Exhibit 10.1

THIS AGREEMENT IS SUBJECT TO ARBITRATION UNDER THE SOUTH CAROLINA UNIFORM

ARBITRATION ACT PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION

ASSOCIATION. AS MODIFIED PURSUANT TO SECTION 11.11 HEREIN.

ASSET PURCHASE AGREEMENT

ACQUISITION OF ASSETS OF

MCALEER COMPUTER ASSOCIATES, INC.

BY

COMPUTER SOFTWARE INNOVATIONS, INC.

November 27, 2006

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into as of the 27th
day of November, 2006, by and among Computer Software Innovations, Inc., a
Delaware corporation (“Buyer”), McAleer Computer Associates, Inc., an Alabama
corporation with its principal place of business in Mobile, Alabama (“Seller”),
and William J. McAleer, the sole shareholder of Seller (“Shareholder”).

RECITALS:

WHEREAS, Seller is engaged in educational management providing software,
hardware, forms and printing, and consultation services to school systems
primarily in Alabama, Georgia, Florida, Mississippi, Tennessee and Louisiana
(the “Business”);

WHEREAS, Buyer wishes to acquire substantially all of the properties and assets
of Seller and the Business and assume certain limited obligations of Seller, and
Seller wishes to convey such assets to Buyer, subject to such limited
obligations and subject to the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration for the mutual agreements contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, in order to consummate said sale, the parties hereto
agree as follows:

ARTICLE 1. PURCHASE AND SALE OF ASSETS.

1.1 Sale of Assets.

(a) Subject to the provisions of this Agreement and except for those assets
expressly excluded in subsection (b) (the “Excluded Assets”), Seller agrees to
sell and Buyer agrees to purchase, at the Closing (as defined in Section 1.5
hereof), all of the properties, assets and business of Seller of every kind and
description, tangible and intangible, real, personal or mixed, and wherever
located, including without limitation:

(i) all assets shown or reflected on the Base Balance Sheet (as defined in
Section 2.7 hereof) of Seller, other than those identified in paragraph
(b) below;

(ii) all work in process, including any and all invoices or billings issued in
2006 for services to be performed in 2007, any cash received relating to all
invoices or billings issued in 2006 for services to be performed in 2007, if
any, and any other items for which services have been prepaid (the “WIP”);

(iii) all furniture, fixtures, machinery, equipment, supplies, raw materials;

(iv) Any rights of Seller in software developed or owned by Seller, including
all versions, variations, modifications, enhancements, additions or replacements
thereof, the source codes and object codes (in all media), all software program
documentation and user materials, and all associated utilities and support
software and any rights of Seller in any software licensed by it together with
all software program documentation and user materials for such software
(collectively, the “Software”);

(v) Any hardware and related products of Seller or used in connection with the
Business, including all versions, variations, modifications, enhancements,
additions or replacements thereof, and all hardware documentation and user
materials (collectively, the “Hardware”);

 

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(vi) All technical and descriptive materials relating to the acquisition,
design, development, manufacture, use, support or maintenance of the Software or
the Hardware, including the computer source and/or object code and program
documentation and related materials to the extent Seller has rights therein
(collectively, the “Technical Documentation”);

(vii) all vehicles of Seller, if any;

(viii) the real property, building and improvements of Seller located at 3209
and 3213 Executive Park Circle, Mobile, Alabama (the “Real Property”);

(ix) all business records and contracts, including project files and customer
histories other than those identified in paragraph (b) below (the “Business
Records”);

(x) all of Seller’s good will and intangible assets including, without
limitation, all, customer lists, brochures, marketing literature, licenses,
permits, processes, files and records; and

(xi) all of Seller’s intellectual property including, without limitation, all
trademarks, trade names, service marks, logos, patents, copyrights, website and
domain names, technology, trade secrets and other intangible assets used in the
Business including, but not limited to, the exclusive right to use the name of
Seller as all or part of a trade or corporate name (collectively, the
“Intellectual Property”).

The assets, property and business of Seller to be sold to and purchased by Buyer
under this Agreement are hereinafter sometimes referred to as the “Subject
Assets.”

(b) The following assets shall be excluded from the Subject Assets as Excluded
Assets:

(i) assets and property disposed of since the date of the Base Balance Sheet in
the ordinary course of business;

(ii) Seller’s corporate franchise, stock record books, corporate record books
containing minutes of meetings of directors and Shareholders, original tax
returns and financial statements, such other records as have to do exclusively
with Seller’s organization or stock capitalization, and copies of such documents
of Seller which Seller deems necessary to substantiate its income and other tax
returns;

(iii) all cash and marketable securities of Seller, except for cash representing
invoices paid in 2006 for services to be performed in 2007 or other prepayments
for services under Section 1.1(a)(ii);

(iv) all benefit plans, if any, including the assets held by Seller under said
benefit plans;

(v) all of Seller’s rights in or under insurance contracts;

(vi) all accounts receivable for any services performed by Seller prior to the
Closing (“Accounts Receivable”); and

(vii) all the assets set forth on Schedule 1.1(b)(vii).

1.2 Assumption of Liabilities.

Upon the sale and purchase of the Subject Assets, with the exception of those
matters listed in Schedule 1.2 (the “Assumed Liabilities”), Buyer shall not
assume and shall not be liable for any debt, obligation, responsibility or
liability of Seller, or any Affiliate (as defined below), or any claim against
any of the foregoing or against the Subject Assets of the Business arising prior
to

 

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Closing, whether known or unknown, contingent or absolute, asserted or
unasserted, or otherwise. Without limiting the foregoing sentence, Buyer shall
have no responsibility with respect to the following, whether or not disclosed
in the Base Balance Sheet or a Schedule hereto, including without limitation:

(i) any liabilities and obligations related to or arising from the transactions
with any officer, director or shareholder of Seller or any person or
organization controlled by, controlling, or under common control with any of
them (an “Affiliate”);

(ii) liabilities and obligations for taxes of any kind, including taxes related
to or arising solely from the transfers contemplated hereby, which transfer
taxes shall be the responsibility of Seller, provided, ad valorem property taxes
due on the Subject Assets (or under any real or personal property lease) shall
be prorated among Buyer and Seller based upon the number of days in the taxable
period to which such ad valorem property taxes apply that each party owns the
Subject Assets;

(iii) liabilities and obligations of Seller for damage or injury to person or
property, including, without limitation, injuries to employees;

(iv) liabilities and obligations to employees of Seller, whether for accident,
disability, or workers compensation insurance or benefits, benefits under
employee benefit plans, or obligations related to or resulting from severance of
employment by Seller;

(v) workmen’s liens on any of the Subject Assets;

(vi) liabilities incurred by Seller or Shareholder in connection with this
Agreement and the transactions provided for herein, including counsel, broker
and accountant’s fees, filing fees, transfer and other taxes, and expenses
pertaining to Seller’s liquidation or the performance by Seller of its
obligations hereunder;

(vii) liabilities of Seller related to environmental matters, including without
limitation, liabilities associated with any disposal or use of hazardous
materials or substances under Federal (including CERCLA) or state laws, common
law or otherwise;

(viii) liabilities of Seller related to the Occupational Safety and Health Act
(“OSHA”), or any other similarly applicable state law, and liabilities for
healthcare expenses incurred prior to Closing;

(ix) liabilities of Seller with respect to any options, warrants, agreements or
convertible or other rights to acquire any shares of its capital stock of any
class or under any benefit plans;

(x) liabilities of Seller regarding any products manufactured or distributed by
Seller prior to Closing; and

(xi) any other liabilities arising out of facts or circumstances existing prior
to the Closing or the operation of Seller’s Business prior to the Closing.

1.3 Purchase Price and Payment.

(a) In consideration of the sale, transfer, conveyance, assignment and delivery
of the Subject Assets by Seller to Buyer, and in reliance upon the
representations and warranties made herein by Seller and Shareholder, Buyer
will, in full payment therefor, pay to Seller a purchase price (the “Purchase
Price”) of Four Million Fifty Thousand and No/100ths Dollars ($4,050,000.00) as
set forth below.

 

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(b) The Purchase Price shall be payable to Seller as follows: (i) One Hundred
Thousand and No/100ths Dollars ($100,000.00) representing the Earnest Money
described in Section 1.3(c) below shall be applied as a credit against the
Purchase Price, (ii) Three Million Four Hundred Twenty Five Thousand and
No/100ths Dollars ($3,425,000.00) in cash or by wire transfer or other
immediately available funds at the Closing and (iii) Five Hundred Twenty Five
Thousand and No/100ths Dollars ($525,000.00) being evidenced by a promissory
note (the “Note”), the form of which is attached hereto as Exhibit A, which
provides for payments of principal over five (5) years in equal quarterly
installments for $26,250.00 per quarter, commencing March 31, 2007, plus
interest on the unpaid balance computed in arrears for each quarterly payment
using three (3) month LIBOR as published in the Wall Street Journal, in effect
on the first business day at the beginning of such quarter and which shall be
secured by a mortgage held by the Shareholder on the Real Property (“Mortgage”),
the form of which is attached hereto as Exhibit B.

(c) Pursuant to and in accordance with that certain Letter Agreement among the
parties dated September 14, 2006 (the “Letter Agreement”), Buyer paid to Seller
One Hundred Thousand and No/100ths Dollars ($100,000.00) as earnest money (the
“Earnest Money”). Upon the Closing, the Earnest Money shall be applied as a
credit against the cash portion of the Purchase Price set forth above in
Subsection 1.3(b)(i). In the event the Closing does not occur through no fault
of the Seller of the Shareholder, the Earnest Money shall be retained by Seller
or returned to Buyer as provided in Section 10.5 hereof.

1.4 Delivery of Consulting and Noncompetition Agreements. At the Closing,
Shareholder shall enter into a consulting agreement with Buyer (the “Consulting
Agreement”) that is mutually agreeable to Shareholder and Buyer and Seller and
Shareholder shall enter into a confidentiality, noncompetition agreement with
and for the benefit of Buyer (collectively, the “Noncompetition Agreements”), in
the form attached hereto as Exhibit C.

1.5 Time and Place of Closing. The closing of the purchase and sale provided for
in this Agreement (herein called the “Closing”) shall be held at the offices of
Leatherwood Walker Todd and Mann, P.C., Greenville, South Carolina, on Tuesday,
January 2, 2007 but with an effective date and time of 12:01 a.m. on Monday,
January 1, 2007 (the “Closing Date”); provided, however, that the Closing may be
postponed for such period as mutually agreed by the parties. Notwithstanding the
foregoing, the parties acknowledge and agree that although the physical location
of the Closing shall be in Greenville, South Carolina, each of the parties that
desire to do so may execute and deliver all documents and instruments at Closing
by facsimile or other mutually agreeable method of transmission with originally
executed documents to be delivered separately.

1.6 Transfer of Subject Assets; Proration.

(a) At the Closing, Seller shall deliver or cause to be delivered to Buyer good
and sufficient instruments of transfer transferring to Buyer title to all the
Subject Assets including deeds, bills of sale, assignments of leases, title to
vehicles subject to title registration, and such other instruments of transfer
as may be required. Such instruments of transfer (i) shall be in the form and
will contain the warranties, covenants and other provisions (not inconsistent
with the provisions hereto) which are usual and customary for transferring the
type of property involved under the laws of the jurisdictions applicable to such
transfers, (ii) shall be in form and substance satisfactory to counsel for
Buyer, and (iii) except as expressly provided herein, shall effectively vest in
Buyer good and marketable title to all the Subject Assets and all of Seller’s
rights and interest therein free and clear of all liens, restrictions and
encumbrances, except liens for taxes not yet due and payable, it being
understood that Seller shall procure and deliver at the Closing such
certificates or other confirmations from the taxing authorities of the State of
Alabama as are generally issuable by such authorities regarding Seller’s payment
of taxes prior to the Closing, and, provided further, that Seller shall, after
the Closing, promptly pay when due such taxes as are not included in the Assumed
Liabilities.

(b) At the Closing Date, Buyer and Seller shall prorate as of the Closing Date
all rents, utilities and other charges affecting the Subject Assets so that
amounts attributable to periods prior to the Closing Date are borne by Seller
(or, in the case of any

 

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benefits, received by Seller) and amounts attributable to periods commencing on
the Closing Date are borne by Buyer (or, in the case of any benefits, received
by Buyer).

1.7 Delivery of Records and Contracts. At the Closing, Seller shall deliver or
cause to be delivered to Buyer all of Seller’s leases, contracts, commitments
and rights, with such assignments thereof and consents to assignments as are
necessary to assure Buyer of the full benefit of the same. Seller shall also
deliver to Buyer at the Closing all of Seller’s Business Records, tax returns
for the five (5) years prior to the Closing, books and other data relating to
the Subject Assets, and the Business and operations represented thereby (except
corporate records, original tax returns and financial statements, and other
property of Seller excluded under Section 1.1(b)) and Seller shall take all
requisite steps to put Buyer in actual possession and operating control of the
assets and Business of Seller. After the Closing, Buyer shall afford to Seller
and its accountants and attorneys reasonable access to the books and records of
Seller delivered to Buyer under this Section 1.7, all of which shall be retained
by Buyer until December 31, 2013, and shall permit Seller to make extracts and
copies therefrom for the purpose of preparing such tax returns of Seller as may
be required after the Closing and for other proper purposes approved by Buyer.
Similarly, after the Closing, Seller shall afford to Buyer and its accountants
and attorneys reasonable access to the books and records of Seller retained by
Seller under Section 1.1(b) and shall permit Buyer to make extracts and copies
therefrom for any proper purpose.

1.8 Change of Name. Immediately following the Closing, Seller shall file with
the Secretary of State of Alabama an amendment to its Charter (as hereafter
defined) changing its name to a name which does not include the phrase “McAleer
Computer Associates” or the word “McAleer” or any derivation or permutation
thereof, or any name confusingly similar to the name of Buyer or any of its
subsidiaries or divisions (such names to be provided to Seller upon request). In
connection with the Closing, Seller shall deliver to Buyer a statement
consenting to the use of the name “McAleer Computer Associates” or “McAleer” by
Buyer or any affiliate thereof, or shall have taken such other steps within
Seller’s power to permit Buyer or any affiliate thereof to use the name.

1.9 Further Assurances. Seller and Shareholder from time to time after the
Closing at the request of Buyer and without further consideration shall execute
and deliver further instruments of transfer and assignment (in addition to those
delivered under Section 1.6) and take such other action as Buyer may reasonably
require to more effectively transfer and assign to, and vest in, Buyer each of
the Subject Assets. To the extent that the assignment of any lease, contract,
commitment or right shall require the consent of other parties thereto, this
Agreement shall not constitute an assignment thereof except to the extent such
consent is obtained; however, Seller shall use its best efforts before and after
the Closing to obtain any necessary consents or waivers to assure Buyer of the
benefits of such leases, contracts, commitments or rights. Seller shall
cooperate with Buyer to permit Buyer to enjoy Seller’s rating and benefits under
the worker’s compensation laws and unemployment compensation laws of applicable
jurisdictions, to the extent permitted by such laws. Nothing herein shall be
deemed a waiver by Buyer of its right to receive at the Closing an effective
assignment of each of the leases, contracts, commitments or rights of Seller. In
addition, Seller and Shareholder agree to cooperate with Buyer following the
Closing in the preparation by Elliott Davis, LLC of audited financial statements
of Seller for the period ending December 31, 2006, which financial statements
shall be prepared at Buyer’s expense.

1.10 Tax Returns. Seller shall promptly prepare and file on or before the due
date or any extension thereof all required Federal, state and local tax returns
with respect to Seller’s operations prior to the Closing, all of which shall be
subject to and consistent with the allocations determined in accordance with
Section 1.11 hereof. Seller shall provide Buyer with copies of all such tax
returns, the contents of which shall be kept confidential by Buyer unless
disclosure is otherwise required by law, subpoena, court order or governmental
audit.

 

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1.11 Allocation of Purchase Price. The Purchase Price payable by Buyer for the
Subject Assets pursuant to Section 1.3 and the face amount of the Assumed
Liabilities assumed pursuant to Section 1.2 shall represent payment for the
Subject Assets at the prices shown on Schedule 1.11. The prices reflected in
Schedule 1.11 shall represent the fair market values of the Subject Assets at
the Closing, to the best of the knowledge and belief of Buyer and the parties
hereto agree that they will each timely file with the Internal Revenue Service
Form 8594, Asset Acquisition Statement, reflecting such prices and they will not
take a position inconsistent with such allocation for Federal income tax
purposes. Any determination as to fair market value with respect to any of the
Subject Assets shall be performed solely at the expense of Seller, and Buyer
shall be required to incur no expense in connection with any obligation arising
pursuant to this section.

1.12 Right to Hire Employees. Seller shall use its reasonable efforts to make
available to Buyer all of Seller’s employees for hire at or after the Closing.
Seller shall be responsible for all wages, benefits, severance obligations,
vacation and sick leave accruals (if any such accruals exist) and other
obligations for such employees relating to the period prior to the date such
employee is no longer an employee of Seller. . The standard procedure
established in Section 4 of Revenue Procedure 84-77, 1984-2 C.B. 753, relating
to employment tax returns and statements shall be adopted by Buyer for the
employees of Seller hired by Buyer after Closing. In timely fashion, Seller
agrees to furnish Buyer with information it has which Buyer needs to comply with
this procedure. Buyer will be the “successor employer” for FICA/FUTA purposes.

ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER.

Each of Seller and Shareholder, jointly and severally, hereby represents and
warrants to Buyer as follows:

2.1 Organization and Qualification of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Alabama, with full power and authority to own, lease and operate its properties
and to conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it. The copies
of Seller’s Articles of Incorporation or equivalent document as amended to date
(“Charter”), certified by the Secretary of State of the State of Alabama and
filed in the appropriate county in Alabama as required by the Alabama Business
Corporation Act, and of Seller’s bylaws as amended to date, certified by
Seller’s Secretary (or the equivalent), previously delivered to Buyer’s counsel,
are, and will be at the Closing, complete and correct. Seller is not qualified
to do business as a foreign corporation in any jurisdiction and is not required
to be licensed or qualified to conduct its business or own its property in any
other jurisdiction where the failure to be so qualified or in good standing
would have a material adverse effect upon the business, business prospects,
assets, operations or condition (financial or otherwise) of Seller (a “Material
Adverse Effect”).

2.2 Capitalization of Seller. All of the issued and outstanding capital stock of
Seller is owned of record and beneficially by Shareholder.

2.3 Subsidiaries. Seller does not own, directly or indirectly, any capital stock
of any corporation and has no subsidiaries. Except as reflected on the Financial
Statements (as defined in Section 2.7(a) hereof) or set forth on Schedule 2.3,
Seller does not own securities issued by any other business organization or
governmental authority and Seller is not a partner or participant in any joint
venture or partnership of any kind.

2.4 Authorization of Transaction. Seller has the full power and authority to
execute, deliver and perform this Agreement and to carry out the transactions
contemplated hereby. All necessary action, corporate or otherwise, including
receipt of the requisite approval of the Shareholders of Seller, has been taken
by Seller to authorize the execution, delivery and performance of this
Agreement, and the transactions contemplated hereby, the Agreement has been
executed and delivered by Seller and Shareholder, and the Agreement is the
legal, valid and binding obligation of Seller and Shareholder, enforceable
against Seller and Shareholder in accordance with its terms.

 

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2.5 Present Compliance with Obligations and Laws. Seller is not: (a) in
violation of its Charter or bylaws; (b) in default in the performance of any
obligation, agreement or condition of any debt instrument which would (with or
without the passage of time or the giving of notice) afford to any person the
right to accelerate any indebtedness or terminate any right; (c) in default of
or breach of (with or without the passage of time or the giving of notice) any
other contract to which it is a party or by which it or any of its assets are
bound; or (d) in violation of any law, regulation, administrative order or
judicial order, decree or judgment applicable to it or its business or assets or
to which it is subject or by which any of its assets or business may be bound,
where any such violation or default, individually or in the aggregate, could
have a Material Adverse Effect.

2.6 No Conflict of Transaction With Obligations and Laws. Except as disclosed in
Schedule 2.6, neither the execution, delivery and performance of this Agreement,
nor the performance of the transactions contemplated hereby, will:
(i) constitute a breach or violation of any provision of the Charter or bylaws
of Seller; (ii) require any consent, approval or authorization of or
declaration, filing or registration with any person, (iii) conflict with or
constitute (with or without the passage of time or the giving of notice) a
breach of, or default under, any debt instrument by Seller and to which Seller
is a party, or give any person the right to accelerate any indebtedness or
terminate, modify or cancel any right; (iv) constitute (with or without the
passage of time or giving of notice) a default under or breach by Seller or
Shareholder of any other agreement, instrument or obligation to which Seller or
Shareholder is a party or by which it or he or any of their respective assets
are bound; (v) result in a violation of any law, regulation, administrative
order or judicial order applicable to Seller or its business or assets or to
which it is subject, or by which its assets or business may be bound;
(vi) invalidate or adversely affect any permit, license or authorization used in
Seller’s Business or (vii) result in the creation of any lien upon any of the
assets of Seller.

2.7 Financial Statements.

(a) Seller has delivered or will deliver to Buyer at Closing (i) audited
financial statements of Seller for the periods ending December 31, 2004 and
December 31, 2005, which shall be prepared by Elliott Davis, LLC, and
(ii) unaudited balance sheet and income statement for the nine (9) month period
ended September 30, 2006 (the “Financial Statements”) all of which are complete
and correct and fairly present in all material respects the financial position
of Seller on the date of such statements and the results of its operations on
the applicable basis for the periods covered thereby, and such Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and prior
periods.

The balance sheet dated September 30, 2006 included in the Financial Statements
is sometimes referred to hereinafter as the “Base Balance Sheet.”

(b) The books of account and other financial records of Seller: (i) have been
maintained in accordance with good business and accounting practices, and
reflect all items of income and expense and all assets and liabilities required
to be reflected therein; and (ii) are in all material respects complete and
correct, and do no contain or reflect any material inaccuracies or
discrepancies.

2.8 Absence of Certain Changes and Undisclosed Liabilities.

(a) Except as set forth on Schedule 2.8(a) hereto, since the date of the Base
Balance Sheet, Seller has operated the Business in the normal and ordinary
course of business and there has not been any change in the financial condition,
working capital, earnings, reserves, properties, assets, liabilities, business
or operations of Seller which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of business, has had
or could be reasonably expected to have a Material Adverse Effect with respect
to Seller.

 

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(b) There are no Liabilities of Seller, other than Liabilities (i) reflected or
reserved against on the Base Balance Sheet or (ii) disclosed on Schedule 2.8(b).
For the purposed of this Section 2.8(b), “Liabilities” shall mean any debts,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including those arising
under any law, legal action or governmental order and those arising under any
contract, agreement, arrangement, commitment or undertaking.

(c) All of the representations and warranties made by Seller and Shareholder in
this Section 2.8, including any schedules thereto, regarding any material
changes and undisclosed liabilities shall be updated as of the Closing Date by
the Seller and Shareholder.

2.9 Payment of Taxes. Seller has duly and timely filed all federal, state,
local, and foreign government income, excise, gross receipts or franchise tax
returns, real estate and personal property tax returns, sales and use tax
returns, employee tax and contribution returns, and all other tax returns,
reports and declarations, including valid extensions therefor, or estimated
taxes required to be filed by it, with respect to all applicable taxes (“Tax
Returns”) including without limitation, with respect to all income, profit,
franchise, sales, use, real property, personal property, ad valorem, excise,
employment, social security and wage withholding, severance, stamp, occupation,
and windfall profit taxes, of every kind, character or description, and imposed
by any government or quasi-governmental authority (domestic or foreign), and any
interest or fines, and any and all penalties or additions relating to such
taxes, charges, fees, levies or other assessments (“Taxes”).

2.10 Title to Premises; Liens; Condition of Properties.

(a) Seller has good and marketable indefeasible fee simple title, free and clear
of all liens and encumbrances to the Real Property except for those encumbrances
permitted under a standard and customary title policy as set forth in Schedule
2.10(a). Seller has not leased or otherwise granted to any person the right to
use or occupy such Real Property or any portion thereof; and there are no
outstanding options, rights of first offer or rights of first refusal to
purchase the Real Property or any portion thereof or interest therein. There is
no condemnation, expropriation or other proceeding in eminent domain, pending or
to the knowledge of Seller and Shareholder threatened, affecting any parcel of
Real Property or any portion thereof or interest therein. There is no
injunction, decree, order, writ or judgment outstanding, nor any claims,
litigation, administrative actions or similar proceedings, pending or to the
knowledge of Seller and Shareholder threatened, relating to the ownership,
lease, use or occupancy of the Real Property or any portion thereof, or the
operation of Seller’s Business as currently conducted thereon. The Real Property
is in compliance with all other applicable building, zoning, subdivision, health
and safety and all other land use laws, including, as amended, and all insurance
requirements affecting the Real Property (collectively, the “Real Property
Law”), and to the knowledge of Seller and Shareholder, the current use and
occupancy of the Real Property and operation of Seller’s Business thereon does
not violate any Real Property Laws. All certificates of occupancy, permits,
licenses, franchise, approvals and authorizations (collectively, the “Real
Property Permits”) of all governmental authorities, board of fire underwriters,
association or any other entity having jurisdiction over the Real Property,
which are required to use or occupy the Real Property or operate Seller’s
Business as currently conducted thereon, have been issued and are in full force
and effect. Seller has not received any notice from any governmental authority
or other entity having jurisdiction over the Real Property threatening a
suspension, revocation, modification or cancellation of the any Real Property
Permit.

(b) Seller has delivered to Buyer true, correct and complete copies of all
material leases, subleases, rental agreements, tenancies or licenses related to
any of the personal property.

(c) Except as specifically disclosed in Schedule 2.10(c) or in the Base Balance
Sheet, Seller has good and marketable title to all its owned personal property,
free from liens, pledges and encumbrances and each of its leases is valid,
binding and enforceable

 

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in accordance with its terms against Seller and, to the knowledge of Seller and
Shareholder, against the other parties thereto, is subsisting and (subject to
obtaining required consents) fully assignable by Seller, and no default by
Seller exists thereunder, or to the knowledge of Seller and Shareholder, by any
other party. Seller has not received notice that any party to any such lease
intends to cancel, terminate or refuse to renew the same or to exercise or
decline to exercise any option or any right thereunder.

(d) Except as otherwise specified in Schedule 2.10(d) hereto, to the knowledge
of Seller and Shareholder, all machinery and equipment of Seller, and the HVAC
system used by Seller, are in good condition, working order and repair, age and
reasonable wear and tear excepted, are adequate for the uses to which they are
put, have been maintained in accordance with the past practices of Seller’s
business in a responsible manner as historically conducted, substantially
conform with all applicable ordinances, regulations and zoning, safety or other
laws, and do not encroach on property of others.

2.11 Work-in-Process; Accounts Receivable. All WIP of Seller existing as of the
date hereof represent valid contracts for Seller’s services for which Seller,
subject to applicable payment terms, is entitled to receive full payment.

2.12 Title to Intellectual Property.

(a) Except as set forth on Schedule 2.12(a)(i) (the “Permitted Intellectual
Property Encumbrances”), Seller owns good and marketable title, free and clear
from all encumbrances, to the Intellectual Property. Seller has delivered to
Buyer true, correct and complete copies of all of the Intellectual Property.
There are no oral contracts, agreements, licenses, or other commitments or
arrangements between Seller and any person or entity in effect which evidence
any intellectual property rights, trade secrets, or other proprietary
information, processes, or formulae used in, or incidental to, the sale,
license, sublicense, development, manufacture, support or maintenance of, or
arising from Software or Hardware, or otherwise necessary for the ownership or
use of the Subject Assets.

(b) Schedule 2.12(b) hereto sets forth the form and placement of the proprietary
legends and copyright notices displayed in or on the Software and the Hardware
which is owned by Seller. In no instance has the eligibility of the Software or
the Hardware for protection under applicable copyright law been forfeited to the
public domain by omission of any required notice or any other action.

(c) Schedule 2.12(c) hereto sets forth (i) the steps and methods that Seller has
employed to protect its Intellectual Property and/or (ii) Seller’s Intellectual
Property protection program. Seller has promulgated and used its best efforts to
enforce such Intellectual Property protection program and/or protect its
Intellectual Property. To the knowledge of Seller and Shareholder, there has
been no material violation of such program by any person or entity or
unauthorized disclosure of its Intellectual Property to any person or entity.
The source code and system documentation relating to the Software owned by
Seller (i) has at all times been maintained in confidence and (ii) has been
disclosed by Seller only to employees and consultants having “a need to know”
the contents thereof in connection with the performance of their duties to
Seller.

(d) Except as set forth on Schedule 2.12(d), all personnel, including employees,
agents, consultants, and contractors, who have contributed to or participated in
the conception and development of the Software, Hardware, Technical
Documentation, or the Intellectual Property on behalf of Seller either (i) have
been party to a “work-for-hire” arrangement or agreement with Seller, in
accordance with applicable federal and state law, that has accorded Seller full,
effective, exclusive, and original ownership of all tangible and intangible
property thereby arising; or (ii) have executed appropriate instruments of
assignment in favor of Seller as assignee that have conveyed to Seller full,
effective, and exclusive ownership of all tangible and intangible property
thereby arising.

 

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(e) No claims have been asserted by any person or entity to the use of the
Subject Assets and neither Seller nor Shareholder knows of any valid basis for
any such claim. To the knowledge of Seller and Shareholder, the use of the
Intellectual Property, such as patents and trademarks, by Seller does not
infringe on the rights of any person or entity.

2.13 Adequacy of Technical Documentation. The Technical Documentation includes
the object code, source code, system documentation, statements of principles of
operation, and schematics for that portion of the Software which is owned by
Seller, as well as any pertinent commentary or explanation that may be necessary
to render such materials understandable and usable by a trained computer
programmer. The Technical Documentation also includes any program (including
compilers), “workbenches,” tools, and higher level (or “proprietary”) language
used for the development, maintenance, and implementation of the Software. The
Technical Documentation also includes the product manufacture documentation,
statements of principles of operation, and schematics for the Hardware, as well
as any pertinent commentary or explanation that may be necessary to render such
materials understandable and usable by a trained computer hardware specialist.

2.14 Third Party Components in the Software and the Hardware.

(a) Software. Seller has validly and effectively obtained the right and license
to use, copy, modify, and distribute the third-party programming and materials
contained in the Software and the Technical Documentation. The Software and the
Technical Documentation owned by Seller contain no other programming or
materials in which any third party may claim superior, joint, or common
ownership, including any right or license. The Software and the Technical
Documentation owned by Seller do not contain derivative works of any programming
or materials not owned in their entirety by Seller and included in the Subject
Assets.

(b) Hardware. Seller has validly and effectively obtained the right and license
to use, copy, modify, and distribute the third-party products and materials
contained in the Hardware and the Technical Documentation. The Hardware and the
Technical Documentation contain no other products or materials in which any
third party may claim superior, joint, or common ownership, including any right
or license. The Hardware and the Technical Documentation owned by Seller do not
contain derivative works of any products or materials not owned in their
entirety by Seller and included in the Subject Assets.

2.15 Third Party Interests or Marketing Rights in the Software and the Hardware.
Seller has not granted, transferred, or assigned any right or interest in the
Software, the Hardware, the Technical Documentation or the Intellectual Property
to any person or entity, except as set forth on Schedule 2.20 hereto. Except as
set forth in Schedule 2.15 hereto, all Material Contracts relating to the
Software constitute only end-user agreements, each of which grants the end-user
thereunder solely the nonexclusive right and license to use an identified piece
of Software and related user documentation, for internal purposes only, on a
single central processing unit (CPU). There are no contracts, agreements,
licenses, and other commitments or arrangements in effect with respect to the
marketing, distribution, licensing, or promotion of the Software or the Hardware
or any other Technical Documentation, or the Intellectual Property by any
independent salesperson, distributor, sub licensor, or other remarketer or sales
organization.

2.16 Labor and Employee Relations.

(a) Except as shown on Schedule 2.16(a) hereto, there are no currently effective
consulting or employment agreements or other material agreements with individual
consultants or employees to which Seller is a party. Complete and accurate
copies of all such written agreements have been delivered by Seller to Buyer.

(b) None of the employees of Seller is covered by any collective bargaining
agreement with any trade or labor union, employees’ association or similar
association. Seller has complied with all applicable laws, rules and regulations
relating to the

 

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employment of labor, including without limitation those relating to wages,
hours, unfair labor practices, discrimination, and payment of social security
and similar taxes, except where failure to comply would not have a Material
Adverse Effect. There are no representation elections, arbitration proceedings,
labor strikes, slowdowns or stoppages, or claims of discrimination or unfair
labor practices pending, or, to the knowledge of Seller and Shareholder,
threatened, with respect to the employees of Seller.

(c) There are no complaints against Seller pending or, to the knowledge of
Seller and Shareholder, threatened before the National Labor Relations Board or
any similar state or local labor agencies, or before the Equal Employment
Opportunity Commission or any similar state or local agency, by or on behalf of
any employee or former employee of Seller.

(d) There is no contingent liability or accruals for sick leave, vacation time,
severance pay or similar items not set forth on the Base Balance Sheet or on
Schedule 2.16(d). The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or at law or any notice requirement
under any federal or state plant closing law.

(e) There has not been any citation, fine or penalty imposed or asserted against
Seller under any law or regulation relating to employment, immigration or
occupational safety matters.

(f) Seller has furnished Buyer a complete and accurate list of all employees of
Seller, their date of hire and their rate of compensation as of the date of this
Agreement (including a breakdown of the portion thereof attributable to salary,
bonus and other compensation). Except as previously disclosed to Buyer in
writing, each of Seller’s employees is an employee at will and will be no longer
employed by Seller on the Closing Date. Buyer may hire such of Seller’s then
former employees on the day following the Closing Date as Buyer decides to hire
upon such terms as determined by Buyer in its sole discretion. Seller shall be
responsible for all severance and other employment related payments accrued as
of the Closing Date.

2.17 ERISA and Employee Benefits

(a) Attached hereto as Schedule 2.17 is a list of each employee benefit plan
within the meaning of the Employee Retirement Income Security Act of 1976, as
amended (“ERISA”) which is or has been maintained for the benefit of employees
of Seller.

(b) As of the Closing, none of the Subject Assets will be subject to any lien
arising under ERISA, and Seller will not have any liability in respect to any
Employee Benefit Plan for which Buyer could be held liable. For purposes of this
Agreement, “Employee Benefit Plans” means all pension, retirement, profit
sharing, deferred compensation, stock ownership, stock purchase, stock option,
restricted stock, bonus, severance or termination pay, payroll practice,
vacation, cafeteria, medical, group, life, health, accident, disability, death,
or other employee benefit plans or arrangements, including (without limitation)
any pension plan (within the meaning of Section 3(2) of ERISA) and any welfare
plan (within the meaning of Section 3(1) of ERISA), covering any present or
former employees, consultants, officers, or directors (or dependents or
beneficiaries of any such persons) of Seller or to which Seller is a party or
bound or by which Seller otherwise may have any liability to any present or
former employee, consultant, officer, or director (or to any dependent or
beneficiary of any such person) of Seller.

2.18 Environmental Matters. To Seller and Shareholder’s knowledge: (a) there are
no and have not been any Hazardous Materials or underground storage tanks at,
on, under or around the Real Property; (b) the Real Property has been operated
and used in compliance with all applicable environmental laws; (c) there are no
actions, suits, claims, proceedings, investigations or enforcement actions
pending or threatened under any environmental law with respect to the Real
Property; and (d) neither Seller nor Shareholder has received any notice, claim
or demand from any governmental entity or other person regarding the presence of
Hazardous

 

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Materials at, on, under or around the Real Property or alleging that the Real
Property are in violation of any environmental laws. Seller has delivered to
Buyer copies of all environmental reports in Seller’s possession. To Seller or
Shareholder’s knowledge, the environmental reports are accurate and complete and
neither Seller nor Shareholder is aware of any other reports or information
pertaining to the environmental condition of the Real Property, other than as
set forth in the environmental reports. “Hazardous Materials” shall mean any
waste, pollutant, chemical, hazardous material, hazardous substance, toxic
substance, hazardous waste, special waste, solid waste, asbestos, radioactive
materials, polychlorinated biphenyls, petroleum or petroleum-derived substance
or waste (regardless of specific gravity), or any constituent or decomposition
product of any such pollutant, material, substance or waste, including, but not
limited to, any hazardous substance or constituent contained within any waste
and any other pollutant, material, substance or waste regulated under or as
defined by any environmental laws.

2.19 Permits. Seller holds and is in compliance with all licenses, permits,
registrations, orders, authorizations, approvals and franchises which are
required to permit it to conduct its business as presently conducted, except
where failure to so comply would not have a Material Adverse Effect, and Seller
has delivered to Buyer, true, correct and complete copies of all such licenses,
permits, registrations, orders, authorizations, approvals and franchises and,
except as indicated on Schedule 2.19 hereto, are now valid, in full force and
effect, and, except as set forth in Schedule 2.19, Buyer shall have full benefit
of the same. Seller has not received any notification of any asserted present
failure (or past and unremedied failure) by it to have obtained any such
license, permit, registration, order, authorization, approval or franchise.
Seller has not received any notification of non-compliance or violation with any
such license, permit, registrations, order, authorizations, approvals or
franchises.

2.20 Material Contracts.

(a) Seller has or has caused to be delivered to Buyer true, correct and complete
copies all of the material contracts and agreements (including oral and informal
arrangements) of Seller and all agreements relating to Intellectual Property
(collectively, the “Material Contracts”).

(b) Except as disclosed in Schedule 2.20(b), each Material Contract is valid and
binding on the respective parties thereto and is in full force and effect.
Neither Seller nor Shareholder has received any notice that Seller is in breach
of or default under any Material Contract or that any event occurred or failed
to occur which, with the giving of notice or passage of time or both, would
constitute a breach of or default under any Material Contract.

(c) Except as disclosed in Schedule 2.20(c), no other party to any Material
Contract is in breach thereof or default thereunder in any material respect nor
has any event occurred or failed to occur which, with the giving of the notice
or passage of time or both, would constitute a material breach of or default
under any Material Contract by any other party to any Material Contract.

(d) Except as disclosed in Schedule 2.20(d), there is no contract, agreement or
other arrangement granting any person any preferential right to purchase, other
than in the ordinary course of business consistent with past practice, any of
the properties or assets of Seller, including the Subject Assets.

2.21 Warranty or Other Claims. Except as set forth on Schedule 2.21, neither
Seller nor Shareholder knows of, or has reason to know of, any existing or
threatened claims, or any facts upon which a claim could be based, against
Seller for product that is defective or fails to meet any product warranty. No
claim is being asserted against Seller for renegotiation or price
redetermination of any business transaction, and neither Seller nor Shareholder
has knowledge of any facts upon which any such claim could be based.

2.22 Litigation. Schedule 2.22 sets forth an accurate and complete list of
(a) all claims, actions, suits, arbitration or other proceeding or
investigations (collectively, “Actions”) in the past five (5) years by or
against Seller (or by or against any Affiliate,

 

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including Shareholder, relating to the Business or Seller), or affecting any of
the Subject Assets or the Business, and (b) all Actions which to the knowledge
of Seller or Shareholder are currently threatened to be brought. Except for
matters described in Schedule 2.22 hereto, there are no Actions pending (or, to
the knowledge of Seller and Shareholder, threatened) against Seller and there
are no outstanding court orders, court decrees, or court stipulations to which
Seller is a party or by which any of its assets are bound, any of which
(a) question this Agreement or affect the transactions contemplated hereby, or
(b) restrict the present business, properties, operations, prospects, assets or
condition, financial or otherwise, of Seller, or (c) will result in any material
adverse change in the business, properties, operations, prospects, or assets of
Seller, on a standalone or consolidated basis. Neither Seller nor Shareholder
has any reason to believe that any such claim, action, suit, arbitration or
other proceeding or investigation may be brought against Seller.

2.23 Insurance. Seller maintains (i) insurance on all of its property (including
leased premises) that insures against loss or damage by fire or other casualty
(including extended coverage) and (ii) insurance against liabilities, claims and
risks of a nature and in such amounts as are normal and customary in its
industry. Seller has delivered to Buyer true, correct and complete copies of all
policies of insurance maintained by Seller (including insurance providing
benefits for employees) in effect on the date hereof, together with complete and
correct information with respect to the premiums, coverages, insurers,
expiration dates, and deductibles in respect of such policies. To the knowledge
of Seller and Shareholder, such policies are sufficient for compliance with all
requirements of law currently applicable to Seller and of all agreements to
which Seller is a party, will remain in full force and effect through the
respective expiration dates of such policies without the payment of additional
premiums. Except for amounts deductible under policies of insurance described on
such schedule or with respect to risks assumed as a self-insurer and described
on such schedule, Seller is not, nor has it been at any time, subject to any
liability as a self-insurer of the businesses or assets of Seller that is
reasonably likely to have a Material Adverse Effect. Except as set forth on
Schedule 2.23, there are no claims pending or, to the knowledge of Seller and
Shareholder, overtly threatened, under any of said policies, or disputes with
insurers, and all premiums due and payable thereunder have been paid, and all
such policies are in full force and effect in accordance with their respective
terms. No notice of cancellation or termination has been received with respect
to any such policy. Except as set forth on Schedule 2.23, Seller has not been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier with which it has applied for
any such insurance or with which it has carried insurance.

2.24 Finder’s Fee. Neither Seller nor Shareholder has incurred or become liable
for any broker’s commission or finder’s fee relating to or in connection with
the transactions contemplated by this Agreement.

2.25 Disclosure of Material Information. Neither this Agreement nor any exhibit
hereto or certificate issued pursuant hereto contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements herein or therein not misleading, relating to the business or affairs
of Seller. There is no fact known to Seller or Shareholder which adversely
affects, or is likely to (so far as now can be reasonably foreseen) materially
adversely affect, the business, condition (financial or otherwise) or prospects
of Seller which has not been specifically disclosed herein.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.

Buyer hereby represents and warrants to Seller and Shareholder as follows:

3.1 Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
power to own or lease its properties and to conduct its business in the manner
and in the places where such properties are owned or leased or such business is
conducted by it. Buyer is, or prior to the Closing, will be duly qualified to
transact business in the State of Alabama.

 

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3.2 Authorization of Transaction. Buyer has the full power and authority to
execute, deliver and perform this Agreement and to carry out the transactions
contemplated hereby. All necessary action, corporate or otherwise, including
approval of the board of directors of Buyer, has been taken by Buyer to
authorize the execution, delivery and performance of this Agreement and the
transactions and agreements contemplated hereby and the same constitute the
legal, valid and binding obligations of Buyer enforceable in accordance with
their respective terms.

3.3 No Conflict of Transaction with Obligations and Laws.

(a) Neither the execution, delivery and performance of this Agreement or any of
the agreements contemplated hereby, nor the performance of the transactions
contemplated hereby, will: (i) constitute a breach or violation of Buyer’s
Charter or bylaws; (ii) conflict with or constitute (with or without the passage
of time or the giving of notice) a breach of, or default under any material
agreement, instrument or obligation to which Buyer is a party or by which it or
its assets are bound which would materially affect the performance by Buyer of
its obligations under this Agreement; or (iii) result in a violation of any law,
regulation, administrative order or judicial order applicable to Buyer.

(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby by Buyer do not require the consent, waiver,
approval, authorization, exemption of or giving of notice to any governmental
authority, except for Buyer’s obligations to disclose under the Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Exchange Act”).

3.4 Finder’s Fee. Buyer has not incurred or become liable for any broker’s
commission or finder’s fee relating to or in connection with the transactions
contemplated by this Agreement.

3.5 Authorization from Others. Buyer has obtained and delivered to Seller all
authorizations, consents and permits of others required to permit the
consummation by Buyer of the transactions contemplated by this Agreement and the
agreements contemplated hereby.

3.6 Litigation. There is no litigation pending or, to the knowledge of Buyer,
threatened against Buyer which will have a material adverse effect on its
properties, assets or business or which would prevent or hinder the consummation
of the transactions contemplated by this Agreement.

ARTICLE 4. COVENANTS OF SELLER AND THE SHAREHOLDER.

Seller and Shareholder hereby jointly and severally covenant and agree with
Buyer as follows:

4.1 Conduct of Business. Between the date of this Agreement and the Closing,
Seller will refrain from (i) conducting the Business outside the normal and
ordinary course, (ii) entering into any material agreement that is reasonably
likely to have a Material Adverse Effect; or (iii) making any change, incurring
any obligation or taking any action that is reasonably likely to have a Material
Adverse Effect.

4.2 Authorization from Others. Prior to the Closing, Shareholder will have
obtained, and will cause Seller to have obtained, all authorizations, consents
and permits of others required to permit the consummation by Shareholder and
Seller of the transactions contemplated by this Agreement.

4.3 Breach of Representations and Warranties. Prior to the Closing, promptly
upon the occurrence of, or promptly upon Seller and Shareholder becoming aware
of the imminent or threatened occurrence of, any event which would cause or
constitute a breach, or would have caused or constituted a breach had such event
occurred or been known to Seller or Shareholder prior to the date hereof, of any
of the representations and warranties of Seller and Shareholder contained in or
referred to in this Agreement, such person shall give detailed written notice
thereof to Buyer, and Seller and Shareholder shall use their best efforts to
prevent or promptly remedy the same.

 

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4.4 Consummation of Agreement. Seller and Shareholder shall use its and his best
efforts to perform and fulfill, and, in case of Shareholder, to cause Seller to
perform and fulfill, all conditions and obligations on their part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out. To this end, Seller
will obtain all necessary authorizations or approvals of its Shareholders and
Board of Directors.

4.5 Exclusivity. Neither Seller nor Shareholder shall, directly or indirectly,
(a) encourage, solicit, initiate, engage or participate in discussions or
negotiations with any person or entity (other than the Buyer) concerning any
merger, consolidation, sale of material assets, recapitalization, accumulation
of shares of capital stock of Seller, or other business combination involving
Seller or (b) provide any information concerning the business, properties or
assets of Seller to any person or entity (other than the Buyer and its
representatives or, Buyer’s lender and its representatives). Seller and
Shareholder shall give Buyer prompt written notice if either of them receive any
inquiry or offer from any other person or entity relating to the foregoing.

ARTICLE 5. COVENANTS OF BUYER.

Buyer hereby covenants and agrees with Seller and Shareholder as follows:

5.1 Authorization from Others. Prior to the Closing, Buyer will have obtained
all authorizations, consents and permits of others required to permit the
consummation by Buyer of the transactions contemplated by this Agreement.

5.2 Consummation of Agreement. Buyer shall use its best efforts to perform and
fulfill all conditions and obligations on its part to be performed or fulfilled
under this Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out. To this end, Buyer will obtain any
approvals of its Shareholders or Board of Directors which may be required in
order to consummate the transactions contemplated hereby.

5.3 Cost of Audited Financial Statements. Buyer shall pay all invoices of
Elliott Davis, LLC relating to the preparation of financial statements of Seller
for the periods ending December 31, 2004, December 31, 2005 and December 31,
2006.

ARTICLE 6. CONDITIONS TO OBLIGATIONS OF BUYER.

The obligations of Buyer to consummate this Agreement and the transactions
contemplated hereby are subject to the condition that on or before the Closing
the actions required by this Article 6 will have been accomplished or waived in
writing by Buyer.

6.1 Representations; Warranties; Covenants. Each of the representations and
warranties of Seller and Shareholder contained in Article 2 shall be true and
correct in all material respects as though made on and as of the Closing. Seller
and Shareholder shall, on or before the Closing, have performed in all material
respects all of its obligations hereunder which by the terms hereof are to be
performed on or before the Closing; and Seller shall have delivered to Buyer a
certificate of Seller’s President dated as of the Closing to the foregoing
effect.

6.2 Absence of Certain Litigation. There shall not be any (a) injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction
contemplated hereby shall not be consummated as herein provided, (b) suit,
action or other proceeding by any federal, state, local or foreign government
(or any agency thereof) pending before any court or governmental agency, or
threatened to be filed or initiated, wherein such complainant seeks the
restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality

 

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thereof or (c) suit, action or other proceeding by a private party pending
before any court or governmental agency, or threatened to be filed or initiated,
which in the reasonable opinion of counsel for Buyer is likely to result in the
restraint or prohibition of the consummation of any material transaction
contemplated hereby or the obtaining of an amount in payment (or
indemnification) of material damages from or other material relief against any
of the parties or against any directors or officers of Buyer, in connection with
the consummation of any material transaction contemplated hereby.

6.3 No Bankruptcy. Seller shall not (i) have commenced a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially all of
its property, or have consented to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or have made a general assignment for the
benefit of its creditors, or (ii) have an involuntary case or other proceeding
commenced against it seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereinafter in effect or seeking the appointing of a trustee, receiver,
liquidator, custodian or similar official of it or substantially all of its
property or (iii) have an attachment placed on all or a significant portion of
its assets.

6.4 No Adverse Change. There shall be no material adverse change to the Subject
Assets or business of Seller taken as a whole since the date of this Agreement.

6.5 Release of Liens, Security Interests and Other Encumbrances. Seller shall
have delivered to Buyer evidence satisfactory to Buyer and its counsel that
Seller is able to deliver the Subject Assets free and clear of all liens (other
than for taxes not yet due and payable), attachments, mortgages, security
interests or other encumbrances of any nature whatsoever.

6.6 Authorization from Others. Seller shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices that are reasonably deemed necessary by
Buyer, upon advice of counsel, (i) to provide for the continuation by Buyer of
the business of Seller, (ii) to assign to Buyer all of the WIP, and (iii) to
consummate the transactions contemplated by this Agreement.

6.7 Due Diligence. Buyer, acting through its own management and personnel,
counsel, accountants, engineers or other representatives designated by it, shall
have been afforded reasonable opportunity to examine, investigate and review all
material aspects of Seller’s Business, including, but not limited to, Seller’s
financial statements, contracts and leases, assets, liabilities, intellectual
property, technology, products, inventory, accounts receivable, methods of
accounting, financial and other business records, customers and suppliers,
Seller’s facilities, machinery and equipment, and prospects. Buyer shall be
satisfied, in its sole discretion and in all respects, with the results of such
due diligence review.

6.8 Fiscal 2006 Results. Seller shall have achieved an adjusted EBITDA (plus
compensation and other expenses of Shareholder) of not less than Six Hundred
Thousand and No/100 Dollars ($600,000.00) for the fiscal year ending
December 31, 2006, calculated in accordance with GAAP consistently applied, and
consistent with historic practices of Seller and the Financial Statements, to
the extent that such practices and Financial Statements are in accordance with
generally accepted accounting principles; provided that if the adjusted EBITDA
for the fiscal year ending December 31, 2006 is less than Six Hundred Thousand
and No/100 Dollars ($600,000.00), Buyer and Seller agree that they will
negotiate in good faith to a ratable adjustment to the Purchase Price, unless
Buyer, in its sole discretion, elects to proceed with Closing without an
adjustment to the Purchase Price.

6.9 Environmental Matters. Seller shall have remedied to the reasonable
satisfaction of Buyer any and all environmental issues raised in the
environmental survey prepared by Thompson Engineering, Inc.; provided, however,
that Seller shall be under no obligation to remedy any contamination of ground
water that has not been caused by Seller.

 

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6.10 Instruments of Transfer. Seller shall have executed and delivered to Buyer
good and sufficient instruments of transfer of title to all the Subject Assets,
including a general warranty deed to the Real Estate, bills of sale, assignments
of leases, title to vehicles subject to title registration, and such other
instruments of transfer as may be required.

6.11 Delivery of Records and Contracts. In addition to having procured the
assignment of the WIP, Seller shall have used all reasonable efforts to have
delivered or caused to be delivered to Buyer all of Seller’s leases, contracts,
commitments and rights, or such assignments thereof and consent to assignments
as are necessary to ensure Buyer the full benefit of same. Seller shall also
have delivered to Buyer all of Seller’s Business Records, tax returns for the
five years prior to the Closing, books and other data relating to the Subject
Assets, and the business and operations represented thereby (except corporate
records, original tax returns and financial statements, and other Excluded
Assets), all of which shall be retained by Buyer until December 31, 2013.

6.12 Change of Name. Seller shall have delivered to Buyer a consent in a form
satisfactory for the Secretary of State of the State of Alabama and the
applicable county in Alabama consenting to the use of the name “McAleer” by
Buyer or any affiliate thereof, or have taken such other steps as would permit
Buyer to use the name “McAleer”.

6.13 Noncompetition Agreement, Consulting Agreement and Employment Agreement.
Buyer shall have entered into (i) Noncompetition Agreement with both Seller and
Shareholder, the form of which is attached hereto as Exhibit C; (ii) a
Consulting Agreement with Shareholder and (iii) a mutually agreeable employment
agreement with Jeff Mackin.

6.14 Acceptable Financing. Buyer shall have obtained financing for the Purchase
Price from a third party lender upon terms and conditions which it believes in
its sole discretion to be reasonable.

6.15 Opinion of Seller’s Counsel. At the Closing, Buyer shall have received from
Mike Ballard, counsel for Seller and Shareholder, an opinion dated as of the
Closing, substantially in the form set forth as Exhibit D hereto.

ARTICLE 7. CONDITIONS TO OBLIGATIONS OF SELLER AND THE SHAREHOLDER.

The obligations of Seller and Shareholder to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article 7 will have been accomplished
or waived in writing by Seller:

7.1 Representations; Warranties; Covenants. Each of the representations and
warranties of Buyer contained in Article 3 shall be true and correct in all
material respects as though made on and as of the Closing; Buyer shall, on or
before the Closing, have performed in all material respects all of its
obligations hereunder which by the terms hereof are to be performed on or before
the Closing; and Buyer shall have delivered to Seller a certificate of the
President of Buyer dated as of the Closing to such effect.

7.2 Absence of Certain Litigation. There shall not be any injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction
contemplated hereby shall not be consummated as herein provided.

7.3 Authorization from Others. Buyer shall have obtained all of the waivers,
permits, consents, approvals or other authorizations that are reasonably deemed
necessary by Seller, upon advice of counsel, to consummate the transactions
contemplated by this Agreement.

 

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7.4 No Bankruptcy. Buyer shall not (i) have commenced a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially all of
its property, or have consented to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or have made a general assignment for the
benefit of its creditors, or (ii) have an involuntary case or other proceeding
commenced against it seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereinafter in effect or seeking the appointing of a trustee, receiver,
liquidator, custodian or similar official of it or substantially all of its
property or (iii) have an attachment placed on all or a significant portion of
its assets, and no such action described in this Section 7.4 shall be threatened
by a bona fide third party.

ARTICLE 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.

8.1 Survival of Warranties. All representations, warranties, agreements,
covenants and obligations herein or in any schedule, certificate or financial
statement delivered by any party to the other party or parties incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing for the periods of
indemnification under Article 9, regardless of any investigation and shall not
merge in the performance of any obligation by the parties hereto.

8.2 Collection of Assets. Subsequent to the Closing, Buyer shall have the right
and authority to collect all accounts receivables and other items transferred
and assigned to it by Seller hereunder and to endorse with the name of Seller
any checks received on account of such receivables or other items, and Seller
agrees that it will promptly transfer or deliver to Buyer from time to time, any
cash or other property that Seller may receive with respect to any claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items required to be transferred by it
to Buyer pursuant to the provisions hereof.

8.3 Payment of Debts. Seller shall as promptly as possible after the Closing pay
all debts and obligations not to be assumed by Buyer hereunder within their
respective existing credit terms.

ARTICLE 9. INDEMNIFICATION.

9.1 Definitions. For purposes of this Article 9:

“Losses” means all losses, damages (including, without limitation, punitive and
consequential damages), liabilities, payments and obligations, and all expenses
related thereto. Losses shall include any reasonable legal fees and costs
incurred by any of the Indemnified Persons subsequent to the Closing in defense
of or in connection with any alleged or asserted liability, payment or
obligation for which indemnity is forthcoming under Section 9.2 or Section 9.3
below, whether or not any liability or payment, obligation or judgment is
ultimately imposed against the Indemnified Persons and whether or not the
Indemnified Persons are made or become parties to any such action.

“Buyer’s Indemnified Persons” means Buyer, its parent, subsidiary and affiliated
corporations, and their respective directors, officers, employees, Shareholders
and agents.

“Indemnified Person” means any person entitled to be indemnified under this
Article 9.

“Indemnifying Person” means any person obligated to indemnify another person
under this Article 9.

 

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“Sellers’ Indemnified Persons” means each of Seller and Shareholder.

“Third Party Action” means any written assertion of a claim, or the commencement
of any action, suit, or proceeding, by a third party as to which any person
believes it may be an Indemnified Person hereunder.

9.2 Indemnification by Seller and Shareholder. Subject to this Article 9, each
of Seller and Shareholder, jointly and severally, agree to defend, indemnify and
hold harmless Buyer’s Indemnified Persons from and against all Losses directly
or indirectly incurred by or sought to be imposed upon any of them:

(i) resulting from or arising out of any breach of any of the representations or
warranties made by Seller or Shareholder in or pursuant to this Agreement or in
any agreement, document or instrument executed and delivered pursuant hereto or
in connection with the Closing;

(ii) resulting from or arising out of any breach of any of the representations
or warranties made by Seller and Shareholder pursuant to (a) Section 2.10 as to
title to assets; (b) Section 2.1 as to organization and qualification of Seller;
(c) Section 2.4 as to authorization; (d) Sections 2.12, 2.13, 2.14, and 2.15 as
to intellectual property rights; and (e) Section 2.21 as to warranties contained
therein;

(iii) resulting from or arising out of any breach of any covenant or agreement
made by Seller and/or Shareholder in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto or in
connection with the Closing, to be performed by Seller and/or Shareholder on or
before the Closing;

(iv) resulting from or arising out of any breach of any covenant or agreement
made by Seller and/or Shareholder in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto or in
connection with the Closing, to be performed by Seller and/or Shareholder after
the Closing;

(v) in respect of any liability or obligation of Seller not included in the
Assumed Liabilities, including any liability or obligation arising out of facts
or circumstances existing prior to the Closing or the operation of Seller’s
Business prior to the Closing;

(vi) resulting from or arising out of any liability, payment or obligation in
respect of any taxes owing by Seller of any kind or description (including
interest and penalties with respect thereto) for all periods or portions of
periods ending on or before the Closing Date except for transfer taxes arising
out of the transactions contemplated hereby;

(vii) resulting from or arising out of any Third Party Action, whether by a
governmental authority or other third party for damages, including fines and
penalties or clean-up costs or other compliance costs under any environmental
law arising out of or caused in whole or in part by the operations of Seller
prior to the Closing; and

(viii) resulting from or arising out of the fraud of Seller or Shareholder.

9.3 Indemnification by Buyer. From and after the Closing Date, Buyer shall
indemnify and hold harmless Sellers’ Indemnified Persons from any and all Losses
directly or indirectly incurred by or sought to be imposed upon them:

(i) resulting from or arising out of any breach of any of the representations or
warranties made by Buyer in or pursuant to this Agreement or in any agreement,
document or instrument executed and delivered pursuant hereto or in connection
with the Closing; or

 

20

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(ii) resulting from or arising out of any breach of any covenant or agreement
made by Buyer in or pursuant to this Agreement or in any agreement, document or
instrument executed and delivered pursuant hereto or in connection with the
Closing, to be performed by Buyer on or before the Closing.

(iii) resulting from or arising out of any breach of any covenant or agreement
made by Buyer in or pursuant to this Agreement or in any agreement, document or
instrument executed and delivered pursuant hereto or in connection with the
Closing, to be performed by Buyer after the Closing.

(iv) in respect of any liability or obligation of Buyer included in the Assumed
Liabilities, including any liability or obligation arising out of facts or
circumstances arising after the Closing or the operation of Buyer’s business
prior to the Closing;

(v) resulting from or arising out of any liability, payment or obligation of
Buyer arising out of any litigation or similar matter asserted against Buyer, in
each case to the extent such litigation or other matter arose out of or relates
to the business of Buyer after the Closing;

(vi) resulting from or arising out of any liability, payment or obligation in
respect of any taxes owing by Buyer of any kind or description (including
interest and penalties with respect thereto) for all periods commencing after
the Closing Date;

(vii) resulting from or arising out of any Third Party Action, whether by a
governmental authority or other third party for damages, including fines and
penalties or clean-up costs or other compliance costs under any environmental
law arising out of or caused by the operations of Buyer after the Closing;

(viii) resulting from or arising out of any additional tax liability or
obligation, penalties and interest, if any, of Seller or Shareholder resulting
from a successful challenge by the Internal Revenue Service or Alabama
Department of Revenue to the allocation of the purchase price under Section 1.11
hereof; and

(ix) resulting from or arising out of the fraud of Buyer.

9.4 Limitations on Indemnification.

(a) Indemnification Period. Neither Seller, Shareholder nor Buyer shall have any
indemnification liability under Section 9.2 or 9.3 unless one or more of the
Indemnified Persons gives written notice to the Indemnifying Persons asserting a
claim for Losses in accordance with Section 9.5 hereof, on or before the
expiration of the period set forth below:

(i) for claims under clauses (i) and (iii) of Section 9.2 above, and (i) and
(ii) of Section 9.3 above, for a period of eighteen (18) months from the Closing
Date;

(ii) for claims under Section 9.3 above, for a period of eighteen (18) months
from the Closing Date;

(iii) for claims under any other clause of Section 9.2 above, without limitation
as to time subject to the expiration of the applicable statute of limitations.

(b) Except for Losses resulting from Third Party Actions (as hereinafter defined
in Section 9.6 below) or those arising under Section 9.2(ii) above, neither
Seller nor Shareholder shall be liable for any Losses with respect to matters
set forth in Section 9.2 or otherwise in this Agreement until all Losses with
respect to such matters exceed Twenty Five Thousand Dollars

 

21

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($25,000.00)(the “Basket”); provided, however, that in the event that the total
of all Losses with respect to such matters exceeds Twenty Five Thousand Dollars
($25,000.00), then Seller and Shareholder will have joint and several liability
with respect to the first dollar of such Losses; provided, further, however,
that in no event shall the total amount to which Seller and Shareholder shall be
liable for such matters exceed Two Million and No/100ths Dollars
($2,000,000.00)(the “Cap”).

9.5 Notice. The Indemnified Person shall give prompt written notice to the
Indemnifying Person of each claim for indemnification hereunder, specifying the
amount and nature of the claim, and of any matter which in the opinion of the
Indemnifying Person is likely to give rise to an indemnification claim. The
omission to give such notice to the Indemnifying Person will not relieve the
Indemnifying Person of any liability hereunder unless it was prejudiced thereby
under this Article 9.

9.6 Defense of Third Party Actions.

(a) Promptly after receipt of notice of any claims, actions or suits of any
third party (hereinafter a “Third Party Action”), any person who believes he,
she or it may be an Indemnified Person will give notice to the potential
Indemnifying Person of such action. The omission to give such notice to the
Indemnifying Person will not relieve the Indemnifying Person of any liability
hereunder unless it was prejudiced thereby, nor will it relieve it of any
liability which it may have other than under this Article 9.

(b) Upon receipt of a notice of a Third Party Action, the Indemnifying Person
shall have the right, at its option and at its own expense, to participate in
and be present at the defense of such Third Party Action, but not to control the
defense, negotiation or settlement thereof, which control shall remain with the
Indemnified Person, unless the Indemnifying Person makes the election provided
in paragraph (c) below.

(c) By written notice within forty five (45) days after receipt of a notice of a
Third Party Action, an Indemnifying Person may elect to assume control of the
defense, negotiation and settlement thereof, with counsel reasonably
satisfactory to the Indemnified Person; provided, however, that the Indemnifying
Person agrees (i) to promptly indemnify the Indemnified Person for its
reasonable expenses to date, and (ii) to hold the Indemnified Person harmless
from and against any and all Indemnified Losses, caused by or arising out of any
settlement of the Third Party Action or any judgment in connection with that
Third Party Action. The Indemnifying Persons shall not in the defense of the
Third Party Action enter into any settlement which does not include as a term
thereof the unconditional release by the third party claimant of the Indemnified
Person, or consent to entry of any judgment, except with the consent of the
Indemnified Person.

(d) Upon assumption of control of the defense of a Third Party Action under
paragraph (c) above, the Indemnifying Person will not be liable to the
Indemnified Person hereunder for any legal or other expenses subsequently
incurred by the Indemnified Person in connection with the defense of the Third
Party Action, other than reasonable expenses of investigation.

(e) If the Indemnifying Person does not elect to control the defense of a Third
Party Action under paragraph (c), the Indemnifying Person shall promptly
reimburse the Indemnified Person for expenses incurred by the Indemnified Person
in connection with defense of such Third Party Action, as and when the same
shall be incurred by the Indemnified Person.

(f) In the event an Indemnifying Person successfully demonstrates that the party
seeking indemnification is responsible and the Indemnifying Person is in fact
the party entitled to indemnity hereunder, the Indemnifying Party shall be
entitled to recover its Losses with respect to such matter from the party
initially seeking indemnification hereunder.

(g) Any person who has not assumed control of the defense of any Third Party
Action shall have the duty to cooperate with the party which assumed such
defense.

 

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9.7 Miscellaneous.

(a) Buyer’s Indemnified Persons shall be entitled to indemnification under
Section 9.2 and Sellers’ Indemnified Persons shall be entitled to
indemnification under Section 9.3, regardless of whether the matter giving rise
to the applicable liability, payment, obligation or expense may have been
previously disclosed to any such person or disclosed in writing herein on the
Schedules hereto.

(b) If any Loss is recoverable under more than one provision hereof, the
Indemnified Person shall be entitled to assert a claim for such Loss until the
expiration of the longest period of time within which to assert a claim for Loss
under any of the provisions which are applicable.

9.8 Payment of Indemnification. Claims for indemnification under this Article 9
shall be paid or otherwise satisfied by the Indemnifying Persons within thirty
(30) days after notice thereof is given by the Indemnified Person. In the event
the Buyer is the Indemnified Person, Buyer may offset the amount of its claim
against any obligation Buyer may have to Seller or Shareholder under this
Agreement, including the obligation to pay any portion of the Purchase Price
following the Closing.

ARTICLE 10. TERMINATION OF AGREEMENT.

10.1 Termination. In connection with the structure of the transactions as
described in this Agreement, the parties have agreed that this Agreement shall
not be terminated, except in accordance with the provisions of this Article 10,
all strictly construed against the party seeking such termination. This
Agreement may be terminated any time prior to the Closing by mutual consent of
the parties. In addition, this Agreement may be terminated by either Buyer or
Seller, if, without fault of such terminating party, the Closing shall not have
occurred on or before January 2, 2007 subject to extension as set forth in
Section 1.5.

10.2 Termination by Buyer Upon Seller or Shareholder Breach, This Agreement may
be terminated by Buyer if (a) at any time prior to the Closing there exists a
breach or breaches of any representation, warranty or covenant of Seller or
Shareholder contained in this Agreement in any material respect such that the
Closing conditions set forth in Section 6.1 would not be satisfied, or (b) the
conditions stated in Article 6 have not been satisfied at or prior to the
Closing; provided, however, that if such failure, breach or breaches are capable
of being cured prior to the Closing, then this Agreement may be terminated by
Buyer if such failure, breach or breaches shall not have been cured within the
later (i) of fifteen (15) days of delivery to Seller of written notice of such
failure, breach or breaches, or (ii)the date specified in Section 10.1 or any
extension thereof.

10.3 Termination by Seller Upon Buyer Breach. This Agreement may be terminated
by Seller if (i) at any time prior to the Closing there exists a breach or
breaches of any representation, warranty or covenant of Buyer contained in this
Agreement in any material respect such that the Closing conditions set forth in
Section 7.1 would not be satisfied, or (ii) the conditions stated in Article 7
have not been satisfied at or prior to the Closing; provided however, that if
such failure, breach or breaches are capable of being cured prior to the
Closing, then this Agreement may be terminated by Seller if such failure, breach
or breaches shall not be cured within the time period specified in Section 10.2.

10.4 Procedure for Termination. In the event of termination by Buyer or Seller
pursuant to this Article 10, written notice thereof shall forthwith be given to
the other.

10.5 Effect of Termination. In the event of termination of this Agreement
pursuant to this Article 10, all obligations of the parties hereunder shall
terminate; provided however, that (a) except as otherwise expressly provided in
this Section 10.5, if this Agreement is terminated as a result of the fault or
refusal of Seller or Shareholder, the Earnest Money shall be immediately
returned to Buyer; (b) in the event this Agreement is terminated through no
fault of Seller or Shareholder, then the Earnest Money shall be

 

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retained by Seller as full consideration for its time and expenses involved in
this transaction, and (c) that nothing herein shall preclude Buyer from seeking
specific performance of this Agreement, it being understood that Buyer may be
irreparably damaged if the provisions hereof are not specifically enforced.
Seller and Shareholder shall have no other remedy at law or in equity for any
default by Buyer.

10.6 Right to Proceed. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article 6 hereof have not
been satisfied, Buyer shall have the right to proceed with the transactions
contemplated hereby without waiving its rights hereunder, and if any of the
conditions specified in Article 7 hereof have not been satisfied, Seller shall
have the right to proceed with the transactions contemplated hereby without
waiving its rights hereunder.

ARTICLE 11. MISCELLANEOUS.

11.1 Right to Offset. Subject to the provisions of Section 11.11, Buyer has the
right to offset and credit any and/or all payments to be made by it under or
pursuant to this Agreement, or the Note, to or for the benefit of Seller or
Shareholder by reason of any valid indemnification obligations of Seller or
Shareholder hereunder.

11.2 Fees and Expenses. Each of the parties will bear its own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement and, except as otherwise provided in this
Agreement, no expenses of Seller or Shareholder relating in any way to the
purchase and sale of the Subject Assets hereunder shall be charged to or paid by
Buyer.

11.3 Notices. Any notice or other communication in connection with this
Agreement shall be made in accordance with this Section 11.3 and shall be deemed
to be delivered if in writing (or in the form of a telegram or facsimile
transmission, receipt telephonically communicated) addressed as provided below
and if either (a) actually delivered electronically or physically at said
address (provided that if said address is a business, delivery is made during
normal business hours), or (b) in the case of a letter, three business days
shall have elapsed after the same shall have been deposited in the United States
mail, postage prepaid and registered or certified, return receipt requested, or
(c) forty eight (48) hours shall have elapsed after the same shall have been
sent by nationally recognized overnight receipted courier:

If to Shareholder or Seller, to:

McAleer Computer Associates, Inc.

Post Office Box 160946

Mobile, Alabama 36616

Attn: William J. McAleer

with a copy to:

Ken Bedsole

Kalifah, Bedsole & Company, PC

1340 Sledge Dr

Mobile, AL 36606

If to Buyer, to:

Computer Software Innovations, Inc.

900 East Main Street, Suite T

Easley, South Carolina 29640

Attention: Nancy Hedrick

 

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with a copy to:

Leatherwood Walker Todd & Mann, P.C.

300 E. McBee Avenue, Suite 500

Greenville, South Carolina 29601

Attention: Richard L. Few, Esq.

and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.

11.5 Publicity and Disclosures. No press releases or any public disclosure,
either written or oral, of the transactions contemplated by this Agreement shall
be made without the mutual consent of the parties, except as required by law.
Seller and Shareholder acknowledge Buyer’s obligations to report under the
Exchange Act with respect to the subject matter of this Agreement.

11.6 Confidentiality. Seller, Shareholder and Buyer entered into that certain
Confidentiality Agreement on June 14, 2006, incorporated herein by reference
(“Confidentiality Agreement”), whereby all the parties agreed that they will
keep confidential and not disclose or divulge any confidential, proprietary or
secret information which they may obtain from Seller or Buyer in connection with
the transactions contemplated herein, or pursuant to inspection rights granted
hereunder, or any terms hereof, unless such information is or hereafter becomes
public information and except as otherwise required by law. The Confidentiality
Agreement duties and obligations of the parties thereunder shall survive the
Closing of the transactions contemplated hereby.

11.7 Entire Agreement. This Agreement (including all exhibits or schedules
appended to this Agreement and all documents delivered pursuant to or referred
to in this Agreement, all of which are hereby incorporated herein by reference)
constitutes the entire agreement between the parties and, except for the
Confidentiality Agreement referenced in Section 11.6 above, supersedes all
previous agreements between the parties including, but not limited to, the
Letter Agreement; All promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by any party hereto have been expressed
herein or in the documents incorporated herein by reference.

11.8 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
hereof.

11.9 Assignability. Neither this Agreement, any agreement, document or
instrument executed and delivered pursuant hereto or in connection with the
Closing, nor any right to the payment of money or other obligations hereunder or
thereunder may be assigned by Seller, Shareholder, or Buyer without the prior
written consent of the other party; provided, however, that (a) Seller and
Shareholder may assign any of their rights to receipt of payment under the Note
to each other or to or for the benefit of any members of their respective
immediate families or to charitable organizations within the meaning of the
Internal Revenue Code, subject to the prior notice to Buyer and to any rights of
offset that Buyer may have with respect to such payments; (b) Buyer may assign
any of its rights under this Agreement or in any agreement, document or
instrument executed and delivered pursuant hereto or in connection with the
Closing (i) to one or more banks or other lenders which provide financing to the
Company from time to time, (ii) to any successor to all or substantially all of
its business and assets relating to the subject matter of this Agreement and
(iii) to one or more subsidiaries (including subsidiaries of subsidiaries) of
Buyer. Unless otherwise expressly consented to by the other parties hereto, no
assignment by any party hereto shall relieve that party of any obligations
hereunder or under any agreement, document or instrument executed and delivered
pursuant hereto or in connection with the Closing. Any assignment in violation
of this agreement shall be deemed a breach hereof for which Buyer shall be
entitled to retain all amounts that would otherwise be payable by Buyer
hereunder as liquidated damages and not as a penalty. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.

 

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11.10 Amendment. This Agreement may be amended only by a written agreement
executed by Buyer, Seller, and Shareholder.

11.11 Binding Arbitration. Any controversy or claim arising out of or related to
this Agreement or any transactions contemplated herein that cannot be amicably
resolved, will be resolved by binding arbitration held in Greenville, South
Carolina, or any other location mutually agreeable to the parties, in accordance
with the commercial arbitration rules of the American Arbitration Association,
as modified. The decree or judgment of any award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.

11.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the South Carolina, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
South Carolina or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of South Carolina.

11.13 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument, and all signatures need not appear on
any one counterpart.

11.14 Effect of Table of Contents and Headings. Any table of contents, title of
an article or section heading herein contained is for convenience of reference
only and shall not affect the meaning of construction of any of the provisions
hereof.

11.15 Knowledge. For purposes of this Agreement, the knowledge of a person shall
mean to the best of such person’s knowledge after due investigation.

11.16 No Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties and their respective affiliates and no provision of this Agreement
shall be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.

[Signature Page to Follow]

 

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

 

Buyer: COMPUTER SOFTWARE INNOVATIONS, INC. By:  

Nancy K. Hedrick

Its:   President/CEO Seller: MCALEER COMPUTER ASSOCIATES, INC. By:  

/s/ William J. McAleer

Its:   President Shareholder:

/s/ William J. McAleer

William J. McAleer

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Schedule 1.1(b)(vii)

Excluded Assets

Various personal items of William J. McAleer that have been agreed upon by both
parties to the Agreement.

 

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Schedule 1.2

Assumed Liabilities

 

1) Maintenance Agreement with OCE Imagistics (copier maintenance)

 

2) Sale and/or Lease Agreement with OCE Imagistics (copier lease)

 

3) Verbal lease with Sherry Barlow of Barlow & Associates regarding the lease of
adjacent office space located at 3217 Executive Park Circle, Mobile, Alabama
37606.

 

4) Those licenses, permits and material contracts of Seller referenced in
Sections 2.19 and 2.20, all of which have provided by Seller to Buyer.

 

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Schedule 1.11

Allocation of Purchase Price

 

Franchise, Fixtures and Equipment

   $ 75,000

Real Property

   $ 450,000

Non-Competition Agreements:

  

Shareholder

   $ 5,000

Seller

   $ 5,000

Goodwill and Intangible Assets

   $ 3,515,000       

Total Purchase Price

   $ 4,050,000

 

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Schedule 2.3

Subsidiaries

None.

 

31

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Schedule 2.6

Conflicts with Obligations and Laws

None.

 

32

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Schedule 2.8(a)

Material Adverse Changes

None.

 

33

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Schedule 2.8(b)

Undisclosed Liabilities

None.

 

34

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Schedule 2.10(a)

Permitted Real Property Encumbrances

 

1) Current year property taxes on the Real Property which are due but not yet
payable.

 

2) Right of way granted to Alabama Power Company by instrument(s) recorded in
Real Property Book 3435, page 353.

 

3) Easement granted City of Mobile, a municipal corporation, by Louise E. M.
Farnell, et all dated September 22, 1961 and recorded in Real Property Book 288,
page 568.

 

4) Easement granted Board of Water and Sewer Commissioners by E. G. Farnell and
Louise E. Farnell dated November 8, 1954 and recorded in Deed Book 648, page
624.

 

5) Right of way granted to Alabama Power Company by instrument(s) recorded in
Deed Book 725, page 235.

 

6) Easement and right of way condemned by Alabama Power Company vs. Edwin
Farnell, (Probate Court Case #6757).

 

7) Right of way granted to Alabama Power Company by instrument(s) recorded in
Real Property Book 2050, page 53.

 

8) Building setback line and drainage and utility line easements as shown on the
recorded plat of said Subdivision.

 

35

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Schedule 2.10(c)

List of Liens and Encumbrances

None.

 

36

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Schedule 2.10(d)

Condition of Machinery and Equipment

No exceptions.

 

37

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Schedule 2.12(a)(i)

Permitted Intellectual Property Encumbrances

None.

 

38

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Schedule 2.12(b)

Legends and Copyright Notices

None.

 

39

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Schedule 2.12(c)

Intellectual Property Protection

1. Upon employment, every employee of Seller was required to sign an Employee
Agreement that contained the following nondisclosure language:

NONDISCLOSURE: The EMPLOYEE shall not, at any time during the term of employment
or after the termination of his employment, except as may authorize by the
COMPANY in writing do the following:

A. Disclose any secret, confidential, technical, planning or policy matter
relating to any aspect of the COMPANY’S business or customer’s business, or

B. Disclose any operational, technical, management, financial control system or
tax matter, information or process relating to the COMPANY and its customers, or

C. Disclose any trade names, trademarks, patents, copyrights, products, mailing
or customer lists, designs, systems, formulae, product composition, label or
label design, package or packaging method used by or contemplated for use by the
COMPANY or its customers, or

D. Make use of, directly or indirectly, any of the COMPANY’S secret and
confidential methods and techniques of it s business, including, but not limited
to, the trade secrets, computer programs (in source and object form), software,
passwords, plans, proposals, designs, drawings, lists, product development,
market research information, customer and mailing lists, suppliers, analysis of
customer responses, data, figures, sales figures, projections, estimates, tax
records, personnel history, accounting procedure, marketing strategies,
promotions, etc., for his/her own benefits, for the benefit of others presently
engaged in the same business as the COMPANY, for others who might or could enter
into the COMPANY’S business, nor divulge the same to any person, firm or
institution, either by statement, deposition, or as a witness, except upon
direct written authority of the employer, and employer shall be entitled to any
injunction by a competent court to enjoin and restrain the unauthorized
disclosure of such information as more fully set out hereinafter.

2. Upon employment, every employee of Seller an Employee Handbook containing the
following language:

Conflict of Interest and Confidentiality

All records and files of MCAI are considered confidential. No employee is
authorized to copy or disclose any file, record or any part thereof.
Confidential information includes but is not limited to all letters or any other
information concerning transactions with customers, customer lists, payroll or
personnel records of past or present employees, financial records of MCAI, all
records pertaining to purchases from vendor or suppliers, engineering drawings,
correspondence and agreements with manufacturers or distributors and documents
concerning operating procedures of MCAI. All telephone calls, letters, e-mail or
other requests for information about current or former employees should be
immediately directed to your supervisor.

MCAI at all times retains the right to access and search all diskettes, files,
database, E-mail messages, voice mail messages and any other electronic
transmissions contained in or used in conjunction with the computer, electronic
and voice mail systems and equipment with no prior notice. This right applies
both during employees’ employment and after separation regardless of whether the
separation is voluntary or involuntary.

 

40

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It is the policy of MCAI to prohibit employees from engaging in any other
business that competes with MCAI. Also, MCAI prohibits employees from having a
financial interest in an outside concern which does business with or is a
competitor of MCAI (except where such interests consists of holding securities
of a publicly owned corporation regularly traded on the public stock market).
Rendering of, managerial or consulting services to any outside concern which
does business with, or is a competitor of MCAI, except with knowledge and
written consent of an authorized representative of MCAI is also prohibited. If
you think that there is a possibility that you may have a conflict as described
above, it is your responsibility to notify your immediate supervisor and obtain
approval in writing.

 

41

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Schedule 2.12(d)

Employee Rights to Intellectual Property

1. Upon employment, every employee of Seller was required to sign an Employee
Agreement that contained the following nondisclosure language:

NONDISCLOSURE: The EMPLOYEE shall not, at any time during the term of employment
or after the termination of his employment, except as may authorize by the
COMPANY in writing do the following:

A. Disclose any secret, confidential, technical, planning or policy matter
relating to any aspect of the COMPANY’S business or customer’s business, or

B. Disclose any operational, technical, management, financial control system or
tax matter, information or process relating to the COMPANY and its customers, or

C. Disclose any trade names, trademarks, patents, copyrights, products, mailing
or customer lists, designs, systems, formulae, product composition, label or
label design, package or packaging method used by or contemplated for use by the
COMPANY or its customers, or

D. Make use of, directly or indirectly, any of the COMPANY’S secret and
confidential methods and techniques of it s business, including, but not limited
to, the trade secrets, computer programs (in source and object form), software,
passwords, plans, proposals, designs, drawings, lists, product development,
market research information, customer and mailing lists, suppliers, analysis of
customer responses, data, figures, sales figures, projections, estimates, tax
records, personnel history, accounting procedure, marketing strategies,
promotions, etc., for his/her own benefits, for the benefit of others presently
engaged in the same business as the COMPANY, for others who might or could enter
into the COMPANY’S business, nor divulge the same to any person, firm or
institution, either by statement, deposition, or as a witness, except upon
direct written authority of the employer, and employer shall be entitled to any
injunction by a competent court to enjoin and restrain the unauthorized
disclosure of such information as more fully set out hereinafter.

2. Upon employment, every employee of Seller an Employee Handbook containing the
following language:

Conflict of Interest and Confidentiality

All records and files of MCAI are considered confidential. No employee is
authorized to copy or disclose any file, record or any part thereof.
Confidential information includes but is not limited to all letters or any other
information concerning transactions with customers, customer lists, payroll or
personnel records of past or present employees, financial records of MCAI, all
records pertaining to purchases from vendor or suppliers, engineering drawings,
correspondence and agreements with manufacturers or distributors and documents
concerning operating procedures of MCAI. All telephone calls, letters, e-mail or
other requests for information about current or former employees should be
immediately directed to your supervisor.

MCAI at all times retains the right to access and search all diskettes, files,
database, E-mail messages, voice mail messages and any other electronic
transmissions contained in or used in conjunction with the computer, electronic
and voice mail systems and equipment with no prior notice. This right applies
both during employees’ employment and after separation regardless of whether the
separation is voluntary or involuntary.

 

42

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It is the policy of MCAI to prohibit employees from engaging in any other
business that competes with MCAI. Also, MCAI prohibits employees from having a
financial interest in an outside concern which does business with or is a
competitor of MCAI (except where such interests consists of holding securities
of a publicly owned corporation regularly traded on the public stock market).
Rendering of, managerial or consulting services to any outside concern which
does business with, or is a competitor of MCAI, except with knowledge and
written consent of an authorized representative of MCAI is also prohibited. If
you think that there is a possibility that you may have a conflict as described
above, it is your responsibility to notify your immediate supervisor and obtain
approval in writing.

 

43

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Schedule 2.15

Non End-User Material Contracts

None.

 

44

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Schedule 2.16(a)

List of Consulting and Employment Agreements

Upon employment, every employee of Seller (currently of which there are 40) was
required to sign an Employee Agreement. Each employee was also given a copy of
an Employee Handbook, however, such document expressly states that it is not to
be construed as a contract or employment agreement.

 

45

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Schedule 2.16(d)

Sick Leave, Vacation and Severance Pay Liabilities

None.

 

46

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Schedule 2.17

List of Employee Benefit Plans

 

1) Group Health and Medical Plan with Blue Cross/Blue Shield

 

2) Dental Plan with Blue Cross/Blue Shield

 

3) Vision Plan with CompBenefits Insurance Company

 

4) Life and AD&D with Genworth Financial Employee Benefits Group (GE Group)

 

5) 401(k) Retirement Savings Plan with Hartford Life Insurance Company

 

47

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Schedule 2.19

List of Issues Relating to Permits and Licenses

None.

 

48

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Schedule 2.20(b)

Breach of a Material Contract by Seller

None.

 

49

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Schedule 2.20(c)

Breach of a Material Contract by Third Party

None.

 

50

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Schedule 2.20(d)

Preferential Rights to Subject Assets of Seller

None.

 

51

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Schedule 2.21

Warranty Claims

None.

 

52

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Schedule 2.22

Litigation

 

1) Worker’s compensation filed by Robert Kepler in 2006. Suit has been
dismissed.

 

2) Wrongful termination suit filed by Jerry Hambuckle. Suit has been dismissed.

 

53

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Schedule 2.23

List of Claims with Respect to Insurance Policies

A claim was made and the roof of the Real Property was subsequently replaced at
a cost of $17,832 following Hurricane Katrina in 2005.

 

54

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Exhibit A

Form of Promissory Note

Attached hereto.

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

EXHIBIT A

PROMISSORY NOTE

 

$525,000.00    January 1, 2007

FOR VALUE RECEIVED, COMPUTER SOFTWARE INNOVATIONS, INC., a South Carolina
corporation (“Maker”), promises to pay to the order of MCALEER COMPUTER
ASSOCIATES, INC., an Alabama corporation (“Holder”), the sum of Five Hundred
Twenty-Five Thousand and No/100 Dollars ($525,000.00) due and payable in equal
quarterly installments of $26,250.00 commencing on March 1, 2007, and continuing
on each June 1, September 1, December 1 and March 1 thereafter until paid in
full on December 1, 2011, together with interest on the unpaid principal balance
computed in arrears for each quarterly payment using three (3) month LIBOR as
published in the Wall Street Journal in effect on the first business day at the
beginning of such quarter.

Payment may be made, in whole or in part, on this Note before the due date of
the Note without notice, premium, or penalty.

Any interest not paid when due shall bear interest at the same rate as
principal.

All installments of principal and all interest are payable in lawful money of
the United States of America, which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment; and in the event
(a) default be made in the payment of any interest or principal as hereinabove
provided, or in the payment of any other sums payable pursuant to the terms of
this Note, (b) the voluntary filing of a petition by Maker of this Note under
the provisions of any state insolvency law or under the provisions of the
Federal Bankruptcy Act, (c) entry of an order, judgment or decree declaring the
Maker of this Note bankrupt or appointing a receiver of its or their assets in
any proceeding instituted by a third party, or (d) any assignment by the Maker
of this Note for the benefit of its creditors, then or at any time thereafter,
the whole of the principal sum then remaining unpaid hereunder, together with
all interest accrued thereon, shall, at the option of the Holder of this Note,
become due and payable immediately upon delivery of written notice to Maker of
Holder’s election to exercise such option.

If this Note is placed in the hands of an attorney for collection or is
collected through any legal proceedings, the Maker promises to pay to the extent
permitted by law, a reasonable attorney’s fee.

Maker waives presentment, protest and demand, notice of protest, demand and
dishonor of this Note, and consents to any and all renewals and extensions of
the time of payment hereof.

None of the rights and remedies of the Holder hereunder are to be waived or
affected by failure or delay to exercise them. All remedies conferred on a
holder of this Note under the Note or any other instrument or agreement shall be
cumulative, and none is exclusive. Such remedies may be exercised concurrently
or consecutively at the Holder’s option.

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

This Note shall be governed as to validity, interpretation, construction,
effect, and in all other respects, by the laws and decisions of the State of
South Carolina.

Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note or portion hereof shall be prohibited by or invalid under such law,
such provision shall be ineffective to be extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.

This Note is given for business purposes and is not a consumer credit
instrument.

This Note is secured by a first priority Mortgage given by Maker to Holder
simultaneously herewith on Maker’s property located at 3209 and 3213 Executive
Park Circle, Mobile, Mobile County, Alabama.

 

COMPUTER SOFTWARE INNOVATIONS, INC. By:  

 

Its:  

 

 

2

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Exhibit B

Form of Mortgage

Attached hereto.

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

EXHIBIT B

STATE OF ALABAMA )

COUNTY OF MOBILE )

MORTGAGE

KNOW ALL MEN BY THESE PRESENTS: That whereas COMPUTER SOFTWARE INNOVATIONS,
INC., a Corporation, hereinafter referred to as the “Mortgagor”, has become
justly indebted by this MORTGAGE (hereinafter sometimes referred to as this
“Mortgage”) to MCALEER COMPUTER ASSOCIATES, INC., hereinafter referred to as the
“Mortgagee”, as evidenced by promissory note of even date herewith, hereinafter
described;

NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that the undersigned Mortgagor,
in consideration of the premises and in order to secure the payment of all
indebtedness of Mortgagor to Mortgagee incurred pursuant to and evidenced by
said note including interest thereon as provided by said note and any and all
extensions and renewals thereof, or of any part thereof, and all interest
payable on all of said debt, including any extensions and renewals and the
interest thereon, and to secure compliance with all of the stipulations,
covenants, and agreements contained herein and of the sum of FIVE HUNDRED
TWENTY-FIVE THOUSAND AND NO/100 ($525,000.00) DOLLARS, cash to said Mortgagor in
hand paid by said Mortgagee, the receipt of which cash is hereby acknowledged
the said COMPUTER SOFTWARE INNOVATIONS, INC. as Mortgagor does grant, bargain,
sell and convey unto the said Mortgagee that certain real property in the County
of Mobile, State of Alabama, described as follows: to-wit:

PARCEL A

Lot B of a Resubdivision of Lot 16, Bel Air Executive Park, Second Unit, as
recorded in Map Book 37, page 28 of the Probate Court Records of Mobile County,
Alabama.

PARCEL B

Lot 15 of Parcel 2, Bel Air Executive Park, 2nd Unit, according to the plat
thereof recorded in Map Book 29, page 105 of the records in the office of the
Judge of Probate of Mobile County, Alabama

SUBJECT TO THE FOLLOWING:

1. Right of way granted to Alabama Power Company by instrument(s) recorded in
Real Property Book 3435, page 353.

2. Easement granted City of Mobile, a municipal corporation, by Louise E. M.
Farnell, et al dated September 22, 1961 and recorded in Real Property Book 288,
page 568.

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3. Easement granted Board of Water and Sewer Commissioners by E.G. Farnell and
Louise E. Farnell dated November 8, 1954 and recorded in Deed Book 648, page
624.

4. Right of way granted to Alabama Power Company by instrument(s) recorded in
Deed book 725, page 235.

5. Easement and right of way condemned by Alabama Power Company vs Edwin
Farnell, (Probate Court Case #6757)

6. Right of way granted to Alabama Power Company by instrument(s) recorded in
Real Property Book 2050, page 53.

7. Building setback line and drainage and utility line easements as shown on the
recorded plat of said Subdivision.

together with all rents and other revenues thereof and all rights, privileges,
hereditaments, and appurtenances thereunto belonging, or in any wise
appertaining, including any after-acquired title and easements and all rights,
title and interest now or hereafter owned by the Mortgagor in and to all
buildings and improvements, storm and screen windows and doors, gas, steam,
electric, and other heating, lighting, ventilating, air conditioning,
refrigeration, and cooking appliances or apparatus, elevators, plumbing,
sprinkling and other equipment and fixtures attached or appertaining to said
premises, all of which (“mortgaged property”) shall be deemed realty and are
conveyed by this mortgage.

TO HAVE AND TO HOLD the same unto the said Mortgagee, its successors and
assigns, forever.

PROVIDED ALWAYS, and this conveyance is upon the express condition, that if said
Mortgagor shall keep the covenants and agreements herein contained, and shall
well and truly pay when due to the said Mortgagee the indebtedness hereinabove
mentioned, according to the tenor and effect of that certain promissory note of
even date herewith, in the sum of FIVE HUNDRED TWENTY-FIVE THOUSAND AND NO/100
($525,000.00) DOLLARS, with or including interest thereon at the times and in
the manner provided for in said note, made by said Mortgagor and payable to the
Mortgagee, or order in Mobile, Alabama, then these presents shall be void;
otherwise they shall remain in full force.

 

2

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And for the purposes of further (i) securing the payment of all indebtedness of
Mortgagor to Mortgagee incurred including any renewals or extensions of same,
(ii) securing the payment of all other indebtedness, now or hereafter owed, by
Mortgagor to Mortgagee, the Mortgagor covenants and agrees as follows:

1. That Mortgagor is lawfully seized in fee and possessed of said mortgaged
property and has a good right to convey the same as aforesaid, that Mortgagor
will warrant and forever defend the title against the lawful claims of all
persons whomsoever, and that said property is free and clear of all
encumbrances, easements, and restrictions not herein specifically mentioned.

2. That Mortgagor will pay all taxes, assessments, or other liens and
encumbrances taking priority over this mortgage when imposed upon said mortgaged
property and should default be made in the payment of same, or any part thereof,
said Mortgagee may pay the same as an additional secured debt of Mortgagor
hereby or may consider the same a default of the terms of this mortgage.

3. That Mortgagor will keep the buildings on said premises continuously insured
in such amounts, and in such manner as may be satisfactory to the Mortgagee
against loss by fire and such other hazards as Mortgagee may specify, with loss,
if any, payable to said Mortgagee, and will deposit with Mortgagee policies for
such insurance and will pay premiums thereto as the same become due. The
insurance coverage may be obtained from a person of Mortgagor’s choice,
provided, however, that Mortgagee reserves the right to refuse to accept, for
reasonable cause, an insurer offered by Mortgagor. Mortgagor shall give
immediate notice in writing to Mortgagee of any loss or damages to said premises
caused by any casualty. If Mortgagor fails to keep said property insured as
above specified, the Mortgagee may insure said property for its insurable value
against loss by fire or other hazards for the benefit of Mortgagee. The proceeds
of such insurance shall be paid by insurer to Mortgagee who is hereby granted
full power to settle and compromise claims under all policies and to demand,
receive and receipt for all sums becoming due thereunder: said proceeds, if
collected, to be credited on the indebtedness secured by this mortgage, less
cost of collecting the same, or to be used in repairing or reconstructing the
premises as the Mortgagee may elect; all amounts so expended by said Mortgagee
for insurance or for the payment of taxes, assessments or any other prior liens
shall become a debt due said Mortgagee additional to the indebtedness herein
described and at once payable without demand upon or notice to any person, and
shall be secured by the lien of this mortgage and shall bear interest at the
highest legal rate from date of payment by said Mortgagee and, if any action or
inaction by the Mortgagor in these

 

3

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respects has adversely affected the Mortgagee’s security hereunder or any right
of the Mortgagee in the mortgaged property, then, at the election of the
Mortgagee and without notice to any person, the Mortgagee may declare the entire
indebtedness secured by this mortgage due and parable and this mortgage subject
to foreclosure and same may be foreclosed as herein provided.

4. To take good care of the mortgaged property above described and not commit or
permit any waste thereon, and to keep the same repaired and at all times to
maintain the same in as good condition as it now is, reasonable wear and tear
alone accepted.

5. That no delay or failure of the Mortgagee to exercise any option to declare
the maturity of any debt secured by this mortgage shall be taken or deemed as a
waiver of the right to exercise such option or to declare such forfeiture either
as to past or present default on the part of said Mortgagor, and that the
procurement of insurance or payment of taxes by the Mortgagee shall not be taken
or deemed as a waiver of the right to declare the maturity of the indebtedness
hereby secured by reason of the failure of the Mortgagor to procure such
insurance or to pay such taxes, it being agreed that no terms or conditions
contained in this mortgage can be waived, altered, or changed except as
evidenced in writing signed by the Mortgagor and by the Mortgagee.

6. That Mortgagor will (i) pay and discharge all indebtedness of Mortgagor to
Mortgagee incurred pursuant to the said promissory note, including any renewals
or extensions of same, as they shall become due and payable, (ii) pay and
discharge all other indebtedness, whenever incurred, of Mortgagor or any of
them, to Mortgagee, not incurred pursuant to said promissory note, as such other
indebtedness shall become due and payable, and (iii) comply with all of the
stipulations contained herein.

7. That after any default on the part of the Mortgagor, the Mortgagee shall,
upon complaint filed or other proper legal proceeding being commenced for the
foreclosure of this mortgage, be entitled as a matter of right to the
appointment by any competent court or tribunal without notice to any party, of a
receiver of rents, issues and profits of said premises, with power to lease and
control the said premises and with such other powers as may be deemed necessary,
and that a reasonable attorney’s fee shall, among other expenses and costs, be
fixed, allowed, and paid out of such rents, issues, and profits or out of the
proceeds of the sale of said mortgaged property.

8. That all covenants and agreements of the Mortgagor herein contained shall
extend to and bind his heirs, executors, administrators, successors, and
assigns, and that such covenants and agreements and all options, rights,
privileges, and powers herein given, granted or secured to the Mortgagee shall
inure to the benefit of the successors or assigns of the Mortgagee.

 

4

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

9. That the debt hereby secured shall at once become due and payable and this
mortgage subject to foreclosure as herein provided at the option of the holder
hereof when and if any statement of lien arising from any action or inaction by
the Mortgagor is filed under the statutes of Alabama relating to liens of
mechanics and materialmen, without regard to the form and contents of such
statement and without regard to the existence or nonexistence of the debt or any
part thereof, or of the lien on which such statement is based.

10. Encumbrance or transfer of the Property. That Mortgagor will not sell or
transfer the mortgaged property, and that Mortgagor will not create or permit to
exist any mortgage, encumbrance or other lien not herein mentioned (except the
creation of a purchase money security interest in household appliances) upon the
mortgaged property, without Mortgagee’s prior written consent. If Mortgagor
violates this covenant, Mortgagee may at Mortgagee’s option declare all of the
sums secured by this mortgage to be immediately due and payable.

If Mortgagee exercises such option to accelerate. Mortgagee shall mail Mortgagor
notice of such acceleration. Such notice shall provide a period of not less than
thirty (30) days from the date the notice was mailed within which Mortgagor may
pay the sum declared due. If Mortgagor fails to pay such sums prior to the
expiration of such period Mortgagee may, without further notice or demand on
Mortgagor, invoke any remedies permitted hereunder.

11. Plural or singular words used herein to designate the undersigned Mortgagor
shall be construed to refer to the maker or makers of this mortgage, whether one
or more persons or a corporation.

12. Preservation and Maintenance or Property; Leaseholds; Condominiums; Planned
Unit Developments. Mortgagor shall keep the property in good repair and shall
not commit waster or permit impairment or deterioration of the property. If this
mortgage conveys a leasehold estate, Mortgagor shall comply with the provisions
of any lease affecting the leasehold estate. If Mortgagor fails to do so,
Mortgagee shall have the right, but not the obligation to take such action as it
deems desirable to prevent or cure any default under such lease. Any amounts
disbursed by Mortgagee pursuant to this paragraph, with interest thereon at the
highest lawful rate, shall become additional indebtedness secured by this
mortgage. Mortgagor expressly grant to Mortgagee the right to enter upon the

 

5

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

property immediately and as often as Mortgagee desires in order to prevent or
cure any such default by Mortgagor. Mortgagor shall not surrender his leasehold
estate or interest, or modify or terminate any lease affecting such estate or
interest without the prior written consent of Mortgagee. If this mortgage
conveys a unit in a condominium or a planned unit development, Mortgagor shall
perform all of Mortgagor’ obligations under the declaration or covenants
creating or governing the condominium or planned unit development, under by-laws
and regulations of the condominium or planned unit development, and under all
other constituent documents. If a condominium or planned unit development rider
is executed by Mortgagor and recorded together with this mortgage, such rider
shall be incorporated herein by reference and shall amend and supplement the
covenants and agreements of this mortgage as if the rider were a part hereof.

13. Environmental Matters. Mortgagor represent and warrant that neither the
premises nor Mortgagor are in violation or subject to any existing pending or
threatened investigation or inquiry by any governmental authority or any
response costs or remedial obligations under any applicable laws pertaining to
health or the environment or hazardous substances as such are defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, as codified at 42 U.S.C. Section 9601 et. seq. (“CERCLA”) the Hazardous
Materials Transportation Act, 49 U.S.C., Section 1801, et.seq; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et.seq; or the Alabama
Hazardous Waste Management, Code of Alabama, as amended and any other or later
laws (herein sometimes collectively called “Applicable Environmental Laws”); and
this statement would continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, presently known to the Mortgagor pertaining to the
premises; that Mortgagor have not obtained and are not required to obtain any
permits, licenses or similar authorizations to construct, occupy, operate or use
any buildings, improvements, fixtures and equipment forming a part of the
premises by reason of any Applicable Environmental Laws; that Mortgagor have
taken all steps necessary to determine and has determined that no oil, toxic or
released on the premises; and that the use which Mortgagor have made, makes or
of any oil, toxic or hazardous substances or solid waste on or to the premises
(the terms “hazardous substance” and “release” shall have the meanings so as to
broaden the meaning of any term defined thereby, and to the extent that the laws
of the State of Alabama establish a meaning for “hazardous substance”, “release”
or “disposal” which is broader than that specified in

 

6

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CERCLA such broader meaning shall apply). Mortgagor do hereby agree to pay all
cost arising from or pertaining to any such Applicable Environmental Laws as a
result of any actions, omissions, events, or circumstances and to indemnify and
hold Mortgagee harmless therefrom. This indemnity shall survive the release and
cancellation of any of the Secured Indebtedness and the release and cancellation
and/or reconveyance of this mortgage.

14. Mortgagor Not Released. If Mortgagee agree for the benefit of any debtor to
extend the time for payment or to modify the amortization of the indebtedness,
or any part thereof, Mortgagee’s action shall not release in any manner the
continuing liability of Mortgagor or any other person on the indebtedness,
Mortgagor shall have no right to require Mortgagee to initiate proceedings
against any obligor on the indebtedness, to refuse to extend the time for
payment by such person, or to refuse otherwise to modify the amortization of any
of the indebtedness.

15. Priority of this Mortgage; Extensions, Modifications and Renewals. This
paragraph shall also be notice that Mortgagee reserves the right to modify,
extend, consolidate, and renew the indebtedness, or any portions thereof, and
the rate of interest charged thereon, without affecting the priority of the lien
created by this mortgage.

UPON CONDITION, HOWEVER, that if the Mortgagor shall well and truly pay and
discharge the indebtedness hereby secured, (which include payment of taxes and
insurance, the satisfaction of prior encumbrances and any other indebtedness
owed to the Mortgagee by the Mortgagor before the full payment of this mortgage)
as it shall become due and payable and shall in all things do and perform all
acts and by them herein agreed to be done according to the tenor and effect
hereof, then and in that event only, this conveyance shall be and become null
and void; but should default be made in the payment of the indebtedness hereby
secured, including any renewals or extensions thereof or any part thereof, or
should default be made in the repayment of any sum expended by said Mortgagee
under the authority of any of the provisions of this mortgage or should the
interest of said Mortgagee in said property become endangered by reasons of the
enforcement of any prior lien or encumbrance thereon arising from any action or
inaction by the Mortgagor, or should the Mortgagor do or fail to do or perform
any other act or thing, that constitutes default under the promissory note, then
in any of said events the whole of the indebtedness hereby secured, or any
portion or part of same may not at said date have been paid, with interest
thereon, shall at once become due and payable and this mortgage subject to
foreclosure at the option of the

 

7

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Mortgagee, all notice of the exercise of such option either contained herein or
by law being hereby expressly waived; and the Mortgagee shall have the right to
enter upon and take possession of the property hereby conveyed and after or
without taking such possession to sell the same before the County Court House
door or where such foreclosure sales customarily take place in the county
wherein the property is located, and, if the property is situated in two or more
counties, in any such county, at public outcry for cash, after first giving
notice of the time, place and terms of such sale by publication once a week for
three consecutive weeks prior to said sale in some newspaper published in said
County as required under the Code of Alabama 1975, as amended, and upon the
payment of the purchase money the Mortgagee, or owner of the debt and mortgage,
or auctioneer, shall execute to the purchaser for and in the name of the
Mortgagor a good and sufficient deed to the property sold; the Mortgagee shall
apply the proceeds of said sale: First, to the expense of advertising, selling,
and conveying, including a reasonable attorney’s fee; second, to the payment of
any amounts that may have been expended or that may then be necessary to expend
in paying insurance, taxes, and other encumbrances, with interest thereon;
third, to the payment in full of the principal indebtedness and interest
thereon, whether the same shall or shall not have fully matured at the said of
said sale, but no interest shall be collected beyond the date of sale; and
fourth, the balance, if any, to be paid over to the said Mortgagor or to
whomever then appears of record to be the owner of said property. The Mortgagee
may, at any sale made under this mortgage, bid and become the purchasers of said
property, or any part thereof or interest therein, like a stranger hereto, in
which event the auctioneer making the sale shall make the deed in the name of
the Mortgagor, and all recitals made in any deed executed under this mortgage
shall be evidenced of the facts therein recited.

IN WITNESS WHEREOF, said Mortgagor has hereunto caused this instrument to be
signed and sealed on this the              day of January, 2007.

 

COMPUTER SOFTWARE INNOVATIONS, INC.

By

                                        
                                               (Seal)

Its

                                        
                                                         Mortgagor

STATE OF                     )

 

8

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COUNTY OF                     )

I, the undersigned, a Notary Public in and for said County in said State, hereby
certify that                              whose name as
                             of COMPUTER SOFTWARE INNOVATIONS, INC., a Delaware
corporation, is signed to the foregoing Mortgage as Mortgagor and who is known
to me, acknowledged before me on this day that, being informed of the contents
of the instrument, he/she as such officer and with full authority executed the
same voluntarily on the day the same bears date.

Given under my hand and official seal this the      day of                     ,
2007.

 

 

 

  NOTARY PUBLIC,                              COUNTY                       
(Affix seal)   My commission expires                                          

PREPARED BY:

MICHAEL E. BALLARD

Ulmer, Hillman & Ballard, P.C.

1908 Government Street

Post Office Box 66196

Mobile, Alabama 36660

(251) 473-4228

 

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Exhibit C

Form of Seller and Shareholder Non-Competition Agreement

Attached hereto.

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EXHIBIT C

CONFIDENTIALITY, NONCOMPETITION AND

NONSOLICITATION AGREEMENT

THIS CONFIDENTIALITY, NONCOMPETITION, AND NONSOLICITATION AGREEMENT
(“Agreement”) is made and entered into effective on the      day of January,
2007, by and among Computer Software Innovations, Inc., a Delaware corporation
("Company"), McAleer Computer Associates, Inc., an Alabama corporation
(“McAleer”), and William J. McAleer, an individual and resident of the State of
Alabama and the sole shareholder of McAleer (“Shareholder”)(McAleer and
Shareholder collectively, the “Seller”).

WHEREAS, pursuant to an Asset Purchase Agreement among Company, McAleer and
Shareholder dated November 27, 2006 (the “Purchase Agreement”), Seller has
agreed to sell substantially all of the assets and business of McAleer to
Company and Company has agreed to purchase such assets, subject to the terms and
conditions contained therein (the “Transaction”);

WHEREAS, prior to the date of the Transaction, McAleer was in the business of
education management providing computer software, hardware, forms and printing,
and consultation services to school systems in the southern United States (the
“Business”) and Company intends to continue and expand the Business following
the Transaction;

WHEREAS, prior to the date of the Transaction, Shareholder was the President of
McAleer and was in charge of the Business;

WHEREAS, Company has expressly required, as a condition to the Purchase
Agreement, that Seller agrees under the terms set forth in this Agreement not to
compete with the Company; and

WHEREAS, this Agreement is a material inducement to Company to enter into the
Purchase Agreement and complete the Transaction.

NOW, THEREFORE, in consideration of the sums set forth below, the sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:

1. Seller acknowledges that through Shareholder’s ownership of McAleer,
Shareholder’s participation in the management of Company’s business activities,
and Shareholder’s prior relationships with the Business, Shareholder has had an
opportunity to become familiar with and has made use of, acquired and/or added
to confidential information of a special and unique nature and value relating to
such matters as McAleer’s list of customers and potential customers, pricing
information and lists, sales and marketing materials and methods, financial and
competition data, employee information, payroll data, supplier relationship,
supplier contracts, customer relationships, customer contracts and terms,
copyrights, proprietary information, trade secrets, patents, systems,
procedures, manuals, confidential reports, records, operational expertise, and
the nature and type of services rendered by McAleer, the products and methods
used and preferred by McAleer’s customers, and the fees paid by them (all of
which are deemed for all purposes confidential and proprietary).

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

2. Seller further acknowledges that the Purchase Agreement would not have been
entered into without the execution by Seller of this Agreement, as the terms and
conditions of this Agreement are essential to the success and the future
operations of Company.

3. Seller has owned various trade secrets consisting of, without limitation,
customer pricing, material costs, customer lists, business practices, plans,
policies, secret inventions, processes and compilations of information, records
and specifications which have been conveyed to Company through the Transaction
and which will be regularly used in the operation of the Business (collectively,
“Company’s Secrets”). Seller has also owned information related to the
development of products, costs, management policies, and plans for the operation
of the Business which has been conveyed to Company through the Transaction
(collectively, “Company’s Policies”). Company’s Secrets and Company’s Policies
shall be referred to herein collectively as the “Trade Secrets”. Except as
otherwise required by law, Seller shall not disclose any of the Trade Secrets,
directly or indirectly, or use the Trade Secrets or such information in any way,
either during the term of this Agreement or at any time thereafter, except with
the prior written consent of Company, or its successor or assignee, which may be
withheld in Company's sole discretion. All files, records, customer lists,
documents, reports, audits, projections and similar items relating to the
Business, whether prepared by or on behalf of Seller or otherwise coming into
the possession of Seller, shall become and remain the exclusive property of
Company and shall not be removed from the premises of Company, either in
original or reproduced form, under any circumstances whatsoever, without the
prior written consent of Company.

4. Seller hereby agrees that during the period commencing as of the date hereof
and ending five (5) years thereafter (the “Noncompete Period”), Seller shall be
subject to and shall strictly comply with the following covenants not to compete
with Company in the conduct of its business:

 

  (a) Within the geographical territory described herein below, Seller will not
engage, directly or indirectly, in any business or activity of the same type and
nature as that being conducted by Company during the one year period prior to
the date hereof. It is understood that the term "directly or indirectly" as used
herein means that Seller shall not participate as an owner, employee, agent or
consultant to any business entity, whether a proprietorship, partnership,
association or corporation, which engages in the prohibited activity.

 

  (b) Within the geographical territory described herein below, Seller will not
engage, directly or indirectly, in any business or activity which requires
Seller, or any person or party employed by him or whom he represents, to provide
any Trade Secret to any other person or party who is then engaged in a business
of the same type or nature as that being conducted by Company at the time of the
execution of this Agreement.

 

  (c) The geographical territory to which the covenants under paragraphs 4(a)
and (b) above relate consists of the following areas: North Carolina, South
Carolina, Alabama, Tennessee, Louisiana, Mississippi, Florida and Georgia.

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5. During the Noncompete Period, Seller shall not (whether alone or as a partner
or joint venturer with any other person or entity, or as a shareholder,
employee, consultant or agent of any corporation or company or as a trustee of
any trust):

 

  (a) employ or retain any individual who is or was an employee or officer of
Company during the twelve (12) month period immediately preceding the date
hereof; or

 

  (b) contact, solicit or assist in the solicitation of any individual described
in paragraph 5(a) above for the purpose of employing him or obtaining his
services for hire or otherwise causing him to leave his employment or engagement
with Company.

6. As consideration for this Agreement, the Company will pay (i) Five Thousand
and No/100ths Dollars ($5,000.00) to McAleer and (ii) Five Thousand and
No/100ths Dollars ($5,000.00) to Shareholder by check or wire transfer at the
Closing of the Transaction.

7. Seller hereby acknowledges that the covenants and obligations hereunder, are
of special, unique, unusual, extraordinary and intellectual character, which
gives them a peculiar value, the actual or threatened breach of which shall
result in substantial injuries and damages, for which monetary relief may fail
to provide an adequate remedy at law. Accordingly, Seller agrees that Company
shall be entitled, in the event of an actual or threatened breach of this
Agreement, to seek remedies including but not necessarily limited to
(i) temporary or permanent injunctive relief; (ii) specific performance; and
(iii) monetary relief, to the extent that monetary relief may constitute an
adequate remedy in whole or in part. If any proceeding for injunctive relief
and/or specific performance is brought by Company to enforce the terms of this
Agreement, Seller shall be deemed to have waived, and shall not assert, any
claim or defense that Company has an inadequate remedy at law or that such a
remedy at law does not exist. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, Company, if it prevails in
such action, shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which a court of
competent jurisdiction may order.

8. It is expressly recognized and acknowledged by Seller that the covenants set
forth in this Agreement are reasonable and necessary for the protection of the
business acquired by Company and that Company will suffer a great loss and
damage should Seller breach or violate any of the stated covenants for which
Company may not have an adequate remedy at law. Seller therefore agrees that in
the event of a material breach of these covenants, Company shall be entitled to
injunctions, both temporary and final, enjoining and restraining such breach,
from a court of competent jurisdiction. Company, in a court of competent
jurisdiction upon proper proof, may also sue to recover for such claims as it
may have against Seller for actual damages resulting from the breach of these
covenants.

9. If any one or more provisions contained in this Agreement or any other
document executed pursuant to this Agreement shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained in this Agreement and the documentation executed
pursuant hereto, shall not in any way be affected or impaired thereby and this
Agreement shall otherwise remain in full force and effect.

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10. This Agreement shall be construed in accordance with and governed for all
purposes by the laws of the State of South Carolina, without reference to its
conflicts of law rules.

11. The parties agree that this Agreement constitutes the entire agreement
between the parties and supersedes any prior or contemporaneous oral or written
understandings concerning the subject matter hereof.

12. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns.

[Signature Page to Follow]

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

 

WITNESSES:     SELLERS:     MCALEER COMPUTER ASSOCIATES, INC.

 

   

 

    William J. McAleer, President

 

   

 

   

 

    William J. McAleer

 

        COMPANY:     COMPUTER SOFTWARE INNOVATIONS, INC.

 

   

 

    Nancy K. Hedrick, President

 

   

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Exhibit D

Form of Seller’s Counsel Opinion

Attached hereto.

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EXHIBIT D

[SELLER COUNSEL LETTERHEAD]

January     , 2007

Computer Software Innovations, Inc.

900 East Main Street, Suite T

Easley, South Carolina 29642

 

Re:   Sale of Business of McAleer Computer Associates, Inc. to   Computer
Software Innovations, Inc.

Ladies and Gentlemen:

We have acted as counsel for McAleer Computer Associates, Inc., an Alabama
corporation (the “Seller”), and William J. McAleer (“Shareholder”), in
connection with the transactions contemplated by that Asset Purchase Agreement
dated as of November 21, 2006 (the “Purchase Agreement”) by and among Seller,
Shareholder and Computer Software Innovations, Inc. (the “Purchaser”). Terms
used and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Purchase Agreement. This opinion is being
furnished to you, at the request of Seller, pursuant to the Purchase Agreement.

In connection with rendering the opinions hereinafter set forth, we have
examined the originals, or copies certified or otherwise identified to our
satisfaction as being true copies, of the following:

 

  (a) The Purchase Agreement, together with all exhibits and schedules thereto;

 

  (b) The Bill of Sale (“Bill of Sale”), the Deed (the “Deed”) and other
instruments of conveyance, transfer and assignment executed by Seller on the
date hereof;

 

  (c) Assignment and Assumption Agreement;

 

  (d) Confidentiality, Noncompetition and Nonsolicitation Agreement;

 

  (e) Consulting Agreement between Purchaser and Shareholder of even date;

 

  (f) Articles of Incorporation and Bylaws of Seller;

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Page 2

January     , 2007

 

  (g) Consent of Shareholders and Directors of Seller; and

 

  (h) Such certificates of public officials, corporate documents and records,
and other certificates to the extent that the same were made available to us for
such examination, and have made such investigation of law, as we have deemed
necessary as a basis for the opinions expressed herein.

The foregoing agreements and instruments executed or delivered by Seller in
connection with the consummation of the transactions contemplated by the
Purchase Agreement (the "Contemplated Transactions") are referred to herein,
collectively, as the "Transaction Documents".

For purposes of the opinions expressed herein, with your permission we have
assumed, without independent investigation or verification of any kind: (i) the
genuineness of all signatures, except signatures of Seller and Shareholder, the
authenticity and completeness of all documents submitted to us as originals and
the conformity to original documents and completeness of all documents submitted
to us as copies; (ii) that all Transaction Documents have been duly authorized,
executed and delivered by Purchaser; and (iii) that the certificates of public
officials dated earlier than the date of this letter remain accurate from such
earlier date through and including the date of this letter.

As to various questions of fact material to our opinion, we have relied upon the
representations made in the Transaction Documents and upon inquiries and/or
certificates of the officers or representatives of Seller. When a statement
herein is qualified by "to our knowledge" or similar language, it is intended to
indicate that, during the course of our representation of Seller, no information
that would give us actual knowledge of the inaccuracy of such statement has come
to our attention.

We are members of the bar of the State of Alabama and do not purport to be
experts in, or to express any opinion concerning, any law other than the laws of
the State of Alabama and the Federal law of the United States of America. No
opinion is expressed as to the laws of any other jurisdiction or the effect
which the laws of any other jurisdiction might have on the subject matter of the
opinions expressed herein under conflict of laws principles or otherwise. In
this connection, we have assumed, with your permission that the Transaction
Documents and any assumed contracts were governed by the laws of the State of
Alabama.

Based upon and subject to the foregoing and the qualifications set forth below,
we are of the opinion that:

1. Seller is a corporation, duly incorporated and validly existing and in good
standing under the laws of the State of Alabama and has the power and authority
to own or lease its assets and properties and to carry on its business as
currently conducted. To our knowledge, Seller is not qualified or required to be
qualified to do business in any other jurisdiction.

 

2

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Page 3

January     , 2007

2. Seller has the power and authority under the laws of the State of Alabama and
under the terms of its Articles of Incorporation and Bylaws to execute and
deliver each of the Transaction Documents and to perform its obligations
thereunder. The Transaction Documents have been duly authorized by all necessary
action on the part of Seller and duly executed and delivered by Seller and
Shareholder, as applicable.

3. Each of the Transaction Documents constitutes the legal, valid and binding
obligation of Seller and/or Shareholder a party thereto, enforceable against it
or them in accordance with its terms.

4. The execution and delivery of the Transaction Documents by Seller and the
performance of its obligations thereunder do not violate: (a) any term or
provision of Seller Articles of Incorporation or Bylaws; (b) any statute,
regulation, law or ordinance which, to our knowledge, Seller is subject; or
(c) to our knowledge, any arbitration award, order, writ, judgment or decree of
any court, arbitration panel or government agency or authority to which Seller
is subject.

5. Except as set forth in the Transaction Documents or related schedules, to our
knowledge, no consent, approval, license or authorization by, and no filing,
recording or registration with, any governmental authority or regulatory body,
which has not been obtained or made, is required in connection with the
execution and delivery of the Transaction Documents by Seller and Shareholder or
for the consummation by Seller and Shareholder of the transactions contemplated
thereby.

6. To our knowledge, except as set forth in the Transaction Documents or the
related schedules, there are no claims, actions, suits, or proceedings pending
or overtly threatened against Seller or Shareholder.

The validity and enforceability of the rights and remedies set forth in the
Transaction Documents are subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting the enforcement of
creditors' rights and remedies generally and the application of principles of
equity whether in an action at law or a proceeding in equity. In addition, we
express no opinion regarding the availability of the remedy of specific
performance, or of any other equitable remedy or relief to enforce any right
under any agreement or document. We also express no opinion as to the
enforceability of any provisions prohibiting competition, the solicitation or
acceptance of customers, of business relationships or of employees, the use or
disclosure of information, or in restraint of trade. In addition, we have
assumed that, to the extent that any party exercises its rights or enforces any
remedies under any agreement to which it is a party, it will do so in good faith
and in a commercially reasonably manner and that it will abide by any implied
covenant of good faith and fair dealing which may be imposed by law.

 

3

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Page 4

January     , 2007

This opinion is being furnished for the sole benefit of the named addressee, and
may not be relied upon by any other person or published, quoted or otherwise
used for any other purpose without our prior written consent. This opinion is
based on the law (and interpretations thereof) and facts existing as of the date
hereof. We disclaim any obligation to advise you of any changes therein that may
be brought to our attention after the date hereof.

Very truly yours,

 

4