court or
administrative agency that questions the validity of the Merger Agreement.

     7. All  consents,  approvals,  authorizations,  or orders of, and  filings,
registrations,  and qualifications with any regulatory authority or governmental
body in the  United  States  required  to be  obtained  prior to the  Closing in
connection with the Company's execution,  delivery and performance of the Merger
Agreement and the  consummation by the Company and the Major  Shareholder of the
Merger as contemplated therein have been made or obtained, other than the filing
of the Merger  Documents  with the Secretary of State of the State of California
as contemplated by Section 2.1(a) of the Merger Agreement.

     8. The Merger Documents have been duly authorized by the Company's Board of
Directors  and its  shareholders  and,  assuming  due  approval by the Boards of
Directors of FAFCO and FAFCOSUB, respectively, and the shareholders of FAFCOSUB,
and compliance by FAFCO and FAFCOSUB with all requirements of applicable law and
the Merger Agreement  necessary to effect the Merger, upon their filing with the
Secretary of State of the State of California, the Merger will be effective.

<PAGE>



                                                                       EXHIBIT J


                         PROPOSED FORM OF OPINION LETTER
                               OF COUNSEL FOR R2

                [The final legal opinion shall contain customary
                        assumptions and qualifications.]

     1. R2 has been duly  organized  and is validly  existing as a company under
the laws of the Republic of Ireland.

     2. R2 has the  requisite  corporate  power to own,  operate  and  lease its
property  and  assets and to  conduct  its  business  as it is  currently  being
conducted.

     3. All  corporate  action on the part of R2, its Board of Directors and its
shareholders  necessary  for the  authorization,  execution  and delivery of the
Related  Documents to be signed by R2 and the  performance  of R2's  obligations
under the  Related  Documents  to be signed  by R2 has been  taken.  Each of the
Related  Documents  to be  signed by R2 has been  duly and  validly  authorized,
executed and delivered by R2 and constitutes a valid and binding agreement of R2
enforceable  against R2 in accordance with its terms,  except as enforcement may
be limited by applicable bankruptcy,  insolvency,  reorganization,  arrangement,
moratorium or other similar laws  affecting  creditors'  rights,  and subject to
general  equity  principles  and to  limitations  on  availability  of equitable
relief, including specific performance.

     4. The execution,  delivery and performance by R2 of the Related  Documents
to be signed by R2 will not violate any provision of R2's charter  documents and
do not violate or contravene (A) any  governmental  statute,  rule or regulation
applicable  to  R2  or  (B)  any  order,  writ,  judgment,  injunction,  decree,
determination or award which has been entered against R2 and of which counsel is
aware,  the violation or  contravention  of which would have a material  adverse
effect on R2's business, financial condition and results of operations, taken as
a whole.

     5. To counsel's knowledge,  there is no action, proceeding or investigation
pending or threatened in writing  against R2 before any court or  administrative
agency that questions the validity of the Related Documents to be signed by R2.

     6. All  consents,  approvals,  authorizations,  or orders of, and  filings,
registrations,  and qualifications with any regulatory authority or governmental
body in the Republic of Ireland  required to be obtained prior to the Closing in
connection  with  R2's  execution,  delivery  and  performance  of  the  Related
Documents to be signed by R2 have been made or obtained.
<PAGE>



                                                                       EXHIBIT K


                         PROPOSED FORM OF OPINION LETTER
                               OF WHITE & CASE LLP

                [The final legal opinion shall contain customary
                        assumptions and qualifications.]

     1. Each of FAFCO and FAFCOSUB have been duly  incorporated  and are validly
existing  corporations  in  good  standing  under  the  laws  of  the  State  of
California.

     2. FAFCO has the requisite  corporate  power to own,  operate and lease its
property  and  assets and to  conduct  its  business  as it is  currently  being
conducted.

     3. All corporate action on the part of FAFCO and FAFCOSUB, their respective
Boards of Directors and shareholders necessary for the authorization,  execution
and delivery of the Merger  Agreement by FAFCO and FAFCOSUB and the  performance
of FAFCO's and FAFCOSUB's obligations under the Merger Agreement has been taken.
The  Merger  Agreement  has  been  duly and  validly  authorized,  executed  and
delivered by FAFCO and FAFCOSUB and constitutes a valid and binding agreement of
FAFCO and FAFCOSUB  enforceable against each of FAFCO and FAFCOSUB in accordance
with its terms,  except as enforcement may be limited by applicable  bankruptcy,
insolvency,  reorganization,  arrangement,  moratorium  or  other  similar  laws
affecting  creditors'  rights,  and subject to general equity  principles and to
limitations on availability of equitable relief, including specific performance.

     4. The authorized  capital stock of FAFCO consists of (i) 36,000,000 Common
Shares,  $1.00 par  value,  of which  ______  shares  have been  issued  and are
outstanding  immediately  prior to the  Closing,  and (ii) 1,000 Series A Junior
Participating  Preferred  Shares,  $1.00 par value, none of which are issued and
outstanding  immediately  prior to the Closing.  The FAFCO  Common  Shares to be
issued to the  shareholders  of the Company in  connection  with the Merger (the
"Merger  Shares") have been duly  authorized  and,  when issued  pursuant to the
terms of the Merger Agreement, will be validly issued,  outstanding,  fully paid
and nonassessable.  To counsel's knowledge, except as expressly set forth in the
Merger Agreement  (including the exception  schedules  thereto relating to FAFCO
(the "FAFCO Disclosure  Schedules")) and Exhibit A to counsel's  opinion,  there
are no  options,  warrants,  conversion  privileges  or other  rights  presently
outstanding  to purchase any  authorized  but unissued  capital  stock of FAFCO.
There  are no voting  agreements,  co-sale  rights  or  rights of first  refusal
applicable to any of FAFCO's outstanding capital stock under FAFCO's articles of
incorporation, bylaws or any FAFCO contract disclosed or attached as Exhibits to
FAFCO's SEC Reports or FAFCO's Disclosure Schedules.

     5. The Merger Shares have been registered under the Securities Act of 1933,
as amended (the "Act"),  pursuant to a  registration  statement on Form S-4 (the
"Registration Statement"). The Registration Statement became effective under the
Act by order of the Securities and Exchange  Commission (the "SEC") on ________,
1998, and, to counsel's knowledge, no stop order suspending the effectiveness of
the  Registration  Statement has been issued and no proceedings for that purpose
have been  instituted  or are pending or  threatened  under the Act.  The Merger
Shares have been issued in compliance with all federal and California securities
laws.

     6. The execution, delivery and performance by FAFCO of the Merger Agreement
and the  consummation  by FAFCO and  FAFCOSUB of the Merger as provided  therein
will  not  violate  any   provision  of  FAFCO's  or   FAFCOSUB's   articles  of
incorporation or bylaws,  and do not constitute a material default (or give rise
to any right of termination,  cancellation or acceleration)  under any provision
of any FAFCO  contract  disclosed  in or  attached  as an Exhibit to FAFCO's SEC
Reports or the FAFCO Disclosure Schedules,  and do not violate or contravene (A)
any governmental  statute, rule or regulation applicable to FAFCO or FAFCOSUB or
(B) any order, writ, judgment,  injunction, decree, determination or award which
has been entered  against FAFCO or FAFCOSUB and of which  counsel is aware,  the
violation  or  contravention  of which would have a material  adverse  effect on
FAFCO's  business,  financial  condition and results of  operations,  taken as a
whole.

     7. To counsel's knowledge,  there is no action, proceeding or investigation
pending  or   threatened   in  writing   against   FAFCO  before  any  court  or
administrative agency that questions the validity of the Merger Agreement.

     8. All  consents,  approvals,  authorizations,  or orders of, and  filings,
registrations,  and qualifications with any regulatory authority or governmental
body in the  United  States  required  to be  obtained  prior to the  Closing in
connection  with FAFCO's and FAFCOSUB's  execution,  delivery and performance of
the Merger Agreement and the consummation by FAFCO and FAFCOSUB of the Merger as
provided therein have been made or obtained, other than the filing of the Merger
Documents with the Secretary of State of the State of California as contemplated
by Section 2.1(a) of the Merger Agreement.

     9. The Merger  Documents  have been duly approved by FAFCO's and FAFCOSUB's
respective  Boards of Directors and  FAFCOSUB's  shareholder  and,  assuming due
approval  by  the  Board  of  Directors  and  shareholders  of the  Company  and
compliance by the Company with all requirements of applicable law and the Merger
Agreement  necessary to effect the Merger,  upon their filing with the Secretary
of State of the State of California, the Merger will be effective.


<PAGE>




                                                              EXHIBIT L


                        FORM OF TAX REPRESENTATION LETTER
                     TO BE EXECUTED BY PARENT AND MERGER SUB


Cooley Godward, LLP                   White & Case LLP
Five Palo Alto Square                 633 West Fifth Street, Suite 1900
3000 El Camino Real                   Los Angeles, California 90071
Palo Alto, California 94306-2155


Re:  Merger  pursuant to the Agreement  and Plan of Merger (the  "Reorganization
     Agreement")  dated  March __,  1998,  among THE  FIRST  AMERICAN  FINANCIAL
     CORPORATION, a California corporation ("Parent"),  IMAGE ACQUISITION CORP.,
     a California  corporation and a wholly owned  subsidiary of Parent ("Merger
     Sub"), DATA TREE CORPORATION, a California corporation (the "Company"), and
     HARISH CHOPRA,  and the related  Agreement of Merger between Merger Sub and
     the Company (the "Agreement of Merger").

Ladies and Gentlemen:

This letter is supplied to you in  connection  with your  rendering  of opinions
regarding  certain  federal  income  tax  consequences  of  the  Merger.  Unless
otherwise indicated,  capitalized terms not defined herein have the meanings set
forth in the  Reorganization  Agreement.  The  Reorganization  Agreement and the
Agreement of Merger,  including  exhibits and schedules  attached  thereto,  are
collectively referred to as the "Agreements."

After  consulting  with their counsel and auditors  regarding the meaning of and
factual  support  for the  following  representations,  the  undersigned  hereby
certify and represent that the following facts are now true and will continue to
be true as of the Effective Time of the Merger and thereafter where relevant:

          1.  Pursuant  to the  Merger,  Merger Sub will merge with and into the
Company,  and the  Company  will  acquire all of the assets and  liabilities  of
Merger Sub. Specifically,  the assets transferred to the Company pursuant to the
Merger will  represent at least ninety percent (90%) of the fair market value of
the net assets and at least  seventy  percent  (70%) of the fair market value of
the  gross  assets  held by  Merger  Sub  immediately  prior to the  Merger.  In
addition,  at least  ninety  percent  (90%) of the fair market  value of the net
assets and at least seventy  percent (70%) of the fair market value of the gross
assets held by the Company  immediately  prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the  percentage  of the  Company's and Merger Sub's net and gross assets held by
the Company  immediately  following  the Merger,  the  following  assets will be
treated  as  property  held by Merger  Sub or the  Company,  as the case may be,
immediately  prior but not subsequent to the Merger:  (i) assets  disposed of by
the Company or Merger Sub (other than assets  transferred from Merger Sub to the
Company in the Merger) prior to or subsequent to the Merger and in contemplation
thereof (including without limitation any asset disposed of by the Company other
than in the ordinary  course of business,  pursuant to a plan or intent existing
during the period ending at the Effective  Time of the Merger and beginning with
the  commencement  of  negotiations  (whether  formal or  informal)  with Parent
regarding the Merger (the "Pre-Merger Period");  (ii) assets used by the Company
or  Merger  Sub to pay  shareholders  perfecting  dissenters'  rights  or  other
expenses or liabilities  incurred in connection with the Merger and (iii) assets
used to make  distribution,  redemption or other payments in respect of stock of
the Company or rights to acquire such stock (including  payments treated as such
for tax  purposes)  that are made in  contemplation  of the  Merger  or that are
related thereto;

          2. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to taxes;

          3. Prior to the Merger,  Parent will be in "Control" of Merger Sub. As
used in this letter,  "Control"  shall consist of direct  ownership of shares of
stock  possessing  at least eighty  percent (80%) of the total  combined  voting
power of all classes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of all other classes of stock of the  corporation.
For purposes of  determining  Control,  a person shall not be  considered to own
shares  of  voting  stock if  rights to vote  such  shares  (or to  restrict  or
otherwise  control  the  voting  of such  shares)  are  held  by a  third  party
(including a voting trust) other than an agent of such person;

          4. In the Merger,  shares of stock of the Company representing Control
of the Company will be exchanged  solely for shares of Parent Common Stock.  For
purposes  of this  paragraph,  shares of stock of the Company  exchanged  in the
Merger for cash and other property (including,  without limitation, cash paid to
shareholders of the Company perfecting dissenters' rights, if any, or in lieu of
fractional  shares of Parent Common Stock) will be treated as shares of stock of
the Company  outstanding  on the date of the Merger but not exchanged for shares
of Parent Common Stock;

          5.  Parent  has no plan or  intention  to cause the  Company  to issue
additional  shares of stock after the  Merger,  or take any other  action,  that
would result in Parent losing Control of the Company;

          6.  Parent  has no plan or  intention  to  repurchase  or  redeem,  in
connection with the Merger, any of its stock issued pursuant to the Merger.

          7. Except for transfers described in Section  368(a)(2)(C) of the Code
and  transfers  permitted to be made  pursuant to Treasury  Regulation  Sections
1.368-1(d), -1(e) and -2(k)(2) Parent has no plan or intention to: (a) liquidate
the Company;  (b) merge the Company with or into another  corporation  including
Parent or its affiliates; (c) sell, distribute or otherwise dispose of the stock
of the Company;  or (d) cause the Company to sell or otherwise dispose of any of
its assets or of any assets  acquired from Merger Sub,  except for  dispositions
made in the ordinary  course of business or payment of expenses  incurred by the
Company pursuant to the Merger;

          8. In the Merger,  Merger Sub will have no liabilities  assumed by the
Company and will not transfer to the Company any assets subject to  liabilities,
except to the extent incurred in connection with the  transactions  contemplated
by the Agreements;

          9.  Parent  intends  that,  following  the Merger,  the  Company  will
continue  its  historic  business or use a  significant  portion of its historic
business assets in a business;

          10. During the past five (5) years, none of the outstanding  shares of
capital  stock of the Company,  including  the right to acquire or vote any such
shares  have,  directly  or  indirectly,  been owned by Parent  or, to  Parent's
knowledge,  persons related to Parent within the meaning of Treasury  Regulation
Section  1.368-1(e)(3);

          11. Neither Parent nor Merger Sub is an investment  Company within the
meaning of Section  368(a)(F)(iii)  and (iv) of the Code;

          12. No  shareholder  of the  Company  is acting as agent for Parent in
connection  with the Merger or the approval  thereof;  Parent will not reimburse
any shareholder of the Company for any stock of the Company such shareholder may
have purchased or for other obligations such shareholder may have incurred;

         13.  Neither Parent nor Merger Sub is, or will be at the Effective Time
of the Merger,  under the  jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code;

         14. Except for  repurchases  or redemptions of Parent Common Stock that
are  consistent  with past  practices  and  pursuant  to  pre-existing  purchase
programs  that were not  created or  modified  in  connection  with the  Merger,
neither  Merger Sub nor Parent nor any "related  person" of Merger Sub or Parent
(as such term is defined by  Treasury  Regulation  Section  1.368-1(e)(3))  will
repurchase  or  redeem  any of the  Parent  Common  Stock  to be  issued  to the
shareholders  of the  Company in  connection  with the Merger;

          15. Except with respect to (i) payments of cash to shareholders of the
Company perfecting  dissenters' rights and (ii) payments of cash to shareholders
of the Company in lieu of fractional  shares of Parent Common Stock, one hundred
percent (100%) of the stock of the Company outstanding  immediately prior to the
Merger will be exchanged  solely for Parent  Common Stock.  Thus,  except as set
forth  in  the  preceding  sentence,  Merger  Sub  and  Parent  intend  that  no
consideration  be  paid  or  received  (directly  or  indirectly,   actually  or
constructively)  for stock of the Company other than Parent Common Stock.  It is
further  represented  that (i) all  payments  made for  imaging  services  to be
provided  by R.  Squared  Limited to Data Tree LLC are not in excess of the fair
market value of such services in the State of California, and such payments are,
in fact, less than amounts paid to other  comparable  providers of such services
in the State of  California;  (ii) with  respect  to the  Promissory  Note of R.
Squared Limited, in the principal amount of ____________ and bearing interest at
8.0% per annum, contributed to Data Tree LLC in exchange for an eighteen percent
Membership  Interest  therein,  such note  represents the full purchase price of
such  Membership  Interest  for an  amount  equal to and not less  than the fair
market  value  of such  Membership  Interest;  and  (iii)  with  respect  to the
Noncompetition  Agreement  contributed  to Data Tree LLC in  exchange  for a two
percent Membership Interest therein, the value of such Noncompetition  Agreement
represents  the full purchase  price of such  Membership  Interest for an amount
equal to and not less than the fair market  value of such  Membership  Interest;

          16. The total fair market value of all consideration other than Parent
Common Stock received by shareholders  of the Company in the Merger  (including,
without  limitation,  cash  paid  to  shareholders  of  the  Company  perfecting
dissenters'  rights) will be less than ten percent (10%) of the  aggregate  fair
market  value of  stock  of the  Company  outstanding  immediately  prior to the
Merger;

          17. The total fair market value of the Parent Common Stock received by
each shareholder of the Company will be  approximately  equal to the fair market
value of the stock of the  Company  surrendered  in exchange  therefor,  and the
aggregate  consideration received by shareholders of the Company in exchange for
their stock of the Company will be approximately  equal to the fair market value
of all of the outstanding  shares of stock of the Company  immediately  prior to
the Merger;

          18. Each of Merger Sub,  Parent,  the Company and each  shareholder of
the Company will pay  separately  his,  her or its own expenses  relating to the
Merger;

          19. There is no  intercorporate  indebtedness  existing between Parent
and the Company or between Merger Sub and the Company that was issued,  acquired
or will be settled  at a discount  as a result of the  Merger,  and Parent  will
assume no  liabilities  of the  Company  or any  shareholder  of the  Company in
connection with the Merger;

          20.  The  terms of the  Reorganization  Agreement  and the  agreements
related thereto are the product of arm's length negotiations;

          21. None of the compensation received by any  shareholder-employee  of
the Company will be separate  consideration  for, or allocable  to, any of their
shares  of stock of the  Company;  none of the  shares of  Parent  Common  Stock
received  by  any   shareholder-employee   of  the  Company   will  be  separate
consideration  for, or allocable to, any  employment  agreement or any covenants
not to compete;  and the compensation  paid to any  shareholder-employee  of the
Company will be for services  actually  rendered and will be  commensurate  with
amounts paid to third parties bargaining at arm's length for similar services;

         22. The payment of cash in lieu of  fractional  shares of Parent Common
Stock is solely for the purpose of avoiding  the  expense and  inconvenience  to
Parent  of  issuing   fractional  shares  and  does  not  represent   separately
bargained-for  consideration.  The total cash consideration that will be paid in
the transaction to the Company shareholders instead of issuing fractional shares
of  Parent  Common  Stock  will  not  exceed  one  percent  (1%)  of  the  total
consideration that will be issued in the transaction to the Company shareholders
in exchange for their shares of Company  Capital  Stock.  The  fractional  share
interests  of each  Company  shareholder  will  be  aggregated,  and no  Company
shareholder will receive cash in an amount equal to or greater than the value of
one full share of Parent Common Stock;

         23. With respect to each instance,  if any, in which shares of stock of
the Company have been  purchased by a  shareholder  of Parent (a  "Shareholder")
during the Pre-Merger  Period (a "Stock  Purchase"):  (i) the Stock Purchase was
made by such  Shareholder not as a representative  of Parent;  (ii) the purchase
price paid by such Shareholder pursuant to the Stock Purchase was the product of
arm's length negotiations,  was not advanced, and will not be reimbursed, either
directly or indirectly,  by Parent; (iii) at no time was such Shareholder or any
other party  required or obligated  to  surrender to Parent the Company  Capital
Stock acquired in the Stock Purchase, and neither such Shareholder nor any other
party will be required to surrender to Parent the Parent  Common Stock for which
such shares of stock of the Company will be  exchanged  in the Merger;  and (iv)
the Stock Purchase was not a formal or informal condition to consummation of the
Merger; and

         24.  Parent  and  Merger  Sub  are   authorized  to  make  all  of  the
representations set forth herein.

The  undersigned  recognize  that  (i)  your  opinions  will  be  based  on  the
representations  set  forth  herein  and  on  the  statements  contained  in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications  including that they may not be relied
upon if any such representations are not accurate in all material respects.

The  undersigned   recognize  that  your  opinions  will  not  address  any  tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.

                                       Very truly yours,

                                       THE FIRST AMERICAN FINANCIAL
                                       CORPORATION, a California corporation


                                       By:__________________________________

                                       Title:_______________________________


                                       IMAGE ACQUISITION CORP.,
                                       a California corporation


                                       By:__________________________________

                                       Title:_______________________________

<PAGE>




                                                                       EXHIBIT M


                            TAX REPRESENTATION LETTER
                          TO BE EXECUTED BY THE COMPANY


Cooley Godward, LLP                            White & Case LLP
Five Palo Alto Square                          633 West Fifth Street, Suite 1900
3000 El Camino Real                            Los Angeles, California 90071
Palo Alto California 94306-2155

Re:  Merger  pursuant to the Agreement  and Plan of Merger (the  "Reorganization
     Agreement"),  dated  March __,  1998,  among THE FIRST  AMERICAN  FINANCIAL
     CORPORATION, a California corporation ("Parent"),  IMAGE ACQUISITION CORP.,
     a California  corporation and a wholly owned  subsidiary of Parent ("Merger
     Sub"), DATA TREE CORPORATION, a California corporation (the "Company"), and
     HARISH CHOPRA and the related  Agreement of Merger  between the Company and
     Merger Sub (the "Agreement of Merger").

Ladies and Gentlemen:

This letter is supplied to you in  connection  with your  rendering  of opinions
regarding  certain  federal  income  tax  consequences  of  the  Merger.  Unless
otherwise indicated,  capitalized terms not defined herein have the meanings set
forth  in  the  Reorganization   Agreement  or  the  Agreement  of  Merger.  The
Reorganization  Agreement  and the Agreement of Merger,  including  exhibits and
schedules attached thereto, are collectively referred to as the "Agreements."

After  consulting  with its counsel and  auditors  regarding  the meaning of and
factual  support  for the  following  representations,  the  undersigned  hereby
certifies and represents that the following facts are now true and will continue
to be true as of the Effective Time of the Merger and thereafter where relevant:

         1.  Pursuant  to the  Merger,  Merger  Sub will merge with and into the
Company,  and the  Company  will  acquire all of the assets and  liabilities  of
Merger Sub. Specifically,  the assets transferred to the Company pursuant to the
Merger will  represent at least ninety percent (90%) of the fair market value of
the net assets and at least  seventy  percent  (70%) of the fair market value of
the  gross  assets  held by  Merger  Sub  immediately  prior to the  Merger.  In
addition,  at least  ninety  percent  (90%) of the fair market  value of the net
assets and at least seventy  percent (70%) of the fair market value of the gross
assets held by the Company  immediately  prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the  percentage  of the  Company's and Merger Sub's net and gross assets held by
the Company  immediately  following  the Merger,  the  following  assets will be
treated  as  property  held by Merger  Sub or the  Company,  as the case may be,
immediately  prior but not subsequent to the Merger:  (i) assets  disposed of by
the Company or Merger Sub (other than assets  transferred from Merger Sub to the
Company in the Merger) prior to or subsequent to the Merger and in contemplation
thereof  (including  without  limitation  any asset  disposed of by the Company,
other than in the  ordinary  course of  business,  pursuant  to a plan or intent
existing  during  the  period  ending at the  Effective  Time of the  Merger and
beginning with the  commencement  of  negotiations  (whether formal or informal)
with Parent regarding the Merger (the "Pre-Merger Period");  (ii) assets used by
the Company or Merger Sub to pay shareholders  perfecting  dissenters' rights or
other expenses or liabilities  incurred in connection  with the Merger and (iii)
assets used to make  distribution,  redemption  or other  payments in respect of
stock of the Company or rights to acquire such stock (including payments treated
as such for tax purposes) that are made in  contemplation  of the Merger or that
are related thereto;

         2. Other than in the  ordinary  course of  business  or pursuant to its
obligations under the Agreements, the Company has made no transfer of any of its
assets  (including any  distribution of assets with respect to, or in redemption
of, stock) in contemplation of the Merger or during the Pre-Merger Period;

         3. The Company's  principal reasons for participating in the Merger are
bona fide business purposes unrelated to taxes;

         4. At the  Effective  Time of the  Merger,  the  Company  will  have no
outstanding  equity  interests  other than those  disclosed in Section __ of the
Reorganization  Agreement. At the time of the Merger, except as specified in the
Reorganization  Agreement,  the  Company  will  have  no  outstanding  warrants,
options,  or  convertible  securities  or any  other  type of right  outstanding
pursuant to which any person could acquire  shares of the Company  Capital Stock
or any other  equity  interest in the  Company,  other than those  disclosed  in
Section __ of the  Reorganization  Agreement  or the  Disclosure  Schedule  with
respect thereto;

         5. In the Merger, shares of stock of the Company representing "Control"
of the Company will be exchanged solely for shares of voting stock of Parent. At
the  Effective  Time of the  Merger,  there will exist no rights to acquire  the
Company Capital Stock or to vote (or restrict or otherwise  control the vote of)
shares of stock of the  Company  which,  if  exercised,  would  affect  Parent's
acquisition  and  retention  of Control of the  Company.  For  purposes  of this
paragraph,  shares of the stock of Company  exchanged in the Merger for cash and
other property (including,  without limitation, cash paid to shareholders of the
Company perfecting  dissenters'  rights, if any, or in lieu of fractional shares
of Parent  Common  Stock)  will be  treated  as  shares of stock of the  Company
outstanding  on the date of the  Merger but not  exchanged  for shares of voting
stock of  Parent.  As used in this  letter,  "Control"  shall  consist of direct
ownership of shares of stock  possessing  at least eighty  percent  (80%) of the
total  combined  voting power of shares of all classes of stock entitled to vote
and at least  eighty  percent  (80%) of the total  number of shares of all other
classes of stock of the  corporation.  For purposes of  determining  Control,  a
person shall not be  considered  to own shares of voting stock if rights to vote
such shares (or to restrict or otherwise  control the voting of such shares) are
held by a third party  (including  a voting  trust)  other than an agent of such
person;

         6. The total fair market value of all  consideration  other than shares
of Parent  Common Stock  received by  shareholders  of the Company in the Merger
(including,  without limitation,  cash paid to Company  shareholders  perfecting
dissenters'  rights or in lieu of fractional shares of Parent Common Stock) will
be less than ten percent (10%) of the  aggregate  fair market value of shares of
stock of the Company outstanding immediately prior to the Merger;

         7. The Company has no plan or intention to issue  additional  shares of
stock after the Merger,  or take any other  action,  that would result in Parent
losing Control of the Company;

         8. Except for transfers  described in Section  368(a)(2)(C) of the Code
and  Treasury  Regulation  Section  1.368-2(k)(2),  the  Company  has no plan or
intention  to sell or  otherwise  dispose  of any of its assets or of any of the
assets  acquired from Merger Sub in the Merger except for  dispositions  made in
the  ordinary  course of  business  or to pay  expenses  incurred by the Company
pursuant to the Merger;

         9. The  Company  intends to  continue  its  historic  business or use a
significant  portion of its historic business assets in a business following the
Merger;

         10. The liabilities of the Company have been incurred by the Company in
the ordinary course of its business;

         11.  The  fair  market  value  of the  Company's  assets  will,  at the
Effective  Time of the Merger,  exceed the aggregate  liabilities of the Company
plus the amount of liabilities, if any, to which such assets are subject;

         12.  The  Company is not and will not be at the  Effective  Time of the
Merger an "investment  company" within the meaning of Section  368(a)(2)(F)(iii)
and (iv) of the Code;

         13.  The  Company is not and will not be at the  Effective  Time of the
Merger  under the  jurisdiction  of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code;

         14. The  Company  has made no  extraordinary  distributions  within the
meaning of  Temporary  Federal  Treasury  Regulation  Section  1.368-IT(e)  with
respect to its stock, prior to and in connection with the Merger;

         15. The Company has not redeemed  and no "related  person" with respect
to the  Company,  as  such  term  is  defined  by  Treasury  Regulation  Section
1.368-1(e)(3),  (without regard to Section  1.368-1(e)(3)(i)(A)),  has purchased
any Company Capital Stock prior to and in connection with the Merger;

         16. Except with respect to (i) payments of cash to  shareholders of the
Company lieu of fractional  shares of Parent Common Stock,  and (ii) payments of
cash to shareholders of the Company perfecting  dissenters'  rights, one hundred
percent  (100%) of the shares of stock of the  Company  outstanding  immediately
prior to the Merger will be exchanged  solely for shares of Parent Common Stock.
Thus, except as set forth in the preceding sentence, the Company intends that no
consideration  be  paid  or  received  (directly  or  indirectly,   actually  or
constructively)  for shares of stock of the Company  other than shares of Parent
Common Stock. It is further  represented  that (i) all payments made for imaging
services to be provided by R. Squared Limited to Data Tree LLC are not in excess
of the fair market value of such services in the State of  California,  and such
payments are, in fact, less than amounts paid to other  comparable  providers of
such services in the State of  California;  (ii) with respect to the  Promissory
Note of R. Squared Limited,  in the principal amount of ____________ and bearing
interest  at 8.0% per annum,  contributed  to Data Tree LLC in  exchange  for an
eighteen  percent  Membership  Interest  therein,  such note represents the full
purchase price of such  Membership  Interest for an amount equal to and not less
than the fair market value of such Membership  Interest;  and (iii) with respect
to the Noncompetition  Agreement  contributed to Data Tree LLC in exchange for a
two  percent  Membership  Interest  therein,  the  value of such  Noncompetition
Agreement  represents the full purchase price of such Membership Interest for an
amount  equal to and not less  than the  fair  market  value of such  Membership
Interest;

         17. The fair market value of the shares of Parent Common Stock received
by each  shareholder  of the  Company  will be  approximately  equal to the fair
market  value of the  shares of stock of the  Company  surrendered  in  exchange
therefor and the aggregate consideration received by shareholders of the Company
in exchange for their shares of stock of the Company will be approximately equal
to the  fair  market  value  of all of the  outstanding  shares  of stock of the
Company immediately prior to the Merger;

         18. Each of Merger Sub, Parent, the Company and each shareholder of the
Company will each pay  separately  his, her or its own expenses  relating to the
Merger;

         19. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued,  acquired, or
will be settled at a discount as a result of the  Merger;  Parent will assume no
liabilities of the Company or any  shareholder of the Company in connection with
the Merger;

         20. The terms of the Reorganization  Agreement and the other agreements
relating thereto are the product of arm's length negotiations;

         21. None of the compensation received by any  shareholder-employees  of
the Company  will be separate  consideration  for, or  allocable to any of their
shares  of stock of the  Company;  none of the  shares of  Parent  Common  Stock
received  by  any   shareholder-employees   of  the  Company  will  be  separate
consideration  for, or allocable to, any  employment  agreement or any covenants
not to compete;  and the compensation paid to any  shareholder-employees  of the
Company will be for services  actually  rendered and will be  commensurate  with
amounts paid to third parties bargaining at arm's length for similar services;

         22. With respect to each instance,  if any, in which shares of stock of
the Company have been  purchased by a  shareholder  of Parent (a  "Shareholder")
during the Pre-Merger period (a "Stock Purchase"):  (i) to the best knowledge of
the  Company,  (A) the Stock  Purchase was made by such  Shareholder  on its own
behalf,  rather than as a representative,  or for the benefit of Parent, (B) the
Stock Purchase was entered into solely to satisfy the separate interests of such
Shareholder and the seller,  and (C) the purchase price paid by such Shareholder
pursuant to the Stock Purchase was the product of arm's length negotiations; and
(ii) the Stock Purchase was not a formal or informal  condition to  consummation
of the Merger; and

         23. The Company is  authorized to make all of the  representations  set
forth herein.


The  undersigned  recognizes  that  (i)  your  opinions  will  be  based  on the
representations  set  forth  herein  and  on  the  statements  contained  in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications  including that they may not be relied
upon if any such representations are not accurate in all material respects.

Notwithstanding  anything  herein  to the  contrary,  the  undersigned  makes no
representations  regarding  any  actions or conduct of the  Company  pursuant to
Parent's exercise of control over the Company after the Merger.

The  undersigned  recognizes  that  your  opinions  will  not  address  any  tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.

                                         Very truly yours,

                                         DATA TREE CORPORATION,
                                         a California corporation



                                         By:___________________________________

                                         Title:________________________________

<PAGE>



                                                                         ANNEX B


 
                               AGREEMENT OF MERGER

         AGREEMENT  OF  MERGER,  dated as of  ________  __,  1998  (the  "Merger
Agreement"),  is made and entered into by and among The First American Financial
Corporation,  a California  corporation  ("FAFCO"),  Image Acquisition  Corp., a
California  corporation  ("Merger  Sub"),  Data Tree  Corporation,  a California
corporation (the "Company"), and Harish Chopra, an individual residing in Rancho
Santa Fe, California (the "Major  Shareholder").  The Company and Merger Sub are
sometimes hereinafter referred to as the "Constituent Corporations."

                              W I T N E S S E T H:

         WHEREAS,  FAFCO directly owns all of the outstanding shares of stock of
Merger Sub;

         WHEREAS, FAFCO, the Constituent  Corporations and the Major Shareholder
have previously entered into an Agreement and Plan of Merger,  dated as of March
27,  1998  (the   "Agreement  and  Plan  of  Merger"),   providing  for  certain
representations,  warranties and agreements in connection with the  transactions
contemplated hereby; and

         WHEREAS,   the  respective  boards  of  directors  of  the  Constituent
Corporations  deem it advisable  and in the best  interests  of the  Constituent
Corporations  and in the best interest of the  shareholders  of the  Constituent
Corporations  that Merger Sub be merged with and into the Company (the "Merger")
so that the Company shall be the surviving corporation of the Merger.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    SECTION 1
                                   THE MERGER

          1.1  Effectiveness.  The Merger shall become effective (the "Effective
Time") upon the filing of this Merger  Agreement  with the Secretary of State of
the State of  California  in  accordance  with  Section  1103 of the  California
General Corporation Law (the "CGCL").

          1.2 Merger. At the Effective Time, (i) Merger Sub shall be merged with
and into the Company,  (ii) the separate existence of Merger Sub shall thereupon
cease and (iii) the Company  shall be the  surviving  corporation  in the Merger
(the "Surviving  Corporation") and shall continue its corporate existence,  with
all of  its  purposes,  objects,  rights,  privileges,  powers,  immunities  and
franchises,  under the laws of the State of California unaffected and unimpaired
by the Merger.

          1.3 The Surviving Corporation. The Surviving Corporation shall succeed
to all of the rights,  privileges,  immunities and franchises of Merger Sub, all
of the  properties  and  assets of Merger  Sub and all of the  debts,  choses in
action and other  interests  due or belonging to Merger Sub and shall be subject
to, and responsible for, all of the debts, liabilities and obligations of Merger
Sub with the effect set forth in the CGCL.

          1.4  Further  Action.  If at any time  after  the  Effective  Time any
further  action is  necessary  or  desirable  to carry out the  purposes of this
Merger Agreement or to vest the Surviving Corporation with the full right, title
and possession to all assets, property, rights, privileges,  immunities,  powers
and  franchises  of Merger Sub,  the officers  and  directors  of the  Surviving
Corporation  are  fully  authorized  in  the  name  of  either  or  both  of the
Constituent Corporations or otherwise to take all such action.

                                    SECTION 2
                          CORPORATE GOVERNANCE MATTERS

          2.1 Articles of Incorporation  and Bylaws.  At the Effective Time, the
Articles  of  Incorporation  and  the  bylaws  of  the  Company,  as  in  effect
immediately  prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation.

                                    SECTION 3
           MANNER OF CONVERTING SHARES OF THE CONSTITUENT CORPORATIONS

          3.1 Merger Sub Stock.  At the Effective Time, each share of the Common
Stock of Merger Sub outstanding prior to the Effective Time shall  automatically
be  converted  into and  become  one  share  of  Common  Stock of the  Surviving
Corporation,  and each  certificate  representing  shares of Merger  Sub  shall,
without any action on the part of the holder thereof, be deemed to represent the
same number of shares of the Surviving Corporation.

          3.2 Conversion of Company Common Stock.  Except as provided in Section
3.5, at the Effective  Time,  each
share of Company  Common Stock  outstanding  immediately  prior to the Effective
Time shall be converted  into the right to receive the  Applicable  Multiple (as
defined  below) of fully paid and  non-assessable  shares of FAFCO Common Stock,
$1.00 par value (the  "Shares").  The term  "Applicable  Multiple"  shall mean a
fraction the numerator of which is the quotient  resulting  from the division of
the Purchase  Price (as defined below) by the number of shares of Company Common
Stock  outstanding as of the Effective time and the  denominator of which is the
average of the last  reported  sales  price of one Share as  reported on the New
York  Stock  Exchange  for the twenty  consecutive  trading  days  ending on the
trading  day  immediately   prior  to  the  special  meeting  of  the  Company's
shareholders  at which  the  Company's  shareholders  will vote to  approve  the
Merger,  the  Agreement and Plan of Merger and this Merger  Agreement.  The term
"Purchase  Price"  means the  difference  between (x)  $43,113,373  and (y) such
reasonable fees and expenses of the counsel,  accountants and financial advisors
of the  Company  and  personal  counsel to the Major  Shareholder  which  exceed
$1,000,000.

          3.3 Closing of the Company's Stock Ledger.  At and after the Effective
Time, all holders of  certificates  representing  shares of Company Common Stock
that were  outstanding  immediately  prior to the Effective  Time shall cease to
have any rights as shareholders of the Company.  At the close of business on the
day of the Effective  Time-the  stock ledger of the Company shall be closed with
respect to all shares of such Company Common Stock.

          3.4  Exchange  of  Company  Stock  Certificates.  At or  prior  to the
Effective  Time,  FAFCO shall deposit with the First American Trust Company (the
"Exchange  Agent"),  in trust for the holders of  certificates (a "Company Stock
Certificate")  which immediately prior to the Effective Time represented  shares
of the Company's  Common Stock, a certificate or certificates  representing  the
number of Shares  which  each  shareholder  of the  Company is to receive in the
Merger. Upon surrender for cancellation to the Exchange Agent of a Company Stock
Certificate,  together  with the letter  of transmittal provided to each Company
shareholder and duly executed and completed in accordance with the  instructions
thereon,  the Exchange Agent shall  promptly  transfer to such  shareholder  the
Shares to which such  shareholder  is entitled  pursuant to Section  3.2.  Until
surrendered as contemplated by this Section-3.4,  each Company Stock Certificate
shall be deemed,  from and after the Effective Time, to represent only the right
to receive  shares of FAFCO  Common  Stock  (and cash in lieu of any  fractional
share of FAFCO Common Stock as  contemplated  by Section 3.5),  pursuant to this
Merger Agreement.  If any Company Stock Certificate shall have been lost, stolen
or destroyed,  the Exchange Agent shall issue a certificate  representing  FAFCO
Common  Stock with  respect  to such lost,  stolen or  destroyed  Company  Stock
Certificate in accordance with this Merger  Agreement upon delivery by the owner
of such lost,  stolen or destroyed  Company Stock  Certificate  to the Surviving
Corporation  of a bond in such sum as the  Surviving  Corporation  may direct or
otherwise  indemnify the Surviving  Corporation in a manner  satisfactory to the
Surviving  Corporation  against any claim that may be made against the Surviving
Corporation with respect to the Company Stock  Certificate  claimed to have been
lost, stolen or destroyed.

          3.5 No Fractional  Shares.  No fractional shares of FAFCO Common Stock
shall be issued in connection with the Merger,  and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, any holder
of Company Common Stock who would otherwise be entitled to receive a fraction of
a share of FAFCO Common Stock shall,  upon  surrender of such  holder's  Company
Stock  Certificate(s),  be paid in cash in the form of a check drawn on FAFCO in
an amount  (rounded to the nearest  cent) equal to the value of such  fractional
share of FAFCO Common Stock.

          3.6  Dissenting  Shares.  Notwithstanding  anything  to  the  contrary
contained  in  this  Merger  Agreement,  any  shares  of  Company  Common  Stock
outstanding immediately prior to the Effective Time that were not voted in favor
of the Merger and are held by shareholders who have complied with the applicable
provisions  of Chapter  13 of the CGCL (the  "Dissenting  Shares")  shall not be
converted  into or represent the right to receive any Shares in accordance  with
Section 3.2 (or cash in lieu of  fractional  shares in  accordance  with Section
3.5), and each holder of Dissenting Shares shall be entitled only to such rights
as may be granted to such holder  under  Chapter 13 of the CGCL.  From and after
the Effective  Time, a holder of Dissenting  Shares shall not have and shall not
be  entitled  to  exercise  any  of the  voting  rights  or  other  rights  of a
shareholder  of the Surviving  Corporation.  If any holder of Dissenting  Shares
shall fail to assert or perfect, or shall waive, rescind,  withdraw or otherwise
lose,  such holder's right to dissent and obtain payment under Chapter 13 of the
CGCL, then such shares shall automatically be converted into and shall represent
only the right to receive (upon the  surrender of Company  Stock  Certificate(s)
previously  representing  such shares)  FAFCO Common  Stock in  accordance  with
Section 3.2 (and cash in lieu of any fractional share in accordance with Section
3.5).

                                    SECTION 4
                                  MISCELLANEOUS

         4.1      Termination.

         (a)  Notwithstanding  the  approval  of this  Merger  Agreement  by the
shareholders  of the  Company  and Merger  Sub,  this  Merger  Agreement  may be
terminated  at any time prior to the Effective  Time by mutual  agreement of the
parties to this Merger Agreement.

         (b)  Notwithstanding  the  approval  of this  Merger  Agreement  by the
shareholders  of the  Company  and  Merger  Sub,  this  Merger  Agreement  shall
terminate automatically in the event that the Agreement and Plan of Merger shall
be terminated as provided therein.

         (c) In the  event  of the  termination  of  this  Merger  Agreement  as
provided  above,  this Merger  Agreement shall become void and there shall be no
liability on the part of the Company, Merger Sub, FAFCO or the Major Shareholder
or the  Company's,  Merger Sub's or FAFCO's  respective  officers or  directors,
except as otherwise provided in the Agreement and Plan of Merger.

          4.2  Amendment.  This Merger  Agreement  may be amended by the parties
hereto  any time  before or after  approval  hereof by the  shareholders  of the
Company or Merger Sub, but after such approval, no amendment shall be made which
by law requires the further approval of such shareholders without obtaining such
approval.  This Merger  Agreement may not be amended  except by an instrument in
writing signed on behalf of each of the parties hereto.

          4.3  Counterparts.  In order to facilitate the filing and recording of
this Merger  Agreement,  the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.


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



                                           THE FIRST AMERICAN FINANCIAL
                                           CORPORATION


                                           By:                                 
                                              Parker S. Kennedy
                                              President


                                           IMAGE ACQUISITION CORP.


                                           By:                                 
                                              Parker S. Kennedy
                                              President


                                           DATA TREE CORPORATION


                                           By:                                 
                                              Harish K. Chopra
                                              President



                                                                                
                                              Harish K. Chopra
<PAGE>



                                                                         ANNEX C


                       CALIFORNIA GENERAL CORPORATION LAW

                         CHAPTER 13. DISSENTERS' RIGHTS

     1300.  [RIGHT TO REQUIRE  PURCHASE -  "DISSENTING  SHARES" AND  "DISSENTING
SHAREHOLDER" DEFINED]. -- (a) If the approval of the outstanding shares (Section
152) of a corporation is required for a  reorganization  under  subdivisions (a)
and (b) or  subdivision  (e) or (f) of Section  1201,  each  shareholder  of the
corporation  entitled  to vote on the  transaction  and  each  shareholder  of a
subsidiary  corporation  in a  short-form  merger  may, by  complying  with this
chapter,  require  the  corporation  in which the  shareholder  holds  shares to
purchase for cash at their fair market value the shares owned by the shareholder
which are dissenting shares as defined in subdivision (b). The fair market value
shall be determined as of the day before the first  announcement of the terms of
the proposed reorganization or short-form merger,  excluding any appreciation or
depreciation in consequence of the proposed  action,  but adjusted for any stock
split,   reverse  stock  split,  or  share  dividend  which  becomes   effective
thereafter.

     (b) As used in this  chapter,  "dissenting  shares" means shares which come
within all of the following descriptions:

          (1)  Which  were  not  immediately  prior  to  the  reorganization  or
     short-form  merger  either (A) listed on any national  securities  exchange
     certified by the  Commissioner  of  Corporations  under  subdivision (o) of
     Section  25100 or (B) listed on the list of OTC margin stocks issued by the
     Board of Governors of the Federal Reserve System, and the notice of meeting
     of shareholders to act upon the reorganization  summarizes this section and
     Sections 1301, 1302, 1303 and 1304; provided,  however, that this provision
     does not  apply to any  shares  with  respect  to which  there  exists  any
     restriction  on  transfer  imposed  by the  corporation  or by  any  law or
     regulation;  and provided,  further,  that this provision does not apply to
     any class of shares  described  in  subparagraph  (A) or (B) if demands for
     payment  are filed with  respect  to 5 percent  or more of the  outstanding
     shares of that class.

          (2)  Which  were  outstanding  on the  date for the  determination  of
     shareholders  entitled to vote on the reorganization and (A) were not voted
     in favor of the  reorganization or, (B) if described in subparagraph (A) or
     (B) or paragraph  (1) (without  regard to the provisos in that  paragraph),
     were voted against the reorganization,  or which were held of record on the
     effective date of a short-form merger; provided, however, that subparagraph
     (A) rather than subparagraph (B) of this paragraph applies in any case were
     the approval  required by Section 1201 is sought by written  consent rather
     than at a meeting.

          (3) Which the dissenting shareholder has demanded that the corporation
     purchase at their fair market value, in accordance with Section 1301.

          (4) Which the dissenting shareholder has submitted for endorsement, in
     accordance with Section 1302.

     (c)  As  used  in  this  chapter,   "dissenting   shareholder"   means  the
recordholder of dissenting shares and includes a transferee of record.

     1301.  [DEMAND FOR PURCHASE].  -- (a) If, in the case of a  reorganization,
any  shareholders of a corporation  have a right under Section 1300,  subject to
compliance with paragraphs (3) and (4) of subdivisions  (b) thereof,  to require
the corporation to purchase their shares for cash, such  corporation  shall mail
to each such shareholder a notice of the approval of the  reorganization  by its
outstanding shares (Section 152) within 10 days after the date of such approval,
accompanied by a copy of Sections 1300,  1302,  1303,  1304 and this section,  a
statement of the price  determined  by the  corporation  to  represent  the fair
market value of the dissenting  shares, and a brief description of the procedure
to be followed if the shareholder  desires to exercise the  shareholder's  right
under  such  sections.  The  statement  of  price  constitutes  an  offer by the
corporation to purchase at the price stated any dissenting  shares as defined in
subdivision  (b) of Section  1300,  unless they lose their status as  dissenting
shares under Section 1309.

     (b) Any  shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs  (3)  and  (4) of  subdivision  (b)  thereof,  and  who  desires  the
corporation  to  purchase  such  shares  shall  make  written  demand  upon  the
corporation  for the purchase of such shares and payment to the  shareholder  in
cash of their fair market  value.  The demand is not  effective  for any purpose
unless it is received by the  corporation  or any transfer  agent thereof (1) in
the  case  of  shares  described  in  clause  (i) or (ii)  of  paragraph  (1) of
subdivision  (b) of  Section  1300  (without  regard  to the  provisos  in  that
paragraph),  not later than the date of the  shareholders'  meeting to vote upon
the  reorganization,  or (2) in any other case  within 30 days after the date on
which  the  notice  of  the  approval  by the  outstanding  shares  pursuant  to
subdivision  (a) or the notice  pursuant to subdivision  (i) of Section 1110 was
mailed to the shareholder.

     (c) The demand  shall  state the  number  and class of the  shares  held of
record by the  shareholder  which the  shareholder  demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the  announcement  of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.

     1302.  [ENDORSEMENT  OF SHARES].  -- Within 30 days after the date on which
notice of the  approval  by the  outstanding  shares or the notice  pursuant  to
subdivision (i) of Section 1110 was mailed to the  shareholder,  the shareholder
shall submit to the corporation at its principal  office or at the office of any
transfer  agent  thereof,  (a) if the shares are  certificated  securities,  the
shareholder's certificates representing any shares which the shareholder demands
that the corporation  purchase,  to be stamped or endorsed with a statement that
the  shares  are  dissenting  shares  or to be  exchanged  for  certificates  of
appropriate  denomination  so  stamped  or  endorsed  or (b) if the  shares  are
uncertificated  securities,  written  notice of the  number of shares  which the
shareholder demands that the corporation purchase.  Upon subsequent transfers of
the dissenting  shares on the books of the  corporation,  the new  certificates,
initial  transaction  statement,  and other written  statements  issued therefor
shall bear a like statement,  together with the name of the original  dissenting
holder of the shares.

     1303.  [AGREED PRICE - TIME FOR  PAYMENT].-- (a) If the corporation and the
shareholder agree that the shares are dissenting shares and agree upon the price
of the shares,  the dissenting  shareholder is entitled to the agreed price with
interest  thereon at the legal rate on judgments from the date of the agreement.
Any agreements  fixing the fair market value of any dissenting shares as between
the corporation and the holders thereof shall be filed with the secretary of the
corporation.

     (b) Subject to the  provisions of Section 1306,  payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual  conditions
to the  reorganization  are  satisfied,  whichever is later,  and in the case of
certificated  securities,  subject to  surrender of the  certificates  therefor,
unless provided otherwise by agreement.

     1304.  [DISSENTER'S  ACTION TO ENFORCE PAYMENT].  -- (a) If the corporation
denies  that the  shares  are  dissenting  shares,  or the  corporation  and the
shareholder  fail to agree upon the fair market  values of the shares,  then the
shareholder  demanding  purchase  of such  shares  as  dissenting  shares or any
interested corporation,  within six months after the date on which notice of the
approval  by  the  outstanding  shares  (Section  152)  or  notice  pursuant  to
subdivision  (i) of  Section  1110  was  mailed  to  the  shareholder,  but  not
thereafter,  may file a complaint  in the  superior  court of the proper  county
praying the court to determine  whether the shares are dissenting  shares or the
fair  market  value of the  dissenting  shares or both or may  intervene  in any
action pending on such a complaint.

     (b) Two or more dissenting shareholders may join as plaintiffs or be joined
as  defendants  in  any  such  action  and  two  or  more  such  actions  may be
consolidated.

     (c) On the trial of the action,  the court shall  determine the issues.  If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue.  If the fair market value of the  dissenting  shares is in
issue,  the  court  shall  determine,  or shall  appoint  one or more  impartial
appraisers to determine, the fair market value of the shares.

     1305.  [APPRAISER'S REPORT - PAYMENT - COSTS]. -- (a) If the court appoints
an appraiser or appraisers,  they shall proceed  forthwith to determine the fair
market value per share. Within the time fixed by the court, the appraisers, or a
majority of them, shall make and file a report in the office of the clerk of the
court.  Thereupon,  on the motion of any party, the report shall be submitted to
the court and considered on such evidence as the court  considers  relevant.  If
the court finds the report reasonable, the court may confirm it.

     (b) If a  majority  of the  appraisers  appointed  fail to make  and file a
report within 10 days from the date of their  appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.

     (c) Subject to the  provisions of Section 1306,  judgment shall be rendered
against the  corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting  shareholder who is a party,  or who has  intervened,  is entitled to
require the  corporation  to purchase,  with interest  thereon at the legal rate
from the date on which judgment was entered.

     (d)  Any  such  judgment  shall  be  payable   forthwith  with  respect  to
uncertificated  securities  and, with respect to certificated  securities,  only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.

     (e) The  costs of the  action,  including  reasonable  compensation  to the
appraisers  to be fixed by the court,  shall be assessed or  apportioned  as the
court considers  equitable,  but, if the appraisal  exceeds the price offered by
the  corporation,  the  corporation  shall  pay  the  costs  (including  in  the
discretion of the court  attorneys'  fees, fees of expert witnesses and interest
at the legal rate on judgments  from the date of compliance  with Sections 1300,
1301 and 1302 if the value  awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).

     1306. [DISSENTING  SHAREHOLDER'S STATUS AS CREDITOR]. -- To the extent that
the  provisions  of Chapter 5 prevent the  payment to any holders of  dissenting
shares  of  their  fair  market  value,  they  shall  become  creditors  of  the
corporation  for the amount thereof  together with interest at the legal rate on
judgments  until the date of payment,  but subordinate to all other creditors in
any liquidation  proceeding,  such debt to be payable when permissible under the
provisions of Chapter 5.

     1307.  [DIVIDENDS  PAID AS  CREDIT  AGAINST  PAYMENT].  --  Cash  dividends
declared and paid by the corporation  upon the dissenting  shares after the date
of approval of the  reorganization  by the outstanding  shares (Section 152) and
prior to payment for the shares by the corporation shall be credited against the
total amount to be paid by the corporation therefor.

     1308.  [CONTINUING  RIGHTS AND PRIVILEGES OF DISSENTING  SHAREHOLDERS].  --
Except as  expressly  limited  in this  chapter,  holders of  dissenting  shares
continue to have all the rights and privileges  incident to their shares,  until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder  may not  withdraw  a demand  for  payment  unless  the  corporation
consents thereto.

     1309.  [TERMINATION OF DISSENTING SHAREHOLDER STATUS]. -- Dissenting shares
lose their  status as  dissenting  shares and the  holders  thereof  cease to be
dissenting  shareholders  and cease to be entitled to require the corporation to
purchase their shares upon the happening of any of the following:

     (a) The corporation  abandons the  reorganization.  Upon abandonment of the
reorganization,   the  corporation   shall  pay  on  demand  to  any  dissenting
shareholder  who has initiated  proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.

     (b) The shares are transferred prior to their submission for endorsement in
accordance  with Section 1302 or are  surrendered  for conversion into shares of
another class in accordance with the articles.

     (c) The dissenting  shareholder  and the  corporation do not agree upon the
status of the  shares as  dissenting  shares or upon the  purchase  price of the
shares,  and neither  files a complaint  or  intervenes  in a pending  action as
provided in Section  1304,  within six months  after the date on which notice of
the approval by the outstanding  shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.

     (d) The  dissenting  shareholder,  with  the  consent  of the  corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.

     1310.  [SUSPENSION OF PROCEEDINGS  FOR PAYMENT PENDING  LITIGATION].  -- If
litigation is instituted to test the  sufficiency  of regularity of the votes of
the shareholder in authorizing a  reorganization,  any proceedings under Section
1304 and 1305 shall be suspended until final determination of such litigation.

     1311. [EXEMPT SHARES]. -- This chapter, except Section 1312, does not apply
to classes  of shares  whose  terms and  provisions  specifically  set forth the
amount to be paid in respect to such shares in the event of a reorganization  or
merger.

     1312.   [ATTACKING  VALIDITY  OF  REORGANIZATION  OR  MERGER].  --  (a)  No
shareholder  of a  corporation  who has a right  under  this  chapter  to demand
payment of cash for the shares held by the  shareholder  shall have any right at
law or in equity to attack the  validity  of the  reorganization  or  short-form
merger,  or to have  the  reorganization  or  short-form  merger  set  aside  or
rescinded,  except in an action to test whether the number of shares required to
authorize  or  approve  the  reorganization  have  been  legally  voted in favor
thereof;  but any  holder  of  shares  of a class  whose  terms  and  provisions
specifically  set forth the amount to be paid in respect to them in the event of
a reorganization  or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the  reorganization are
approved  pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.

     (b) If one of the  parties  to a  reorganization  or  short-form  merger is
directly or indirectly  controlled  by, or under common  control  with,  another
party to the  reorganization  or short-form  merger,  subdivision  (a) shall not
apply to any shareholder of such party who has not demanded  payment of cash for
such  shareholder's  shares  pursuant to this  chapter;  but if the  shareholder
institutes any action to attack the validity of the reorganization or short-form
merger  or to  have  the  reorganization  or  short-form  merger  set  aside  or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's  shares pursuant to this chapter. The court in any
action attacking the validity of the  reorganization  or short-form merger or to
have the  reorganization  or short-form  merger set aside or rescinded shall not
restrain  or enjoin the  consummation  of the  transaction  except upon 10 days,
prior  notice to the  corporation  and upon a  determination  by the court  that
clearly no other remedy will adequately  protect the complaining  shareholder or
the class of shareholders of which such shareholder is a member.

     (c) If one of the  parties  to a  reorganization  or  short-form  merger is
directly or indirectly  controlled  by, or under common  control  with,  another
party to the  reorganization  or short-form  merger, in any action to attack the
validity  of  the   reorganization   or   short-form   merger  or  to  have  the
reorganization  or short-form  merger set aside or  rescinded,  (1) a party to a
reorganization  or  short-form  merger  which  controls  another  party  to  the
reorganization  or  short-form  merger shall have the burden of proving that the
transaction  is just and  reasonable as to the  shareholders  of the  controlled
party,  and (2) a person who controls  two or more  parties to a  reorganization
shall have the burden of proving that the  transaction is just and reasonable as
to the shareholders of any party so controlled.

<PAGE>
                                     PART II

             Information Not Required in Prospectus/Proxy Statement

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Subject to certain limitations,  Section 317 of the California Corporations
Code provides in part that a  corporation  shall have the power to indemnify any
person  who  was or is a  party  or is  threatened  to be  made a  party  to any
proceeding  (other  than an  action  by or in the  right of the  corporation  to
procure a judgment in its favor) by reason of the fact that the person is or was
an agent  (which term  includes  officers  and  directors)  of the  corporation,
against expenses,  judgments, fines, settlements, and other amounts actually and
reasonably  incurred in connection  with the  proceeding if that person acted in
good  faith and in a manner  the person  reasonably  believed  to be in the best
interests of the corporation and, in the case of a criminal  proceeding,  had no
reasonable cause to believe the conduct of the person was unlawful.

     The California  indemnification  statute, as provided in Section 317 of the
California  Corporations  Code  (noted  above),  is  nonexclusive  and  allows a
corporation  to  expand  the  scope  of  indemnification  provided,  whether  by
provisions  in its  Bylaws or by  agreement,  to the  extent  authorized  in the
corporation's articles.

     The  Articles  of  Incorporation  of  the  Registrant  provide  that:  "The
liability of the  directors of the  Corporation  for monetary  damages  shall be
eliminated to the fullest extent  permissible  under California law." The effect
of  this  provision  is  to  exculpate  directors  from  any  liability  to  the
Registrant,  or anyone claiming on the Registrant's  behalf, for breaches of the
directors' duty of care. However,  the provision does not eliminate or limit the
liability  of a director  for actions  taken in his  capacity as an officer.  In
addition,  the provision applies only to monetary damages and is not intended to
impair the rights of parties suing on behalf of the Registrant to seek equitable
remedies (such as actions to enjoin or rescind a transaction  involving a breach
of the directors' duty of care or loyalty).

     The   Bylaws  of  the   Registrant   provide   that,   subject  to  certain
qualifications,  "(i) the corporation shall indemnify its Officers and Directors
to the fullest extent permitted by law,  including those  circumstances in which
indemnification  would  otherwise  be  discretionary;  (ii) the  corporation  is
required  to  advance  expenses  to its  Officers  and  Directors  as  incurred,
including  expenses relating to obtaining a determination that such Officers and
Directors are entitled to indemnification, provided that they undertake to repay
the amount advanced if it is ultimately determined that they are not entitled to
indemnification;  (iii) an  Officer  or  Director  may bring  suit  against  the
corporation  if a  claim  for  indemnification  is not  timely  paid;  (iv)  the
corporation may not retroactively amend this Section 1 in a way which is adverse
to its Officers and Directors;  (v) the  provisions of  subsections  (i) through
(iv)  above  apply  to all  past  and  present  Officers  and  Directors  of the
corporation."  "Officer"  includes  the  following  officers of the  Registrant:
Chairman  of  the  Board,  President,  Vice  President,   Secretary,   Assistant
Secretary,  Treasurer,  Assistant Treasurer and such other officers as the board
shall designate from time to time. "Director" of the Registrant means any person
appointed  to  serve  on the  Registrant's  board  of  directors  either  by its
shareholders or by the remaining board members.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors,  officers or persons  controlling  the registrant
pursuant to the foregoing provisions,  the registrant has been informed that, in
the opinion of the Commission,  such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

     Each of the  Registrant's  1996 Stock  Option Plan and its 1997  Directors'
Stock Plan (each  individually,  the "Plan")  provides that,  subject to certain
conditions,  "The Company shall, through the purchase of insurance or otherwise,
indemnify  each member of the Board (or board of  directors  of any  affiliate),
each member of the [Compensation]  Committee,  and any [other] employees to whom
any responsibility with respect to the Plan is allocated or delegated,  from and
against any and all claims, losses, damages, and expenses,  including attorneys'
fees,  and any  liability,  including  any amounts paid in  settlement  with the
Company's  approval,  arising  from the  individual's  action or failure to act,
except when the same is judicially  determined to be  attributable  to the gross
negligence or willful misconduct of such person."

     The Registrant's  Deferred  Compensation Plan provides that, "To the extent
permitted by applicable state law, the Company shall indemnify and save harmless
the Committee and each member  thereof,  the Board of Directors and any delegate
of the Committee who is an employee of the Company against any and all expenses,
liabilities and claims,  including legal fees to defend against such liabilities
and claims  arising  out of their  discharge  in good faith of  responsibilities
under or incident to the Plan,  other than expenses and liabilities  arising out
of  willful   misconduct.   This  indemnity  shall  not  preclude  such  further
indemnities  as may be  available  under  insurance  purchased by the Company or
provided  by the  Company  under any  bylaw,  agreement  or  otherwise,  as such
indemnities are permitted under state law."

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

EXHIBIT
NUMBER   DESCRIPTION
- -------  -----------
2.1      Agreement and Plan  of Merger,  dated as of March 27, 1998 by and among
         the Registrant,  Image  Acquisition  Corp.,  Data Tree Corporation and
         Harish Chopra. (1)

3.1      Restated  Articles  of  Incorporation  of The First American  Financial
         Corporation dated January 1, 1998. (2)

3.2      Bylaws of The First American Financial Corporation.

4.1      Description of the  Registrant's  capital stock in Article Sixth of the
         Restated  Articles  of  Incorporation  of The First American  Financial
         Corporation (contained in Exhibit 3.1).

4.2      Rights  Agreement,  dated  as of  October  23,  1997 by and  among  the
         Registrant and Wilmington Trust company, as Rights Agent. (3)

5.1      Opinion of White & Case LLP.

21.1     Subsidiaries of the Registrant. (4)

23.1     Consent of White & Case LLP (contained in Exhibit 5.1).

23.2     Consent of Price Waterhouse LLP.

23.3     Consent of Ernst & Young LLP, independent auditors.

24.1     Power of Attorney.

99.1     Form of Proxy of Data Tree.

99.2     Form of Notice and Letter of Transmittal.

- --------------
(1)      Incorporated by reference to Annex A hereto.
(2)      Incorporated  by reference to  Exhibit 3(a) of the Company's  Form 10-K
         for the year ended December 31, 1997.
(3)      Incorporated   by   reference   to  Exhibit  4  of   the   Registrant's
         Registration Statement on Form 8-A dated November 7, 1997.
(4)      Incorporated  by  reference  from Company  Form 10-K for the year ended
         December 31, 1997.


ITEM 23. UNDERTAKINGS.

     The undersigned Registrant hereby undertakes:

     (1) That,  for purposes of determining  any liability  under the Securities
Act of 1933, each filing of the  Registrant's  annual report pursuant to Section
13(a) or 15(d) of the Securities  Exchange Act of 1934 (and,  where  applicable,
each filing of an employee  benefit  plan's  annual  report  pursuant to Section
15(d) of the Securities  Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (2) That  prior  to any  public  reoffering  of the  securities  registered
hereunder  through  use of a  prospectus  which  is a part of this  registration
statement,  by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c),  the issuer  undertakes that such reoffering  prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.

     (3) That every  prospectus:  (i) that is filed  pursuant to  paragraph  (2)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3)  of the  Securities  Act of  1933  and is used  in  connection  with an
offering  of  securities  subject  to Rule  415,  will be  filed as a part of an
amendment  to the  registration  statement  and  will  not be  used  until  such
amendment is  effective,  and that,  for purposes of  determining  any liability
under the Securities Act of 1933,  each such  post-effective  amendment shall be
deemed to be a new  registration  statement  relating to the securities  offered
therein,  and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

     (4) To  respond  to  requests  for  information  that  is  incorporated  by
reference  into this  prospectus  pursuant to Item 4,  10(b),  11, or 13 of this
Form,  within  one  business  day of receipt  of such  request,  and to send the
incorporated  documents by first class mail or other equally prompt means.  This
includes  information  contained in documents filed  subsequent to the effective
date  of the  registration  statement  through  the  date of  responding  to the
request.

     (5) To file,  during any period in which  offers or sales are being made, a
post-effective amendment to this registration statement:

          (i) To include  any  prospectus  required  by Section  10(a)(3) of the
     Securities Act of 1933;

          (ii) To reflect in the  prospectus  any facts or events  arising after
     the  effective  date of the  registration  statement  (or the  most  recent
     post-effective  amendment  thereof) which individually or in the aggregate,
     represent  a  fundamental  change  in  the  information  set  forth  in the
     registration  statement.  Notwithstanding  the  foregoing,  any increase or
     decrease  in volume of  securities  offered (if the total  dollar  value of
     securities  offered  would not exceed  that which was  registered)  and any
     deviation from the low or high end of the estimated  maximum offering range
     may be  reflected  in the form of  prospectus  filed  with  the  Commission
     pursuant  to Rule  424(b) if, in the  aggregate,  the changes in volume and
     price  represent  no more than 20 percent  change in the maximum  aggregate
     offering price set forth in the "Calculation of Registration  Fee" table in
     the effective registration statement.

          (iii) to include any material  information with respect to the plan of
     distribution not previously disclosed in the registration  statement or any
     material change to such information in the registration.

     (6) To remove from registration by means of a post-effective  amendment any
of the securities being registered which remain unsold at the termination of the
offering.

     (7) That  prior  to any  public  reoffering  of the  securities  registered
hereunder  through  use of a  prospectus  which  is a part of this  registration
statement,  by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c),  the issuer  undertakes that such reoffering  prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.

     (8) That every  prospectus:  (i) that is filed  pursuant to  paragraph  (7)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in  connection  with an  offering of  securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective,  and that, for
purposes of determining  any liability  under the  Securities Act of 1933,  each
such  post-effective  amendment  shall  be  deemed  to be the  new  registration
statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
of  1933  and  is,  therefore,  unenforceable.  In the  event  that a  claim  of
indemnification  against  such  liabilities  (other  than  the  payment  by  the
Registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  Registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by its is against  public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

     Pursuant  to  Item  601(b)(2)  of  Regulation  S-K,  the  schedules  to the
Agreement  and  Plan of  Merger  attached  as  Annex  A to the  Prospectus/Proxy
Statement  have  been  omitted.  These  schedules  describe  exceptions  to  the
representations  and  warranties  contained in the Agreement and Plan of Merger.
The Registrant  hereby  undertakes to furnish  supplementally a copy of any such
omitted schedule to the Commission upon request.

                                      * * *



<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused  this  Registration   Statement  to  be  signed  on  its  behalf  by  the
undersigned,  thereunto  duly  authorized,  in the city of Santa  Ana,  state of
California, on May __, 1998.

                                                THE FIRST AMERICAN FINANCIAL
                                                CORPORATION



                                                By:/s/ Parker S. Kennedy
                                                   -----------------------------
                                                   Parker S. Kennedy, President
                                                   (Principal Executive Officer)

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.

Date:  May__, 1998               By:/s/ D.P. Kennedy
                                    --------------------------------------------
                                    D.P. Kennedy, Chairman and Director

Date:  May__, 1998               By:/s/ Parker S. Kennedy
                                    --------------------------------------------
                                    Parker S. Kennedy, President and Director

Date:  May__, 1998               By:/s/ Thomas A. Klemens
                                    --------------------------------------------
                                    Thomas A. Klemens, Executive Vice
                                    President, Chief Financial Officer
                                    (Principal Financial and Accounting Officer)



<PAGE>


     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.

Date:  May __, 1998                 By:/s/George L. Argyros*
                                    --------------------------------------------
                                       George L. Argyros, Director

Date:  May__, 1998                  By:/s/ Gary J. Beban*
                                    --------------------------------------------
                                       Gary J. Beban, Director

Date:  May__, 1998                  By:/s/ J. David Chatham*
                                    --------------------------------------------
                                       J. David Chatham, Director

Date:  May__, 1998                  By:/s/ William G. Davis*
                                    --------------------------------------------
                                       William G. Davis, Director

Date:  May__, 1998                  By:/s/ James L. Doti*
                                    --------------------------------------------
                                       James L. Doti, Director

Date:  May__, 1998                  By:/s/ Lewis W. Douglas, Jr.*
                                    --------------------------------------------
                                       Lewis W. Douglas, Jr., Director

Date:  May__, 1998                  By:/s/ Paul B. Fay, Jr.*
                                    --------------------------------------------
                                       Paul B. Fay, Jr., Director

Date:  May__, 1998                  By:/s/ Dale F. Frey*
                                    --------------------------------------------
                                       Dale F. Frey, Director

Date:  May__, 1998                  By:/s/ Anthony R. Moiso*
                                    --------------------------------------------
                                       Anthony R. Moiso, Director

Date:  May__, 1998                  By:/s/ Rudolph J. Munzer*
                                    --------------------------------------------
                                       Rudolph J. Munzer, Director

Date:  May__, 1998                  By:/s/ Frank O'Bryan*
                                    --------------------------------------------
                                       Frank O'Bryan, Director

Date:  May__, 1998                  By:/s/ Roslyn B. Payne*
                                    --------------------------------------------
                                       Roslyn B. Payne, Director

Date:  May__, 1998                  By:/s/ D. Van Skilling*
                                    --------------------------------------------
                                       D. Van Skilling, Director

Date:  May__, 1998                  By:/s/ Virginia Ueberroth*
                                    --------------------------------------------
                                       Virginia Ueberroth, Director


*By:/s/ Mark R Arnesen
- ------------------------------------
    Mark R Arnesen
    Attorney-in-Fact



<PAGE>


                                  EXHIBIT INDEX


EXHIBIT
NUMBER   DESCRIPTION
- -------  -----------
2.1      Agreement and Plan  of Merger,  dated as of March 27, 1998 by and among
         the Registrant,  Image  Acquisition  Corp.,  Data Tree Corporation and
         Harish Chopra. (1)

3.1      Restated  Articles  of  Incorporation  of The First American  Financial
         Corporation dated January 1, 1998. (2)

3.2      Bylaws of The First American Financial Corporation.

4.1      Description of the  Registrant's  capital stock in Article Sixth of the
         Restated  Articles  of  Incorporation  of The First American  Financial
         Corporation (contained in Exhibit 3.1).

4.2      Rights  Agreement,  dated  as of  October  23,  1997 by and  among  the
         Registrant and Wilmington Trust company, as Rights Agent. (3)

5.1      Opinion of White & Case LLP.

21.1     Subsidiaries of the Registrant. (4)

23.1     Consent of White & Case LLP (contained in Exhibit 5.1).

23.3     Consent of Price Waterhouse LLP.

23.4     Consent of Ernst & Young LLP, independent auditors.

24.1     Power of Attorney.

99.1     Form of Proxy of Data Tree.

99.2     Form of Notice and Letter of Transmittal.

- --------------
(1)      Incorporated by reference to Annex A hereto.
(2)      Incorporated  by reference to  Exhibit 3(a) of the Company's  Form 10-K
         for the year ended December 31, 1997.
(3)      Incorporated   by   reference   to  Exhibit  4  of   the   Registrant's
         Registration Statement on Form 8-A dated November 7, 1997.
(4)      Incorporated  by  reference  from Company  Form 10-K for the year ended
         December 31, 1997.





<PAGE>

                                                                     EXHIBIT 3.2



                                     BYLAWS
                                       OF
                    THE FIRST AMERICAN FINANCIAL CORPORATION


                                    ARTICLE I

                                     OFFICES

     Section l.  PRINCIPAL  OFFICES.  The  location of the  principal  executive
office of the corporation is 114 East Fifth Street, Santa Ana,  California.  The
board of directors may change the location of the principal  executive office to
any place within or outside the State of California.  If the principal executive
office is  located  outside  this  state,  and the  corporation  has one or more
business offices in this state, the board of directors shall fix and designate a
principal business office in the State of California.

     Section 2. OTHER OFFICES.  The board of directors may at any time establish
branch or  subordinate  offices at any place or places where the  corporation is
qualified to do business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

     Section l. PLACE OF MEETINGS. Meetings of shareholders shall be held at any
place  within or  outside  the State of  California  designated  by the board of
directors. In the absence of any such designation,  shareholders' meetings shall
be held at the principal executive office of the corporation.

     Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be held
each year on a date and at a time designated by the board of directors.  At each
annual meeting, directors shall be elected, and any other proper business may be
transacted.

     Section 3. SPECIAL  MEETING.  A special meeting of the  shareholders may be
called at any time by the board of  directors,  or by the chairman of the board,
or by the  president,  or by one or  more  shareholders  holding  shares  in the
aggregate entitled to cast not less than 10% of the votes at that meeting.

     If a special  meeting  is called by any  person or  persons  other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business  proposed to be  transacted,  and
shall be delivered  personally or sent by registered  mail or by  telegraphic or
other facsimile  transmission to the chairman of the board,  the president,  any
vice president,  or the secretary of the corporation.  The officer receiving the
request shall cause notice to be promptly given to the shareholders  entitled to
vote, in accordance  with the provisions of Sections 4 and 5 of this Article II,
that a meeting  will be held at the time  requested  by the  person  or  persons
calling the  meeting,  not less than  thirty-five  (35) nor more than sixty (60)
days after the receipt of the request.  If the notice is not given within twenty
(20) days after  receipt of the request,  the person or persons  requesting  the
meeting may give notice.  Nothing  contained in this paragraph of this Section 3
shall be construed as limiting,  fixing or affecting  the time when a meeting of
shareholders called by action of the board of directors may be held.

     Section 4.  NOTICE OF  SHAREHOLDERS'  MEETING.  All  notices of meetings of
shareholders  shall be sent or otherwise  given in accordance  with Section 5 of
this  Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting.  The notice shall  specify the place,  date and hour of the
meeting  and (i) in the case of a special  meeting,  the  general  nature of the
business  to be  transacted,  or (ii) in the case of the annual  meeting,  those
matters which the board of directors,  at the time of giving the notice, intends
to present  for action by the  shareholders.  The notice of any meeting at which
directors  are to be elected  shall  include the name of any nominee or nominees
whom, at the time of the notice, management intends to present for election.

     If action is  proposed  to be taken at any  meeting  for  approval of (i) a
contract or transaction  in which a director has a direct or indirect  financial
interest,  pursuant to Section 310 of the Corporations Code of California,  (ii)
an amendment of the articles of  incorporation,  pursuant to Section 902 of that
Code,  (iii) a reorganization  of the  corporation,  pursuant to Section 1201 of
that Code, (iv) a voluntary dissolution of the corporation,  pursuant to Section
1900 of that code, or (v) a distribution in dissolution other than in accordance
with the rights of  outstanding  preferred  shares,  pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.

     Section 5.  MANNER OF GIVING  NOTICE;  AFFIDAVIT  OF NOTICE.  Notice of any
meeting of shareholders  shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder  at the address of that  shareholder  appearing  on the books of the
corporation or given by the  shareholder to the  corporation  for the purpose of
notice.  If no such  address  appears  on the  corporation's  books or is given,
notice  shall  be  deemed  to have  been  given if sent to that  shareholder  by
first-class   mail  or  telegraphic  or  other  written   communication  to  the
corporation's  principal  executive  office,  or if published at least once in a
newspaper  of general  circulation  in the county  where that office is located.
Notice shall be deemed to have been given at the time when delivered  personally
or  deposited  in the  mail  or sent by  telegram  or  other  means  of  written
communication.

     If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the  corporation is returned to the corporation by the
United  States Postal  Service  marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address,  all
future  notices or reports  shall be deemed to have been given  without  further
mailing if these shall be available to the  shareholder on written demand of the
shareholder at the principal executive office of the corporation for a period of
one year from the date of the giving of the notice.

     An  affidavit  of the  mailing  or other  means of giving any notice of any
shareholders'  meeting shall be executed by the secretary,  assistant secretary,
or any transfer agent of the corporation  giving the notice,  and shall be filed
and maintained in the minute book of the corporation.

     Section 6.  QUORUM.  The presence in person or by proxy of the holders of a
majority of the shares  entitled to vote at any  meeting of  shareholders  shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held  meeting at which a quorum is present  may  continue to do
business   until   adjournment,   notwithstanding   the   withdrawal  of  enough
shareholders  to leave  less than a quorum,  if any  action  taken  (other  than
adjournment)  is  approved  by at least a  majority  of the shares  required  to
constitute a quorum.

     Section 7. ADJOURNED MEETING NOTICE. Any shareholders'  meeting,  annual or
special,  whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy,  but in the absence of a quorum,  no other  business  may be
transacted at that meeting, except as provided in Section 6 of this Article II.

     When any meeting of shareholders, either annual or special, is adjourned to
another time or place;  notice need not be given of the adjourned meeting if the
time and place are  announced  at a meeting at which the  adjournment  is taken,
unless a new  record  date for the  adjourned  meeting  is fixed,  or unless the
adjournment  is for more than  forty-five  (45) days from the date set forth for
the  original  meeting,  in which  case the board of  directors  shall set a new
record  date.  Notice  of any  such  adjourned  meeting  shall  be given to each
shareholder  of record  entitled to vote at the adjourned  meeting in accordance
with the  provisions  of Sections 4 and 5 of this  Article II. At any  adjourned
meeting  the  corporation  may  transact  any  business  which  might  have been
transacted at the original meeting.

     Section 8.  VOTING.  The  shareholders  entitled  to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section ll
of this Article II,  subject to the provisions of Sections 702 to 704 inclusive,
of the  Corporations  Code of  California  (relating to voting  shares held by a
fiduciary  in  the  name  of  a  corporation,   or  in  joint  ownership).   The
shareholders' vote may be by voice vote or by ballot; provided however, that any
election for directors must be by ballot if demanded by any  shareholder  before
the voting has begun.  On any matter  other than  elections  of  directors,  any
shareholder  may vote part of the shares in favor of the  proposal  and  refrain
from voting the remaining shares or vote them against the proposal,  but, if the
shareholder  fails to specify  the  number of shares  which the  shareholder  is
voting  affirmatively,  it will be conclusively  presumed that the shareholder's
approving vote is with respect to all shares that the shareholder is entitled to
vote. If a quorum is present, the affirmative vote of the majority of the shares
represented  at the meeting and  entitled to vote on any matter  (other than the
election of directors) shall be the act of the shareholders,  unless the vote of
a greater  number or  voting  by  classes  is  required  by  California  General
Corporation Law or by the articles of incorporation.

     At a  shareholders'  meeting  at  which  directors  are to be  elected,  no
shareholder  shall be entitled to cumulate votes (i.e., cast for any one or more
candidates  a number  of votes  greater  than the  number  of the  shareholder's
shares)  unless the  candidates'  names have been placed in nomination  prior to
commencement  of  the  voting  and a  shareholder  has  given  notice  prior  to
commencement of the voting of the shareholder's  intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate  votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that  shareholder's  shares are entitled,  or  distribute  the
shareholder's votes on the same principle among any or all of the candidates, as
the  shareholder  thinks fit. The  candidates  receiving  the highest  number of
votes, up to the number of directors to be elected, shall be elected.

     Section  9.  WAIVER OF  NOTICE  OR  CONSENT  BY  ABSENT  SHAREHOLDERS.  The
transactions of any meeting of shareholders,  either annual or special,  however
called and  noticed,  and  wherever  held,  shall be as valid as though had at a
meeting duly held after regular call and notice,  if a quorum be present  either
in person or by proxy,  and if, either before or after the meeting,  each person
entitled  to vote,  who was not  present in person or by proxy,  signs a written
waiver of notice or a consent to a holding of the meeting, or an approval of the
minutes. The waiver of notice or consent need not specify either the business to
be transacted or the purpose of any annual or special  meeting of  shareholders,
except that if action is taken or  proposed  to be taken for  approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the waiver of notice or consent shall state the general  nature of the proposal.
All such  waivers,  consents  or  approvals  shall be filed  with the  corporate
records or made a part of the minutes of the meeting.

     Attendance  by a person  at a meeting  shall  also  constitute  a waiver of
notice of that meeting,  except when the person objects, at the beginning of the
meeting,  to the transaction of any business because the meeting is not lawfully
called or convened,  and except that  attendance at a meeting is not a waiver of
any right to object to the  consideration  of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.

     Section 10.  SHAREHOLDER  ACTION BY WRITTEN CONSENT WITHOUT A MEETING.  Any
action which may be taken at any annual or special meeting of  shareholders  may
be taken without a meeting and without  prior  notice,  if a consent in writing,
setting  forth the  action so taken,  is signed by the  holders  of  outstanding
shares having not less than the minimum  number of votes that would be necessary
to  authorize  or take that action at a meeting at which all shares  entitled to
vote on that  action  were  present  and  voted.  In the  case  of  election  of
directors,  such a consent  shall be effective  only if signed by the holders of
all outstanding shares entitled to vote for the election of directors; provided,
however,  that a  director  may be  elected at any time to fill a vacancy on the
board of  directors  that has not been filled by the  directors,  by the written
consent of the holders of a majority of the outstanding  shares entitled to vote
for the  election  of  directors.  All such  consents  shall  be filed  with the
secretary of the corporation  and shall be maintained in the corporate  records.
Any shareholder giving a written consent, or the shareholder's proxy holders, or
a transferee of the shares or a personal  representative  of the  shareholder or
their respective proxy holders,  may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.

     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
solicited  in  writing,  and if  the  unanimous  written  consent  of  all  such
shareholders  shall not have been  received,  the  secretary  shall give  prompt
notice of the corporate action approved by the  shareholders  without a meeting.
This notice shall be given in the manner  specified in Section 5 of this Article
II. In the case of approval of (i) contracts or transactions in which a director
has a direct or  indirect  financial  interest,  pursuant  to Section 310 of the
Corporations  Code  of  California,   (ii)  indemnification  of  agents  of  the
corporation, pursuant to Section 317 of that Code, (iii) a reorganization of the
corporation,  pursuant to Section 1201 of that Code, and (iv) a distribution  in
dissolution  other than in accordance  with the rights of outstanding  preferred
shares,  pursuant  to Section  2007 of that Code,  the notice  shall be given at
least ten (10) days before the  consummation  of any action  authorized  by that
approval.

     Section  ll.  RECORD  DATE  FOR  SHAREHOLDER  NOTICE,  VOTING,  AND  GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give  consent to  corporate  action  without a
meeting,  the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days  before the date of
any such meeting nor more than sixty (60) days before any such action  without a
meeting,  and in this event only shareholders of record on the date so fixed are
entitled  to  notice  and to vote  or to  give  consents,  as the  case  may be,
notwithstanding any transfer of any shares on the books of the corporation after
the  record  date,  except  as  otherwise  provided  in the  California  General
Corporation Law.

     If the board of directors does not so fix a record date:

     (a) The record date for determining  shareholders  entitled to notice of or
to vote at a meeting of  shareholders  shall be at the close of  business on the
business  day next  preceding  the day on which notice is given or, if notice is
waived,  at the close of business on the business day next  preceding the day on
which the meeting is held.

     (b) The record date for determining  shareholders  entitled to give consent
to corporate  action in writing  without a meeting,  (i) when no prior action by
the board has been taken, shall be the day on which the first written consent is
given,  or (ii) when prior  action of the board has been taken,  shall be at the
close of business on the day on which the board adopts the  resolution  relating
to that action, or the sixtieth (60th) day before the date of such other action,
whichever is later.

     Section 12. PROXIES.  Every person entitled to vote for directors or on any
other  matter  shall  have the right to do so either in person or by one or more
agents  authorized  by a written  proxy  signed by the person and filed with the
secretary  of  the   corporation.   A  proxy  shall  be  deemed  signed  if  the
shareholder's  name  is  placed  on the  proxy  (whether  by  manual  signature,
typewriting,  telegraphic transmission,  or otherwise) by the shareholder or the
shareholder's  attorney in fact. A validly  executed  proxy which does not state
that it is  irrevocable  shall  continue  in full  force and  effect  unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation  stating that the proxy is revoked, or by a
subsequent  proxy executed by, or attendance at the meeting and voting in person
by,  the person  executing  the proxy;  or (ii)  written  notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the  expiration of eleven (ll) months from the date of the proxy,
unless otherwise  provided in the proxy. The revocability of a proxy that states
on its face  that it is  irrevocable  shall be  governed  by the  provisions  of
Sections 705(e) and 705(f) of the Corporations Code of California.

     Section 13. INSPECTORS OF ELECTION. Before any meeting of shareholders, the
board of directors may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If no inspectors of
election are so  appointed,  the chairman of the meeting may, and on the request
of any  shareholder  or a  shareholder's  proxy  shall,  appoint  inspectors  of
election at the  meeting.  The number of  inspectors  shall be either one (l) or
three (3). If  inspectors  are  appointed  at a meeting on the request of one or
more  shareholders  or  proxies,  the  holders of a majority  of shares or their
proxies  present at the  meeting  shall  determine  whether one (l) or three (3)
inspectors are to be appointed.  If any person  appointed as inspector  fails to
appear or fails or refuses to act, the chairman of the meeting may, and upon the
request of any shareholder or a shareholder's  proxy shall,  appoint a person to
fill that vacancy.

     These inspectors shall:

     (a)  Determine  the number of shares  outstanding  and the voting  power of
each, the shares represented at the meeting,  the existence of a quorum, and the
authenticity, validity, and effect of proxies;

     (b) Receive votes, ballots, or consents;

     (c) Hear and determine all  challenges  and questions in any way arising in
connection with the right to vote;

     (d) Count and tabulate all votes or consents;

     (e) Determine when the polls shall close;

     (f) Determine the result; and

     (g) Do any other acts that may be proper to conduct  the  election  or vote
with fairness to all shareholders.


                                   ARTICLE III

                                    DIRECTORS

     Section l. POWERS.  Subject to the  provisions  of the  California  General
Corporation Law and any limitations in the articles of  incorporation  and these
bylaws relating to action required to be approved by the  shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all  corporate  powers shall be  exercised by or under the  direction of the
board of directors.

     Without  prejudice  to  these  general  powers,  and  subject  to the  same
limitations, the directors shall have the power to:

     (a)  Select  and  remove  all  officers,   agents,  and  employees  of  the
corporation;  prescribe any powers and duties for them that are consistent  with
law,  with the  articles  of  incorporation,  and with these  bylaws;  fix their
compensation; and require from them security for faithful service.

     (b) Change the principal  executive office or the principal business office
in the State of California  from one location to another;  cause the corporation
to be  qualified to do business in any other state,  territory,  dependency,  or
country and to conduct  business within or without the State of California;  and
designate any place within or without the State of California for the holding of
any shareholders' meeting, or meetings, including annual meetings.

     (c)  Adopt,  make,  and  use a  corporate  seal;  prescribe  the  forms  of
certificates of stock; and alter the form of the seal and certificates.

     (d)  Authorize  the issuance of shares of stock of the  corporation  on any
lawful terms, in  consideration  of money paid,  labor done,  services  actually
rendered,  debts or securities  cancelled,  or tangible or  intangible  property
actually received.

     (e) Borrow money and incur  indebtedness on behalf of the corporation,  and
cause to be  executed  and  delivered  for the  corporation's  purposes,  in the
corporate name, promissory notes, bonds, debentures,  deeds of trust, mortgages,
pledges, hypothecations, and other evidences of debt and securities.

     Section 2. NUMBER AND  QUALIFICATION OF DIRECTORS.  The number of directors
of the corporation shall be no less than 9 nor more than 17. The exact number of
directors  shall be 16 until changed,  within the limits  specified  above, by a
bylaw  amending this Section 2, duly adopted by the board of directors or by the
shareholders.  The indefinite number of directors may be changed,  or a definite
number fixed  without  provision  for an  indefinite  number,  by a duly adopted
amendment to the articles of incorporation; provided, however, that an amendment
reducing  the number or the minimum  number of  directors  to a number less than
five cannot be adopted if the votes cast  against  its  adoption at a meeting of
the shareholders,  or the shares not consenting in the case of action by written
consent,  are equal to more than 16 2/3% of the  outstanding  shares entitled to
vote. No amendment may change the stated maximum number of authorized  directors
to a number greater than two times the stated minimum number of directors  minus
one.

     Section 3.  ELECTION AND TERM OF OFFICE OF  DIRECTORS.  Directors  shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting.  Each director,  including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.

     Section 4. VACANCIES.  Vacancies in the board of directors may be filled by
a majority of the remaining  directors,  though less than a quorum, or by a sole
remaining  director,  except that a vacancy created by the removal of a director
by the vote or written  consent  of the  shareholders  or by court  order may be
filled only by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present,  or by the written  consent
of  holders of a majority  of the  outstanding  shares  entitled  to vote.  Each
director  so elected  shall hold  office  until the next  annual  meeting of the
shareholders and until a successor has been elected and qualified.

     A vacancy or vacancies  in the board of directors  shall be deemed to exist
in the event of the death,  resignation,  or removal of any director,  or if the
board of directors by  resolution  declares  vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized  number of directors is increased,  or if the  shareholders
fail,  at any meeting of  shareholders  at which any director or  directors  are
elected, to elect the number of directors to be voted for at that meeting.

     The  shareholders may elect a director or directors at any time to fill any
vacancy or  vacancies  not filled by the  directors,  but any such  election  by
written  consent  shall  require the  consent of a majority  of the  outstanding
shares entitled to vote.

     Any director may resign  effective on giving written notice to the chairman
of the board, the president,  the secretary,  or the board of directors,  unless
the notice specifies a later time for that resignation to become  effective.  If
the  resignation  of a director  is  effective  at a future  time,  the board of
directors  may elect a successor  to take office  when the  resignation  becomes
effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.

     Section 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Regular meetings of
the board of  directors  may be held at any place within or outside the State of
California  that has been  designated  from  time to time by  resolution  of the
board. In the absence of such a designation,  regular  meetings shall be held at
the principal executive office of the corporation. Special meetings of the board
shall be held at any place  within or outside the State of  California  that has
been  designated in the notice of the meeting or, if not stated in the notice or
there is no notice,  at the principal  executive office of the corporation.  Any
meeting,  regular or special,  may be held by  conference  telephone  or similar
communication  equipment,  so long as all directors participating in the meeting
can hear one another,  and all such  directors  shall be deemed to be present in
person at the meeting.

     Section 6. ANNUAL  MEETING.  Immediately  following  each annual meeting of
shareholders,  the  board of  directors  shall  hold a regular  meeting  for the
purpose of organization,  any desired election of officers,  and the transaction
of other business. Notice of this meeting shall not be required.

     Section 7. OTHER REGULAR  MEETINGS.  Other regular meetings of the board of
directors  shall be held without call at such time as shall from time to time be
fixed by the board of  directors.  Such  regular  meetings  may be held  without
notice.

     Section 8. SPECIAL MEETINGS. Special meetings of the board of directors for
any purpose or purposes  may be called at any time by the  chairman of the board
or the president or the secretary or any two directors.

     Notice  of the  time and  place  of  special  meetings  shall be  delivered
personally  or by  telephone  to each  director or sent by  first-class  mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation.  In case the notice is mailed,
it shall be  deposited  in the United  States mail at least four (4) days before
the  time of the  holding  of the  meeting.  In case  the  notice  is  delivered
personally,  or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the  meeting.  Any oral  notice  given  personally  or by
telephone  may be  communicated  either  to the  director  or to a person at the
office of the  director  who the person  giving the notice has reason to believe
will promptly  communicate  it to the director.  The notice need not specify the
purpose  of the  meeting  nor  the  place  if the  meeting  is to be held at the
principal executive office of the corporation.

     Section 9. QUORUM.  A majority of the authorized  number of directors shall
constitute  a quorum  for the  transaction  of  business,  except to  adjourn as
provided in Section ll of this Article III. Every act done or decision made by a
majority of the  directors  present at a meeting  duly held at which a quorum is
present shall be regarded as the act of the board of  directors,  subject to the
provisions of Section 310 of the Corporations Code of California (as to approval
of  contracts  or  transactions  in which a  director  has a direct or  indirect
material  financial  interest),  Section 311 of that Code (as to  appointment of
committees),  and  Section  317(e)  of  that  Code  (as  to  indemnification  of
directors).  A meeting at which a quorum is  initially  present may  continue to
transact  business  notwithstanding  the withdrawal of directors,  if any action
taken is  approved  by at  least a  majority  of the  required  quorum  for that
meeting.

     Section 10. WAIVER OF NOTICE.  The transactions of any meeting of the board
of directors,  however called and noticed or wherever held, shall be as valid as
though had at a meeting  duly held after  regular call and notice if a quorum is
present and if,  either  before or after the meeting,  each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the  minutes.  The waiver of notice or consent  need not specify the
purpose of the meeting. All such waivers, consents, and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.  Notice
of a meeting  shall also be deemed given to any director who attends the meeting
without  protesting  before or at its  commencement,  the lack of notice to that
director.

     Section ll.  ADJOURNMENT.  A majority of the directors present,  whether or
not constituting a quorum, may adjourn any meeting to another time and place.

     Section 12. NOTICE OF ADJOURNMENT.  Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than  twenty-four  hours,  in which case  notice of the time and place  shall be
given  before the time of the  adjourned  meeting,  in the manner  specified  in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.

     Section 13. ACTION WITHOUT MEETING.  Any action required or permitted to be
taken by the board of directors may be taken  without a meeting,  if all members
of the board  shall  individually  or  collectively  consent  in writing to that
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the board of directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.

     Section 14. FEES AND  COMPENSATION  OF DIRECTORS.  Directors and members of
committees may receive such compensation,  if any, for their services,  and such
reimbursement  of expenses,  as may be fixed or  determined by resolution of the
board of  directors.  This  Section 14 shall not be  construed  to preclude  any
director  from  serving  the  corporation  in any other  capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.



                                   ARTICLE IV

                                   COMMITTEES

     Section  l.  COMMITTEES  OF  DIRECTORS.  The  board of  directors  may,  by
resolution  adopted  by a  majority  of  the  authorized  number  of  directors,
designate one or more committees,  each consisting of two or more directors,  to
serve  at the  pleasure  of the  board.  The  board  may  designate  one or more
directors  as  alternate  members of any  committee  who may  replace any absent
member at any meeting of the committee. Any committee, to the extent provided in
the resolution of the board,  shall have all the authority of the board,  except
with respect to:

     (a) the approval of any action which, under the General  Corporation Law of
California,  also requires shareholders' approval or approval of the outstanding
shares;

     (b) the filling of vacancies on the board of directors or in any committee;

     (c) the fixing of compensation of the directors for serving on the board or
on any committee;

     (d) the amendment or repeal of bylaws or the adoption of new bylaws;

     (e) the  amendment  or repeal of any  resolution  of the board of directors
which by its express terms is not so amendable or repealable;

     (f) a distribution to the shareholders of the corporation, except at a rate
or in a  periodic  amount or  within a price  range  determined  by the board of
directors; or

     (g) the  appointment  of any other  committees of the board of directors or
the members of these committees.

     Section  2.  MEETINGS  AND  ACTION OF  COMMITTEES.  Meetings  and action of
committees  shall be governed  by, and held and taken in  accordance  with,  the
provisions  of Article III of these bylaws,  Sections 5 (place of  meetings),  7
(regular meetings),  8 (special meetings and notice), 9 (quorum),  10 (waiver of
notice),  11 (adjournment),  12 (notice of adjournment),  and 13 (action without
meeting),  with such changes in the context of those bylaws as are  necessary to
substitute  the  committee  and its members for the board of  directors  and its
members,  except  that  the  time  of  regular  meetings  of  committees  may be
determined  either by  resolution  of the board of directors or by resolution of
the committee;  special  meetings of committees may also be called by resolution
of the board of directors;  and notice of special  meetings of committees  shall
also be given to all alternate  members,  who shall have the right to attend all
meetings  of the  committee.  The board of  directors  may  adopt  rules for the
government  of any  committee  not  inconsistent  with the  provisions  of these
bylaws.

                                    ARTICLE V

                                    OFFICERS

     Section l. OFFICERS.  The officers of the corporation shall be a president,
a secretary,  and a chief financial  officer.  The corporation may also have, at
the discretion of the board of directors,  a chairman of the board,  one or more
vice  presidents,  one or more  assistant  secretaries,  one or  more  assistant
treasurers,  and such other officers as may be appointed in accordance  with the
provisions  of Section 3 of this Article V. Any number of offices may be held by
the same person.

     Section 2. ELECTION OF OFFICERS.  The officers of the  corporation,  except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the board of  directors,  and
each shall serve at the pleasure of the board, subject to the rights, if any, of
any officer under any contract of employment.

     Section 3. SUBORDINATE  OFFICERS.  The board of directors may appoint,  and
may empower the president to appoint, such other officers as the business of the
corporation  may require,  each of whom shall hold office for such period,  have
such  authority  and perform such duties as are provided in the bylaws or as the
board of directors may from time to time determine.

     Section 4. REMOVAL AND RESIGNATION OF OFFICERS.  Subject to the rights,  if
any,  of any  officer  under any  contract  of  employment,  any  officer may be
removed, either with or without cause, by the board of directors, at any regular
or special meeting of the board,  or, except in the case of an officer chosen by
the board of  directors,  by an officer  upon whom such power of removal  may be
conferred by the board of directors.

     Any  officer  may  resign  at any  time by  giving  written  notice  to the
corporation.  Any  resignation  shall take  effect at the date of the receipt of
that notice or at any later time specified in that notice;  and unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall  not be
necessary to make it  effective.  Any  resignation  is without  prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

     Section 5. VACANCIES IN OFFICES.  A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.

     Section 6.  CHAIRMAN OF THE BOARD.  The  chairman of the board,  if such an
officer be  elected,  shall,  if  present,  preside at  meetings of the board of
directors and exercise and perform such powers and duties as may be from time to
time assigned to him by the board of directors or  prescribed by the bylaws.  If
there is no president, the chairman of the board shall, in addition be the chief
executive  officer  of the  corporation  and shall  have the  powers  and duties
prescribed in Section 7 of this Article V.

     Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors  to the chairman of the board,  if there be such
an  officer,  the  president  shall  be  the  chief  executive  officer  of  the
corporation  and shall,  subject to the control of the board of directors,  have
general supervision,  direction, and control of the business and the officers of
the corporation.  He shall preside at all meetings of the  shareholders  and, in
the absence of the chairman of the board,  or if there be none,  at all meetings
of the board of  directors.  He shall  have the  general  powers  and  duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the board of directors
or by the bylaws.

     Section 8. VICE  PRESIDENT.  In the absence or disability of the president,
the vice  presidents,  if any,  in order of their  rank as fixed by the board of
directors  or,  if not  ranked,  a vice  president  designated  by the  board of
directors,  shall  perform all 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.  The vice  presidents  shall have such other powers and perform other
duties as from time to time may be prescribed for them respectively by the board
of directors or the bylaws, and the president, or the chairman of the board.

     Section 9. SECRETARY.  The secretary shall keep or cause to be kept, at the
principal  executive  office or such other place as the board of  directors  may
direct,  a book of minutes of all meetings and actions of directors,  committees
of  directors,  and  shareholders,  with the time and place of holding,  whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at  directors'  meetings or committee  meetings,  the number of
shares present or represented at shareholders' meetings, and the proceedings.

     The secretary  shall keep, or cause to be kept, at the principal  executive
office or at the office of the  corporation's  transfer  agent or registrar,  as
determined  by  resolution of the board of  directors,  a share  register,  or a
duplicate  share  register,  showing  the  names of all  shareholders  and their
addresses,  the number of classes of shares held by each, the number and date of
certificates  issued for the same,  and the number and date of  cancellation  of
every certificate surrendered for cancellation.

     The secretary  shall give, or cause to be given,  notice of all meetings of
the shareholders and of the board of directors  required by the bylaws or by law
to be given, and he shall keep the seal of the corporation if one be adopted, in
safe custody,  and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by the bylaws.

     Section 10. CHIEF FINANCIAL OFFICER. The chief financial officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records  of  accounts  of  the  properties  and  business  transactions  of  the
corporation,   including   accounts  of  its  assets,   liabilities,   receipts,
disbursements,  gains, losses, capital,  retained earnings and shares. The books
of the  account  shall  at all  reasonable  times be open to  inspection  by any
director.

     The chief financial officer shall deposit moneys and other valuables in the
name and to the  credit  of the  corporation  with such  depositaries  as may be
designated  by the  board of  directors.  He  shall  disburse  the  funds of the
corporation  as may be ordered by the board of  directors,  shall  render to the
president  and  directors,  whenever  they  request  it, an  account  of all his
transactions  as chief financial  officer and of the financial  condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the board of directors or the bylaws.


                                   ARTICLE VI

                INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
              AND OTHER AGENTS; INSURANCE OF DIRECTORS AND OFFICERS

     Section  1.  INDEMNIFICATION.  (i)  The  corporation  shall  indemnify  its
Officers and Directors to the fullest extent  permitted by law,  including those
circumstances in which  indemnification  would otherwise be discretionary;  (ii)
the corporation is required to advance expenses to its Officers and Directors as
incurred,  including  expenses  relating to obtaining a determination  that such
Officers and  Directors  are  entitled to  indemnification,  provided  that they
undertake to repay the amount advanced if it is ultimately  determined that they
are not entitled to indemnification; (iii) an Officer or Director may bring suit
against the corporation if a claim for  indemnification is not timely paid; (iv)
the  corporation  may not  retroactively  amend this Section 1 in a way which is
adverse to its Officers and Directors;  (v) the  provisions of  subsections  (i)
through (iv) above shall apply to all past and present Officers and Directors of
the corporation.

     Indemnification  of Agents of the  corporation who are not its Officers and
Directors  shall be in  accordance  with the  provisions  of Section  317 of the
Corporations Code of California.

     The  corporation  may  enter  into  indemnification   agreements  with  its
Directors,  Officers  and other  Agents  upon such terms and  conditions  as are
deemed to be in the best interests of the corporation by its board of directors.

     The other provisions of this Section 1 to the contrary notwithstanding, the
corporation shall not be obligated:

     (a) to indemnify or advance expenses to an Officer,  Director or Agent with
respect  to  proceedings  or claims  initiated  or brought  voluntarily  by such
Officer,  Director  or Agent and not by way of defense,  except with  respect to
proceedings brought to establish or enforce a right to indemnification  under an
indemnification  agreement or any statute or law or otherwise as required  under
Section 317 of the Corporations Code of California,  but such indemnification or
advancement of expenses may be provided by the  corporation in specific cases if
the board of directors has approved the bringing of such suit;

     (b) to  indemnify an Officer,  Director or Agent for any expenses  incurred
with respect to any proceeding instituted by such Officer,  Director or Agent to
enforce or interpret  provisions of an indemnity agreement or this Section 1, if
a  court  of  competent  jurisdiction  determines  that  each  of  the  material
assertions  made by the Officer,  Director or Agent in such  proceeding  was not
made in good faith or was frivolous;

     (c) to indemnify an Officer,  Director or Agent for expenses or liabilities
of any type whatsoever (including,  but not limited to, judgments,  fines, ERISA
excise taxes or penalties,  and amounts paid in settlement) which have been paid
or satisfied by an insurance  carrier under a policy of officers' and directors'
liability insurance maintained by the corporation; provided that the corporation
shall be  obligated  to remit to the  Officer,  Director or Agent any  insurance
proceeds  received  in respect of  expenses or  liabilities  previously  paid or
satisfied by such Officer, Director or Agent;

     (d) to indemnify  an Officer,  Director or Agent for  expenses,  judgments,
fines or penalties  sustained,  or for an accounting  of profits made from,  the
purchase  and sale by such  Officer,  Director  or Agent  of  securities  of the
corporation  in violation of the  provisions of Section 16(b) of the  Securities
Exchange  Act of  1934,  as  amended,  the  rules  and  regulations  promulgated
thereunder,  any  amendments  thereto or any similar  provisions of any federal,
state or local statutory law; or

     (e) in the event a court of competent  jurisdiction finally determines that
such indemnification is unlawful.

     The term "Officer" as used in this Section 1 shall mean each person who is,
or was,  appointed  to the  office of  Chairman  of the Board,  President,  Vice
President,  Secretary,  Assistant Secretary, Chief Financial Officer, Treasurer,
Assistant Treasurer, and such other office of the corporation as the board shall
designate from time to time. The term "Director" as used in this Section 1 shall
mean any person  who is, or was,  appointed  to serve on the board of  directors
either by the  shareholders or the remaining board members.  The term "Agent" as
used in this  Section 1 shall have the same meaning as that set forth in Section
317(a) of the Corporations Code of California,  except that it shall not include
Officers and Directors.

     Section 2. INSURANCE.  The corporation may purchase and maintain  insurance
on behalf of its Directors,  Officers and Agents, against any liability asserted
against,  or incurred by, any of them by reason of the fact that such person is,
or was,  a  Director,  Officer or Agent of the  corporation,  whether or not the
corporation  would  have the  power  to  indemnify  such  persons  against  such
liability under the General Corporation Law of California.


                                   ARTICLE VII

                               RECORDS AND REPORTS

     Section l.  MAINTENANCE AND INSPECTION OF SHARE  REGISTER.  The corporation
shall keep at its principal  executive  office, or at the office of its transfer
agent or  registrar,  if either be appointed  and as determined by resolution of
the board of  directors,  a record  of its  shareholders,  giving  the names and
addresses  of all  shareholders  and the number and class of shares held by each
shareholder.

     A shareholder  or  shareholders  of the  corporation  holding at least five
percent  (5%)  in  the  aggregate  of  the  outstanding  voting  shares  of  the
corporation  may (i)  inspect and copy the  records of  shareholders'  names and
addresses  and  shareholdings  during  usual  business  hours on five days prior
written  demand on the  corporation,  and (ii) obtain from the transfer agent of
the  corporation,  on written demand and on the tender of such transfer  agent's
usual charges for such list, a list of the  shareholders'  names and  addresses,
who are entitled to vote for the election of directors, and their shareholdings,
as of the most recent record date for which that list has been compiled or as of
a date specified by the shareholder after the date of demand. This list shall be
made  available to any such  shareholder  by the transfer agent on or before the
latter of five (5) days after the demand is  received or the date  specified  in
the  demand as the date as of which the list is to be  compiled.  The  record of
shareholders  shall  be  open  to  inspection  on  the  written  demand  of  any
shareholder  or holder of a voting  trust  certificate,  at any time  during the
usual business hours, for a purpose reasonably related to the holder's interests
as a shareholder or as the holder of a voting trust certificate.  Any inspection
and  copying  under  this  Section  l may be made in  person  or by an  agent or
attorney of the shareholder or holder of a voting trust  certificate  making the
demand.

     Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep
at its principal  executive office or, if its principal  executive office is not
in the State of California,  at its principal business office in this state, the
original  or a copy of the  bylaws as amended  to date,  which  shall be open to
inspection by the  shareholders at all reasonable  times during office hours. If
the  principal  executive  office of the  corporation  is  outside  the State of
California and the corporation  has no principal  business office in this state,
the Secretary  shall,  upon the written request of any  shareholder,  furnish to
that shareholder a copy of the bylaws as amended to date.

     Section 3.  MAINTENANCE  AND  INSPECTION OF OTHER  CORPORATE  RECORDS.  The
accounting  books and records and minutes of proceedings of the shareholders and
the board of directors and any committee or committees of the board of directors
shall be kept at such place or places  designated  by the board of directors or,
in the absence of such  designation,  at the principal  executive  office of the
corporation.  The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. The minutes and accounting  books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate,  at any reasonable time during the usual business
hours,  for  a  purpose  reasonably  related  to  the  holder's  interests  as a
shareholder or as the holder of a voting trust  certificate.  The inspection may
be made in person or by an agent or  attorney,  and shall  include  the right to
copy and make extracts.  These rights of inspection  shall extend to the records
of each subsidiary corporation of the corporation.

     Section 4. INSPECTION BY DIRECTORS.  Every director shall have the absolute
right at any  reasonable  time to inspect all books,  records,  and documents of
every  kind  and the  physical  properties  of the  corporation  and each of its
subsidiary corporations. This inspection by a director may be made in person, or
by an agent or attorney and the right of  inspection  includes the right to copy
and make extracts of documents.

     Section 5. ANNUAL  REPORT TO  SHAREHOLDERS.  The board of  directors  shall
cause an annual report to be sent to the shareholders not later than one hundred
twenty days (120) after the close of the fiscal year adopted by the corporation.
This report shall be sent at least  fifteen (15) days before the annual  meeting
of  shareholders  to be held  during  the next  fiscal  year  and in the  manner
specified  in  Section 5 of Article  II of these  bylaws  for  giving  notice to
shareholders of the corporation. The annual report shall contain a balance sheet
as of the end of the  fiscal  year and an  income  statement  and  statement  of
changes in financial position for the fiscal year,  accompanied by any report of
independent  accountants  or, if there is no such report,  the certificate of an
authorized  officer of the corporation that the statements were prepared without
audit from the books and records of the corporation.

     Section 6. FINANCIAL  STATEMENTS.  A copy of any annual financial statement
and any income  statement  of the  corporation  for each  fiscal  year,  and any
accompanying  balance sheet of the corporation as of the end of each such period
that  has  been  prepared  by the  corporation,  shall  be  kept  on file in the
principal  executive  office of the  corporation for twelve (12) months and each
such  statement  shall be exhibited at any  reasonable  time to any  shareholder
demanding an  examination of any such statement or a copy shall be mailed to any
such shareholder.

     If a shareholder or shareholders  holding at least five percent (5%) of the
outstanding  shares  of any  class of stock of the  corporation  makes a written
request to the  corporation  for an income  statement of the corporation for the
three-month,  six-month or  nine-month  period of the then  current  fiscal year
ended more than thirty (30) days before the date of the  request,  and a balance
sheet of the  corporation  as of the end of that  period,  the  chief  financial
officer shall cause that statement to be prepared, if not already prepared,  and
shall  deliver  personally  or mail that  statement or  statements to the person
making the request within thirty (30) days after the receipt of the request.  If
the corporation has not sent to the  shareholders its annual report for the last
fiscal  year,  this  report  shall  likewise  be  delivered  or  mailed  to  the
shareholder or shareholders within thirty (30) days after the request.

     The corporation shall also, on the written request of any shareholder, mail
to the  shareholder a copy of the last annual,  semi-annual or quarterly  income
statement  which  it has  prepared,  and a  balance  sheet as of the end of that
period.

     The quarterly  income  statements  and balance  sheets  referred to in this
section  shall  be  accompanied  by the  report,  if  any,  of  any  independent
accountants  engaged by the  corporation  or the  certificate  of an  authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

     Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.  The corporation shall,
during the period commencing on April l and ending on September 30 in each year,
file with the Secretary of State of the State of  California,  on the prescribed
form, a statement  setting forth the authorized  number of directors,  the names
and complete  business or residence  addresses of the chief  executive  officer,
secretary  and chief  financial  officer,  the street  address of its  principal
executive office or principal business office in this state and the general type
of business  activity of the  corporation,  together with a  designation  of the
agent  of the  corporation  for  the  purpose  of  service  of  process,  all in
compliance with Section 1502 of the Corporations Code of California.


                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS

     Section l. RECORD  DATE FOR  PURPOSES  OTHER THAN  NOTICE AND  VOTING.  For
purposes of  determining  the  shareholders  entitled to receive  payment of any
dividend  or other  distribution  or  allotment  of any  rights or  entitled  to
exercise any rights in respect of any other lawful  action (other than action by
shareholders by written  consent without a meeting),  the board of directors may
fix, in  advance,  a record  date,  which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are  entitled to receive the  dividend,  distribution,  or allotment of
rights  or to  exercise  the  rights,  as the case may be,  notwithstanding  any
transfer of any shares on the books of the corporation  after the record date so
fixed, except as otherwise provided in the California General Corporation Law.

     If the board of directors  does not so fix a record  date,  the record date
for  determining  shareholders  for any such  purpose  shall be at the  close of
business on the day on which the board adopts the  applicable  resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

     Section 2. CHECKS, DRAFTS,  EVIDENCES OF INDEBTEDNESS.  All checks, drafts,
or other orders for payment of money, notes, or other evidences of indebtedness,
issued in the name of or payable to the corporation, shall be signed or endorsed
by such person or persons  and in such  manner as,  from time to time,  shall be
determined  by  resolution  of the  board of  directors.  

     Section 3. CORPORATE CONTRACTS AND INSTRUMENTS;  HOW EXECUTED. The board of
directors,  except as otherwise  provided in these  bylaws,  may  authorize  any
officer or officers,  agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the  corporation,  and this authority
may be general or confined to specific  instances;  and, unless so authorized or
ratified by the board of directors or within the agency power of an officer,  no
officer,  agent or  employee  shall  have any  power  or  authority  to bind the
corporation  by any contract or  engagement or to pledge its credit or to render
it liable for any purpose or for any amount.

     Section 4.  CERTIFICATES  FOR SHARES.  A certificate  or  certificates  for
shares  of the  capital  stock  of the  corporation  shall  be  issued  to  each
shareholder  when any of these shares are fully paid, and the board of directors
may  authorize  the issuance of  certificates  or shares as partly paid provided
that these  certificates  shall state the amount of the consideration to be paid
for them and the amount paid.  All  certificates  shall be signed in the name of
the  corporation  by the chairman of the board or vice  chairman of the board or
president or vice president and by the chief  financial  officer or an assistant
treasurer or the secretary or an assistant  secretary,  certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the  signatures  on the  certificates  may be  facsimile.  In case any  officer,
transfer  agent,  or registrar who has signed or whose  facsimile  signature has
been  placed on a  certificate  shall have ceased to be that  officer,  transfer
agent, or registrar before that  certificate is issued,  it may be issued by the
corporation  with the same effect as if that  person  were an officer,  transfer
agent, or registrar at the date of issue.

     Section 5. LOST CERTIFICATES.  Except as provided in this Section 5, no new
certificates for shares shall be issued to replace an old certificate unless the
latter is  surrendered  to the  corporation  and cancelled at the same time. The
board of directors may, in case any share  certificate  or  certificate  for any
other  security is lost,  stolen,  or  destroyed,  authorize  the  issuance of a
replacement  certificate  on such terms and conditions as the board may require,
including  provision for indemnification of the corporation secured by a bond or
other adequate security  sufficient to protect the corporation against any claim
that may be made against it,  including any expense or liability,  on account of
the alleged loss,  theft,  or destruction of the  certificate or the issuance of
the replacement certificate.

     Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.  The chairman of
the board, the president,  or any vice president, or any other person authorized
by resolution  of the board of directors or by any of the  foregoing  designated
officers,  is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations,  foreign or domestic,  standing in the
name of the  corporation.  The  authority  granted to these  officers to vote or
represent  on  behalf  of  the  corporation  any  and  all  shares  held  by the
corporation in any other  corporation or corporations may be exercised by any of
these  officers in person or by any person  authorized  to do so by a proxy duly
executed by these officers.

     Section  7.  CONSTRUCTION  AND  DEFINITIONS.  Unless the  context  requires
otherwise, the general provisions, rules of construction, and definitions in the
California  General  Corporation  Law shall  govern  the  construction  of these
bylaws.  Without limiting the generality of this provision,  the singular number
includes  the plural,  the plural  number  includes the  singular,  and the term
"person" includes both a corporation and a natural person.


                                   ARTICLE IX

                                   AMENDMENTS

     Section l.  AMENDMENT BY  SHAREHOLDERS.  New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided,  however, that if
the  articles  of  incorporation  of the  corporation  set forth  the  number of
authorized directors of the corporation,  the authorized number of directors may
be changed only by an amendment of the articles of incorporation.

     Section  2.   AMENDMENT  BY  DIRECTORS.   Subject  to  the  rights  of  the
shareholders  as  provided  in Section l of this  Article IX to adopt,  amend or
repeal  bylaws,  bylaws  may be  adopted,  amended or  repealed  by the board of
directors;  provided,  however, that the board of directors may adopt a bylaw or
amendment of a bylaw  changing the  authorized  number of directors only for the
purpose of fixing the exact number of directors  within the limits  specified in
the articles of incorporation or in Section 2 of Article III of these bylaws.





                                                                     EXHIBIT 5.1



                        [LETTERHEAD OF WHITE & CASE LLP]

                                  May __, 1998

The First American Financial Corporation
114 East Fifth Street
Santa Ana, California  92701


Re: The First American Financial Corporation Registration Statement on Form S-4

 Ladies and Gentlemen:

     This  opinion  is  furnished  to you  in  connection  with  a  Registration
Statement on Form S-4 (the  "Registration  Statement") filed with the Securities
and Exchange  Commission (the "Commission") under the Securities Act of 1933, as
amended,  for the  registration  of 838,095 Common shares,  $1.00 par value (the
"Common Shares") of The First American Financial Corporation (the "Company").

     We have acted as counsel for the Company in connection with the issuance of
the Common Shares pursuant to an Agreement and Plan of Merger, dated as of March
27, 1998 (the "Merger Agreement"),  by and among the Company,  Image Acquisition
Corp. ("IAC"),  Data Tree Corporation and Harish Chopra. We have examined signed
copies of the Registration  Statement and all exhibits thereto  (including,  but
not limited to, the Merger Agreement), all as filed with the Commission. We also
have  examined  and relied upon the original or copies of minutes of meetings of
the  board  of  directors  of  the  Company,  minutes  of  the  meetings  of the
shareholders  and  board  of  directors  of IAC and  the  Restated  Articles  of
Incorporation  and the Bylaws of the Company and such other documents as we have
deemed material to the opinion set forth below.

     Based upon the  foregoing,  we are of the opinion that the Common Shares to
be issued  pursuant to the Merger  Agreement are duly  authorized by the Company
and, when issued in accordance with the terms of the Merger  Agreement,  will be
validly issued, fully paid and non-assessable.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
Registration  Statement  and to the use of our name  wherever  it appears in the
Registration  Statement  and  in  the  related  Prospectus/Proxy  Statement,  as
originally filed or as amended or supplemented.

     This  opinion is to be used only in  connection  with the  issuance  of the
Common Shares while the Registration Statement is in effect.

                                               Very truly yours,

                                               /s/  White & Case LLP






                                                                    EXHIBIT 23.3


                         CONSENT OF PRICE WATERHOUSE LLP

     We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement  constituting part of this  Registration  Statement on Form S-4 of The
First  American  Financial  Corporation  of our report  dated  February  9, 1998
appearing on page 19 of The First American Financial Corporation's Annual Report
on Form 10-K for the year  ended  December  31,  1997.  We also  consent  to the
reference to us under the heading "Experts" in such Prospectus/Proxy Statement.

/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Costa Mesa, California
May 7, 1998







                                                                    EXHIBIT 23.4

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the  reference to our firm under the caption  "Experts" and to the
use of  our  report  dated  December  3,  1997  with  respect  to the  financial
statements of Data Tree  Corporation,  included in the Proxy  Statement  that is
made a part of the Registration Statement (Form S-4) and Prospectus of The First
American  Financial  Corporation  for the  registration of 838,095 shares of its
common stock.


                                             /S/ Ernst & Young LLP
                                             Ernst & Young LLP


San Diego, California
May 6, 1998







                                                                    EXHIBIT 24.1


                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of The First
American Financial  Corporation,  a California  corporation (the "Corporation"),
hereby constitute and appoint Parker S. Kennedy and Mark R Arnesen,  and each of
them, the true and lawful agents and attorneys-in-fact of the undersigned,  with
full power and authority in said agents and attorneys-in-fact,  and in either or
both of them,  to sign for the  undersigned  and in  their  respective  names as
directors of the Corporation the Registration  Statement on Form S-4 to be filed
with the United States  Securities and Exchange  Commission,  Washington,  D.C.,
under the Securities Act of 1933, as amended, and any amendment or amendments to
such Registration Statement,  relating to the Common shares, par value $1.00 per
share, of the Corporation to be offered  thereunder,  and the undersigned ratify
and confirm all acts taken by such  agents and  attorneys-in-fact,  or either or
both of them,  as herein  authorized.  This Power of Attorney may be executed in
one or more counterparts.



Date:  April 12, 1998                By:/s/ George L. Argyros
                                        ----------------------------------------
                                        George L. Argyros, Director

Date:  April 15, 1998                By:/s/ Gary J. Beban
                                        ----------------------------------------
                                        Gary J. Beban, Director

Date:  April 13, 1998                By:/s/ J. David Chatham
                                        ----------------------------------------
                                        J. David Chatham, Director

Date:  April 14, 1998                By:/s/ William G. Davis
                                        ----------------------------------------
                                        William G. Davis, Director

Date:  April 15, 1998                By:/s/ James L. Doti
                                        ----------------------------------------
                                        James L. Doti, Director

Date:  April 13, 1998                By:/s/ Lewis W. Douglas, Jr.
                                        ----------------------------------------
                                        Lewis W. Douglas, Jr., Director

Date:  April 13, 1998                By:/s/ Paul B. Fay, Jr.
                                        ----------------------------------------
                                        Paul B. Fay, Jr., Director

Date:  April 18, 1998                By:/s/ Dale F. Frey
                                        ----------------------------------------
                                        Dale F. Frey, Director

Date:  April 20, 1998                By:/s/ Anthony R. Moiso
                                        ----------------------------------------
                                        Anthony R. Moiso, Director

Date:  April 14, 1998                By:/s/ Rudolph J. Munzer
                                        ----------------------------------------
                                        Rudolph J. Munzer, Director

Date:  April 15, 1998                By:/s/ Frank O'Bryan
                                        ----------------------------------------
                                        Frank O'Bryan, Director

Date:  April 13, 1998                By:/s/ Roslyn B. Payne
                                        ----------------------------------------
                                        Roslyn B. Payne, Director

Date:  April 14, 1998                By:/s/ D. Van Skilling
                                        ----------------------------------------
                                        D. Van Skilling, Director

Date:  April 15, 1998                By:/s/ Virginia Ueberroth
                                        ----------------------------------------
                                        Virginia Ueberroth, Director





                                                                    EXHIBIT 99.1



                           FORM OF PROXY OF DATA TREE



                              DATA TREE CORPORATION
                         550 WEST "C" STREET, SUITE 2040
                           SAN DIEGO, CALIFORNIA 9210

                    PROXY SOLICITED BY THE BOARD OF DIRECTORS
                    FOR A SPECIAL MEETING OF THE SHAREHOLDERS
                        TO BE HELD ON ____________, 1998

     The undersigned  hereby appoints  Harish Chopra and Michael  Reynolds,  and
each of them, as  attorneys-in-fact  and proxies of the  undersigned,  with full
power  of  substitution,  to vote  all  shares  of  Common  Stock  of Data  Tree
Corporation,  a California  corporation  ("Data Tree") which the  undersigned is
entitled  to vote at the  Special  Meeting  of  Shareholders  of Data  Tree (the
"Special  Meeting")  to be held at the  offices  of Data  Tree at 550  West  "C"
Street, Suite 2040, San Diego, California 92101 on _________, 1998 at 9:00 a.m.,
California Time, and at any and all postponements, continuations or adjournments
thereof,  with all powers  that the  undersigned  would  possess  if  personally
present thereat,  upon and in respect of the following matters and in accordance
with the following instructions.

     THIS PROXY,  WHEN PROPERLY  EXECUTED,  WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. UNLESS A CONTRARY DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH BELOW,  AS SUCH  PROPOSAL IS
MORE SPECIFICALLY DESCRIBED IN THE PROSPECTUS/PROXY  STATEMENT DATED __________,
1998 TRANSMITTED IN CONNECTION WITH THE SPECIAL MEETING AND THIS PROXY.

MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.


     1. TO APPROVE AND ADOPT THE (I) PRINCIPAL TERMS OF AN AGREEMENT AND PLAN OF
MERGER  DATED MARCH 27,  1998 (THE  "MERGER  AGREEMENT")  BY AND AMONG THE FIRST
AMERICAN FINANCIAL CORPORATION, A CALIFORNIA CORPORATION (THE "COMPANY"),  IMAGE
ACQUISITION CORP., A CALIFORNIA  CORPORATION AND WHOLLY-OWNED  SUBSIDIARY OF THE
COMPANY ("IAC"), DATA TREE AND HARISH CHOPRA, WHICH MERGER AGREEMENT IS ATTACHED
AS APPENDIX A TO THE  PROSPECTUS/PROXY  STATEMENT  THAT HAS BEEN  TRANSMITTED IN
CONNECTION WITH THE SPECIAL  MEETING AND THIS PROXY,  (II) APPROVE THE MERGER OF
IAC WITH AND INTO DATA TREE  WHEREBY  DATA TREE WILL  CONTINUE AS THE  SURVIVING
CORPORATION AND A WHOLLY-OWNED  SUBSIDIARY OF THE COMPANY, (III) PRINCIPAL TERMS
OF THE RELATED  AGREEMENT OF MERGER TO BE FILED WITH THE OFFICE OF THE SECRETARY
OF STATE OF THE STATE OF  CALIFORNIA  TO EFFECT THE MERGER  WHICH  AGREEMENT  OF
MERGER IS ATTACHED  AS ANNEX B TO THE  PROSPECTUS/PROXY  STATEMENT  AND (IV) THE
RELATED  AGREEMENT OF MERGER OR SIMILAR DOCUMENT TO BE FILED WITH THE OFFICES OF
THE SECRETARY OF STATE OF THE STATE OF CALIFORNIA IN ORDER TO EFFECT THE MERGER.

          (_)      FOR              (_)      AGAINST           (_)      ABSTAIN

     The undersigned  hereby  acknowledges  receipt of (a) the Notice of Special
Meeting   of   Shareholders   to  be  held  on   ________,   1998  and  (b)  the
Prospectus/Proxy  Statement  dated ______,  1998 containing a description of the
transactions listed above.


Dated:  _________, 1998.


                                                 -------------------------------
                                                            Signature(s)

Number of Shares of Data Tree Common Stock Held: _______________________





                                                                    EXHIBIT 99.2



                    FORM OF NOTICE AND LETTER OF TRANSMITTAL


                              LETTER OF TRANSMITTAL

                    THE FIRST AMERICAN FINANCIAL CORPORATION
                             IMAGE ACQUISITION CORP.
                              DATA TREE CORPORATION

                                   EXCHANGE OF
                DATA TREE CORPORATION COMMON SHARES, NO PAR VALUE
                                       FOR
                         COMMON SHARES, $1.00 PAR VALUE
                   OF THE FIRST AMERICAN FINANCIAL CORPORATION
           WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
                                 PURSUANT TO THE
                          AGREEMENT AND PLAN OF MERGER
                              DATED MARCH 27, 1998
                                     AND THE
                           PROSPECTUS/PROXY STATEMENT
                               DATED MAY __, 1998


- --------------------------------------------------------------------------------
DATA TREE COMMON  SHARES MUST BE DELIVERED TO THE EXCHANGE  AGENT BY _______ __,
1998 (THE "EXPIRATION DATE"), UNLESS EXTENDED.
- --------------------------------------------------------------------------------

           THE EXCHANGE AGENT UNDER THE AGREEMENT AND PLAN OF MERGER:
                          FIRST AMERICAN TRUST COMPANY

                        BY MAIL/OVERNIGHT DELIVERY/HAND:
                          First American Trust Company
                              421 North Main Street
                            Santa Ana, CA 92701-4642
                             Attn: Trust Operations

                   TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
                                 (800) 854-3643

                             _______________________


     DELIVERY  OF THIS  LETTER OF  TRANSMITTAL  TO AN ADDRESS  OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID  DELIVERY.  THE  INSTRUCTIONS  CONTAINED
HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

     This Letter of  Transmittal  is to be completed by holders of common shares
of Data Tree  Corporation  ("Data  Tree  Shares")  if Data Tree Shares are to be
forwarded  herewith  pursuant to the  procedures set forth in Section 2.5 of the
Merger Agreement (as defined below).

                     NOTE: SIGNATURES MUST BE PROVIDED BELOW
               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY


<PAGE>


<TABLE>
<CAPTION>
============================================================================================================
                                 DESCRIPTION OF TRANSMITTED DATA TREE SHARES
- ------------------------------------------------------------------------------------------------------------
                                                            TOTAL NUMBER
                                                         OF DATA TREE SHARES
NAME AND ADDRESS OF REGISTERED        CERTIFICATE            REPRESENTED                 NUMBER OF
HOLDER                                  NUMBERS               BY SHARE               DATA TREE SHARES
(PLEASE FILL IN IF BLANK)                                  CERTIFICATE(S)              TRANSMITTED*
<S>                                   <C>                <C>                         <C>
                                   ----------------- -------------------------- ----------------------------

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

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

- ------------------------------------------------------------------------------------------------------------
TOTAL NUMBER TRANSMITTED:
============================================================================================================
<FN>
*    Unless otherwise indicated,  it will be assumed that all shares represented
     by certificates delivered to FATCO will be deemed to have been transmitted.
</FN>
</TABLE>


Ladies and Gentlemen:

     The  undersigned  hereby  transmits  to First  American  Trust  Company,  a
California corporation ("FATCO"), the above-described common shares of Data Tree
Corporation  (the  "Data  Tree  Shares")  upon  the  terms  and  subject  to the
conditions  set forth in (i) the  Agreement and Plan of Merger dated as of March
27, 1998 (the  "Merger  Agreement")  by and among The First  American  Financial
Corporation (the "Company"),  Image Acquisition Corp., Data Tree Corporation and
Harish Chopra,  (ii) the  Prospectus/Proxy  Statement dated May __, 1998 (as the
same may be amended or  supplemented  from time to time,  the  "Prospectus/Proxy
Statement"),  receipt of which is hereby acknowledged,  and (iii) this Letter of
Transmittal (which,  together with the Merger Agreement and the Prospectus/Proxy
Statement, constitutes the "Exchange").

     Subject to and  effective  upon the  acceptance  for exchange of all or any
portion of the Data Tree  Shares  transmitted  herewith in  accordance  with the
terms and conditions of the Exchange,  the undersigned  hereby delivers to FATCO
Data Tree Shares. The undersigned  hereby  irrevocably  constitutes and appoints
FATCO as its agent and  attorney-in-fact  with respect to the  transmitted  Data
Tree  Shares,  with full power of  substitution  (such power of  attorney  being
deemed to be an  irrevocable  power  coupled  with an  interest)  to (i) deliver
Certificates  for  the  Data  Tree  Shares  to the  Company  together  with  all
accompanying  evidences of transfer and authenticity to and (ii) receive for the
account  of the  Company  all  benefits  and  otherwise  exercise  all rights of
beneficial  ownership of such Data Tree Shares, all in accordance with the terms
and conditions of the Exchange.

     THE  UNDERSIGNED  HEREBY  REPRESENTS AND WARRANTS THAT THE  UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO DELIVER THE DATA TREE SHARES  TRANSMITTED HEREBY AND
THAT,  WHEN THE SAME ARE ACCEPTED FOR  EXCHANGE,  THE COMPANY WILL ACQUIRE GOOD,
MARKETABLE  AND  UNENCUMBERED  TITLE  THERETO,  FREE  AND  CLEAR  OF ALL  LIENS,
RESTRICTIONS,   CHARGES  AND  ENCUMBRANCES,   AND  THAT  THE  DATA  TREE  SHARES
TRANSMITTED  HEREBY  ARE NOT  SUBJECT  TO ANY  ADVERSE  CLAIMS OR  PROXIES.  THE
UNDERSIGNED  WILL,  UPON REQUEST,  EXECUTE AND DELIVER ANY ADDITIONAL  DOCUMENTS
DEEMED BY THE COMPANY TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE. THE
UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE.

     The name and  address  of the  registered  holder of the Data  Tree  Shares
transmitted  hereby should be printed  above,  if they are not already set forth
above, as they appear on the  Certificates  representing  such Data Tree Shares.
The Certificate  numbers and the Data Tree Shares that the undersigned wishes to
transmit should be indicated in the appropriate boxes above.

     If any  transmitted  Data Tree Shares are not  transmitted  pursuant to the
Exchange for any reason, Certificates for such unexchanged or untransmitted Data
Tree Shares will be returned,  without expense to the transmitting  holder. Such
Data Tree Shares must be retransmitted in the manner proscribed by the Exchange.

     The undersigned  understands  that transmittal of Data Tree Shares pursuant
to the procedure  described under Section 2.5 of the Merger Agreement and in the
instructions herein will, upon the Company's acceptance of such transmitted Data
Tree Shares,  constitute a binding  agreement  between the  undersigned  and the
Company upon the terms and subject to the conditions of the Exchange.

     Unless  otherwise  indicated herein in the box entitled  "Special  Issuance
Instructions"  below,  the  undersigned  hereby  directs that the Common shares,
$1.00 par value, of The First American  Financial  Corporation  ("FAFCO Shares")
and any cash payment in lieu of  fractional  shares,  as discussed in the Merger
Agreement, be issued in the name of the undersigned. Similarly, unless otherwise
indicated  under "Special  Delivery  Instructions"  below,  please deliver FAFCO
Shares  and any cash in lieu of  fractional  shares  to the  undersigned  at the
address shown below the undersigned's signature.

     All authority  herein conferred or agreed to be conferred in this Letter of
Transmittal  shall survive the death or incapacity  of the  undersigned  and any
obligation  of the  undersigned  hereunder  shall be  binding  upon  the  heirs,
executors,  administrators,  personal  representatives,  trustees in bankruptcy,
legal  representatives,   successors  and  assigns  of  the  undersigned.   This
transmittal is irrevocable.


<PAGE>


                 HOLDERS SIGN HERE (SEE INSTRUCTIONS 2, 4 AND 5)
                 (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 9)
       (NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

     Must be signed by registered holder exactly as name appears on Certificates
for the Data Tree Shares  hereby  transmitted,  or by any person  authorized  to
become the registered holder by endorsements and documents  transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Company or FATCO to comply with the  restrictions on transfer
applicable  to the Data Tree  Shares).  If signature is by an  attorney-in-fact,
executor, administrator,  trustee, guardian, officer of a corporation or another
acting in a fiduciary capacity or representative capacity,  please set forth the
signer's full title. See Instruction 4.

o_______________________________________________________________________________
                              (SIGNATURE OF HOLDER)

Date:________ __, 1998

Name:___________________________________________________________________________
                                 (PLEASE PRINT)

Capacity (full title):__________________________________________________________

Address:  ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________
                               (INCLUDE ZIP CODE)

Area Code and Telephone Number:_________________________________________________

Tax Identification or Social Security Number:___________________________________

                             GUARANTEE OF SIGNATURE
                           (SEE INSTRUCTIONS 2 AND 4)

o_______________________________________________________________________________
                             (AUTHORIZED SIGNATURE)

Date:________ __, 1998

Name:___________________________________________________________________________
                                 (PLEASE PRINT)

Capacity (full title):__________________________________________________________

Address:  ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________
                               (INCLUDE ZIP CODE)

Area Code and Telephone Number:_________________________________________________

Tax Identification or Social Security Number:___________________________________


<PAGE>


                          SPECIAL ISSUANCE INSTRUCTIONS
                          (SEE INSTRUCTIONS 1, 4 AND 5)

To be completed ONLY if the FAFCO Shares are to be issued in the name of someone
other than the  registered  holder of the Data Tree  Shares  whose name  appears
above.

Issue FAFCO Shares

to:

Name:___________________________________________________________________________

Address:  ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________
                               (INCLUDE ZIP CODE)

Area Code and Telephone Number:_________________________________________________

Tax Identification or Social Security Number:___________________________________





<PAGE>


                                  INSTRUCTIONS

            FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE

     1.  DELIVERY  OF LETTER OF  TRANSMITTAL  AND  CERTIFICATES.  This Letter of
Transmittal  is to be completed if  Certificates  are to be forwarded  herewith.
Certificates  as well as this Letter of  Transmittal  (or a facsimile  thereof),
properly completed and duly executed,  with any required  signature  guarantees,
and any other documents required by this Letter of Transmittal, must be received
by FATCO at its address set forth herein on or prior to the Expiration Date.

     THE METHOD OF DELIVERY OF CERTIFICATES,  THIS LETTER OF TRANSMITTAL AND ALL
OTHER  REQUIRED  DOCUMENTS  IS AT THE OPTION  AND SOLE RISK OF THE  TRANSMITTING
HOLDER AND THE  DELIVERY  WILL BE DEEMED  MADE ONLY WHEN  ACTUALLY  RECEIVED  BY
FATCO. IF DELIVERY IS BY MAIL,  REGISTERED  MAIL WITH RETURN RECEIPT  REQUESTED,
PROPERLY INSURED,  OR OVERNIGHT  DELIVERY SERVICE IS RECOMMENDED.  IN ALL CASES,
SUFFICIENT  TIME SHOULD BE ALLOWED TO ENSURE TIMELY  DELIVERY ON OR PRIOR TO THE
EXPIRATION DATE.

     2.  GUARANTEE  OF  SIGNATURES.  No  signature  guarantee  on this Letter of
Transmittal  is  required  if  this  Letter  of  Transmittal  is  signed  by the
registered holder of Data Tree Shares transmitted  herewith,  unless such holder
has completed the information under the caption "Special Issuance  Instructions"
above.

     In all other cases, an Eligible Institution must guarantee the signature on
this  Letter  of  Transmittal.  See  Instruction  4. As used  herein,  "Eligible
Institution"  means a firm or other entity  identified in Rule 17Ad-15 under the
Securities  Exchange  Act  of  1934,  as  amended,  as  "an  eligible  guarantor
institution,"  including (as such terms are defined  therein) (i) a bank, (ii) a
broker,  dealer,  municipal securities broker or dealer or government securities
broker or dealer;  (iii) a credit union,  (iv) a national  securities  exchange,
registered   securities   association  or  clearing  agency  or  (v)  a  savings
association that is a participant in a securities transfer association.

     3.   INADEQUATE   SPACE.  If  the  space  provided  in  the  box  captioned
"Description of Transmitted Data Tree Shares" is inadequate, the total number of
Data Tree  Shares  represented  by  Certificate  and/or  the number of Data Tree
Shares  transmitted  and any other  required  information  should be listed on a
separate signed schedule which is attached to this Letter of Transmittal.

     4. SIGNATURES ON LETTER OF TRANSMITTAL,  ASSIGNMENTS AND  ENDORSEMENTS.  If
this Letter of Transmittal  is signed by the registered  holder of the Data Tree
Shares  transmitted  hereby, the signature must correspond exactly with the name
as written on the face of the Certificates  without  alteration,  enlargement or
any change whatsoever.

     If any of the Data Tree  Shares  transmitted  hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.

     If any  transmitted  Data Tree Shares are registered in different  names on
several Certificates,  it will be necessary to complete, sign and submit as many
separate  Letters of Transmittal (or facsimiles  thereof) as there are different
registrations of Certificates.

     If this  Letter of  Transmittal  or any  Certificates  or stock  powers are
signed by trustees,  executors,  administrators,  guardians,  attorneys-in-fact,
officers  of  corporations  or others  acting in a fiduciary  or  representative
capacity,  such persons  should so indicate  when signing and must submit proper
evidence  satisfactory to the Company, in its sole discretion,  of such persons'
authority to so act.

     When this Letter of Transmittal  is signed by the registered  holder of the
Data Tree Shares listed and transmitted  hereby,  no endorsement of Certificates
or separate  stock powers are  required  unless FAFCO Shares are to be issued in
the name of a  person  other  than the  registered  holder.  Signatures  on such
Certificates or stock powers must be guaranteed by an Eligible Institution.

     If this  Letter  of  Transmittal  is  signed  by a  person  other  than the
registered  holder of the Data Tree  Shares  listed,  the  Certificates  must be
endorsed or accompanied by appropriate stock powers,  signed exactly as the name
of the  registered  holder  appears  on  the  Certificates,  and  also  must  be
accompanied by such opinions of counsel, certifications and other information as
the Company or FATCO may require in accordance with the restrictions on transfer
applicable  to the Data Tree Shares.  Signatures on such  Certificates  or stock
powers must be guaranteed by an Eligible Institution.

     5. SPECIAL  ISSUANCE AND DELIVERY  INSTRUCTIONS.  If FAFCO Shares are to be
issued in the name of a person  other than the  registered  holder,  or if FAFCO
Shares  are to be sent to  someone  other  than the  registered  holder or to an
address  other than that shown above,  the  appropriate  boxes on this Letter of
Transmittal should be completed.

     6. IRREGULARITIES.  The Company will determine, in its sole discretion, all
questions as to the form of documents,  validity, eligibility (including time of
receipt) and  acceptance  for exchange of any  transmittal  of Data Tree Shares,
which  determination  shall be final and  binding on all  parties.  The  Company
reserves  the  absolute  right  to  reject  any and all  transmissions  which it
determines to not to be in proper form or the  acceptance of which,  or exchange
for, may, in the view of counsel to The Company,  be unlawful.  The Company also
reserves  the absolute  right,  subject to  applicable  law, to waive any of the
conditions of the Exchange or any conditions or  irregularity in any transmittal
of Data Tree Shares of any particular  holder whether or not similar  conditions
or  irregularities  are  waived  in the case of  other  holders.  The  Company's
interpretation  of the terms and  conditions  of the  Exchange  (including  this
Letter of Transmittal and the instructions hereto) will be final and binding. No
transmittal  of Data Tree Shares will be deemed to have been  validly made until
all irregularities  with respect to such transmission have been cured or waived.
None of The Company or any  affiliates or assigns of The Company,  nor any other
person shall be under any duty to give  notification  of any  irregularities  in
transmissions or incur any liability for failure to give such notification.

     7. QUESTIONS,  REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for  assistance  may be directed to FATCO at its address and  telephone
number set forth on the front of this Letter of Transmittal.  Additional  copies
of the Prospectus/Proxy  Statement and the Letter of Transmittal may be obtained
from FATCO.

     8. 31% BACKUP  WITHHOLDING;  SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a holder whose  transmitted  Data Tree Shares are accepted for exchange
is required to provide FATCO with such holder's correct taxpayer  identification
number ("TIN") on the Substitute  Form W-9 below.  If FATCO is not provided with
the correct TIN, the Internal Revenue Service (the "IRS") may subject the holder
or other payee to a $50 penalty. In addition,  payments to such holders or other
payees with respect to Data Tree Shares  exchanged  pursuant to the Exchange may
be subject to 31% backup withholding.

     The  box  in  Part 3 of the  Substitute  Form  W-9  may be  checked  if the
transmitting  holder  has not  been  issued a TIN and has  applied  for a TIN or
intends to apply for a TIN in the near future.  If the box in Part 3 is checked,
the  holder or other  payee  must also  complete  the  Certificate  of  Awaiting
Taxpayer  Identification  Number  below in order  to avoid  backup  withholding.
Notwithstanding  that  the  box in Part 3 is  checked  and  the  Certificate  of
Awaiting Taxpayer Identification Number is completed, FATCO will withhold 31% of
all payments made prior to the time a properly  certified TIN is provided to the
FATCO.  FATCO  will  retain  such  amounts  withheld  during  the 60 day  period
following the date of the  Substitute  Form W-9. If the holder  furnishes  FATCO
with its TIN  within 60 days  after  the date of the  Substitute  Form W-9,  the
amounts  retained during the 60-day period will be remitted to the holder and no
further  amounts  shall be retained or withheld from payments made to the holder
thereafter.  If, however,  the holder has not provided FATCO with its TIN within
such  60-day  period,  amounts  withheld  will be  remitted to the IRS as backup
withholding.  In addition,  31% of all payments made thereafter will be withheld
and remitted to the IRS until a correct TIN is provided.

     The holder is required to give FATCO the TIN (e.g.,  social security number
or  employer  identification  number) of the  registered  owner of the Data Tree
Shares or of the last  transferee  appearing  on the  transfers  attached to, or
endorsed on, the Data Tree  Shares.  If the Data Tree Shares are  registered  in
more  than one  name or are not in the name of the  actual  owner,  consult  the
enclosed  "Guidelines for  Certification  of Taxpayer  Identification  Number on
Substitute Form W-9" for additional guidance on which number to report.

     Certain  holders   (including,   among  others,   corporations,   financial
institutions  and certain  foreign  persons)  may not be subject to these backup
withholding  and  reporting  requirements.   Such  holders  should  nevertheless
complete the attached  Substitute Form W-9 below, and write "exempt" on the face
thereof,  to avoid possible erroneous backup  withholding.  A foreign person may
qualify as an exempt recipient by submitting a properly  completed IRS Form W-8,
signed under  penalties of perjury,  attesting to that holder's  exempt  status.
Please  consult  the  enclosed   "Guidelines  for   Certification   of  Taxpayer
Identification  Number on Substitute Form W-9 " for additional guidance on which
holders are exempt from backup withholding.

     Backup  withholding is not an additional U.S.  Federal income tax.  Rather,
the U.S. Federal income tax liability of a person subject to backup  withholding
will be reduced  by the amount of tax  withheld.  If  withholding  results in an
overpayment of taxes, a refund may be obtained.

     9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificates representing
Data Tree Shares have been lost, destroyed or stolen, the holder should promptly
notify  FATCO.  This  Letter of  Transmittal  and  related  documents  cannot be
processed  until such holder of Data Tree Shares that have been lost,  destroyed
or stolen  delivers  to the Company a bond in such sum as the Company may direct
or otherwise  indemnify the Company in a manner  satisfactory  to it against any
claim that may be made  against the Company with respect to the Data Tree shares
claimed to have been lost, destroyed or stolen.

     10. SECURITY  TRANSFER  TAXES.  Holders who transmit their Data Tree Shares
for  exchange  will not be obligated  to pay any  transfer  taxes in  connection
therewith. If, however, FAFCO Shares are to be delivered to, or are to be issued
in the name of, any person  other  than the  registered  holder of the Data Tree
Shares  transmitted,  or if a transfer  tax is imposed for any reason other than
the  exchange  of Data Tree Shares in  connection  with the  Exchange,  then the
amount of any such transfer tax (whether imposed on the registered holder or any
other  persons)  will be payable by the  transmitting  holder.  If  satisfactory
evidence of payment of such taxes or exemption  therefrom is not submitted  with
the  Letter of  Transmittal,  the amount of such  transfer  taxes will be billed
directly to such transmitting holder.

<PAGE>




<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:  FIRST AMERICAN TRUST COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                                     <C>
SUBSTITUTE
FORM W-9                          PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT     SOCIAL SECURITY NUMBER OR EMPLOYER
DEPARTMENT OF THE TREASURY        AND CERTIFY BY SIGNING AND DATING BELOW.                IDENTIFICATION NUMBER
  INTERNAL REVENUE SERVICE

PAYER'S REQUEST FOR TAXPAYER                                                              __________________________________
IDENTIFICATION NUMBER (TIN)
                                  --------------------------------------------------------------------------------------------------

                                  PART 2--CERTIFICATION--UNDER   PENALTIES  OF PERJURY, I CERTIFY THAT:

                                  (1)      THE  NUMBER  SHOWN  ON  THIS  FORM  IS  MY CORRECT  TAXPAYER IDENTIFICATION
                                           NUMBER (OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME) AND

                                  (2)      I   AM   NOT    SUBJECT   TO   BACKUP WITHHOLDING EITHER BECAUSE:  (A) I AM
                                           EXEMPT  FROM BACKUP  WITHHOLDING,  OR (B) I HAVE NOT BEEN  NOTIFIED  BY THE
                                           INTERNAL  REVENUE SERVICE (THE "IRS") THAT   I   AM   SUBJECT   TO   BACKUP
                                           WITHHOLDING  AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR  DIVIDENDS,
                                           OR (C) THE IRS HAS NOTIFIED ME THAT I AM  NO  LONGER   SUBJECT   TO  BACKUP
                                           WITHHOLDING.

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

                                  CERTIFICATION INSTRUCTIONS--YOU MUST CROSS OUT               Part 3--    
                                  ITEM  (2)  ABOVE  IF YOU  HAVE  BEEN  NOTIFIED
                                  BY THE IRS  THAT  YOU  ARE  CURRENTLY  SUBJECT               Awaiting TIN 9
                                  TO   BACKUP   WITHHOLDING   BECAUSE  OF  UNDER
                                  REPORTING  INTEREST OR  DIVIDENDS  ON YOUR TAX
                                  RETURN.  HOWEVER,  IF  AFTER  BEING   NOTIFIED
                                  BY   THE   IRS  THAT  YOU   ARE   SUBJECT   TO
                                  BACKUP   WITHHOLDING,   YOU  RECEIVED  ANOTHER
                                  NOTIFICATION  FROM  THE  IRS  THAT  YOU ARE NO
                                  LONGER SUBJECT TO BACKUP  WITHHOLDING,  DO NOT
                                  CROSS OUT SUCH ITEM (2).

                                  THE INTERNAL REVENUE SERVICE  DOES NOT REQUIRE 
                                  YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
                                  OTHER  THAN  THE  CERTIFICATIONS  REQUIRED  TO 
                                  AVOID BACKUP WITHHOLDING.

                                  SIGNATURE ______________________ DATE ________
                                  NAME (PLEASE PRINT) __________________________
                                  ADDRESS (PLEASE PRINT) _______________________

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE  AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
      OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE. PLEASE REVIEW
      THE  ENCLOSED "GUIDELINES  FOR  CERTIFICATION  OF TAXPAYER  IDENTIFICATION
      NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.



<PAGE>


YOU MUST COMPLETE THE FOLLOWING  CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.

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

             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

     I certify under penalties of perjury that a Taxpayer  Identification Number
has not been  issued  to me,  and  either  (1) I have  mailed  or  delivered  an
application  to  receive a  Taxpayer  Identification  Number to the  appropriate
Internal Revenue Service Center or Social Security  Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number by the time of payment, 31%
of all  reportable  payments made to me will be withheld,  but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.

Signature________________________________________________ Date__________________

Name (Please Print)_____________________________________________________________

Address (Please Print)__________________________________________________________

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



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