DIRECT INSITE CORP
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>diex10-1platacq.txt
<TEXT>


                          AGREEMENT AND PLAN OF MERGER


                                  by and among

                           Platinum Acquisition Corp.

                                      and

                             its sole stockholder,
                              Direct Insite Corp.

                                      and

                         Platinum Communications, Inc.

                                      and

                               its shareholders,
                                   Kevin Ford
                                      and
                                  Ken Tanoury





                                  May 10, 2001



<PAGE>


                               TABLE OF CONTENTS

                                                                        PAGE
                                                                        ----
1.  The Merger                                                            1
        1.1     The Merger                                                1
        1.2     Effect of the Merger                                      1
        1.3     Consummation of the Merger                                2
        1.4     Charter; Bylaws; Directors and Officers                   2
        1.5     The Closing                                               2
        1.6     Further Assurances                                        2
2.  Conversion of Shares                                                  2
        2.1     Conversion of Shares                                      2
        2.2     Stock Options, Warrants, Treasury Shares, Etc             2
        2.3     Surrender and Exchange of Shares; Payment of
                Merger Consideration                                      3
        2.4     The Earn-Out Shares                                       3
        2.5     Closing of Stock Transfer Book                            5
        2.6     Voting and Dividend Rights                                6
3.  Representations and Warranties of the Shareholders and the Company    6
        3.1     Organization                                              6
        3.2     Capitalization                                            6
        3.3     Authorization; Validity of Agreement                      7
        3.4     No Violations; Consents and Approvals                     7
        3.5     Company Financial Statements                              8
        3.6     No Material Adverse Change                                8
        3.7     No Undisclosed Liabilities                                8
        3.8     Litigation; Compliance with Law; Licenses and Permits     9
        3.9     Employee Benefit Plans; ERISA                             9
        3.10    Real Property                                            10
        3.11    Intellectual Property; Computer Software                 11
        3.12    Tangible Personal Property; Capital Budget               12
        3.13    Material Contracts                                       12
        3.14    Taxes                                                    13
        3.15    Affiliated Party Transactions                            16
        3.16    Environmental Matters                                    16
        3.17    No Brokers                                               18
        3.18    Accounts Receivable and Accounts Payable                 18
        3.19    Inventories                                              18
        3.20    Product Claims                                           18
        3.21    Warranties and Returns                                   18
        3.22    Assets Utilized in the Business                          19
        3.23    Insurance                                                19
        3.24    Delivery of Documents; Corporate Records                 19
        3.25    Customers, Suppliers and Distributors                    19

<PAGE>
                           TABLE OF CONTENTS (Cont'd)

        3.26    Labor Matters                                            19
        3.27    Bank Accounts                                            20
        3.28    Directors, Officers and Certain Employees                20
        3.29    No Misstatements or Omissions                            20
        3.30    Investment Undertaking                                   20
        3.31    Conduct of  Business                                     20
        3.32    Notice of Developments                                   22
        3.33    Equipment and Other Assets                               22
        3.34    Repayment of Certain Obligations to the Company          22
4.  Representations and Warranties of the Buyer and Direct Insite        23
        4.1     Organization of the Buyer Group                          23
        4.2     Authorization; Validity of Agreement                     23
        4.3     No Violations; Consents and Approvals                    24
        4.4     Litigation                                               24
        4.5     Compliance with Law; Licenses and Permits                24
        4.6     Capital Structure                                        25
        4.7     Valid Issuance of Shares, Etc                            25
        4.8     Direct Insite  Form 10-K and Financial Statements        25
        4.9     No Misstatements or Omissions                            25
        4.10    Conduct of  Business                                     26
5.  Other Agreements of the Parties                                      26
        5.1     Tax Returns; Taxes                                       26
        5.2     Non-Disclosure of Confidential Information               26
        5.3     No Solicitation of Employees, Suppliers or Customers     27
        5.4     Non-Competition                                          27
        5.5     Other Actions                                            27
        5.6     Employment Agreements                                    28
        5.7     Accounts Receivables                                     28
        5.8     Company Financial Statements                             28
        5.9     Direct Insite SEC Filings                                28
6.  Conditions Precedent to the Closing.                                 29
        6.1     Conditions Precedent to the Buyer Group's Obligations
                to Close                                                 29
        6.2     Conditions Precedent to the Seller Group's Obligations
                to Close                                                 29
7.  Documents to be Delivered at the Closing                             30
        7.1     Deliveries of the Seller Group                           30
        7.2     Deliveries of the Buyer                                  30
8.  Termination                                                          31
9.  Indemnification                                                      31
        9.1     Survival of Representations and Warranties of the
                Seller Group                                             31
        9.2     Survival of Representations and Warranties of the
                Buyer Group                                              32
<PAGE>
                           TABLE OF CONTENTS (Cont'd)

        9.3     Determination of Damages Without Regard to
                "Materiality" or "Knowledge" Qualifications              32
        9.4     Indemnification by the Shareholders                      33
        9.5     Indemnification by the Buyer Group                       33
        9.6     Indemnification Procedures.                              33
        9.7     Limitations on Indemnification by the Shareholders.      35
        9.8     Right to Set-Off                                         35
10.  Miscellaneous                                                       35
        10.1    Transaction Fees and Expenses                            35
        10.2    Notices                                                  36
        10.3    Amendment                                                37
        10.4    Waiver                                                   37
        10.5    Governing Law                                            37
        10.6    Jurisdiction                                             37
        10.7    Remedies                                                 37
        10.8    Severability                                             37
        10.9    Further Assurances                                       38
        10.10   Assignment                                               38
        10.11   Binding Effect                                           38
        10.12   No Third Party Beneficiaries                             38
        10.13   Entire Agreement                                         38
        10.14   Headings                                                 38
        10.15   Counterparts                                             38

<PAGE>

                                   Schedules
                                   ---------

Schedule 3.2(a)(i)      Stock Ownership and Percentage Participation
Schedule 3.2(a)(ii)     Rights, Agreements and Interests in connection with
                        Company Shares
Schedule 3.4(b)         Required Consents
Schedule 3.5(a)         Financial Statements of the Company
Schedule 3.7(a)         Liabilities Incurred since December 31, 2000
Schedule 3.8(a)         Litigation
Schedule 3.8(b)         Violations of Law
Schedule 3.9(a)         Employee Benefit Plans
Schedule 3.9(b)         Employee Benefit Plans subject to Title IV of ERISA
Schedule 3.10(b)        Leased Property
Schedule 3.11(a)        Intellectual Property
Schedule 3.11(b)        Licenses
Schedule 3.12(a)        Title to Tangible Personal Property
Schedule 3.12(b)        Fixed Assets Ledger
Schedule 3.12(c)        Capital Budget
Schedule 3.13           Material Contracts
Schedule 3.14(a)        Taxes
Schedule 3.15           Affiliated Party Transactions
Schedule 3.16           Environmental Matters
Schedule 3.19           Inventories
Schedule 3.20           Service and Product Liability Claims
Schedule 3.21           Warranties and Returns Policies; Product Failures
                        or Defects
Schedule 3.22           Liens
Schedule 3.23           Insurance
Schedule 3.25           Customers; Suppliers and Distributors
Schedule 3.27           Bank Accounts
Schedule 3.28           Directors, Officers and Certain Employees
Schedule 3.31(c)        Dividends and Distributions by the Company
Schedule 3.31(e)        Permitted Benefits
Schedule 3.31(f)        Permitted Transactions
Schedule 3.31(m)        Permitted Expenditures
Schedule 4.4            Buyer Group Litigation


                                    Exhibits
                                    --------

Exhibit 1.3             Form of Articles of Merger (Texas)
Exhibit 5.6A            Form of Kevin Ford Employment Agreement
Exhibit 5.6B            Form of Ken Tanoury Employment Agreement

<PAGE>


                          AGREEMENT AND PLAN OF MERGER
                               Dated May 10, 2001


     The parties to this  Agreement  and Plan of Merger (this  "Agreement")  are
Platinum Acquisition Corp., a Texas corporation (the "Buyer") and a wholly-owned
subsidiary of Direct Insite Corp., a Delaware corporation ("Direct Insite"),  on
the one hand,  and  Platinum  Communications,  Inc.,  a Texas  corporation  (the
"Company"),  Kevin Ford and Ken  Tanoury,  as the  shareholders  of the  Company
(each, a "Shareholder"  and,  collectively,  the  "Shareholders"),  on the other
hand. The Buyer and Direct Insite are  hereinafter  referred to  collectively as
the "Buyer  Group"  while the  Company  and the  Shareholders  are  referred  to
collectively as the "Seller Group."

     This  Agreement  contemplates a transaction in which the Company will merge
with and into the Buyer with the  result  that the Buyer  will  continue  as the
surviving  corporation and the separate existence of the Company shall cease. As
a result  of the  Merger,  on the  Closing  Date (as  hereinafter  defined)  the
outstanding  shares of the capital stock of the Company shall be converted  into
the right to receive:  (i) an  aggregate of 66,667  shares (the  "Direct  Insite
Shares") of Direct  Insite  common  stock,  par value $.0001 per share  ("Direct
Insite  Common  Stock"),  (ii) the Cash  Consideration  (as  defined  in section
2.3(b)),  and (iii) an aggregate of an additional 46,667 shares of Direct Insite
Common Stock (the "Earn-Out  Shares"),  subject to section  2.3(c).  The parties
hereto intend that this merger  transaction be a tax-free  reorganization  under
Section 368 of the Code (as hereinafter  defined) and intend that this Agreement
be a "plan of reorganization" within the meaning of the regulations  promulgated
under such Section of the Code.

     The Board of  Directors  of the Buyer  and the  Board of  Directors  of the
Company have each  determined  that the Merger is in the best interests of their
respective  shareholders,  as the  case  may be,  and  have  each  duly  adopted
resolutions  approving this Agreement and the transactions  contemplated hereby.
In accordance  with the  foregoing,  the Buyer desires to merge with the Company
and the  Company  desires to merge with and into the Buyer,  upon and subject to
the terms and conditions set forth below.

     It is therefore agreed as follows:

1.   The  Merger.

     1.1 The Merger. Subject to the terms and conditions of this Agreement, upon
the Closing (as hereinafter  defined),  in accordance  with this Agreement,  the
terms and conditions set forth herein and in accordance  with the Texas Business
Corporation Act (the "TBCA"), Direct Insite and the Shareholders shall cause the
Company to be merged with and into the Buyer (the  "Merger") such that the Buyer
shall be the surviving  corporation.

     1.2 Effect of the  Merger.  The Merger  shall have the effects set forth in
the TBCA. Without limiting the generality of the foregoing, and subject thereto,
upon the Closing  all the assets,  properties,  rights,  privileges,  powers and
franchises of the Company shall vest in the Buyer and,  subject to section 3.34,
all  debts,  liabilities  and  duties of the  Company  shall  become  the debts,
liabilities and duties of the Buyer.

                                       1

<PAGE>

     1.3 Consummation of the Merger.  The Merger shall become effective upon the
filing with the  Secretary  of State of Texas of properly  executed  articles of
merger and other documents in the form of Exhibit 1.3 (the "Articles of Merger")
on the Closing Date.  The Merger shall be effective  when the Articles of Merger
have been filed.

     1.4 Charter;  Bylaws; Directors and Officers. The Articles of Incorporation
of the Buyer from and after the Closing  shall be the Articles of  Incorporation
of the Buyer  immediately  prior to the Closing unless  amended  pursuant to the
Articles of Merger and  thereafter  amended in  accordance  with the  provisions
thereof and as provided by the TBCA.  The Bylaws of the Buyer from and after the
Closing shall be the Bylaws of the Buyer as in effect  immediately  prior to the
Closing.  The  initial  directors  and  officers  of the  Buyer on and after the
Closing  shall  be the  directors  and  officers,  respectively,  of  the  Buyer
immediately prior to the Closing, in each case until their respective successors
are duly elected and qualified.

     1.5 The Closing.  The consummation of the Merger and the other transactions
contemplated by this Agreement (the  "Closing")  shall take place at the offices
of the Buyer Group's counsel in New York, New York at 10:00 a.m., local time, on
such date and such time as may be  designated  by the Buyer  Group to the Seller
Group on not fewer  than  five (5) days  written  notice.  The date on which the
Closing occurs is referred to as the "Closing Date."

     1.6 Further Assurances.  On and after the Closing Date, each of the parties
to this  Agreement  shall from time to time,  at the request of any of the other
parties,  promptly  execute such  instruments and take such other actions as the
requesting party may reasonably request to vest,  perform or confirm,  of record
or otherwise,  in the Buyer, its respective rights,  title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
the Company, or otherwise to evidence or implement the transactions contemplated
by this Agreement.

2.   Conversion of Shares.

     2.1 Conversion of Shares. By virtue of the Merger and without any action on
the part of the Shareholders,  at the Closing,  all of the outstanding shares of
common stock (the "Company Shares") of the Company, $.01 par value (the "Company
Common  Stock"),  shall be  converted  into the right to receive  (i) the Direct
Insite  Shares,  (ii) the Cash  Consideration,  and (iii) the  Earn-Out  Shares,
subject to section 2.3(c).

     2.2 Stock Options, Warrants, Treasury Shares, Etc. Immediately prior to the
Closing, the Company shall cause each outstanding stock option, warrant or other
right  to  purchase  any  capital  stock  of the  Company,  whether  or not then
exercisable  or vested,  to be canceled,  and no capital stock of Direct Insite,
cash or other consideration shall be paid or delivered in exchange therefor. Any
shares of the Company  Common Stock held in the treasury of the Company shall be
canceled and retired and no cash,  securities  or other  consideration  shall be
paid in respect of such shares.

                                       2

<PAGE>


     2.3 Surrender and Exchange of Shares; Payment of Merger Consideration

     (a)  At  the  Closing,   the   Shareholders   shall  deliver   certificates
representing  all issued and  outstanding  Company Shares to Direct Insite.  The
Shareholders  shall be  entitled,  upon such  surrender,  to receive in exchange
therefor,  in the respective  amounts set forth on Schedule  3.2(a)(i),  without
cost to them, the Direct Insite Shares,  Cash Consideration and Earn- Out Shares
into which the Company Shares  represented by the certificate or certificates so
surrendered shall have been converted as provided in section 2.1 hereof, and the
certificate or  certificates  so surrendered in exchange for such  consideration
shall forthwith be canceled by Direct Insite.

     (b) At the Closing, upon the surrender for cancellation of the certificates
representing the Company Shares pursuant to section 2.3(a) above,  Direct Insite
shall deliver the following:

          (i)  certificate(s)  representing  the Direct Insite Shares,  free and
     clear  of all  liens  and  encumbrances,  claims,  mortgages,  pledges  and
     security interests of any kind (collectively,  "Liens"),  registered in the
     names  of the  Shareholders  as set  forth  on  Schedule  3.2(a)(i),  which
     certificates, notwithstanding anything to the contrary contained herein, at
     the Closing  shall be  deposited  into escrow in  accordance  with  section
     2.3(c) hereof; and

          (ii) $50,000 in cash (the "Cash  Consideration"),  which shall be paid
     to the  Shareholders at the Closing in proportion to their ownership of the
     Company Shares immediately prior thereto; and

          (iii) certificate(s)  representing the Earn-Out Shares, free and clear
     of all Liens,  registered in the names of the  Shareholders as set forth on
     Schedule  3.2(a)(i),  which certificates,  notwithstanding  anything to the
     contrary contained herein, at the Closing shall be deposited into escrow in
     accordance with section 2.3(c) hereof.

     (c) All of the Direct  Insite  Shares and  Earn-Out  Shares at the  Closing
shall be  deposited  into  escrow by  Direct  Insite by  delivery  to  Jenkens &
Gilchrist Parker Chapin LLP, as escrow agent, to be held by such escrow agent in
accordance  with the terms of the escrow  agreement  dated the Closing Date (the
"Escrow Agreement") among such escrow agent, the Shareholders, Direct Insite and
the Buyer.

     2.4 The Earn-Out Shares.

     (a) Subject to the terms of the Escrow Agreement, which in the event of any
conflict  with the terms hereof  shall  control,  the  Earn-Out  Shares shall be
subject to release from escrow as follows:

          (i) In accordance with generally accepted accounting principles, on or
     before April 16, 2002, Direct Insite shall determine the consolidated gross
     revenue of Direct Insite and the Buyer for the period from the Closing Date
     through  December 31,  2001,  which gross  revenue for all purposes  hereof

                                       3

<PAGE>


     shall  include all revenue  during  such  period  derived  from the Buyer's
     account management system software (as acquired in the Merger).  Subject to
     the procedures with respect to such  determination  as set forth in section
     2.4(b) below, promptly following the final such determination of such gross
     revenue for such  period,  one-third of the  Earn-Out  Shares  (which shall
     include interim cash dividends,  the Earn-Out Shares and any and all shares
     of Direct  Insite  Common  Stock or other  securities,  property  or monies
     issued  as a  result  of any  stock  split,  stock  dividend,  subdivision,
     reclassification,   combination,  exchange,   recapitalization,   spin-off,
     split-off,  merger, consolidation or other similar transaction with respect
     to such  shares  ("Additional  Property"))  shall  be  released  (A) to the
     Shareholders in the proportion set forth in Schedule 3.2(a)(i) in the event
     that such gross revenue equals or exceeds  $2,500,000,  or (B) to the Buyer
     or Direct  Insite,  as they  shall  instruct,  in the event that such gross
     revenue is less than $2,500,000;

          (ii) In accordance with generally accepted accounting  principles,  on
     or before April 16, 2003,  Direct Insite shall  determine the  consolidated
     gross  revenue  of Direct  Insite  and the  Buyer for the full year  ending
     December  31,  2002.  Subject  to  the  procedures  with  respect  to  such
     determination as set forth in section 2.4(b) below,  promptly following the
     final such  determination of such gross revenue for such year, one- half of
     the  Earn-Out  Shares  (which  shall  include the  Earn-Out  Shares and any
     Additional Property with respect to such shares) not previously released in
     accordance  herewith or with the Escrow  Agreement shall be released (A) to
     the  Shareholders in the proportion set forth in Schedule  3.2(a)(i) in the
     event that such gross revenue equals or exceeds  $7,500,000,  or (B) to the
     Buyer or Direct  Insite,  as they  shall  instruct,  in the event that such
     gross revenue is less than $7,500,000;

          (iii) In accordance with generally accepted accounting principles,  on
     or before April 16, 2004,  Direct Insite shall  determine the  consolidated
     gross  revenue  of Direct  Insite  and the  Buyer for the full year  ending
     December  31,  2003.  Subject  to  the  procedures  with  respect  to  such
     determination as set forth in section 2.4(b) below,  promptly following the
     final such  determination  of such gross revenue for such year,  all of the
     Earn-Out Shares (which shall include the Earn-Out Shares and any Additional
     Property with respect to such shares) not previously released in accordance
     herewith  or  with  the  Escrow  Agreement  shall  be  released  (A) to the
     Shareholders in the proportion set forth in Schedule 3.2(a)(i) in the event
     that such gross revenue equals or exceeds $10,000,000,  or (B) to the Buyer
     or Direct  Insite,  as they  shall  instruct,  in the event that such gross
     revenue is less than $10,000,000;  and

          (iv) Notwithstanding anything to the contrary contained herein, in the
     event that and upon the final closing of (i) a merger of Direct Insite with
     an  unaffiliated  third party in which Direct  Insite is not the  surviving
     entity and in which the  holders  of the  combined  voting  power of Direct
     Insite  immediately  prior to such closing  represents not more than 30% of
     the combined voting power of such surviving  entity  immediately  following
     such closing,  or (ii) a sale by Direct Insite of all or substantially  all
     of its assets to an  unaffiliated  third  party,  then all of the  Earn-Out
     Shares  remaining in escrow on the date of such closing pursuant to section
     2.3 shall be released to the  Shareholders  in the  proportion set forth in
     Schedule 3.2(a)(i),  it being further agreed that in any event a management
     buy-out  or  similar  "going-private"  transaction  shall  not be  deemed a
     transaction covered by either clause (i) or (ii) of this paragraph.

                                       4

<PAGE>


     (b) In each case as  contemplated  by section  2.4(a) above,  Direct Insite
shall deliver to the  Shareholders in writing Direct Insite's  determination  of
the consolidated gross revenue figure as prepared by Direct Insite (the "Revenue
Determination"). The Shareholders shall have twenty-five (25) days after receipt
of the  Revenue  Determination  (the  "Revenue  Dispute  Period") to dispute the
amount or the method of calculation of the amount reflected  therein (a "Revenue
Dispute").  If the  Shareholders  do not  give  written  notice  signed  by both
Shareholders  of a Revenue  Dispute to Direct Insite within the Revenue  Dispute
Period, the Revenue  Determination  shall be deemed to have been accepted by the
Shareholders  in the form in which it was  delivered  by Direct  Insite.  In the
event  that the  Shareholders  do not agree  with the  amount  or the  method of
calculation of the Revenue  Determination,  the  Shareholders  shall give Direct
Insite written notice signed by both  Shareholders (a "Revenue  Dispute Notice")
within  the  Revenue  Dispute  Period,  setting  forth in  detail  the  basis of
his/their disagreement, and Direct Insite and the Shareholders shall, within ten
(10) days after receipt by Direct Insite of such Revenue Dispute Notice, attempt
to  resolve  such   Revenue   Dispute  and  agree  in  writing  upon  the  final
determination   of  gross  revenue.   In  connection  with  the  review  by  the
Shareholders  of the Revenue  Determination,  Direct  Insite  shall use its best
efforts to make its  workpapers  of the  Buyer's  statements  of income and cash
flows  for  the  applicable   12-month   period  then  ended  available  to  the
Shareholders  and both of the  Shareholders  shall  sign any  customary  waivers
requested by Direct Insite. In the event that the Shareholders and Direct Insite
are  unable  to  resolve  any  such  Revenue  Dispute  within  the ten  (10) day
resolution  period,  then a non "Big- Five" accounting firm which has not in the
past provided any services to either Direct Insite, the Company or any affiliate
thereof, selected by Direct Insite and reasonably acceptable to the Shareholders
(the  "Appraiser")  shall be  employed  as  appraiser  hereunder  to settle such
Revenue  Dispute as soon as reasonably  practicable in which case (x) each party
shall  furnish  to  the  Appraiser  such  workpapers  and  other  documents  and
information  as the  Appraiser may request,  (y) each party and its  accountants
shall be afforded  reasonable  opportunity to present such material  relating to
the disputed  issues as it may wish to the Appraiser and to discuss the disputed
issues with it, (z) the Appraiser shall render its  determination(s)  in writing
by notice to the parties,  which  determination(s) shall be final and binding on
the Shareholders and Direct Insite (the  "Appraiser's  Revenue  Determination").
The Shareholders,  on one hand, and Direct Insite, on the other hand, shall bear
the fees and  expenses of the  Appraiser  for the  services of the  Appraiser in
proportion  to the  difference  between the  determination  of gross  revenue as
submitted  to the  Appraiser by the  Shareholders  and the  Appraiser's  Revenue
Determination,  calculated as follows:  (i) the Shareholders  jointly shall bear
the portion of such fees and  expenses  equal to a fraction,  the  numerator  of
which is equal to the excess of the  determination of gross revenue as submitted
to the Appraiser by the Shareholders over the Appraiser's Revenue Determination,
and the denominator of which is the excess of the determination of gross revenue
as submitted to the Appraiser by the Shareholders and the Revenue  Determination
as submitted to the Appraiser by Direct Insite and (ii) Direct Insite shall bear
the remaining portion of such fees and expenses;  provided, however, that in the
event the fraction set forth in the preceding clause (i) is less than zero, such
fraction  shall be deemed to equal zero,  and in the event that the fraction set
forth in the preceding  clause (i) is greater than one,  such fraction  shall be
deemed to equal one.

     2.5 Closing of Stock Transfer Book. On and after the date of this Agreement
there shall be no transfers on the stock transfer books of the Company of shares
of capital  stock of the Company  that were issued and  outstanding  immediately
prior to the date  hereof.

                                       5
<PAGE>


     2.6 Voting and Dividend Rights.

     (a) Subject to the terms of the Escrow  Agreement,  all voting  rights with
respect to Direct Insite Shares and Earn-Out Shares (including all Direct Insite
Common Stock issued as Additional Property) held in escrow pursuant to the terms
of the Escrow Agreement may be exercised by the respective  Shareholders  during
the period that such  shares are so held in escrow.

     (b) Subject to the terms of the Escrow Agreement,  all Additional  Property
issued with respect to Direct Insite  Shares and Earn-Out  Shares held in escrow
pursuant to the terms of the Escrow  Agreement shall be deemed to have been paid
or made to the respective Shareholders for income tax purposes.

     3. Representations and Warranties of the Shareholders and the Company. Each
Shareholder,  severally  in the  proportion  that he  owns  the  Company  Shares
immediately prior to the Closing (subject to the limitations on  indemnification
set forth in section  9.7),  and the  Company,  jointly and  severally  with the
Shareholders, represent and warrant to the Buyer and Direct Insite as follows:

     3.1 Organization.  The Company is a corporation duly incorporated,  validly
existing and in good  standing  under the laws of the State of Texas and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted in the State of Texas,
which is the only state in which a  qualification  or  licensing  to conduct its
business  is  required,  except  those  states  in which  the  failure  to be so
qualified or licensed or to be in good standing individually or in the aggregate
would not have or be reasonably  expected to have a material  adverse  effect on
the  condition  (financial  or  otherwise),   business,  assets  or  results  of
operations  of  the  Company  or  the  Buyer  either  before  or  following  the
transactions  contemplated  hereby (a "Material Adverse Effect on the Company").
The Company has delivered to the Buyer Group true,  correct and complete  copies
of the Company's  Articles of Incorporation and Bylaws, as in effect immediately
prior to Closing.

3.2     Capitalization.

     (a) The authorized  capital stock of the Company  consists of 75,000 shares
of Company Common Stock. The Company Shares are the only shares of capital stock
of the Company that are issued and  outstanding,  and all of the Company  Shares
are  owned of  record  and  beneficially  by the  Shareholders  as set  forth on
Schedule  3.2(a)(i),  free and clear of any Liens. All of the Company Shares are
duly authorized,  validly issued, fully paid and non- assessable.  Except as set
forth  on  Schedule  3.2(a)(ii),  there  are no (i)  options,  warrants,  calls,
preemptive  rights,  subscriptions  or  other  rights,  convertible  securities,
agreements or commitments of any character obligating, now or in the future, the
Company or the  Shareholders  to issue,  transfer  or sell any shares of capital
stock, options,  warrants, calls or other equity interest of any kind whatsoever
in the Company or securities convertible into or exchangeable for such shares or
equity  interests,  (ii)  contractual  obligations of the Company to repurchase,
redeem or otherwise  acquire any capital stock or equity interest of the Company
or (iii) voting  trusts,  proxies or similar  agreements to which the Company or
any of the  Shareholders  is a party with  respect to the voting of the  capital
stock of the Company.

                                       6

<PAGE>

     (b) The Company does not own any  outstanding  shares of capital  stock (or
other equity interests of entities other than  corporations) of any partnership,
joint venture,  trust,  corporation,  limited  liability company or other entity
(each, an "Entity").

     3.3 Authorization;  Validity of Agreement. Each of the Shareholders and the
Company has the requisite capacity or corporate power and authority, as the case
may be, to execute,  deliver and perform  this  Agreement  and each of the other
agreements, instruments, documents and certificates to be executed and delivered
by the  Company  or the  Shareholders,  as the  case  may be,  pursuant  to this
Agreement,  including  but not  limited  to any item  referred  to in  Article 7
(collectively,  with this Agreement, the "Transaction Documents"),  to which the
Company or the  Shareholders,  as the case may be, are party,  and to assume and
perform its or their obligations hereunder and thereunder, and to consummate the
transactions  contemplated  hereby and  thereby.  The  execution,  delivery  and
performance  by each of the  Shareholders  and the Company of this Agreement and
the other  Transaction  Documents to which the Company or any  Shareholder  is a
party and the consummation of the transactions  contemplated  hereby and thereby
have been duly and validly  authorized  by the Board of Directors of the Company
and the shareholders of the Company to the extent legally required, and no other
corporate  proceedings on the part of the Company are necessary to authorize the
execution,  delivery and performance of this Agreement and the other Transaction
Documents by the Company, and the consummation of the transactions  contemplated
hereby and thereby.  Each of this Agreement and the other Transaction  Documents
has been duly  executed and  delivered by the Company and the  Shareholders,  as
applicable,  and is a  valid  and  binding  obligation  of the  Company  and the
Shareholders  that are  parties  thereto,  enforceable  against  each of them in
accordance  with their  respective  terms,  except that such  enforcement may be
limited by (i) applicable bankruptcy, reorganization,  insolvency, moratorium or
other laws  affecting  creditors'  rights  generally,  (ii)  equitable  rules or
principles affecting the enforcement of obligations generally, whether at law or
in equity, or (iii) the exercise of the discretionary powers of any court before
which may be  brought  any  proceeding  seeking  equitable  remedies,  including
without limitation specific performance and injunctive relief.


     3.4 No Violations; Consents and Approvals.

     (a) The execution,  delivery and  performance of each of this Agreement and
the other  Transaction  Documents  by the  Company  and the  Shareholders  party
thereto,  do not, and the consummation by them of the transactions  contemplated
hereby and  thereby  will not:  (i)  violate any  provision  of the  Articles of
Incorporation  or Bylaws of the Company,  or (ii) violate any Law (as defined in
section  3.8(b))  applicable to the  Shareholders or the Company or any of their
respective  properties  or  assets,  except  with  respect  to clause  (ii) such
violations as would not  individually  or in the aggregate have or be reasonably
expected  to have a Material  Adverse  Effect on the  Company.

     (b) No filing or  registration  with,  notification  to, or  authorization,
consent or approval of, any  legislative  or executive  agency or  department or
other regulatory service, authority or agency or any court, arbitration panel or
other tribunal or judicial authority of any foreign,  provincial,  United States
federal, state, county, municipal or other local jurisdiction, political entity,
body, organization, subdivision or branch (each, a "Governmental Entity") or any
other  individual or other entity  (each,  a "Person") is required in connection
with the  execution,  delivery and  performance  of this Agreement or any of the
other  Transaction   Documents  by  the  Company  or  the  Shareholders  or  the

                                       7

<PAGE>

consummation by the Company or the Shareholders of the transactions contemplated
hereby and thereby, except for such consents, approvals, orders, authorizations,
notifications,   notices,   estoppel  certificates,   releases,   registrations,
ratifications,   declarations,   filings,   waivers,   exemptions  or  variances
(individually,  a "Consent" and  collectively,  "Consents")  with respect to any
License  (as  defined  in section  3.8(c))  or Law as are set forth on  Schedule
3.4(b) hereof (the  "Required  Consents")  and except for those  Consents  whose
failure to be obtained  individually  or in the  aggregate  would not have or be
reasonably  expected  to have a  Material  Adverse  Effect on the  Company.  3.5
Company  Financial  Statements.

     (a) Attached to Schedule  3.5(a) is the balance  sheet of the Company as of
December 31, 2000 (the  "Year-End  Balance  Sheet"),  together  with the related
statements of income and retained  earnings and statements of cash flows for the
year ended December 31, 2000, a balance sheet (the "Pre-Closing  Balance Sheet")
of the Company as of a date not  earlier  than ten days prior to the date hereof
and a detailed  schedule of accounts  receivable and accounts  payable as of the
date  of  the   Pre-Closing   Balance   Sheet,   including   the  aging  thereto
(collectively, the "Company Financial Statements").

     (b) The Company  Financial  Statements  have been derived  from,  and agree
with,  the books and  records of the Company  and fairly  present the  financial
position of the Company as of the  respective  dates  thereof and the results of
operations  of the Company for the  respective  periods set forth  therein.  The
Company Financial Statements have been prepared in accordance with United States
generally accepted accounting  principles,  consistently applied ("GAAP"), as of
the  dates  and  for  the  periods  involved,  except  to the  extent  that  the
Pre-Closing  Balance  Sheet omits  footnotes  and is subject to normal  year-end
adjustments.

     3.6 No Material  Adverse  Change.  Since  December 31, 2000,  (i) no event,
condition or circumstance has occurred that could, or could be reasonably likely
to, have a Material Adverse Effect on the Company, other than events, conditions
or circumstances  solely attributable to general economic  conditions;  and (ii)
the Company has not taken, nor have the Shareholders  permitted to be taken, any
action  that if taken or  permitted  to be taken  after  the date  hereof  would
constitute a violation or breach of or would otherwise be inconsistent  with any
of the provisions set forth in section  3.31(a)  through (p).

     3.7 No Undisclosed Liabilities.

     (a) The Company  does not have,  and as of the Closing  will not have,  any
liabilities (whether accrued, contingent,  known, or otherwise) other than those
that (i) are set forth or reserved  against on the Year-End  Balance  Sheet;  or
(ii) were incurred since  December 31, 2000 in the ordinary  course of business,
none of which,  individually  or in the aggregate,  is material to the Company's
business,  operations,  condition  or  prospects,  all of which are set forth on
Schedule 3.7(a).

                                       8

<PAGE>


     (b) The accounts  payable of the Company set forth in the Year-End  Balance
Sheet or arising  subsequent thereto are the result of bona fide transactions in
the ordinary course of business.

3.8 Litigation; Compliance with Law;  Licenses  and  Permits.

     (a)  Except  as set forth in  Schedule  3.8(a),  there is no  claim,  suit,
action,  or proceeding (each, a "Proceeding")  pending,  nor is there, to Seller
Group's best knowledge,  any Proceeding  threatened or any  investigation,  that
involves or affects the  Company,  by or before any  Governmental  Entity or any
other Person.

     (b) Except as set forth on Schedule  3.8(b) and except where the failure to
so comply  individually  or in the  aggregate  would  not have or be  reasonably
expected to have a Material Adverse Effect on the Company,  the Company has, and
on the Closing Date will have, complied in with all applicable  criminal,  civil
or  common  laws,  statutes,  ordinances,  orders,  codes,  rules,  regulations,
policies,  guidance  documents,  writs,  judgments,   decrees,  injunctions,  or
agreements of any Governmental Entity (collectively,  "Laws"), including but not
limited to Laws  relating  to Taxes (as  defined in  section  3.14(b)),  zoning,
building codes, antitrust,  occupational safety and health,  industrial hygiene,
environmental  protection,  water,  ground  or air  pollution,  the  generation,
handling,  treatment, storage or disposal of Hazardous Substances (as defined in
section 3.16(k)),  consumer product safety,  product liability,  hiring,  wages,
hours,  employee  benefit  plans and  programs,  collective  bargaining  and the
payment of  withholding  and social  security  taxes.  Since January 1, 1998, no
member of the Seller Group has  received any notice of any  violation of any Law
except as set forth on Schedule 3.8(b).

     (c) The Company has every license, permit, certification,  qualification or
franchise  issued by any  Governmental  Entity (each,  a  "License"),  and every
Consent by or on behalf of any Person that is not a party to this Agreement,  in
each case which the Seller Group  believes  necessary for the Company to conduct
its business as presently conducted.  All such Licenses and Consents are in full
force and effect and  neither  the Company  nor the  Shareholders  has  received
notice of any pending  cancellation  or  suspension  of any thereof  nor, to the
knowledge  of  the  Shareholders,  is any  cancellation  or  suspension  thereof
threatened. The applicability and validity of each such License and Consent will
not be adversely  affected by the consummation of the transactions  contemplated
by this Agreement, except where any inapplicability or invalidity would not have
or be reasonably expected to have a Material Adverse Effect on the Company.

     3.9 Employee Benefit Plans; ERISA

     (a)  Schedule  3.9(a)  lists each  "employee  benefit  plan" (as defined in
section 3(3) of the Employee  Retirement Income Security Act of 1974 ("ERISA")),
and all other material  employee benefit  (including,  without  limitation,  any
non-qualified plans), bonus, deferred compensation,  incentive, stock option (or
other equity-based), severance, change-in- control, medical insurance and fringe
benefit plans maintained for the benefit of, or contributed to by the Company or
any trade or business, whether or not incorporated (an "ERISA Affiliate"),  that
would be deemed a "single employer" within the meaning of Section 4001 of ERISA,

                                       9

<PAGE>

for the benefit of any employee or former employee of the Company (the "Plans").
The Seller Group has heretofore  delivered to the Buyer Group, true, correct and
complete copies of each of the Plans, including all amendments to date.

     (b) Each of the Plans that is subject to ERISA  complies with ERISA and the
applicable  provisions  of the Internal  Revenue  Code of 1986,  as amended (the
"Code")  and  has  been   administered  in  accordance  with  ERISA  and,  where
applicable,  the Code.  Each of the Plans intended to be "qualified"  within the
meaning of Code Section 401(a) has received a timely  determination  letter from
the Internal Revenue Service that it is so qualified and neither Shareholder nor
the Company knows of any facts or circumstances that would materially  adversely
affect such  qualification.  Except as set forth in Schedule 3.9(b), none of the
Plans is subject to Title IV of ERISA.  No  "reportable  event," as such term is
defined in Section  4043(b) of ERISA,  has  occurred  with  respect to any Plan.
There are no pending or, to the  knowledge  of any  Shareholder  or the Company,
threatened  claims (other than routine claims for benefits),  actions,  suits or
proceedings  by, on behalf of or against any of the Plans or any trusts  related
thereto.

     (c) No Plan  provides  benefits  including,  without  limitation,  death or
medical  benefits  (whether or not  insured),  with respect to any  employees or
former employees of the Company beyond their retirement or other  termination of
service (other than (i) coverage mandated by applicable law, (ii) death benefits
or  retirement  benefits  under  any  "employee  pension  plan," as that term is
defined in section  3(2) of ERISA,  or (iii)  benefits the full cost of which is
borne by the current or former employee (or his or her beneficiary).

     (d) With respect to each Plan,  neither the Company,  the  Shareholders nor
any ERISA Affiliate has engaged in a "prohibited  transaction"  (as such term is
defined in Section 4975 or Section 406 of ERISA) that would subject the Company,
or the Buyer Group to any taxes,  penalties or other liabilities  resulting from
prohibited  transactions  under Code  Section  4975 or Sections 409 or 502(i) of
ERISA.

     (e) The Company has complied with the notice and  continuation  of coverage
requirements of Code Section 4980B and the  regulations  thereunder with respect
to each plan that is, or was during any  taxable  year of the  Company for which
the statute of  limitations  on the  assessment of federal  income taxes remains
open, by consent or otherwise, a group health plan within the meaning of Section
4980B(g) of ERISA.

     (f) No Plan has incurred an "Accumulated Funding Deficiency" (as defined in
Section 302(a) of ERISA or Code Section 412(a)), whether or not waived.

     (g) Neither the  Company,  the  Shareholders  nor any ERISA  Affiliate  has
incurred or would incur a "withdrawal"  or "partial  withdrawal,"  as defined in
Sections 4203 and 4205 of ERISA, from any Plan that has resulted or would result
in a withdrawal liability of the Company or any ERISA Affiliate under such Plan.


     3.10 Real Property.

     (a) The Company does not have any ownership interest in any real property.

                                       10

<PAGE>

     (b) Schedule 3.10(b) contains a true,  correct and complete list of all the
leases, subleases, licenses and other agreements under which the Company uses or
occupies  or has the  right to use or  occupy,  now or in the  future,  any real
property  (such land,  buildings  and other  improvements  being  herein  called
collectively,  the  "Leased  Property"),  and all  leases,  subleases  and other
agreements  under which the  Company  gives  another  Person the right to use or
occupy, now or in the future,  the Leased Property.  All agreements set forth on
Schedule  3.10(b)  are  hereinafter  called  collectively,  the  "Real  Property
Contracts." The Shareholders  have heretofore  delivered to the Buyer Group true
and correct copies of all Real Property  Contracts.  Each Real Property Contract
is in full force and effect,  all rent and other sums and charges  payable by or
to the  Company  thereunder  are  current,  no  written  notice  of  default  or
termination  under any Real Property  Contract is  outstanding,  no  termination
event or condition or default which has remained uncured beyond  applicable cure
periods on the part of the  Company or any other  Person  exists  under any Real
Property Contract, and no event has occurred and no condition exists which, with
the  giving  of notice or the  lapse of time or both,  would  constitute  such a
default  or  termination  event  or  condition.  The  Company  has a  valid  and
enforceable  leasehold  interest in the Leased Property,  subject to no Liens or
Title Defects which interfere with the operation of the Company's  business.  No
Affiliate  (as  defined in section  3.15) of the Company is the owner of, or has
any ownership,  economic or similar interest in, any lease, sublease, license or
other  agreement  concerning  the  Leased  Property.  None of the Real  Property
Contracts  have been  amended,  modified or extended as of the date hereof.  The
Company maintains actual and exclusive possession of the Real Property.

     3.11 Intellectual Property; Computer Software.

     (a) Schedule  3.11(a) lists all items of intellectual  property  including,
without limitation,  trademarks, trade names, service marks, service names, mark
registrations,   logos,  assumed  names,  copyrights,  copyright  registrations,
patents,   know-how  and  all  applications  therefor  that  are  owned  by  the
Shareholders,  the  Company or any other  Person and used by the  Company in the
operations of its business,  (collectively,  "Intellectual Property"), and there
are no pending or threatened  claims by any Person relating to the Company's use
of any  Intellectual  Property.  Except as set forth in  Schedule  3.11(a),  the
Company has such rights of  ownership  (free and clear of all Liens) of, or such
rights by license, lease or other agreement to use (free and clear of all Liens)
the Intellectual  Property as are necessary to permit the Company to conduct its
business  and the Company is not  obligated to pay any royalty or similar fee to
any  Person  in  connection  with the  Company's  use or  license  of any of the
Intellectual Property.

     (b) Except as set forth on Schedule 3.11(b), the Company has such rights of
ownership (free and clear of all Liens) of, or such rights by license,  lease or
other  agreement  to use (free and clear of all Liens),  the  computer  software
programs including,  without limitation,  application  software that are used by
the Company and that are  material to the conduct of its  business as  currently
conducted,  as are  necessary to permit the conduct of its business as currently
conducted.  None of the Company's  ownership  rights or rights to use any of the
computer  programs  referred to above will be  adversely  affected by any of the
transactions  contemplated  hereby.


                                       11
<PAGE>


     3.12 Tangible Personal Property; Capital Budget.

     (a) Except as set forth on Schedule 3.12(a),  the Company has good title to
all tangible  personal  property used in its business or located on its premises
free and clear of all Liens.

     (b) All material items of machinery,  equipment, tooling and other tangible
personal  property owned or leased by the Company and used in the conduct of its
business (other than items of inventory) are listed in the detailed fixed assets
ledger of the Company attached to Schedule 3.12(b) (collectively,  the "Personal
Property").  The  Personal  Property  conforms in all  material  respects to all
requirements  of applicable  Laws,  except as  individually  or in the aggregate
would not have or be reasonably  expected to have a Material  Adverse  Effect on
the Company.  All of the items of machinery  and equipment  included  within the
Personal  Property are fully operational and operating in the ordinary course of
the Company's business, as applicable,  are in good operating condition and in a
good state of maintenance and repair, are adequate for use in the conduct of the
Company's business as previously conducted and as proposed to be conducted on an
efficient and profitable basis.

     (c) Schedule 3.12(c)  includes a true,  correct and complete capital budget
for the fiscal year ending  December 31,  2001.  Except as set forth on Schedule
3.12(c), no capital expenditures are contemplated by the Company.

     3.13 Material Contracts.

     (a)  Schedule  3.13 sets forth a true,  complete  and correct list of every
note,  bond,  mortgage,  indenture,  guarantee,  other evidence of indebtedness,
license,  lease,  option,  contract,   undertaking,   understanding,   covenant,
agreement or other  instrument or document  (each,  a  "Contract")  to which the
Company is a party or by which any of its  properties  or assets may be bound or
otherwise  subject  that:  (i) provides  for  aggregate  future  payments by the
Company  or to the  Company  of more  than  $10,000  and has an  unexpired  term
exceeding  three (3) months and may not be canceled upon thirty (30) days notice
without  any  liability,  penalty  or  premium  (excluding  purchase  orders and
invoices  arising in the ordinary course of business);  (ii) was entered into by
the  Company  with  either  of the  Shareholders,  or an  officer,  director  or
significant employee of the Company; (iii) is a collective bargaining or similar
agreement;  (iv) guarantees or indemnifies or otherwise causes the Company to be
liable or otherwise responsible for the obligations or liabilities of another or
provides for a material charitable  contribution by the Company; (v) involves an
agreement with any bank, finance company or similar organization; (vi) restricts
the Company  from  engaging in any  business or activity  anywhere in the world;
(vii) is an employment  agreement,  consulting  agreement or similar arrangement
with any employee of the Company; (viii) is a lease of real property; or (ix) is
otherwise material to the rights, properties,  assets, business or operations of
the Company (the  foregoing,  collectively,  "Material  Contracts").  The Seller
Group has heretofore  provided true, complete and correct copies of all Material
Contracts to the Buyer.

     (b)  Except  as set  forth  in  Schedule  3.13:  (i)  each of the  Material
Contracts  is in full force and  effect,  (ii)  there is not,  and there has not
been,  claimed or alleged by any Person with respect to any  Material  Contract,

                                       12
<PAGE>


any existing  default,  or event that with notice or lapse of time or both would
constitute a default or event of default,  on the part of the Company, or to the
knowledge  of the Company,  on the part of any other party  thereto and (iii) no
Consent from, or notice to, any Governmental  Entity or other Person is required
in order to  maintain  in full force and effect any of the  Material  Contracts,
other than such Consents that have been  obtained and are  unconditional  and in
full force and effect and such  notices  that have been duly given and copies of
such Consents have been delivered to the Buyer Group.

     (c) Each of the  Contracts  to which the Company is a party and that is not
listed on  Schedule  3.13 does not  involve the payment by the Company or to the
Company of more than $10,000 (excluding  purchase orders received from customers
in the ordinary course for the sale of products at standard prices,  or purchase
orders given to suppliers in the ordinary course of business for the purchase of
products at standard  prices) and is not  otherwise  material,  individually  or
together with one or more Contracts, to the Company or its business.

3.14 Taxes.

     (a) Except as set forth in Schedule  3.14(a):

          (1) the  Company  has (A) duly and timely  filed or caused to be filed
     with the  appropriate  Tax Authority each Tax Return that is required to be
     filed by or on behalf of the  Company  or that  includes  or relates to the
     Company, its income,  sales, assets or business,  which Tax Return is true,
     correct and complete, (B) duly and timely paid in full or caused to be paid
     in full, all Taxes due and payable on or prior to the date hereof,  and (C)
     properly  accrued on the books and records of the Company  (including,  but
     not limited to, the Year-End  Balance  Sheet) in accordance  with generally
     accepted accounting principles a provision for the payment of all Taxes due
     or  claimed  to be due or for  which  the  Company  otherwise  is or may be
     liable;

          (2) the Company has not requested an extension of time within which to
     file any Tax Return in  respect of any Tax period  which has not since been
     filed;

          (3) the Company has complied in all respects with all applicable  laws
     relating to the  payment,  collection  or  withholding  of any Tax, and the
     remittance  thereof  to any  and all Tax  Authorities,  including,  but not
     limited to, Code Sections 1441, 1442, 1445 and 3402;

          (4)  there is no lien for  Taxes  upon any  asset or  property  of the
     Company (except for any statutory lien for any Tax not yet due);

          (5) the  Company  does not  have,  and is not  expected  to have,  any
     liability in respect of any Tax as a transferee  or successor of any Person
     (including,  but not limited to, any liability  arising  under Treas.  Reg.
     Sec. 1.1502-6),  and the Company is not, and never has been, a party to any
     Tax allocation, Tax indemnification or Tax sharing contract or agreement;

          (6) all Taxes  assessed  or  proposed  to be  assessed,  if any,  with
     respect to the Company's income,  sales,  assets or business,  or for which
     the Company is or may be liable have been paid;

                                       13

<PAGE>


          (7)  any  assessment,  deficiency  or  adjustment  related  to  or  in
     connection  with any Tax for which the  Company is or may be liable or with
     respect to the Company's income,  sales,  assets or business that is or was
     required to be reported to any Tax Authority has been so reported,  and any
     additional Taxes owed with respect thereto have been paid;

          (8) no Tax  Proceeding has ever occurred or is pending,  proposed,  or
     threatened with respect to any Tax, the payment,  collection or withholding
     of any Tax or any Tax Return filed by or on behalf of the Company;

          (9)  the  statute  of  limitations  for  any  Tax  Proceeding  or  the
     assessment  or  collection  of any Tax for which the  Company  is or may be
     liable or with respect to the Company's income,  sales,  assets or business
     has never been extended or waived;

          (10) there is no  outstanding  subpoena or request for  information or
     documents  from any Tax  Authority  with  respect  to any Tax for which the
     Company is or may be liable or with respect to the Company's income, sales,
     assets or business;

          (11) the Company has never  entered  into any  agreement  with any Tax
     Authority (including,  but not limited to, any closing agreement within the
     meaning of Code Section 7121 or any analogous  provision of applicable  law
     or any agreement relating to transfer or intercompany pricing) or requested
     or  received  a  private  letter  or other  ruling  from any Tax  Authority
     relating  to any Tax for  which  the  Company  is or may be  liable or with
     respect to the Company's income, sales, assets or business;

          (12) the Company is not a party to any  contract,  agreement  or other
     arrangement  that  could  result,  alone or in  conjunction  with any other
     contract, agreement or other arrangement, in the payment of any amount that
     would not be  deductible by reason of Code Sections 162, 280G or 404 or any
     similar provision of applicable law;

          (13) the Company is not a "consenting  corporation" within the meaning
     of Code Section  341(f) or any similar  provision of applicable law and has
     not agreed to have Code Section  341(f)(2)  apply to any  disposition  of a
     subsection  (f) asset (as such term is defined in Code  Section  341(f)(4))
     owned by the Company;

          (14) the Company does not have any  "tax-exempt  use property"  within
     the meaning of Code Section  168(g) or Code  Section  168(h) or any similar
     provision of applicable law with respect to the Company, its income, sales,
     assets or business;

          (15) none of the assets of the  Company is  required  to be treated as
     being owned by any other person  pursuant to any  provision  of  applicable
     law, including, but not limited to, the "safe harbor" leasing provisions of
     Code  Section  168(f)(8)  as in effect  prior to the repeal of those  "safe
     harbor" leasing provisions;

          (16) the  Company  is not,  nor has it been,  a  "United  States  real
     property holding  corporation" within the meaning of Code Section 897(c)(2)
     at any time  during  the  applicable  period  referred  to in Code  Section
     897(c)(1)(A)(ii);

                                       14
<PAGE>


          (17) no election  under Code  Section 338 or any similar  provision of
     applicable  law has been made or required to be made by or with  respect to
     the Company (or a subsidiary, if any, of the Company);

          (18) the  Company  (i) has not  adjusted  or changed or  received  any
     request,  demand,  or proposal from a Tax Authority to adjust or change any
     accounting method, (ii) is not required to include in income any adjustment
     pursuant to Code Section  481(a) (or any similar  provision  of  applicable
     law) by reason  of a change in  accounting  method,  and (iii) has  neither
     deferred   any  income  to  a  period  after  the  Closing  Date  that  has
     economically accrued or is otherwise  attributable to a period prior to the
     Closing Date nor  accelerated  any  deductions  into a period  ending on or
     before the  Closing  Date that will or may  economically  accrue  after the
     Closing Date;

          (19) there is no power of attorney  in effect  relating to any Tax for
     which the  Company  is or may be liable or with  respect  to the  Company's
     income, sales, assets or business;

          (20) no jurisdiction  where the Company does not file a Tax Return has
     made or  threatened  to make a claim that the Company is required to file a
     Tax Return for such jurisdiction;


          (21) the Company and the Shareholders, to the extent permitted by Law,
     have  closed (or taken all action  necessary  to permit the  Company or the
     Buyer Group to close) each Tax Period that begins prior to the Closing Date
     as of the close of day  immediately  preceding  the Closing  Date or on the
     Closing  Date;  and

          (22)  Schedule  3.14 sets forth a list of all  elections  currently in
     effect (or made within the five most recent Tax periods  ending on or prior
     to the Closing Date) with respect to any Tax or Tax Return.

          (b) For purposes of this Agreement,

          (1) "Tax"  means  any tax,  charge,  fee,  levy,  deficiency  or other
     assessment of whatever kind or nature including,  without  limitation,  any
     net income, gross income, profits, gross receipts, excise, real or personal
     property,  sales, ad valorem,  withholding,  social  security,  retirement,
     excise, employment,  unemployment,  minimum,  estimated,  severance, stamp,
     property,  occupation,  environmental,  windfall profits, use, service, net
     worth, payroll, franchise, license, gains, customs, transfer, recording and
     other tax, duty, fee, assessment or charge of any kind whatsoever,  imposed
     by any Tax  Authority,  including  any  liability  therefor as a transferee
     (including  without  limitation  under  Code  Section  6901 or any  similar
     provision of applicable  law), as a result of Treas.  Reg.  Sec.1.1502-6 or
     any similar  provision of applicable law, or as a result of any tax sharing
     or similar agreement, together with any interest, penalties or additions to
     tax relating thereto.

          (2) "Tax  Authority"  means any branch,  office,  department,  agency,
     instrumentality,    court,   tribunal,    officer,   employee,    designee,
     representative,  or other Person that is acting for, on behalf or as a part
     of any  foreign  or  domestic  government  (or  any  political  subdivision
     thereof)  that is  engaged  in or has any power,  duty,  responsibility  or

                                       15

<PAGE>

     obligation  relating  to  the  legislation,  promulgation,  interpretation,
     enforcement,  regulation,  monitoring,  supervision or collection of or any
     other activity relating to any Tax or Tax Return.

          (3)  "Tax   Proceeding"   means  any   audit,   examination,   review,
     reassessment,  litigation or other  administrative  or judicial  proceeding
     relating  to any Tax for which the Company is (or is asserted to be) or may
     be liable,  the  collection,  payment or withholding of any Tax, or any Tax
     Return filed by or on behalf of the Company.

          (4) "Tax  Return"  means any return,  election,  declaration,  report,
     schedule, information return, document, information, opinion, statement, or
     any amendment to any of the foregoing  (including  without  limitation  any
     consolidated,  combined  or unitary  return)  submitted  or  required to be
     submitted  to any Tax  Authority.

          (5) "Treas.  Reg." means any temporary,  proposed or final  regulation
     promulgated under the Code.

     3.15 Affiliated  Party  Transactions.  Except for (i)  obligations  arising
under this Agreement and other  documents to be signed at the Closing,  and (ii)
as set forth on Schedule 3.15 hereto, as of the Closing Date neither the Company
nor any of its  affiliates,  nor the  Shareholders  or any of  their  respective
affiliates or immediate  family  (collectively,  the  "Affiliates"),  will have,
directly or  indirectly,  any  obligation to or cause of action or claim against
the Company.

     3.16 Environmental  Matters.  Except as set forth on Schedule 3.16:

     (a) The Company is in compliance  with, and its business has been conducted
in compliance with, all Environmental  Laws (as defined below) and Environmental
Permits (as defined below);

     (b) No  Site  (as  defined  below)  is a  treatment,  storage  or  disposal
facility,  as defined  in and  regulated  under the  Resource  Conservation  and
Recovery  Act,  42  U.S.C.  Sec.  6901 et seq.,  is on or ever was  listed or is
proposed  for  listing  on  the  National   Priorities   List  pursuant  to  the
Comprehensive Environmental Response,  Compensation and Liability Act, 42 U.S.C.
Sec. 9601 et seq., or on any similar state list of sites requiring investigation
or cleanup;

     (c) None of the  Shareholders  nor the Company has received any notice that
remains pending or outstanding with respect to its business or any Site from any
Governmental  Entity or Person  alleging  that the Company is not in  compliance
with any Environmental Law;

     (d) There has been no  Release  (as  defined  below)  caused by the acts or
omissions of the Company or the Shareholders,  or its or their agents, employees
or  representatives,  of a Hazardous  Substance (as defined below) at, from, in,
to, on or under any Site that would require any  corrective  action at such Site
and no  Hazardous  Substances  are present in, on, about or migrating to or from
any Site that  could  give rise to an  Environmental  Claim (as  defined  below)
against the Company;

     (e) There are no pending or outstanding notices, orders or other directives
by any Governmental Entity that require or may require the Company to conduct or

                                       16
<PAGE>

pay for any  investigation,  remediation  or cleanup of any Site  resulting from
acts or omissions of the Company or the  Shareholders,  or its or their  agents,
employees or representatives, and there have been no corrective actions required
of the Company by any Governmental Entity at any Site in the past;

     (f) The Company has obtained and holds all necessary Environmental Permits,
and those  Environmental  Permits will remain in full force and effect after the
consummation of the transactions  contemplated  hereby,  subject to any notices,
modifications   or  amendments   required  to  be  filed  with  the  appropriate
Governmental  Entity to reflect  the  change in  ownership  or  control  and the
payment of any fees  required  in  connection  with such  filings,  all of which
required filings and fees are identified on Schedule 3.16.;

     (g) There are no past or pending,  or to the knowledge of the  Shareholders
or the  Company,  threatened,  Environmental  Claims  against the  Company,  and
neither the Company nor any  Shareholder is aware of any facts or  circumstances
that could be expected to form the basis for any Environmental Claim against the
Company that  individually or in the aggregate would have or be expected to have
a  Material  Adverse  Effect  on the  Company;  and

     (h) As used  herein,  (i)  "Environment"  means  all  air,  surface  water,
groundwater, or land, including land surface or subsurface,  including all fish,
wildlife,  biota and all other natural  resources;  (ii)  "Environmental  Claim"
means any and all  administrative or judicial actions,  suits,  orders,  claims,
liens, notices, notices of violations, investigations,  complaints, requests for
information,  proceedings  or other  communications  (written or oral),  whether
criminal  or civil  (collectively,  "Claims"),  pursuant  to or  relating to any
applicable  Environmental Law by any person (including,  but not limited to, any
Governmental   Entity,   Person  and  citizens'  group)  based  upon,  alleging,
asserting,  or claiming any actual or  potential:  (A) violation of or liability
under any Environmental  Law, (B) violation of any Environmental  Permit, or (C)
liability for investigatory costs, cleanup costs, removal costs, remedial costs,
response costs,  natural resource  damages,  property  damage,  personal injury,
fines, or penalties  arising out of, based on, resulting from, or related to the
presence,  Release, or threatened Release into the Environment, of any Hazardous
Substances at any location, including, but not limited to, any off-Site location
to which Hazardous  Substances or materials containing Hazardous Substances were
sent by the  Company  for  handling,  storage,  treatment,  or  disposal;  (iii)
"Environmental  Law" means any and all Laws  relating to the  protection  of the
Environment,  worker health and safety,  and/or  governing  the  handling,  use,
generation,   treatment,   storage,   transportation,   disposal,   manufacture,
distribution,   formulation,   packaging,  labeling,  or  Release  of  Hazardous
Substances and the state analogies thereto,  all as of the Closing Date, and any
common law  doctrine,  including,  but not  limited  to,  negligence,  nuisance,
trespass,  personal injury,  or property damage related to or arising out of the
presence,  Release,  or exposure to a Hazardous  Substance;  (iv) "Environmental
Permit" means any Licenses or Consents required by any Governmental Entity under
or in connection with any  Environmental  Law; (v) "Hazardous  Substance"  means
petroleum, petroleum hydrocarbons or petroleum products, petroleum by- products,

<PAGE>

radioactive  materials,  asbestos or  asbestos-containing  materials,  gasoline,
diesel fuel,  pesticides,  radon,  urea  formaldehyde,  lead or  lead-containing
materials,  polychlorinated  biphenyls;  and  any  other  chemicals,  materials,
substances  or wastes in any amount or  concentration  which are now included in
the  definition of "hazardous  substances,"  "hazardous  materials,"  "hazardous
wastes,"  "extremely  hazardous wastes,"  "restricted  hazardous wastes," "toxic
substances," "toxic pollutants,"  "pollutants,"  "regulated  substances," "solid
wastes," or "contaminants"  or words of similar import,  under any Environmental
Law; (vi) "Release" means any spilling,  leaking,  pumping,  pouring,  emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Substance into the Environment; and (vii) "Site" means any of the real
properties  currently  or  previously  owned,  leased,  used or  operated by the
Company, any predecessors of the Company or any entities previously owned by the
Company,  including all soil, subsoil,  surface waters and groundwater  thereat.


     3.17 No Brokers.  Neither the Company nor the Shareholders has employed, or
otherwise  engaged,  any  broker or finder or  incurred  any  liability  for any
brokerage  or  investment  banking  fees,  commissions,  finders'  fees or other
similar fees in connection with the transactions contemplated by this Agreement.

     3.18 Accounts Receivable and Accounts Payable.  All accounts receivable and
all accounts  payable of the Company have arisen from bona fide  transactions in
the ordinary course of the Company's business  consistent with past practice and
established in the ordinary  course of such Company's  business  consistent with
past practice. Each of the accounts receivable of the Company either has been or
will be collected in full, without any set-off,  within one hundred twenty (120)
days after the day on which it first  becomes due and  payable.  The Company has
since  December 31, 2000  collected and will collect the accounts  receivable in
the ordinary  course of its business  consistent  with past practice and has not
and will not  accelerate  or otherwise  alter its  collection  practices.  Since
December  31,  2000,  the Company has not and will not delay or alter in any way
the  payment  by  the  Company  under  any  of  its  accounts  payable  in a way
inconsistent  with  its  ordinary  course  of  business.

     3.19  Inventories.  As reflected on the Company Financial  Statements,  the
inventories of the Company's  business have been valued at the lower of cost (on
the first-in,  first-out method) or market in accordance with GAAP, consistently
applied,  and the value of obsolete  materials and  materials of below  standard
quality has been written down in  accordance  with GAAP,  consistently  applied.
Except as reflected in the Year-End  Balance  Sheet  referred to in section 3.5,
the  inventories of the Company's  business  contain no material amount of items
not salable or usable  within six months from the date thereof at normal  profit
margins  consistent  with  historical  sales  practices.  Except as set forth in
Schedule 3.19, the Company is not under any liability or obligation with respect
to the return of inventory or  merchandise  in the  possession  of  wholesalers,
distributors, retailers or other customers.

     3.20 Product Claims. No product liability claim is pending,  or to the best
knowledge of the Shareholders or the Company, threatened, against the Company or
against any other party with respect to the products of the Company's  business.
Schedule 3.20 lists all service and product  liability claims seeking damages in
excess of $5,000 asserted against the Company (or in respect of which any member
of the Seller  Group has  received  notice)  with respect to the products of the
Company's  business or the Company  during the last three (3) years.  Claims not
listed on Schedule 3.20 do not aggregate more than $10,000.

     3.21  Warranties  and  Returns.  Schedule  3.21 sets forth a summary of the
practices and policies  followed by the Company with respect to  warranties  and
returns of any products  manufactured  or sold by it, whether such practices are
oral or in writing or are deemed to be legally enforceable.  Except as set forth
on Schedule 3.21, there is not presently,  nor has there been since December 31,

                                       18

<PAGE>

1997,  any  failure  or  defect  in any  product  sold by the  Company  that has
required,  or that may  require,  a general  recall or  replacement  campaign or
similar action with respect to such product or a reformulation or change of such
product, nor has there been any acceptance of material quantities of returned or
defective  goods of the  Company.

     3.22 Assets  Utilized in the Business.  The assets,  properties  and rights
owned,  leased  or  licensed  by the  Company  and used in  connection  with the
Company's business and that will be owned,  leased or licensed by the Company as
of the Closing,  and all the agreements to which any  Shareholder or the Company
is a party relating to the Company's business, constitute all of the properties,
assets and agreements  necessary to the Company in connection with the operation
and conduct by the Company of its  business as  presently  and as proposed to be
conducted.  Except as set forth on Schedule  3.22, as a result of the Merger and
upon the  Closing  the  Buyer  will  obtain  good  title to all of such  assets,
properties and rights, free and clear of all Liens.

     3.23  Insurance.  Schedule 3.23 contains a complete and correct list of all
policies of insurance of any kind or nature covering the Company,  including any
policies  of  life,  fire,  theft,   casualty,   product  liability,   workmen's
compensation,  business  interruption,  employee fidelity and other casualty and
liability  insurance.  All such policies (i) are sufficient for compliance  with
all material requirements of law and of all applicable material agreements;  and
(ii) are valid,  outstanding  and  enforceable  policies.  Complete  and correct
copies  of such  policies  have been  furnished  to the  Buyer  Group.  All such
insurance  policies or comparable  coverage shall be continued in full force and
effect  through the Closing Date.  Since  December 31, 1997, the Company has not
been denied any insurance coverage which it has requested.

     3.24  Delivery  of  Documents;  Corporate  Records.  The  Seller  Group has
heretofore  delivered  or made  available  to the Buyer Group true,  correct and
complete copies of all documents,  instruments,  agreements and records referred
to in this  Article 3 or in the  Schedules to this  Agreement  and copies of the
minute and stock record books of the Company.  The minute and stock record books
of the Company are, for all material purposes, true, correct and complete copies
of the records of all meetings and consents in lieu of a meeting of the Board of
Directors (and all committees thereof) and the shareholders of the Company since
the date of its  incorporation.

     3.25 Customers,  Suppliers and  Distributors.  Schedule 3.25 sets forth (i)
the sales of the  Company for the fiscal  year ended  December  31, 2000 and the
sales of the Company for the three  months  ended March 31,  2001;  (ii) the ten
customers  with the highest  dollar volume of purchases  from the Company during
each of those periods  indicating the  approximate  total sales to each of those
customers;  and (iii) the ten largest suppliers and the ten largest distributors
of the  Company  during each of those  periods.  Except as set forth on Schedule
3.25, there has not been any adverse change in the business  relationship of the
Company  with any such  customer,  supplier  or  distributor,  and  neither  the
Shareholder or the Company is aware of any threatened loss of any such customer,
supplier or distributor.

     3.26 Labor Matters. There are no labor strikes,  slow-downs or stoppages or
other labor troubles  pending or threatened with respect to the employees of the
Company;  no representation  questions exist; there is no collective  bargaining
agreement  binding on the Company and there is no agreement  which restricts the

<PAGE>

Company from  relocating or closing any or all of its  businesses or operations;
there are no  grievances  asserted  that might have an adverse  effect  upon the
Company's business,  or the financial condition or prospects of the Company, nor
is there pending any  arbitration  proceeding  arising out of or under any labor
union  agreement;  the Company has not  experienced any work stoppage during the
last five (5) years.

     3.27 Bank Accounts. Schedule 3.27 sets forth the names and locations of all
banks, depositories and other financial institutions in which the Company has an
account or safe  deposit  box and the names of all  persons  authorized  to draw
thereon or to have access thereto.

     3.28 Directors,  Officers and Certain Employees. Schedule 3.28 sets forth a
complete and correct list of the names,  current annual salary, bonus and title,
for each  director  and officer and each other  employee of the Company who is a
party  to an  employment  agreement  with the  Company  or who  received  annual
compensation  during the Company's  most  recently  ended fiscal year, or who is
entitled to receive compensation, on an annualized basis, whether or not paid to
date, in excess of $30,000.  Neither the Company nor either of the  Shareholders
is aware of any  employee  in the  Company's  senior  management  who intends to
terminate  his or her  employment  relationship  with the  Company,  either as a
result of the transactions contemplated hereby or otherwise.

     3.29 No Misstatements or Omissions.  No  representation  or warranty by the
Shareholders  or the  Company  contained  in  this  Agreement  and no  statement
contained  in any  certificate,  list,  Schedule,  Exhibit  or other  instrument
specified or referred to in this Agreement,  whether heretofore furnished to the
Buyer Group or hereafter furnished to the Buyer Group pursuant to this Agreement
on the part of any member of the  Seller  Group  contains  or will  contain  any
untrue  statement  of a material  fact or omits or will omit any  material  fact
necessary  to  make  the  statements   contained   therein,   in  light  of  the
circumstances  under  which  they were made,  not  misleading.

     3.30 Investment  Undertaking.  Each Shareholder confirms that the shares of
Direct Insite Common Stock to be issued to him pursuant to this  Agreement  will
be "restricted  securities"  within the meaning of Rule 144 of the General Rules
and Regulations  under the Securities Act of 1933 ("Rule 144"). Each Shareholder
is  acquiring  such  shares  for his own  account  and not  with a view to their
distribution  within the meaning of section 2(11) of the Securities Act of 1933.
Each  Shareholder  understands  that such  shares  issued  hereunder  may not be
disposed of for a period of at least one year (and possibly two years)  pursuant
to Rule 144. Each Shareholder understands that he must bear the economic risk of
the investment indefinitely because such shares may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act of
1933 and applicable state  securities laws or an exemption from  registration is
available.  Each Shareholder is a sophisticated investor who either (i) has such
knowledge  and  experience  in financial  and  business  matters such that he is
capable of evaluating the merits and risks of this  investment in the securities
being  acquired  hereunder,  or  (ii)  has  obtained  independent   professional
financial  advice  sufficient  to enable him to evaluate the merits and risks of
this investment in the securities being acquired hereunder.

     3.31  Conduct of  Business.  Since  December  31,  2000,  the  Company  has
conducted its business in the ordinary  course,  consistent  with past practice,
and in such a manner that would not result in a Material Adverse Effect. Without

                                       20
<PAGE>


limiting  the  generality  of and in  addition  to the  foregoing,  prior to the
Closing Date, none of the  Shareholders nor the Company has, except as the Buyer
may have otherwise consented to in writing,  permitted the Company to:

          (a) amend its Articles of Incorporation or Bylaws;

          (b) authorize for issuance, issue, sell, deliver or agree or commit to
     issue,  sell or deliver  (whether  through  the  issuance  or  granting  of
     options,  warrants,  commitments,  subscriptions,  rights  to  purchase  or
     otherwise) any stock of any class or any other securities;

          (c) split,  combine or  reclassify  any shares of its  capital  stock,
     declare,  set aside or pay any dividend or other distributions  (whether in
     cash, stock or property or any combination  thereof) to the Shareholders or
     otherwise in respect of its capital  stock or redeem or  otherwise  acquire
     any of its  securities,  or  make  any  payments  or  distributions  to the
     Shareholders,  the Affiliates, or any Person (other than institutional bank
     lenders) to which the Company had, prior to Closing,  any liability  (other
     than trade accounts  payable  incurred in the ordinary  course of business,
     subject to the  provisions  of Article 5) or any officer or director of the
     Company,  except, as more fully described in Schedule  3.31(c),  employment
     compensation to the  Shareholders in annualized  amounts not exceeding such
     payments  made or accrued by the  Company  in the year ended  December  31,
     2000.

          (d) (i) incur or assume any  indebtedness  other  than trade  payables
     incurred  in the  ordinary  course of  business;  (ii)  assume,  guarantee,
     endorse  or  otherwise  become  liable or  responsible  (whether  directly,
     contingently  or otherwise)  for any  obligations  of any other Person;  or
     (iii) make any loans,  advances or capital contributions to, or investments
     in, any other  Person  (other than loans or advances  to  employees  in the
     ordinary course of business in accordance with past practices);

          (e) except as set forth on  Schedule  3.31(e),  enter  into,  adopt or
     amend any bonus,  profit  sharing,  compensation,  severance,  termination,
     stock option, stock appreciation right, restricted stock, performance unit,
     pension, retirement, deferred compensation,  employment, severance or other
     employee benefit agreements,  trusts, plans, funds or other arrangements of
     or for the  benefit or welfare of any  employee,  or increase in any manner
     the compensation or fringe benefits of any employee or paid any benefit not
     required  by  any  existing  plan  and  arrangement   (including,   without
     limitation,  the  granting of stock  options,  stock  appreciation  rights,
     shares of restricted stock or performance units);

          (f) except as set forth on Schedule  3.31(f),  acquire,  sell,  lease,
     transfer  or  dispose  of any of its  properties  or  assets  except in the
     ordinary  course of business and  consistent  with past practice or entered
     into any material commitment or transaction;

          (g) except as may be required by law,  take any action to terminate or
     materially  amend any of its employee  benefit plans with respect to or for
     the benefit of employees;

          (h) modify any policy or procedure with respect to credit to customers
     or collection of receivables;

                                       21

<PAGE>


          (i) pay, discharge or satisfy before it was due any claim or liability
     of the  Company  or fail to pay any such item in a timely  manner,  in each
     case given the Company's prior practices;

          (j)  cancel  any  debts or waive any  claims or rights of  substantial
     value;

          (k)  except to the  extent  required  by  applicable  law,  change any
     accounting  principle  or  method  or make any  election  for  purposes  of
     foreign, federal, state or local income Taxes;

          (l) take or suffer any action that would  result in the  creation,  or
     consent to the  imposition,  of any Lien on any of the properties or assets
     of the Company;

          (m) except as set forth in Schedule 3.31(m), make or incur any capital
     expenditure,   lease  or  commitment  for  additions  to  property,  plant,
     equipment or other capital assets in excess of $10,000;

          (n) except in the  ordinary  course of business  consistent  with past
     practice,  amend, waive,  surrender or terminate or agree to the amendment,
     waiver,  surrender  or  termination  of any Material  Contract,  License or
     Consent.

          (o) except in the  ordinary  course of business  consistent  with past
     practice,  exercise  any right or option  under or  extended or renewed any
     Material Contract; or

          (p) enter  into any  Contract  to do, or take,  or agree in writing or
     otherwise to take or consent to, any of the foregoing actions.

     3.32 Notice of  Developments.  Prior to the Closing Date,  the Seller Group
shall promptly  notify the Buyer Group,  and vice versa,  in writing of: (i) all
events,  circumstances,  facts and occurrences arising subsequent to the date of
this Agreement that could result in any material breach of a  representation  or
warranty or covenant of the Seller Group or the Buyer Group, as the case may be,
in this Agreement or which could have the effect of making any representation or
warranty  of the Seller  Group or the Buyer  Group,  as the case may be, in this
Agreement  untrue  or  incorrect  in any  material  respect,  and (ii) all other
material developments affecting the business,  financial condition,  operations,
results of  operations,  customer or  supplier  relations,  employee  relations,
projections or prospects of the Company or Direct Insite, as the case may be.

     3.33  Equipment and Other Assets.  The  Shareholders  have, and have caused
Affiliates and other Persons  affiliated with them to, contribute to the Company
all assets (including, without limitation, all equipment, intellectual property,
real estate or other  assets) owned by any of them that are or have been used by
the Company.  Any  consideration  received in connection with such  transactions
shall reduce by the same amount the Cash Consideration.

     3.34 Repayment of Certain Obligations to the Company. The Shareholders have
paid in full,  and have caused their  respective  Affiliates  and other  Persons
affiliated  with them to pay in full, to the Company the  outstanding  amount of
all  obligations,  if any,  of the  Shareholders  and such  Persons  (including,

                                       22
<PAGE>


without limitation, an amount equal to all outstanding principal and interest on
all  indebtedness  of the  Shareholders  or such Persons) to the Company and all
claims, if any, of the Company against the Shareholders and Affiliates,  in full
satisfaction thereof.

4.  Representations  and Warranties of the Buyer and Direct Insite.  Each of the
Buyer and Direct  Insite,  jointly and  severally,  represent and warrant to the
Shareholders and the Company as follows:

     4.1 Organization of the Buyer Group. Each of the Buyer and Direct Insite is
a corporation duly incorporated, validly existing and in good standing under the
laws of its  respective  states of  organization  or  incorporation  and has the
requisite  corporate  power and  authority to carry on its business as now being
conducted, except, as to subsidiaries,  for those states in which the failure to
be so  incorporated,  existing  or  in  good  standing  individually  or in  the
aggregate  would not have or be reasonably  expected to have a material  adverse
effect on the condition (financial or otherwise), business, assets or results of
operations  of  Direct  Insite  either  before  or  following  the  transactions
contemplated hereby (a "Material Adverse Effect on Direct Insite").  Each of the
Buyer and Direct  Insite is duly  qualified or licensed to do business and is in
good standing  (with respect to  jurisdictions  that  recognize such concept) in
each jurisdiction in which the nature of its business or the ownership,  leasing
or operation of its properties makes such qualification or licensing  necessary,
except for those  jurisdictions where the failure to be so qualified or licensed
or to be in good  standing  individually  or in the  aggregate  would not have a
Material  Adverse  Effect  on Direct  Insite.  The  Buyer  Group has  heretofore
delivered  to the  Seller  Group  true and  correct  copies of the  Articles  of
Incorporation  and Certificate of Incorporation  and Bylaws of each of the Buyer
and Direct Insite as currently in effect.

     4.2  Authorization;  Validity  of  Agreement.  Each of the Buyer and Direct
Insite has the requisite  corporate power and authority to execute,  deliver and
perform this  Agreement and each other  agreement  executed or to be executed by
each of the  Buyer or Direct  Insite  pursuant  to the  terms of this  Agreement
(collectively, the "Buyer Acquisition Agreements") and to assume and perform its
or  their   obligations   hereunder  and  thereunder,   and  to  consummate  the
transactions  contemplated  hereby and  thereby.  The  execution,  delivery  and
performance  by each of the Buyer and Direct  Insite of this  Agreement  and the
other  Buyer  Acquisition  Agreements  to which the Buyer or Direct  Insite is a
party and the consummation of the transactions  contemplated  hereby and thereby
have been duly and validly authorized by the Board of Directors of the Buyer and
Direct Insite and, where  necessary,  the  shareholders  of the Buyer and Direct
Insite,  and no other corporate  proceedings on the part of the Buyer and Direct
Insite are necessary to authorize the  execution,  delivery and  performance  of
this  Agreement  and the other  Buyer  Acquisition  Agreements  by the Buyer and
Direct  Insite,  as the case may be, and the  consummation  of the  transactions
contemplated  hereby  and  thereby.  Each  of  this  Agreement  and  each  Buyer
Acquisition  Agreement  has been duly  executed  and  delivered by the Buyer and
Direct Insite, as the case may be, and is a valid and binding  obligation of the
Buyer and Direct  Insite,  enforceable  against each of them in accordance  with
their  respective  terms,  except  that such  enforcement  may be limited by (i)
applicable  bankruptcy,  reorganization,  insolvency,  moratorium  or other laws
affecting  creditors'  rights  generally,  (ii)  equitable  rules or  principles
affecting the enforcement of obligations generally, whether at law or in equity,
or (iii) the exercise of the discretionary  powers of any court before which may
be  brought  any  proceeding  seeking  equitable  remedies,   including  without
limitation  specific  performance  and  injunctive  relief.

                                       23
<PAGE>


     4.3 No Violations; Consents and Approvals.

     (a) The execution, delivery and performance of this Agreement and the Buyer
Acquisition  Agreements by each of the Buyer or Direct  Insite,  as the case may
be, do not, and the  consummation  by each of the Buyer and Direct Insite of the
transactions contemplated hereby and thereby will not, (i) violate any provision
of the Articles of  Incorporation  or Certificate of  Incorporation or Bylaws of
the Buyer or Direct  Insite,  as the case may be, (ii) result in a violation  or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under,  any of the terms,  conditions or provisions of any material  Contract to
which  the  Buyer or  Direct  Insite  is a party or by which the Buyer or Direct
Insite or any of their respective properties or assets may be bound or otherwise
subject or (iii) violate any order, writ,  judgment,  injunction,  decree,  law,
statute,  rule or regulation  applicable to the Buyer or Direct Insite or any of
their  respective  properties  or assets.

     (b) No filing or  registration  with,  notification  to, or  authorization,
consent or approval of, any Governmental  Entity or any other Person is required
in connection with the execution,  delivery and performance of this Agreement or
the Buyer Acquisition  Agreements by each of the Buyer and Direct Insite, as the
case  may  be,  or the  consummation  by  the  Buyer  or  Direct  Insite  of the
transactions contemplated hereby and thereby.

     4.4 Litigation. Except as set forth on Schedule 4.4, there is no Proceeding
pending  nor,  to the  knowledge  of the  Buyer or Direct  Insite,  is there any
investigation  or Proceeding  threatened,  that involves or affects the Buyer or
Direct Insite, by or before any Governmental  Entity or any other Person that if
adversely  determined  would be  reasonably  likely to have a  Material  Adverse
Effect on Direct Insite.

     4.5 Compliance with Law; Licenses and Permits.

     (a) The Buyer Group has, and on the Closing Date will have,  complied  with
all  applicable  Laws,  including  but not  limited to Laws  relating  to Taxes,
zoning,  building codes, antitrust,  occupational safety and health,  industrial
hygiene,   environmental  protection,   water,  ground  or  air  pollution,  the
generation,  handling,  treatment,  storage or disposal of Hazardous Substances,
consumer product safety,  product  liability,  hiring,  wages,  hours,  employee
benefit plans and programs, collective bargaining and the payment of withholding
and social security taxes, except where the failure to so comply individually or
in the  aggregate  would not have or be  reasonably  expected to have a Material
Adverse  Effect on Direct  Insite.  Neither  the Buyer  nor  Direct  Insite  has
received  any  notice of any  material  violation  of any Law,  except  for such
notices  relating to violations  that would not be  reasonably  likely to have a
Material  Adverse  Effect on Direct  Insite.

     (b) To the  knowledge  of the Buyer  Group:  (i)  Direct  Insite  has every
License,  and every Consent by or on behalf of any Person that is not a party to
this Agreement,  required for it to conduct its business as presently  conducted
and (ii) all such Licenses and Consents are in full force and effect and neither
Buyer nor Direct  Insite has  received  notice of any  pending  cancellation  or
suspension  of any  thereof  nor  is  any  cancellation  or  suspension  thereof

                                       24
<PAGE>


threatened,  except where the failure of any such statement in items (i) or (ii)
of this section 4.5(b) to be true relates to a fact or  circumstance  that would
not be reasonably  likely to have a Material  Adverse  Effect on Direct  Insite,
taken as a whole.  The  applicability  and  validity  of each such  License  and
Consent will not be adversely  affected by the  consummation of the transactions
contemplated by this Agreement,  except where any  inapplicability or invalidity
would not have or be reasonably  expected to have a Material  Adverse  Effect on
Direct Insite.

     4.6  Capital  Structure.  The  authorized  capital  stock of Direct  Insite
consists of  150,000,000  shares of Direct Insite  Common Stock.  As of the date
hereof,  there were  outstanding  1,425,462  (after giving effect to the reverse
stock  split of Direct  Insite  Common  Stock on May 8,  2001,  but prior to the
issuances of shares of Direct Insite Common Stock contemplated hereby).

     4.7 Valid  Issuance of Shares,  Etc. Each of the Direct Insite Shares to be
issued in the Merger  pursuant to the terms of section  2.3(b)  will,  upon such
issuance, be duly authorized,  validly issued, fully paid and non-assessable and
owned of record by the Shareholder,  free and clear of preemptive rights and all
Liens other than Liens that may result from acts of the Shareholder.

     4.8 Direct Insite Form 10-K and Financial Statements.

     (a) Direct Insite has made available to the Shareholders  true and complete
copies of (i) its  Annual  Report on Form 10-K for the year ended  December  31,
2000  (the  "Form  10-K"),  as filed  with the  Commission,  and (ii) its  proxy
statement (the "Proxy Statement")  relating to its most recent annual meeting of
its  stockholders.  As of their respective filing dates, the Form 10-K and Proxy
Statement (including,  without limitation, any financial statements or schedules
or other information  included or incorporated by reference therein) complied as
to form and content,  in all material  respects,  with the  requirements  of the
Securities Act of 1933 and the Securities  Exchange Act of 1934, as the case may
be, and the rules and regulations  promulgated  thereunder,  and did not contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading.  The
financial  statements  of Direct  Insite for the year ended  December  31,  2000
included in the Form 10-K were  prepared in  accordance  with GAAP (as in effect
from time to time) applied on a consistent basis and (except as may be indicated
therein  or in the notes  thereto)  present  fairly the  consolidated  financial
position,  consolidated  results of operations  and  consolidated  cash flows of
Direct  Insite and its  subsidiaries  as of and for the year ended  December 31,
2000.

     4.9 No Misstatements  or Omissions.  No  representation  or warranty by the
Buyer or Direct Insite contained in this Agreement and no statement contained in
any  certificate,  list,  Schedule,  Exhibit or other  instrument  specified  or
referred to in this Agreement,  whether heretofore furnished to the Seller Group
or hereafter  furnished to the Seller  Group  pursuant to this  Agreement on the
part of the Buyer or Direct  Insite  Group  contains or will  contain any untrue
statement of a material fact or omits or will omit any material  fact  necessary
to make the statements  contained therein,  in light of the circumstances  under
which they were made, not misleading.

                                       25
<PAGE>
     4.10 Conduct of  Business.  Since  December 31, 2000,  the Buyer and Direct
Insite have  conducted  their  respective  businesses  in the  ordinary  course,
consistent  with past practice,  and in such a manner that would not result in a
Material Adverse Effect.

5.   Other Agreements of the Parties.

     5.1 Tax Returns; Taxes.

     (a) The  Shareholders  acknowledge  that on and after the Closing  Date the
Company shall cease to exist as a result of the Merger and, accordingly, any Tax
Return relating to the Company referred to in section 3.14 that was not required
to be filed  prior to the  Closing  Date shall be filed or caused to be filed by
the Shareholders after the Closing Date, subject to approval of the Buyer Group.
The Shareholders agree to prepare and file, at their expense,  such Tax Returns,
including  without  limitation  income tax returns  with  respect to the periods
ended on the Closing  Date;  provided  that such Tax Returns shall be subject to
approval by the Buyer Group prior to filing following reasonable  opportunity of
the Buyer Group to review such Tax Returns.

     (b) After the Closing Date, the Buyer Group and the Shareholders shall each
make available to the other, upon reasonable request,  all information,  records
or other documents  relating to any Tax and shall preserve all such information,
records  or other  documents  until  the date that is six (6)  months  after the
expiration of the statute of limitations applicable to the Tax. In addition, the
Buyer Group and the Shareholders shall cooperate with each other upon request in
connection  with all matters  relating to the preparation of any Tax Returns and
in connection with any Tax Proceeding.  Any  investigation,  review,  comment or
discussion by the Buyer Group  related to or in  connection  with the payment of
Taxes,  the  preparation of Tax Returns or drafts of Tax Returns,  the filing of
Tax Returns,  any Tax  Proceeding or any provision of this section 5.1 shall not
affect  the  indemnity  provisions  of  Article  9 or  limit  the  scope of such
provisions  (including but not limited to section 9.1) in any way, or affect any
other representations, warranties or obligations of the Seller Group. Each party
shall bear its own costs and expenses in complying  with the  provisions of this
section 5.1(b).

     (c) After the Closing  Date,  the  Shareholders  shall duly and timely file
with the  applicable  Taxing  Authority all Tax Returns  required to be filed by
them  in  connection  with  the  transactions  contemplated  by  this  Agreement
(including  without  limitation,  all Tax Returns relating to any stock transfer
Tax or any documentary stamp Tax).

     5.2 Non-Disclosure of Confidential Information.

     (a) From and after the Closing  Date,  no member of the Seller  Group shall
divulge, communicate, use to the detriment of the Buyer Group or for the benefit
of any other Person, or misuse in any way, any confidential information or trade
secrets  relating  to  the  Company  including,  without  limitation,  personnel
information, secret processes, know-how, customer lists or other technical data.


     (b) From and after the  Closing  Date,  no member of the Buyer  Group shall
divulge,  communicate,  use to the  detriment  of the  Shareholders  or for  the

                                       26
<PAGE>
benefit of any other Person, or misuse in any way, any confidential  information
or trade secrets relating to the Shareholders,  including,  without  limitation,
personnel  information,  secret  processes,  know-how,  customer  lists or other
technical data.


     5.3 No Solicitation of Employees,  Suppliers or Customers. The Shareholders
shall not, and shall not permit any of their respective  Affiliates to, from and
after the  Closing  Date and for a period of two years  thereafter,  directly or
indirectly,  for  itself or on behalf of any  other  Person,  employ,  engage or
retain any Person who, at any time during the  then-preceding  12- month period,
shall have been an employee of the Buyer,  or contact any supplier,  customer or
employee  of the Buyer for the  purpose  of  soliciting  or  diverting  any such
supplier, customer or employee from the Buyer.


     5.4 Non-Competition.

     (a) Until the second anniversary of the Closing Date,  neither  Shareholder
shall, and neither  Shareholder  shall permit any of his Affiliates to, anywhere
in North America or Europe, directly or indirectly, alone or in association with
any other Person, firm, corporation or other business organization,  (i) acquire
or own in any manner, any interest in any Person that is engaged in any facet of
the  business of the  Company,  (ii) engaged in any facet of the business of the
Company  or  compete  in any way  with the  business  of the  Company,  (iii) be
employed in any capacity by, serve as an employee of, or  consultant  or advisor
to, or otherwise  participate in the management or operation of, any Person that
(x) engages in any facet of the  business of the Company,  or (y) competes  with
the business of the Company in any way; provided,  however, that notwithstanding
the foregoing,  the Shareholders and their respective  Affiliates  (collectively
and not individually) may own up to two percent (2%) of the voting securities of
any publicly- traded Company.

     (b) The parties hereto intend that the covenant contained in section 5.4(a)
shall be  construed  as a series of  separate  covenants,  one for each state or
country specified.  Except for geographic coverage,  each such separate covenant
shall be deemed  identical in terms to the covenant  contained in section 5.4(a)
above. If in any judicial proceeding, a court shall refuse to enforce any of the
separate  covenants  deemed  included in section 5.4(a)  unenforceable  covenant
shall be deemed  reduced  in scope  or,  if  necessary,  eliminated  from  these
provisions  for the  purpose of those  proceedings  to the extent  necessary  to
permit the remaining separate covenants to be enforce.

     (c) The  Shareholders  acknowledge that the provisions of this section 5.4,
and the period of time,  geographic  area and scope and type of  restrictions on
its activities set forth herein, are reasonable and necessary for the protection
of the Buyer Group and are an essential inducement to the Buyer Group's entering
into the  Transaction  Documents  to which it is a party  and  consummating  the
transactions contemplated thereby.

     5.5 Other  Actions.  Each of the parties  hereto  shall use all  reasonable
efforts to (i) take, or cause to be taken, all actions,  (ii) do, or cause to be
done, all things, and (iii) execute and deliver all such documents,  instruments
and other papers,  as in each case may be necessary,  proper or advisable  under
applicable  Laws,  or  reasonably  required  in order to carry out the terms and

                                       27
<PAGE>

provisions  of  this   Agreement  and  to  consummate  and  make  effective  the
transactions contemplated hereby.

     5.6 Employment  Agreements.  At the Closing, each of the Shareholders shall
enter into an employment and  non-competition  agreement with Direct Insite,  in
the form  attached  hereto as Exhibit  5.6A for Mr.  Ford (the "Ford  Employment
Agreement") and Exhibit 5.6B for Mr. Tanoury (the "Tanoury Employment Agreement"
and, with the Ford Employment Agreement, the "Employment Agreements").

     5.7  Accounts  Receivables.  After  the  Closing,  it shall be the  Buyer's
responsibility to collect the Company's  accounts  receivable.  The Shareholders
shall  permit  the  Buyer to  collect,  in the name of the  Company,  all of the
Company's  accounts  receivable  and to endorse with the name of the Company for
deposit in the Buyer's account any checks or drafts received in payment thereof.
The Shareholders shall take any and all steps reasonably requested by the Buyer,
at the Buyer's expense, to effectuate the intent of the preceding sentence.  The
Shareholders  shall  promptly  turn over to the Buyer any cash,  checks or other
property  that  he may  receive  after  the  Closing  in  respect  of any of the
Company's receivable.

     5.8 Company Financial Statements.

     (a) At any time  after the  Closing,  the  Buyer  may cause to be  prepared
audited balance sheets, income statement, statements of cash flow and statements
of changes in  stockholders'  equity  prepared in accordance  with GAAP, for the
Company's  business  for the fiscal  year ended  December  31,  2000 and for the
period commencing on May 1, 1999 and ended on the Closing Date. The Shareholders
shall  fully  assist and  cooperate  with the Buyer in the  preparation  of such
financial statements and shall use his best efforts to cause others to so assist
the Buyer.

     (b) The Shareholders shall provide the Buyer and its agents,  including the
Buyer's  auditors,  full access to the books and records,  work papers and other
documents of the Company that is required in connection  with the preparation by
the Buyer of any other  financial  statements  for any fiscal  periods the Buyer
deems necessary  which take into account the operations and financial  condition
of the Company's business.  In preparing the Buyer's financial  statements,  the
Buyer's  auditors shall consult with the Company's  independent  accountants and
any consultants  designated by the  Shareholders  ("Company  Accountants").  The
Shareholders  shall use their best  efforts to take,  or cause to be taken,  all
actions and to do, or cause to be done,  all things  necessary  or  desirable in
order to expeditiously  complete the Buyer's  financial  statements which may be
related to the Company's business for the fiscal periods desired by the Buyer.

     5.9 Direct Insite SEC Filings.  Following the Closing,  Direct Insite shall
use its reasonable  efforts to file on a timely basis all reports required to be
filed by it under the Securities Act of 1933 and the Securities  Exchange Act of
1934 and the  rules and  regulations  adopted  by the  Securities  and  Exchange
Commission thereunder to the extent required to enable the holders of the Direct
Insite  Shares to sell  such  Shares  pursuant  to Rule 144 (as such Rule may be
amended from time to time) or any similar rule or regulation  hereafter  adopted
by the Securities and Exchange Commission.

                                       28
<PAGE>
6.   Conditions Precedent to the Closing.

     6.1 Conditions  Precedent to the Buyer Group's  Obligations  to Close.  The
obligation  of the Buyer and Direct  Insite to enter into this  Agreement and to
consummate the transactions  contemplated  hereby is subject to the satisfaction
prior to or on the Closing Date of each of the following  conditions;  provided,
however,  the Buyer or Direct  Insite  shall  have the right to waive all or any
part of each such condition and to close the  transactions  contemplated  hereby
without,  however,  releasing the Shareholders or the Company from any covenant,
obligation,  agreement or condition  contained  herein or from any liability for
any loss or damage  sustained  by the  Buyer or  Direct  Insite by reason of the
breach by the Shareholders or the Company of any covenant, obligation, agreement
or condition contained herein or by reason of any misrepresentation  made by the
Shareholders or the Company:

     (a) The  Buyer  Group  shall  have  received,  each in form  and  substance
reasonably satisfactory to each member of the Buyer Group, all Required Consents
and any other  Consent  from any  Governmental  Entity or other  Person  that is
required for the  consummation of the transactions  contemplated  hereby and for
the Buyer to own and operate the assets and business of the Company.

     (b) The form and substance of all certificates,  consents, instruments, and
other  documents  delivered  to the Buyer  Group under this  Agreement  shall be
satisfactory in all reasonable respects to the Buyer Group and its counsel.

     (c) The  Shareholders  and/or the Company shall have delivered to the Buyer
Group each of the items required to be delivered pursuant to section 7.1.

     (d) No Law  shall  be in  effect  that  prohibits  any  party  hereto  from
consummating the transactions contemplated hereby.

     (e) There shall be no order,  decree or  injunction of a court of competent
jurisdiction or other Governmental  Entity that prevents the consummation of the
transactions  contemplated  by this  Agreement or Proceeding  that  threatens to
prevent such transactions.

     (f) The Buyer  Group  shall  have  received  from the  Shareholders  at the
Closing a certificate of  non-foreign  status (the  "Certificate  of Non-Foreign
Status")  in the  form  required  by  Code  Section  1445  and  the  regulations
thereunder, signed by both of the Shareholders under penalties of perjury.

     6.2 Conditions  Precedent to the Seller Group's  Obligations to Close.  The
obligations of the  Shareholders  and the Company to consummate the transactions
contemplated  hereby is subject to the  satisfaction  prior to or on the Closing
Date of each of the following  conditions;  provided,  however,  that the Seller
Group shall have the right to waive all or any part of each such condition,  and
to close the transactions  contemplated hereby without,  however,  releasing the
Buyer or Direct  Insite from any  covenant,  obligation,  agreement or condition
contained  herein or from any liability for any loss or damage  sustained by the
Seller  Group by  reason of the  breach  by the  Buyer or  Direct  Insite of any
covenant,  obligation,  agreement or condition contained herein, or by reason of
any misrepresentation made by the Buyer or Direct Insite:

                                       29
<PAGE>
     (a) The form and substance of all certificates,  consents,  instruments and
other  documents  delivered  to the Seller Group under this  Agreement  shall be
satisfactory in all reasonable respects to the Seller Group and its counsel;

     (b) The Buyer Group shall have  delivered  to the Seller  Group each of the
items required to be delivered pursuant to section 7.2;

     (c) No Law  shall  be in  effect  that  prohibits  any  party  hereto  from
consummating the transactions contemplated hereby; and

     (d) There shall be no order,  decree or  injunction of a court of competent
jurisdiction or other Governmental  Entity that prevents the consummation of the
transactions  contemplated  by this  Agreement or Proceeding  that  threatens to
prevent such transactions.

7.   Documents to be Delivered at the Closing.

     7.1 Deliveries of the Seller Group. At the Closing,  the Company shall, and
the Shareholders  shall cause the Company to, deliver the following items to the
Buyer Group:

     (a) The Required Consents;

     (b) The Employment  Agreements  referred to in section 5.6 duly executed by
the respective Shareholders;

     (c) The Escrow Agreement duly executed by the Company and the Shareholders;

     (d) Stock  certificates  representing the Company Shares,  duly indorsed in
blank or  accompanied  by stock  transfer  powers and with all  requisite  stock
transfer tax stamps attached;

     (e) A certificate duly executed by the secretary of the Company, attesting,
with respect to the Company,  the  resolutions  duly and validly  adopted by the
Board of Directors of the Company  evidencing the authorization of its execution
and delivery of this Agreement and the other Transaction  Documents to which the
Company is a party and the consummation of the transactions  contemplated hereby
and  thereby,  as to its  Articles of  Incorporation  and Bylaws,  and as to the
incumbency of each of its executive officers;

     (f) A  certificate  with respect to the Company from the Secretary of State
of the State of Texas attesting as to its valid existence as of a date recent to
the Closing Date;

     (g) The Articles of Merger; and

     (h) The Certificate of Non-Foreign Status.

     7.2  Deliveries  of the Buyer.  At the Closing,  the Buyer shall and Direct
Insite shall cause the Buyer to deliver the following items:

                                       30
<PAGE>
     (a) A  certificate  of the secretary of each of the Buyer and Direct Insite
certifying  the  resolutions  duly  and  validly  adopted  by  the  Buyer  Group
evidencing the  authorization  of their execution and delivery of this Agreement
and the other Transaction  Documents to which the members of the Buyer Group are
parties  and  the  consummation  of the  transactions  contemplated  hereby  and
thereby,  and the names and  signatures  of the  officers  of each member of the
Buyer  Group  authorized  to  sign  this  Agreement  and the  other  Transaction
Documents to be delivered hereunder;

     (b) The Cash  Consideration  required to be  delivered  pursuant to section
2.3(b)(ii), to be delivered into escrow pursuant to section 2.3(c);

     (c) The Direct Insite Shares  required to be delivered  pursuant to section
2.3(b)(i), to be delivered into escrow pursuant to section 2.3(c);

     (d) The  Earn-Out  Shares  required  to be  delivered  pursuant  to section
2.3(b)(iii), to be delivered into escrow pursuant to section 2.3(c);

     (e) The Employment  Agreements  referred to in section 5.6 duly executed by
an officer of Direct Insite;

     (f) The Escrow Agreement duly executed by Direct Insite;

     (g) Evidence reasonably  satisfactory to the Seller Group of the listing as
of the Closing Date of the Direct Insite Common Stock on Nasdaq;

     (h) A certificate  with respect to each of Direct Insite and the Buyer from
the Secretary of State of the State of Delaware and Texas,  respectively,  as to
their respective valid existence as of a date recent to the Closing Date; and

     (i) A certificate of an authorized  officer of Direct Insite  certifying as
to the number of issued and  outstanding  shares of Direct  Insite  Common Stock
immediately prior to the Closing Date.

8.   Termination.

     [Intentionally Omitted].

9.   Indemnification.

     9.1 Survival of Representations  and Warranties of the Seller Group. At the
Closing,  the Buyer Group shall,  without  waiving any of its rights  hereunder,
advise  the  Shareholders  if the Buyer  Group has actual  knowledge  of (i) any
material breach of any of the  representations and warranties of the Company and
the Shareholders herein and (ii) any situation in existence prior to the Closing
which would result in the payment of Damages by the Shareholders or the Company.
Notwithstanding any right of the Buyer or Direct Insite to fully investigate the
affairs of the Company and the Shareholders and notwithstanding any knowledge of
facts  determined or determinable by the Buyer or Direct Insite pursuant to such
investigation  or right of  investigation,  the Buyer and Direct Insite have the
right to rely fully upon the  representations and warranties of the Shareholders

                                       31
<PAGE>

and  the  Company  contained  in  this  Agreement  or in any  other  Transaction
Document.  All such  representations  and warranties shall survive the execution
and delivery of this  Agreement and the Closing  hereunder and shall  thereafter
continue in full force and effect  until the second  anniversary  of the Closing
Date,  and the  Shareholders'  liability  in  respect  of any breach of any such
representation  or warranty  shall  terminate on the second  anniversary  of the
Closing Date,  except for liability with respect to which notice shall have been
given on or prior to such date to the party against which such claim is asserted
pursuant to section 9.6.  Notwithstanding the foregoing, the representations and
warranties  contained in sections  3.2(a),  3.3, 3.9, 3.12,  3.14 and 3.16 shall
survive the Closing,  and the  Shareholders'  liability in respect of any breach
thereof shall continue, in the case of sections 3.2 and 3.12, in perpetuity,  in
the case of section  3.16,  until the date of the  expiration  of the statute of
limitation  applicable to any liability relating thereto,  which liability shall
remain an obligation  of the party against whom such claim is asserted,  and, in
the case of sections  3.9 and 3.14,  until the date that is six (6) months after
the expiration of the statute of limitation applicable to any liability relating
thereto,  which  liability  shall remain an obligation of the party against whom
such claim is asserted.

     9.2 Survival of  Representations  and Warranties of the Buyer Group. At the
Closing,  the Shareholders shall, without waiving any of their rights hereunder,
advise the Buyer Group if the Shareholders have actual knowledge of any material
breach of any of the  representations  and warranties of the Buyer Group herein.
The  Shareholders  and the  Company  have  the  right  to rely  fully  upon  the
representations  and warranties of the Buyer and Direct Insite contained in this
Agreement or in any other Transaction  Document.  All such  representations  and
warranties  shall survive the  execution and delivery of this  Agreement and the
Closing  hereunder and shall thereafter  continue in full force and effect until
the second  anniversary of the Closing Date and the Buyer's and Direct  Insite's
liability in respect of any breach of any such  representation or warranty shall
terminate on the second  anniversary  of the Closing Date,  except for liability
with  respect to which  notice shall have been given on or prior to such date to
the party against which such claim is asserted pursuant to section 9.6.

     9.3  Determination   of  Damages   Without  Regard  to   "Materiality"   or
          "Knowledge" Qualifications.

     (a) Certain  representations and warranties contained in this Agreement and
in certain  agreements,  documents  and  instruments  executed and  delivered in
connection   with  this  Agreement   include  either  (or  both)  a  Materiality
Qualification  (as  defined  below) or a  Knowledge  Qualification  (as  defined
below).  Notwithstanding  any such  qualification,  it is the  intention  of the
parties  that  the  only  purpose  of the  Materiality  Qualifications  and  the
Knowledge  Qualifications  is  to  determine  whether  the  representations  and
warranties  contained in this Agreement are true and correct for purposes of the
parties'  condition to consummate the transactions  contemplated at the Closing.
Accordingly,  Damages  recoverable  under this section 9 shall be  determined as
though  no  Materiality   Qualification  and  no  Knowledge  Qualification  were
contained in or applied with respect to any representation or warranty contained
in this Agreement.

     (b) As used herein:

                                       32
<PAGE>
     (1) the term "Materiality  Qualification" means any term, expression,  word
or  combination  thereof  that  qualifies  a  representation,  warranty or other
statement  made with respect to  "materiality,"  "in all material  respects," or
insofar as any misstatement of such representation,  warranty or other statement
would  result in or reflect a  "Material  Adverse  Effect," or words or terms of
similar import, and

     (2) the term "Knowledge Qualification" means any term, expression,  word or
combination thereof that qualifies a representation, warranty or other statement
made with respect to the  "knowledge"  of the party  making the  representation,
warranty or other statement.

     9.4  Indemnification  by the Shareholders.  Each Shareholder,  severally in
proportion  to his  ownership  of the Company  Shares  immediately  prior to the
Closing,  shall indemnify and defend the Buyer and Direct Insite and each of its
respective officers,  directors,  employees,  shareholders,  agents, advisors or
representatives  (each,  a "Buyer  Indemnitee")  against,  and hold  each  Buyer
Indemnitee harmless from, any loss, liability,  obligation,  deficiency, damage,
Tax or expense including, without limitation,  interest,  penalties,  reasonable
attorneys' and consultants'  fees and disbursements  (collectively,  "Damages"),
that any Buyer  Indemnitee  may  suffer or incur  based  upon,  arising  out of,
relating to or in connection with any of the following:

     (a) Any breach of any  representation  or warranty made by the Shareholders
or the Company contained in this Agreement or in any other Transaction  Document
or in respect of any claim made based upon facts that would  constitute any such
breach;

     (b) The Shareholders' or the Company's failure to perform or to comply with
any  covenant or  condition  required to be  performed  or complied  with by the
Shareholders  or the  Company  contained  in  this  Agreement  or in  any  other
Transaction Document; or

     9.5  Indemnification  by the Buyer  Group.  The Buyer  and  Direct  Insite,
jointly and severally,  shall  indemnify and defend the  Shareholders  and their
agents, advisors or representatives (each, a "Shareholder  Indemnitee") against,
and hold  each  Shareholder  Indemnitee  harmless  from,  any  Damages  that the
Shareholder  Indemnitee  may  suffer or incur  arising  from,  related  to or in
connection with any of the following:

     (a) any  breach  of any  representation  or  warranty  made by the Buyer or
Direct Insite contained in this Agreement or in any other  Transaction  Document
or in respect of any claim made based upon facts  alleged that would  constitute
any such breach; or

     (b) the Buyer's or Direct Insite's failure to perform or to comply with any
covenant or condition  required to be  performed  or complied  with by the Buyer
Group contained in this Agreement or in any other Transaction Document.

     9.6 Indemnification Procedures.

     (a)  Promptly  after  notice  to an  indemnified  party of any claim or the
commencement  of any  Proceeding,  including  any  Proceeding  by a third party,
involving any Damages referred to in sections 9.4 or 9.5, such indemnified party
shall, if a claim for  indemnification  in respect thereof is to be made against

                                       33
<PAGE>
an  indemnifying  party  pursuant to this Article 9, give written  notice to the
latter  of the  commencement  of such  claim  or  Proceeding,  setting  forth in
reasonable  detail the nature  thereof and the basis upon which such party seeks
indemnification hereunder.

     (b) (1) In the case of any such  Proceeding  by a third  party  against  an
indemnified  party, the indemnifying party shall, upon notice as provided above,
assume  the  defense  thereof,  with  counsel  reasonably  satisfactory  to  the
indemnified  party,  and,  after  notice  from  the  indemnifying  party  to the
indemnified  party of its assumption of the defense  thereof,  the  indemnifying
party  shall  not be  liable  to such  indemnified  party for any legal or other
expenses  subsequently  incurred by the indemnified party in connection with the
defense  thereof (but the  indemnified  party shall have the right,  but not the
obligation,  to  participate  at its own cost and  expense  in such  defense  by
counsel  of  its  own  choice)  or for  any  amounts  paid  or  foregone  by the
indemnified  party as a result of the settlement or compromise  thereof (without
the written consent of the indemnifying party).

     (2) anything in section 9.6(b)(1) notwithstanding, if both the indemnifying
party  and the  indemnified  party  are  named as  parties  or  subject  to such
Proceeding  and either such party  determines  upon advice of counsel that there
may be one or more legal  defenses  available to it that are  different  from or
additional to those available to the other party or that a material  conflict of
interest between such parties may exist in respect of such Proceeding,  then the
indemnifying  party  may  decline  to  assume  the  defense  on  behalf  of  the
indemnified  party or the  indemnified  party may retain the  defense on its own
behalf,  and,  in either  such case,  after  notice to such effect is duly given
hereunder to the other party,  the  indemnifying  party shall be relieved of its
obligation to assume the defense on behalf of the indemnified  party,  but shall
be required to pay any legal or other expenses  including,  without  limitation,
reasonable attorneys' fees and disbursements,  incurred by the indemnified party
in such defense.  If a Proceeding shall be commenced against more than one Buyer
Indemnitee (a "Multi-Buyer Indemnitee Proceeding"), each Shareholder,  severally
in proportion to his ownership of the Company  Shares  immediately  prior to the
Closing,  shall be  responsible  for the  legal  and  other  expenses  which are
actually incurred in connection with the representation of all Buyer Indemnitees
who are named as defendants in such a Multi-Buyer  Indemnitee Proceeding only to
the  extent  the  Buyer  Indemnitees  are  represented  in  such  a  Multi-Buyer
Indemnitee Proceeding by a single legal counsel.

     (c) If the  indemnifying  party assumes the defense of any such Proceeding,
the  indemnified  party shall cooperate  fully with the  indemnifying  party and
shall appear and give testimony,  produce documents and other tangible evidence,
allow the indemnifying  party access to the books and records of the indemnified
party and otherwise assist the indemnifying party in conducting such defense. No
indemnifying party shall,  without the consent of the indemnified party, consent
to entry of any judgment or enter into any  settlement or compromise  which does
not  include as an  unconditional  term  thereof  the giving by the  claimant or
plaintiff to such  indemnified  party of a release from all liability in respect
of such claim or Proceeding.  Provided that proper notice is duly given,  if the
indemnifying  party shall fail  promptly  and  diligently  to assume the defense
thereof,  then the indemnified  party may respond to, contest and defend against
such Proceeding (but the indemnifying  party shall have the right to participate
at its own cost and  expense in such  defense by counsel of its own  choice) and
may make in good faith any compromise or settlement  with respect  thereto,  and
recover  from  the  indemnifying  party  the  entire  cost and  expense  thereof

                                       34
<PAGE>
including, without limitation,  reasonable attorneys' fees and disbursements and
all amounts paid or foregone as a result of such  Proceeding,  or the settlement
or compromise thereof.  The indemnification  required hereunder shall be made by
periodic  payments of the amount thereof during the course of the  investigation
or defense,  as and when bills or  invoices  are  received  or loss,  liability,
obligation, damage or expense is actually suffered or incurred.

9.7  Limitations on Indemnification by the Shareholders.

     (a) Anything herein to the contrary  notwithstanding,  no Shareholder shall
have any  liability  with  respect to  Damages  that  result  from  breaches  of
representations  or  warranties  set  forth in this  Agreement  (other  then the
representations  and warranties  contained in sections 3.2(a), 3.3 and 3.14) for
and to the  extent  that  the  aggregate  amount  of such  Damages  exceeds  the
aggregate value of the consideration  received by such Shareholder in connection
with the  Merger  plus any bonus  (but  excluding  base  salary)  earned by such
Shareholder pursuant to section 3(c) of his Employment Agreement.

     (b) The  limitations  set forth in paragraph  (a) of this section 9.7 shall
not limit or reduce the  Shareholders'  obligations  to  indemnify  the Buyer or
Direct Insite in respect of Damages that result from actual or claimed  breaches
of the  representations  and warranties  contained in sections  3.2(a),  3.3 and
3.14.

     (c) Limitations on Indemnification by the Buyer Group. The Buyer and Direct
Insite shall have indemnification obligations pursuant to section 9.5 respecting
Damages that result from breaches of  representations or warranties set forth in
this  Agreement only if and only to the extent that the aggregate of all Damages
resulting  from such  breaches  shall  exceed  $25,000.  Anything  herein to the
contrary  notwithstanding,  the Buyer and Direct  Insite shall have no liability
with  respect to  Damages  that  result  from  breaches  of  representations  or
warranties set forth in this Agreement, for and to the extent that the aggregate
amount of such Damages exceeds the aggregate value of the consideration received
by the Shareholders in the Merger.

     (d)  Limitation  on  Remedies.  The remedies set forth in this Article Nine
shall  constitute  the exclusive  remedies for breaches of  representations  and
warranties set forth in this Merger  Agreement,  except that the foregoing shall
not limit any remedies that may be available for claims of fraud.

     9.8 Right to Set-Off.  The Buyer and Direct  Insite shall have the right to
set-off the amount of any and all Damages for which a  Shareholder  is liable to
the  Buyer  or  Direct  Insite  hereunder  against  any  sums  payable  to  such
Shareholder pursuant to section 3(c) of such Shareholder's Employment Agreement.

10.  Miscellaneous

     10.1 Transaction Fees and Expenses.  The Buyer and Direct Insite shall bear
such costs, fees and expenses as may be incurred by them in connection with this
Agreement  and the  transactions  contemplated  hereby and,  up to an  aggregate
amount of $10,000,  one-half of the costs,  fees and expenses as may be incurred
by the  Shareholders  in connection  with this  Agreement  and the  transactions

                                       35
<PAGE>
contemplated  hereby.  The  Shareholders  shall bear the  balance of all of such
costs, fees and expenses.

     10.2 Notices. Any notice,  demand,  request or other communication which is
required,  called for or  contemplated  to be given or made hereunder to or upon
any  party  hereto  shall be  deemed  to have  been  duly  given or made for all
purposes if (a) in writing and sent by (i)  messenger or a  recognized  national
overnight courier service for next day delivery with receipt  therefor,  or (ii)
certified or registered mail,  postage paid,  return receipt  requested,  or (b)
sent by facsimile  transmission with a written copy thereof sent on the same day
by postage paid  first-class  mail or (c) by personal  delivery to such party at
the following address:

      if to the Buyer Group, to:

        Direct Insite Corp.
        80 Orville Drive
        Bohemia, NY  11716
        Attention:  Warren Wright
        Facsimile No.: (631) 563-8085

      with a copy to:

        Jenkens & Gilchrist Parker Chapin LLP
        The Chrysler Building
        405 Lexington Avenue
        New York, NY  10174
        Attention:  Gary J. Simon
        Facsimile No.:  (212) 704-6288

      if to the Seller Group, to:

        Mr. Kevin Ford
        5580 Peterson
        Suite 240
        Dallas, Texas  75240
        Facsimile No.:  (972) 774-8811

      with a copy to:

        Fulbright & Jaworski LLP
        2200 Ross Avenue, Suite 2800
        Dallas, Texas  75201-2784
        Attention:  David E. Morrison
        Facsimile No.:  (214) 855-8200

or such other  address as either party  hereto may at any time,  or from time to
time, direct by notice given to the other party in accordance with this section.
The date of giving or making of any such notice or demand  shall be, in the case
of clause (a)(i), the date of the receipt,  in the case of clause (a)(ii),  five

                                       36
<PAGE>
(5)  business  days after  such  notice or demand is sent,  and,  in the case of
clause (b), the business  day next  following  the date such notice or demand is
sent.

     10.3 Amendment.  Except as otherwise  provided herein, no amendment of this
Agreement  shall be valid or  effective  unless in  writing  and signed by or on
behalf of the party against whom the same is sought to be enforced.

     10.4 Waiver. No course of dealing of any party hereto, no omission, failure
or delay on the part of any party hereto in asserting  or  exercising  any right
hereunder, and no partial or single exercise of any right hereunder by any party
hereto  shall  constitute  or operate as a waiver of any such right or any other
right hereunder.  No waiver of any provision hereof shall be effective unless in
writing  and  signed by or on behalf of the party to be  charged  therewith.  No
waiver of any  provision  hereof  shall be deemed or  construed  as a continuing
waiver,  as a waiver in respect of any other or subsequent  breach or default of
such provision, or as a waiver of any other provision hereof unless expressly so
stated  in  writing  and  signed  by or on  behalf  of the  party to be  charged
therewith.

     10.5 Governing Law. This  Agreement  shall be governed by, and  interpreted
and enforced in accordance with, the laws of the State of New York.

     10.6 Jurisdiction.  Each of the parties hereto hereby irrevocably  consents
and submits to the exclusive  jurisdiction  of the United States  District Court
for the Southern District of New York in connection with any Proceeding  arising
out of or relating to this Agreement or the  transactions  contemplated  hereby,
waives  any  objection  to venue  in such  District  (unless  such  court  lacks
jurisdiction with respect to such Proceeding, in which case, each of the parties
hereto  irrevocably  consents to the  jurisdiction of the courts of the State of
New York, County of New York, in connection with such Proceeding) and waives any
objection  to venue in the State of New York,  and  agrees  that  service of any
summons,  complaint,  notice or other process relating to such Proceeding may be
effected in the manner provided by clause (a) of section 10.2.

     10.7 Remedies.  In the event of any actual or prospective breach or default
by any party hereto,  the other  parties shall be entitled to equitable  relief,
including  remedies  in  the  nature  of  rescission,  injunction  and  specific
performance.  All remedies  hereunder are cumulative and not exclusive.  Nothing
contained  herein and no election of any  particular  remedy  shall be deemed to
prohibit or limit any party from pursuing, or be deemed a waiver of the right to
pursue, any other remedy or relief available now or hereafter existing at law or
in equity  (whether  by statute or  otherwise)  for such  actual or  prospective
breach or default, including the recovery of damages.

     10.8 Severability. The provisions hereof are severable and if any provision
of this  Agreement  shall be determined to be legally  invalid,  inoperative  or
unenforceable  in any  respect by a court of  competent  jurisdiction,  then the
remaining  provisions  hereof shall not be affected,  but shall,  subject to the
discretion of such court, remain in full force and effect, and any such invalid,
inoperative  or  unenforceable  provision  shall be deemed,  without any further
action on the part of the  parties  hereto,  amended  and  limited to the extent
necessary to render such provision valid,  operative and enforceable;  provided,
however,  that  nothing  herein shall be construed as allowing a court to change
the Merger Consideration provided for in section 2.3.

                                       37
<PAGE>
     10.9 Further Assurances. Each party hereto covenants and agrees promptly to
execute, deliver, file or record such agreements, instruments,  certificates and
other  documents  and to perform  such other and further acts as the other party
hereto may  reasonably  request or as may  otherwise  be  necessary or proper to
consummate and perfect the transactions contemplated hereby.

     10.10 Assignment.  This Agreement and all of the provisions hereof shall be
binding  upon and inure to the  benefit of the parties  hereto,  their heirs and
their respective successors and permitted assignees.  Permitted assignees of the
rights  hereunder  of the  Buyer or  Direct  Insite  shall  include  any  Person
controlling,  controlled  by or under  common  control  of the  Buyer or  Direct
Insite.  Permitted assignees of the Shareholders' rights hereunder shall include
any Affiliate  (as defined in section 3.15 hereof).  Neither the Buyer or Direct
Insite  nor the  Shareholders  may  assign  any of their  obligations  hereunder
without  the consent of the other  party.  Except for the  permitted  assignees,
neither  party shall have the right to assign any rights  hereunder  without the
consent of the other party.

     10.11 Binding Effect. This Agreement shall be binding upon and inure to the
benefit  of the  parties  hereto  and their  respective  legal  representatives,
successors and permitted assigns.

     10.12 No Third Party  Beneficiaries.  Nothing  contained in this Agreement,
whether express or implied, is intended, or shall be deemed, to create or confer
any  right,  interest  or remedy for the  benefit  of any  Person  other than as
otherwise provided in this Agreement.

     10.13  Entire  Agreement.  This  Agreement,  together  with  the  Exhibits,
Schedules,  certificates and other documentation  referred to herein or required
to be delivered  pursuant to the terms hereof,  contains the terms of the entire
agreement  among the  parties  with  respect to the  subject  matter  hereof and
supersedes   any  and  all  prior   agreements,   commitments,   understandings,
discussions, negotiations or arrangements of any nature relating thereto.

     10.14 Headings.  The headings  contained in this Agreement are included for
convenience  and  reference  purposes  only and  shall be given no effect in the
construction or interpretation of this Agreement.

     10.15  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

            [The remainder of this page is intentionally left blank;
                 the next succeeding page is a signature page]

                                       38
<PAGE>
                                DIRECT INSITE CORP.


                                By:/s/____________________________
                                   Name:   Warren Wright
                                   Title:  Chief Executive Officer


                                PLATINUM ACQUISITION CORP.


                                By: /s/___________________________
                                   Name:   Warren Wright
                                   Title:  Chief Executive Officer


                                PLATINUM COMMUNICATIONS, INC.


                                By: /s/___________________________
                                   Name:   Kevin Ford
                                   Title:  Chief Executive Officer

                                /s/_______________________________
                                Kevin Ford, shareholder of Platinum
                                Communications, Inc.

                                /s/ _______________________________
                                Ken Tanoury, shareholder of Platinum
                                Communications, Inc.







                                       39



</TEXT>
</DOCUMENT>
