Exhibit 10.1

 

CACI INTERNATIONAL INC

CACI, INC. - FEDERAL

C-CUBED CORPORATION

 

STOCK PURCHASE AGREEMENT

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CACI INTERNATIONAL INC

CACI, INC. - FEDERAL

C-CUBED CORPORATION

 

STOCK PURCHASE AGREEMENT

 

TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

   1      1.1    CERTAIN MATTERS OF CONSTRUCTION    1      1.2    CROSS
REFERENCES    2      1.3    CERTAIN DEFINITIONS    3

ARTICLE 2 THE PURCHASE AND SALE OF SHARES

   7      2.1    PURCHASE OF THE SHARES FROM THE STOCKHOLDERS.    7      2.2   
PURCHASE PRICE.    8           2.2.1   

The Aggregate Purchase Price

   8           2.2.2   

The Purchase Price Paid at the Closing

   8           2.2.3   

The Purchase Price Adjustments and Claims Escrows.

   8           2.2.4   

The Earn-Out

   9      2.3    ADDITIONAL ACTIONS    10      2.4    STOCKHOLDERS’
REPRESENTATIVES.    10           2.4.1   

Non-ESOP Stockholders’ Representative

   10           2.4.2   

ESOP Stockholder’s Representative

   12      2.5    ADJUSTMENT TO PURCHASE PRICE.    13           2.5.1   

Estimated Closing Balance Sheet.

   13           2.5.2   

Closing Sheet Balance

   13           2.5.3   

Adjustments to the Purchase Price

   15

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF C-CUBED AND THE STOCKHOLDERS

   16      3.1    CORPORATE STATUS OF C-CUBED    16      3.2    CAPITAL STOCK.
   16           3.2.1   

Authorized Stock of C-CUBED

   16           3.2.2   

Options and Convertible Securities of C-CUBED

   16      3.3    SUBSIDIARIES    17      3.4    AUTHORITY FOR AGREEMENT;
NONCONTRAVENTION.    17           3.4.1   

Authority

   17           3.4.2   

No Conflict

   17      3.5    FINANCIAL STATEMENTS    18      3.6    ABSENCE OF MATERIAL
ADVERSE CHANGES    18      3.7    ABSENCE OF UNDISCLOSED LIABILITIES    18

 

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3.8

   COMPLIANCE WITH APPLICABLE LAW, CHARTER AND BY-LAWS    18

3.9

   LITIGATION AND AUDITS    19

3.10

   TAX MATTERS.    19      3.10.1   

Filing of Returns

   19      3.10.2   

Payment of Taxes

   19      3.10.3   

Assessments or Disputes

   19      3.10.4   

Waiver of Statute of Limitations

   20      3.10.5   

Collapsible Corporations, Golden Parachutes, Real Property Holding Corporations

   20      3.10.6   

Tax Basis

   20      3.10.7   

Unpaid Taxes

   20      3.10.8   

Unclaimed Property

   20      3.10.9   

No Changes in Accounting, Closing Agreement, Installment Sale

   21      3.10.10   

S Corporation

   21      3.10.11   

Election

   21

3.11

   EMPLOYEE BENEFIT PLANS.    21      3.11.1   

List of Plans

   21      3.11.2   

ERISA

   22      3.11.3   

Plan Determinations

   22      3.11.4   

Funding

   23      3.11.5   

Certain Other Matters

   23      3.11.6   

Welfare Plans

   23

3.12

   EMPLOYMENT-RELATED MATTERS.    24      3.12.1   

Labor Relations

   24      3.12.2   

Employee List

   24

3.13

   ENVIRONMENTAL.    25      3.13.1   

Environmental Laws

   25      3.13.2   

Environmental Claims

   25      3.13.3   

No Basis for Claims

   25      3.13.4   

Disclosure of Information

   25      3.13.5   

Liens

   25

3.14

   NO BROKER’S OR FINDER’S FEES    26

3.15

   ASSETS OTHER THAN REAL PROPERTY.    26      3.15.1   

Title

   26      3.15.2   

Accounts Receivable

   26      3.15.3   

Condition

   26

3.16

   REAL PROPERTY.    26      3.16.1   

C-CUBED Real Property

   26      3.16.2   

C-CUBED Leases

   26      3.16.3   

Condition

   27

3.17

   AGREEMENTS, CONTRACTS AND COMMITMENTS.    27      3.17.1   

C-CUBED Agreements

   27      3.17.2   

Validity

   29      3.17.3   

Third-Party Consents

   29

3.18

   INTELLECTUAL PROPERTY.    29      3.18.1   

No Conflicts

   29

 

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     3.18.2   

Proprietary Rights; Licenses

   30      3.18.3   

Employee Agreements

   30

3.19

  

INSURANCE CONTRACTS

   31

3.20

  

BANKING RELATIONSHIPS

   31

3.21

  

NO CONTINGENT LIABILITIES

   31

3.22

  

ABSENCE OF CERTAIN RELATIONSHIPS

   31

3.23

  

FOREIGN CORRUPT PRACTICES

   31

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND FEDERAL

   32

4.1

  

CORPORATE STATUS OF PARENT AND FEDERAL

   32

4.2

  

AUTHORITY FOR AGREEMENT; NONCONTRAVENTION.

   32      4.2.1   

Authority of Parent

   32      4.2.2   

No Conflict

   32

4.3

  

SEC STATEMENTS, REPORTS AND DOCUMENTS

   32

4.4

  

ABSENCE OF MATERIAL ADVERSE CHANGES

   33

4.5

  

LITIGATION

   33

4.6

  

NO MISREPRESENTATIONS

   33

4.7

  

INVESTMENT REPRESENTATIONS

   33

4.8

  

FINANCING ARRANGEMENTS

   33

ARTICLE 5 CONDUCT PRIOR TO THE CLOSING DATE

   33

5.1

  

CONDUCT OF BUSINESS OF C-CUBED

   33

5.2

  

CONDUCT OF BUSINESS OF PARENT

   36

ARTICLE 6 ADDITIONAL AGREEMENTS

   36

6.1

  

EXCLUSIVITY

   36

6.2

  

EXPENSES.

   36      6.2.1   

General

   36      6.2.2   

Broker Fees

   36      6.2.3   

Attorney Fees

   37      6.2.4   

Accountant Fees

   37      6.2.5   

Uncovered Expenses

   37

6.3

  

INDEMNIFICATION

   37      6.3.1   

Claims for Indemnification

   37      6.3.2   

Defense by Indemnifying Party

   38      6.3.3   

Limitation on Liability for Indemnity.

   38      6.3.4   

Claims Period

   39

6.4

  

ACCESS AND INFORMATION

   39

6.5

  

PUBLIC DISCLOSURE

   40

6.6

  

FURTHER ASSURANCES.

   40      6.6.1   

Generally

   40      6.6.2   

Novation of Contracts

   40

6.7

  

CERTAIN TAX MATTERS.

   41      6.7.1   

338(h)(10) Election

   41

 

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     6.7.2   

Allocation of Purchase Price

   41      6.7.3   

S Corporation Status

   41      6.7.4   

Tax Periods Ending on or before the Closing Date

   41      6.7.5   

Cooperation on Tax Matters.

   41      6.7.6   

Tax Sharing Agreements

   42      6.7.7   

Certain Taxes

   42

6.8

   NOTIFICATION    42

6.9

   FUTURE OF THE ESOP    42

ARTICLE 7 CONDITIONS PRECEDENT

   43

7.1

   CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY    43      7.1.1   

No Illegality

   43      7.1.2   

Government Consents

   43      7.1.3   

No Injunction

   43      7.1.4   

Escrow Agreements

   43      7.1.5   

Paying Agent Agreements

   43

7.2

   CONDITIONS PRECEDENT TO OBLIGATION OF PARENT AND FEDERAL TO CONSUMMATE THE
TRANSACTION    44      7.2.1   

Representations and Warranties

   44      7.2.2   

Agreements and Covenants

   44      7.2.3   

Legal Opinion

   44      7.2.4   

Closing Documents

   44      7.2.5   

Third Party Consents

   45      7.2.6   

Diligence Review

   45      7.2.7   

Authority of the Trustee of the C-CUBED ESOP Stockholder

   45      7.2.8   

Non-Compete, Non-Solicitation and Non-Disturbance Agreements

   45      7.2.9   

Employment Agreements

   45      7.2.10   

Updated Employee List

   45      7.2.11   

Material Adverse Effect

   45      7.2.12   

No Outstanding Options, Warrants, Etc.

   46      7.2.13   

No Outstanding Notes

   46      7.2.14   

Intentionally Left Blank

   46      7.2.15   

Individual Stock Purchase Agreements, Etc.

   46      7.2.16   

No Letters of Credit, Security Interests or Financing Statements

   46      7.2.17   

No Joint Venture

   46      7.2.18   

Subsidiaries

   46

7.3

   CONDITIONS TO OBLIGATIONS OF C-CUBED AND THE STOCKHOLDERS TO CONSUMMATE THE
TRANSACTION    46      7.3.1   

Representations and Warranties

   47      7.3.2   

Agreements and Covenants

   47      7.3.3   

Legal Opinion

   47      7.3.4   

Closing Documents

   47      7.3.5   

Material Adverse Effect

   47      7.3.6   

Payment of Purchase Price

   48

 

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ARTICLE 8 SURVIVAL OF REPRESENTATIONS

   48

8.1

  

C-CUBED’s AND THE STOCKHOLDERS’ REPRESENTATIONS

   48

8.2

  

PARENT’S AND FEDERAL’S REPRESENTATIONS

   48

ARTICLE 9 OTHER PROVISIONS

   48

9.1

  

TERMINATION EVENTS

   48

9.2

  

NOTICES

   49

9.3

  

ENTIRE AGREEMENT

   51

9.4

  

ASSIGNABILITY

   51

9.5

  

VALIDITY

   51

9.6

  

SPECIFIC PERFORMANCE

   51

9.7

  

SETTLEMENT OF DISPUTES

   51

9.8

  

COUNTERPARTS

   52

 

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STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of September 22, 2003 (the “Agreement”), by
and among CACI International Inc, a Delaware corporation (“Parent”), CACI, INC.
- FEDERAL, a Delaware corporation and wholly-owned subsidiary of Parent
(“Federal”), C-CUBED Corporation, a Virginia corporation (“C-CUBED”), and the
stockholders of C-CUBED listed on Schedule A attached hereto that are
signatories to this Agreement (each individually a “Stockholder” and
collectively, the “Stockholders”).

 

W I T N E S S E T H

 

WHEREAS, as of the date hereof, each Stockholder owns the number of issued and
outstanding shares of common stock, $0.10 (Ten Cents) par value per share, of
C-CUBED (“C-CUBED Common Stock”) set forth opposite such Stockholder’s name on
Schedule A;

 

WHEREAS, the Stockholders own 223,428 (Two Hundred Twenty Three Thousand Four
Hundred and Twenty-eight) of the issued and outstanding shares of C-CUBED Common
Stock;

 

WHEREAS, the Stockholders, and the other owners who own C-CUBED Common Stock or
will own C-CUBED Common Stock at Closing pursuant to the exercise of their
options and who are listed on Schedule A, but are not signatories to this
Agreement, wish to sell all of their shares of C-CUBED Common Stock (the
“Shares”) and Federal wishes to purchase all (but not less than all) of the
Shares (the “Transaction”); and

 

WHEREAS, Parent, Federal, the Stockholders and C-CUBED wish to make certain
representations and warranties and other agreements in connection with the
Transaction;

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:

 

Article 1

DEFINITIONS

 

1.1 Certain Matters of Construction. A reference to an article, section, exhibit
or schedule shall mean an Article of, a Section in, or Exhibit or Schedule to,
this Agreement unless otherwise expressly stated. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement, which shall be considered as a whole. The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.” All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms. Any agreement, instrument, law or
regulation defined or referred to herein or in any agreement or instrument that

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is referred to herein means such agreement, instrument or law or regulation as
from time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of laws and
regulations) by succession of comparable successor laws or regulations and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.

 

1.2 Cross References. The following terms defined elsewhere in this Agreement in
the Sections set forth below shall have the respective meanings therein defined:

 

Term

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Definition

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AAA

   Section 9.7

Acquisition Proposals

   Section 6.1

Agreement

   Preamble

Auditor

   Section 2.5.2

Broker

   Section 2.2.2

C-CUBED Balance Sheet

   Section 3.5

C-CUBED Common Stock

   Recitals

C-CUBED Financial Statements

   Section 3.5

C-CUBED Insurance Contracts

   Section 3.19

C-CUBED Plans

   Section 3.11.1

C-CUBED Proprietary Rights

   Section 3.18.1

C-CUBED

   Preamble

C-CUBED’s Accountant

   Section 2.2.2

C-CUBED’s Counsel

   Section 2.2.2

Closing Balance Sheet

   Section 2.5.2

Closing Date

   Section 2.1

Closing

   Section 2.1

Direct Payment

   Section 2.2.2

Employee List

   Section 3.12.2

Encumbrances

   Section 3.15.1

Escrow Agent

   Section 2.2.3

ESOP Adjustments and Claims Escrow

   Section 2.2.3

ESOP Adjustments and Claims Escrow Agreement

   Section 2.2.3

ESOP Adjustments and Claims Escrow Payment

   Section 2.2.3

ESOP Earn-Out Escrow

   Section 2.2.4

ESOP Earn-Out Escrow Agreement

   Section 2.2.4

ESOP Stockholder’s Representative

   Section 2.4.2

Estimated Closing Balance Sheet

   Section 2.5.1

Expenses

   Section 6.2.1

Federal

   Preamble

Final Closing Balance Sheet

   Section 2.5.2

GAAP

   Section 2.5.1

Governmental Entity

   Section 3.4.2

Indemnification Claim

   Section 6.3.1

Indemnified Party

   Section 6.3.1

Indemnifying Party

   Section 6.3.1

Non-ESOP Adjustments and Claims Escrow

   Section 2.2.3

 

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Non-ESOP Adjustments and Claims Escrow Agreement

   Section 2.2.3

Non-ESOP Adjustments and Claims Escrow Payment

   Section 2.2.3

Non-ESOP Earn-Out Escrow

   Section 2.2.4

Non-ESOP Earn-Out Escrow Agreement

   Section 2.2.4

Non-ESOP Stockholders’ Representative

   Section 2.2.3

Notice of Claim

   Section 6.3.1

Objection

   Section 2.5.2

Parent Balance Sheet

   Section 4.3

Parent Indemnified Parties

   Section 6.3

Parent Indemnifying Parties

   Section 6.3

Parent Indemnity Deductible

   Section 6.3.3

Parent Reports

   Section 4.3

Parent

   Preamble

Permits

   Section 3.8

Purchase Price

   Section 2.2.1

Section 338(h)(10) Election

   Section 6.7.1

Shares

   Recitals

Stockholder Indemnified Parties

   Section 6.3

Stockholder Indemnifying Parties

   Section 6.3

Stockholder Indemnity Deductible

   Section 6.3.3

Stockholders

   Recitals

Stockholders’ Representatives

   Section 2.4.2

Third Party Claim

   Section 6.3.2

Transaction

   Recitals

Welfare Plan

   Section 3.11.6

 

1.3 Certain Definitions. As used herein, the following terms shall have the
following meanings:

 

Affiliate: with respect to any Person, any Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person.

 

Affiliated Group: any affiliated group within the meaning of Code section
1504(a).

 

Bednar: Edmund J. Bednar, President and Chief Executive Officer of C-CUBED.

 

C-CUBED Leases: each lease, sublease, license or other agreement under which
C-CUBED uses, occupies or has the right to occupy any real property or interest
therein.

 

C-CUBED Material Adverse Effect: any materially adverse change in or effect on
C-CUBED’s financial condition, business, operations, assets, properties, or
results of operations.

 

COBRA: the provisions of Section 4980B of the Code and Part 6 of Title I of
ERISA.

 

Code: the United States Internal Revenue Code of 1986, as amended from time to
time.

 

Commercial Software: packaged commercial software programs generally available
to

 

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the public through retail dealers in computer software or directly from the
manufacturer which have been licensed to C-CUBED and which are used in C-CUBED’s
business but are in no way a component of or incorporated in or specifically
required to develop any of C-CUBED’s products and related trademarks and
technology.

 

Control: (including with correlative meaning, controlled by and under common
control with) as used with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.

 

Environmental Claim: any actual notice alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
response or remediation costs, natural resources damages, property damages,
personal injuries, fines or penalties) arising out of, based on or resulting
from (a) the presence, or release of any Material of Environmental Concern at
any location, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.

 

Environmental Laws: any and all Federal, state, local or foreign statutes,
regulations and ordinances relating to the protection of public health, safety
or the environment.

 

ERISA Affiliate: with respect to a party, any member (other than that party) of
a controlled group of corporations, group of trades or businesses under common
control or affiliated service group that includes that party (as defined for
purposes of Section 414(b), (c) and (m) of the Code).

 

ERISA: the Employee Retirement Income Security Act of 1974, as amended.

 

Escrow Agreements: The ESOP Adjustments and Claims Escrow, the Non-ESOP
Adjustments and Claims Escrow, the ESOP Earn-Out Escrow and the Non-ESOP
Earn-Out Escrow.

 

ESOP: the C-CUBED Corporation Employee Stock Ownership Plan.

 

ESOP Percentage: the percentage of the Shares owned by the ESOP Stockholder.

 

ESOP Stockholder: the C-CUBED Corporation Employee Stock Ownership Trust.

 

Exchange Act: the Securities Exchange Act of 1934, as amended.

 

Hogan: E. Jackson Hogan, Vice President of Business Development of C-CUBED.

 

Knowledge of C-CUBED: shall mean the actual, current knowledge of Bednar, Hogan,
Lugar, Mead, Teague and Moe.

 

Letter of Intent: the letter dated July 23, 2003 from Stephen L. Waechter,
Executive Vice President and Chief Financial Officer of Parent, to Bednar,
expressing the companies’ intention to effect the stock purchase and related
transactions, subject to execution of this Agreement and other matters.

 

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Liability: any liability or obligation, known or unknown, asserted or
unasserted, accrued or unaccrued, absolute or contingent, liquidated or
unliquidated, or otherwise, and whether due or to become due, including any
liability for Taxes.

 

Losses: the amount of any actual damages, liabilities, obligations,
deficiencies, losses (including without limitation any actual diminution in
value), expenditures, costs or expenses (including without limitation reasonable
attorneys’ fees and disbursements). For purposes of determining the amount of
any Loss, the amount of any Loss shall be reduced by any insurance proceeds
received or receivable in respect thereof (in each case net of costs of
recovery). For purposes of determining the amount of any Loss incurred by reason
of any breach of any representation or warranty made by C-CUBED under this
Agreement, each such representation or warranty would read as if all
qualifications as to materiality and knowledge were deleted therefrom. It is
nevertheless understood that all such qualifications as to materiality and
knowledge shall be considered in determining whether a representation or
warranty has been breached.

 

Lugar: Rhonda L. Lugar, Vice President and Chief Financial Officer of C-CUBED.

 

M Street Lease Adjustment: the Net Worth shall be reduced by the amount of any
settlement that is reached with Aera and/or EDO (as appropriate), which obtains
termination of the lease space obligation at 140 M Street (the “M Street lease)
no later than the date of Federal’s delivery of the Final Closing Balance Sheet
under Section 2.5.2(a). Any negotiation with Aera and/or EDO, and any such
proposed settlement negotiated, shall require Federal’s involvement and prior
written approval, respectively. In the event that no settlement is obtained as
of the date of Federal’s delivery of the Final Closing Balance Sheet under
Section 2.5.2(a), the Net Worth shall be reduced by $125,000.

 

Materials of Environmental Concern: petroleum and its by-products and any and
all other substances or constituents to the extent that they are regulated by,
or form the basis of liability under, any Environmental Law.

 

Mead: Michael E. Mead, Vice President of Operations of C-CUBED.

 

Moe: Eric Moe, General Counsel of C-CUBED.

 

Net Worth: C-CUBED’s total assets less total liabilities as of the Closing Date,
determined in accordance with GAAP and prepared in accordance with presently
disclosed C-CUBED accounting methodology provided it is consistent with GAAP.
Any cash receipts from the exercise of stock options after execution of the
Letter of Intent and any related tax benefits to C-CUBED shall be excluded from
assets in determining the Net Worth. All notes receivable from stockholders
which exist at the date of signing of this Agreement shall be includable in Net
Worth to the extent they are paid off at Closing. Any built-in gain or liability
incurred or any Tax arising from any built-in gain shall be excluded from
liabilities in determining Net Worth.

 

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Non-ESOP Percentage: the percentage of the Shares owned by the Non-ESOP
Stockholders.

 

Non-ESOP Stockholders: the stockholders listed on Schedule A exclusive of the
ESOP Stockholder.

 

Parent Material Adverse Effect: any change in or effect on the financial
condition, business, operations, assets, properties, results of operations of
Parent and Federal considered on a consolidated basis that might reasonably be
expected to impair the ability of Parent to provide funds for payment of the
entire Purchase Price in accordance with the terms of this Agreement.

 

Paying Agent Agreement: the Non-ESOP Paying Agent Agreement, substantially in
the form attached hereto as Exhibit I.

 

Permitted Encumbrances: (a) liens for current taxes and other statutory liens
and trusts not yet due and payable or that are being contested in good faith,
(b) liens incurred in the ordinary course of business, such as carriers’,
warehousemen’s, landlords’ and mechanics’ liens and other similar liens arising
in the ordinary course of business, (c) liens on personal property leased under
operating leases, (d) liens, pledges or deposits incurred or made in connection
with workmen’s compensation, unemployment insurance and other social security
benefits, or securing the performance of bids, tenders, leases, contracts (other
than for the repayment of borrowed money), statutory obligations, progress
payments, surety and appeal bonds and other obligations of like nature, in each
case incurred in the ordinary course of business, (e) pledges of or liens on
manufactured products as security for any drafts or bills of exchange drawn in
connection with the importation of such manufactured products in the ordinary
course of business, (f) liens under Article 2 of the Uniform Commercial Code
that are special property interests in goods identified as goods to which a
contract refers, (g) liens under Article 9 of the Uniform Commercial Code that
are purchase money security interests, (h) those liens disclosed on Exhibit J
hereto, (i) such imperfections or minor defects of title, easements,
rights-of-way and other similar restrictions (if any) as are insubstantial in
character, amount or extent, do not materially detract from the value or
interfere with the present or proposed use of the properties or assets of the
party subject thereto or affected thereby, and do not otherwise adversely affect
or impair the business or operations of such party, and (j) accounts payable
incurred in the normal course of business.

 

Person: an individual, a corporation, an association, a partnership, an estate,
a trust or any other entity or organization.

 

SEC: the United States Securities and Exchange Commission, or any Governmental
Entity succeeding to its functions.

 

Securities Act: the Securities Act of 1933, as amended.

 

Security Interest: any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) mechanic’s, materialman’s, and similar liens,
(b) liens for Taxes not yet due and payable, (c) purchase money liens and liens
securing rental payments

 

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under capital lease arrangements, and (d) other liens arising in the ordinary
course of business consistent with past custom and practice (including with
respect to quantity and frequency) and not incurred in connection with the
borrowing of money.

 

Subsidiary: any corporation, association, or other business entity a majority
(by number of votes on the election of directors or persons holding positions
with similar responsibilities) of the shares of capital stock (or other voting
interests) of which is owned directly or indirectly by C-CUBED.

 

Tax: any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

 

Tax Return: any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.

 

Teague: S. Wesley Teague, Executive Vice President of C-CUBED.

 

Treasury Regulation: a regulation promulgated by the United States Treasury
Department under one or more provisions of the Code.

 

Article 2

THE PURCHASE AND SALE OF SHARES

 

2.1 Purchase of the Shares from the Stockholders.

 

Subject to and upon the terms and conditions of this Agreement, and on the basis
of the representations, warranties, covenants, and agreements herein contained,
at the closing of the transactions contemplated by this Agreement (the
“Closing”), the Stockholders shall sell, transfer, convey or assign and deliver
to Federal, and Federal shall purchase, acquire and accept from the
Stockholders, the Shares, free and clear of any and all liens, claims,
encumbrances or rights of any third party. At the Closing, the Stockholders
shall deliver to Federal certificates evidencing the Shares duly endorsed in
blank or with stock powers or other appropriate instruments of transfer duly
executed, with signatures guaranteed. The Closing shall take place at the
offices of Parent in Arlington, Virginia, commencing at 10 a.m. local time on
October 15, 2003 or on such other date as the parties may agree after the
satisfaction or waiver of all conditions to the obligations of the parties to
consummate the transactions contemplated hereby (the “Closing Date”). The
Agreement shall be effective at 12:01 a.m. local time on October 16, 2003 (the
“Effective Date”).

 

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2.2 Purchase Price.

 

2.2.1 The Aggregate Purchase Price. The aggregate purchase price (the “Purchase
Price”) to be paid by Federal for the Shares shall be $35,000,000 (Thirty-Five
Million Dollars), assuming the satisfaction of the conditions set forth in
Section 7.2 and subject to adjustment as provided below in Section 2.5. All
payments of the Purchase Price under this Section 2.2 shall be made in
immediately available funds wired to one or more accounts designated by the
Stockholders’ Representative, by a certified check or by such other method as
may be agreed by the Stockholders’ Representative and Federal.

 

2.2.2 The Purchase Price Paid at the Closing. $29,500,000 (Twenty-Nine Million
Five Hundred Thousand Dollars) of the total Purchase Price decreased by
$2,000,000 (Two Million Dollars) to secure the Stockholders’ obligation pursuant
to Section 2.5.3 and increased or decreased by the amount of any adjustment to
the Purchase Price at Closing pursuant to Section 2.5.1(c) (the “Direct
Payment”), less

 

(a) the amount of the fees owed by C-CUBED or the Stockholders (or any of them)
to Windsor Group, LLC and Windsor Advisory Services, LLC (collectively,
“Broker”) which will be paid by Federal directly to Broker pursuant to Section
6.2.2,

 

(b) the amount of the fees owed by C-CUBED or the Stockholders (or any of them)
to Jaeger & Associates P.C. (“C-CUBED’s Counsel”) which will be paid by Federal
directly to C-CUBED’s Counsel pursuant to Section 6.2.3,

 

(c) the amount of the fees owed by C-CUBED or the Stockholders (or either of
them) to Alcorn & Cureton (“C-CUBED’s Accountant”) which will be paid by Federal
directly to C-CUBED’s Accountant pursuant to Section 6.2.4,

 

and shall be paid to the Stockholders’ Representatives by Federal on the Closing
Date on the basis of the allocations set forth on Schedule A hereto.

 

2.2.3 The Purchase Price Adjustments and Claims Escrows.

 

(a) For the purpose of securing the obligations of the ESOP Stockholder
hereunder, a portion of the total Purchase Price equal to the product of the sum
of $3,500,000 plus $2,000,000 pursuant to 2.5.3 (that is, Three Million Five
Hundred Thousand Dollars Plus Two Million Dollars pursuant to 2.5.3) and the
ESOP Percentage (the “ESOP Adjustments and Claims Escrow Payment”) shall be
delivered to an account (the “ESOP Adjustments and Claims Escrow”) to be
administered by SunTrust Bank (the “Escrow Agent”) pursuant to an escrow
agreement substantially in the form of Exhibit A-1 (the “ESOP Adjustments and
Claims Escrow Agreement”). The portion of the ESOP Adjustments and Claims Escrow
Payment equal to the product of $3,500,000 (Three Million Five Hundred Thousand
Dollars) and the ESOP Percentage has been allocated for the sole purpose of
securing the ESOP Stockholder’s obligation under Section 6.3 of this Agreement.
Any and all claims made to the ESOP Stockholder’s Representative pursuant to
Section 6.3 shall not exceed the product of $3,500,000 (Three Million

 

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Five Hundred Thousand Dollars) and the ESOP Percentage. A second portion of the
ESOP Adjustments and Claims Escrow Payment equal to the product of $2,000,000
(Two Million Dollars) and the ESOP Percentage has been allocated for the sole
purpose of securing the ESOP Stockholder’s obligations pursuant to Section
2.5.3. All earnings and other proceeds on the ESOP Adjustments and Claims Escrow
shall be the property of the ESOP Stockholders.

 

(b) For the purpose of securing the obligations of the Non-ESOP Stockholders
hereunder, a portion of the total Purchase Price equal to the product of the sum
of $3,500,000 plus $2,000,000 pursuant to 2.5.3 (that is, Three Million Five
Hundred Thousand Dollars Plus Two Million Dollars pursuant to 2.5.3) and the
Non-ESOP Percentage (the “Non-ESOP Adjustments and Claims Escrow Payment”) shall
be delivered to an account (the “Non-ESOP Adjustments and Claims Escrow”) on
behalf of the Non-ESOP Stockholders represented by the Non-ESOP Stockholders’
Representative, as hereinafter defined, and administered by the Escrow Agent
pursuant to an escrow agreement substantially in the form of Exhibit A-2 (the
“Non-ESOP Adjustments and Claims Escrow Agreement”). The portion of the Non-ESOP
Adjustments and Claims Escrow Payment equal to the product of $3,500,000 (Three
Million Five Hundred Thousand Dollars) and the Non-ESOP Percentage has been
allocated for the sole purpose of securing the Non-ESOP Stockholders’ obligation
under Section 6.3 of this Agreement. Any and all claims made to the Non-ESOP
Stockholders’ Representative pursuant to Section 6.3 shall not exceed the
product of $3,500,000 (Three Million Five Hundred Thousand Dollars) and the
Non-ESOP Percentage. A second portion of the Non-ESOP Adjustments and Claims
Escrow Payment equal to the product of $2,000,000 (Two Million Dollars) and the
Non-ESOP Percentage has been allocated for the sole purpose of securing the
Non-ESOP Stockholder’s obligations pursuant to Section 2.5.3. All earnings and
other proceeds on the Non-ESOP Adjustments and Claims Escrow shall be the
property of the Non-ESOP Stockholders.

 

2.2.4 The Earn-Out. On the six-, twelve-, and eighteen-month anniversaries of
the Closing Date, disbursements will be made to the ESOP Stockholder and the
Non-ESOP Stockholders’ Representative, as paying agent, from escrow accounts
established for such purpose (the “ESOP Earn-Out Escrow” and the “Non-ESOP
Earn-Out Escrow,” respectively) pursuant to the terms set forth on Exhibit B
hereto. The ESOP Earn-Out Escrow shall be managed by the Escrow Agent pursuant
to an escrow agreement substantially in the form of Exhibit A-3 (the “ESOP
Earn-Out Escrow Agreement”), which agreement shall provide for the payment by
Federal of all fees and expenses of the Escrow Agent relating to the ESOP
Earn-Out Escrow. The Non-ESOP Earn-Out Escrow shall be managed by the Escrow
Agent pursuant to an escrow agreement substantially in the form of Exhibit A-4
(the “Non-ESOP Earn-Out Escrow Agreement”), which agreement shall provide for
the payment by Federal of all fees and expenses of the Escrow Agent relating to
the Non-ESOP Earn-Out Escrow. On the Closing Date, Federal shall pay an amount
equal to the product of $2,000,000 (Two Million Dollars) and the ESOP Percentage
shall be delivered to the ESOP Earn-Out Escrow and an amount equal to the
product of $2,000,000 (Two Million Dollars) and the Non-ESOP Percentage shall be
delivered to the Non-ESOP Earn-Out Escrow. All earnings and other proceeds on
the ESOP Earn-Out Escrow and the Non-ESOP Earn-Out Escrow shall be the property
of Federal and shall be paid to Federal on a quarterly basis.

 

2.2.4(a) Windsor Fees. Following the final determination and payment of any
earn-out to the Stockholders Representatives, the ESOP Stockholder’s
Representative and

 

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the Non-ESOP Stockholders’ Representative shall pay pursuant to the pro rata
stock ownership of the ESOP Stockholder and the Non-ESOP Stockholders, a fee
equal to 3.5% (Three and One-Half Percent) of the total earn-out to Windsor
Group, LLC.

 

2.3 Additional Actions. If, at any time after the Closing Date, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest, perfect or confirm in Federal title to or ownership or possession of
the Shares acquired pursuant to this Agreement, the Stockholders, as well as the
officers and directors of C-CUBED and Federal, are fully authorized in their
name and in the name of their respective corporations or otherwise to take, and
will take, all such lawful and necessary action to so vest, perfect or confirm
in Federal title to or ownership of the Shares, so long as such action is
consistent with this Agreement.

 

2.4 Stockholders’ Representatives.

 

2.4.1 Non-ESOP Stockholders’ Representative. The Non-ESOP Stockholders hereby
appoint Lugar as the true and lawful agent and attorney-in-fact (the “Non-ESOP
Stockholders’ Representative”) of the Non-ESOP Stockholders with full power of
substitution to act in the name, place and stead of the Non-ESOP Stockholders
with respect to the surrender of the stock certificates owned by the Non-ESOP
Stockholders to Federal in accordance with the terms and provisions of this
Agreement, and to act on behalf of the Non-ESOP Stockholders in any litigation
or arbitration involving this Agreement, act as the paying agent on behalf of
the Non-ESOP Stockholders, do or refrain from doing all such further acts and
things, and execute all such documents as the Non-ESOP Stockholders’
Representative shall deem necessary or appropriate in connection with the
transactions contemplated by this Agreement, including, without limitation, the
power:

 

(a) to act for the Non-ESOP Stockholders with regard to matters pertaining to
indemnification, earn-outs and Purchase Price adjustments referred to in this
Agreement, including the power to compromise any claims or disputes related
thereto on behalf of the Non-ESOP Stockholders and to transact matters of
litigation;

 

(b) to execute and deliver all ancillary agreements, certificates and documents
that the Non-ESOP Stockholders’ Representative deems necessary or appropriate in
connection with the consummation of the transactions contemplated by this
Agreement;

 

(c) to act as the paying agent and to receive funds and give receipts for funds,
including in respect of any adjustments to the Purchase Price, and to do or
refrain from doing the actions further described in the Paying Agent Agreement;

 

(d) to do or refrain from doing any further act or deed on behalf of the
Non-ESOP Stockholders that the Non-ESOP Stockholders’ Representative deems
necessary or appropriate in her sole discretion relating to the subject matter
of this Agreement and the Paying Agent Agreement as fully and completely as the
Non-ESOP Stockholders could do if personally present; and

 

(e) to receive service of process in connection with any claims under this
Agreement.

 

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The appointment of the Non-ESOP Stockholders’ Representative shall be deemed
coupled with an interest and shall be irrevocable, and Parent, Federal and
C-CUBED may conclusively and absolutely rely, without inquiry, upon any action
of the Non-ESOP Stockholders’ Representative in all matters referred to herein.

 

If Lugar resigns, dies or is otherwise unable to serve as the Non-ESOP
Stockholders’ Representative, the successor Non-ESOP Stockholders’
Representative shall be designated in writing by the Non-ESOP Stockholders who
held a majority of the Common Stock held by Non-ESOP Stockholders immediately
prior to the Closing.

 

If any individual Non-ESOP Stockholder should die or become incapacitated, if
any trust or estate should terminate or if any other such event should occur,
any action taken by the Non-ESOP Stockholders’ Representative pursuant to this
Section 2.4.1 shall be as valid as if such death or incapacity, termination or
other event had not occurred, regardless of whether or not the Non-ESOP
Stockholders’ Representative, Parent, Federal or C-CUBED shall have received
notice of such death, incapacity, termination or other event.

 

All notices and other deliveries required to be made or delivered by Parent,
Federal or C-CUBED to the Non-ESOP Stockholders shall be made to the Non-ESOP
Stockholders’ Representative for the benefit of the Non-ESOP Stockholders and
shall discharge in full all notice requirements of Parent, Federal or C-CUBED to
the Non-ESOP Stockholders with respect thereto. The Non-ESOP Stockholders hereby
confirm all that the Non-ESOP Stockholders’ Representative shall do or cause to
be done by virtue of her appointment hereunder.

 

The Non-ESOP Stockholders’ Representative shall act for the Non-ESOP
Stockholders on all of the matters set forth in this Agreement in the manner the
Non-ESOP Stockholders’ Representative believes to be in the best interest of the
Non-ESOP Stockholders and consistent with the obligations under this Agreement,
but the Non-ESOP Stockholders’ Representative shall not be responsible to the
Non-ESOP Stockholders for any loss or damages the Non-ESOP Stockholders may
suffer by the performance by the Non-ESOP Stockholders’ Representative of her
duties under this Agreement, other than loss or damage arising from willful
violation of the law by the Non-ESOP Stockholders’ Representative of her duties
under this Agreement. The Non-ESOP Stockholders’ Representative and her heirs
and personal or legal representatives shall be held harmless by the Non-ESOP
Stockholders from, and indemnified against any loss or damages arising out of or
in connection with the performance of her obligations in accordance with the
provisions of this Agreement, except for any of the foregoing arising out of the
willful violation of the law by the Non-ESOP Stockholders’ Representative of her
duties hereunder. The foregoing indemnity shall survive the resignation or
substitution of the Non-ESOP Stockholders’ Representative.

 

Notwithstanding anything to the contrary herein, the Non-ESOP Stockholders’
Representative shall have no liability or obligation to any Parent Indemnified
Party otherwise than, and only to the extent of, her individual liability as a
Stockholder as set forth in Section 6.3.

 

The Non-ESOP Stockholders’ Representative shall be entitled to expense
reimbursement for services rendered under this Agreement. Out-of-pocket expenses
including but not limited to legal fees, mailing costs and accountant fees shall
be documented and shall be paid on a monthly basis after payment of fees and
expenses to the Escrow Agent out of the earnings in the Non-ESOP Adjustments and
Claims Escrow.

 

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2.4.2 ESOP Stockholder’s Representative. The ESOP Stockholder hereby appoints
Kentucky Trust Bank as its true and lawful agent and attorney-in-fact (the “ESOP
Stockholder’s Representative,” and, together with the Non-ESOP Stockholders’
Representative, the “Stockholders’ Representatives”) with full power of
substitution to act in the name, place and stead of the ESOP Stockholder with
respect to the surrender of the stock certificates owned by the ESOP Stockholder
to Federal in accordance with the terms and provisions of this Agreement, and to
act on behalf of the ESOP Stockholder in any litigation or arbitration involving
this Agreement, do or refrain from doing all such further acts and things, and
execute all such documents as the ESOP Stockholder’s Representative shall deem
necessary or appropriate in connection with the transactions contemplated by
this Agreement, including, without limitation, the power:

 

(a) to act for the ESOP Stockholder with regard to matters pertaining to
indemnification, earn-outs and Purchase Price adjustments referred to in this
Agreement, including the power to compromise any claims or disputes related
thereto on behalf of the ESOP Stockholder and to transact matters of litigation;

 

(b) to execute and deliver all ancillary agreements, certificates and documents
that the ESOP Stockholder’s Representative deems necessary or appropriate in
connection with the consummation of the transactions contemplated by this
Agreement;

 

(c) to do or refrain from doing any further act or deed on behalf of the ESOP
Stockholder that the ESOP Stockholder’s Representative deems necessary or
appropriate in his sole discretion relating to the subject matter of this
Agreement and the Paying Agent Agreement as fully and completely as the ESOP
Stockholder could do if personally present; and

 

(d) to receive service of process in connection with any claims under this
Agreement.

 

The appointment of the ESOP Stockholder’s Representative shall be deemed coupled
with an interest and shall be irrevocable, and Parent, Federal and C-CUBED may
conclusively and absolutely rely, without inquiry, upon any action of the ESOP
Stockholder’s Representative in all matters referred to herein.

 

All notices and other deliveries required to be made or delivered by Parent,
Federal or C-CUBED to the ESOP Stockholder shall be made to the ESOP
Stockholder’s Representative for the benefit of the ESOP Stockholder and shall
discharge in full all notice requirements of Parent, Federal or C-CUBED to the
ESOP Stockholder with respect thereto. The ESOP Stockholder hereby confirms all
that the ESOP Stockholder’s Representative shall do or cause to be done by
virtue of its appointment hereunder.

 

The ESOP Stockholder’s Representative shall act for the ESOP Stockholder on all
of the matters set forth in this Agreement in the manner the ESOP Stockholder’s
Representative believes to be in the best interest of the ESOP Stockholder and
consistent with the obligations under this Agreement, but the ESOP Stockholder’s
Representative shall not be responsible to the

 

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ESOP Stockholder for any loss or damages the ESOP Stockholder may suffer by the
performance by the ESOP Stockholder’s Representative of its duties under this
Agreement, other than loss or damage arising from willful violation of the law
by the ESOP Stockholder’s Representative of its duties under this Agreement. The
ESOP Stockholder’s Representative shall be held harmless by the ESOP Stockholder
from, and indemnified against any loss or damages arising out of or in
connection with the performance of its obligations in accordance with the
provisions of this Agreement, except for any of the foregoing arising out of the
willful violation of the law by the ESOP Stockholder’s Representative of its
duties hereunder. The foregoing indemnity shall survive the resignation or
substitution of the ESOP Stockholder’s Representative.

 

2.5 Adjustment to Purchase Price.

 

2.5.1 Estimated Closing Balance Sheet.

 

(a) Preparation of the Estimated Closing Balance Sheet. As soon as reasonably
practicable before the Closing Date, but in no event fewer than 4 (Four) days
prior to Closing, C-CUBED shall prepare or cause to be prepared and shall
deliver to Parent and Federal an Estimated Closing Balance Sheet for C-CUBED
estimated as of the close of business on the Closing Date (the “Estimated
Closing Balance Sheet”). The Estimated Closing Balance Sheet shall be prepared
in accordance with United States generally accepted accounting principles
(“GAAP”) and prepared in accordance with presently disclosed C-CUBED accounting
methodology provided it is consistent with GAAP.

 

(b) Review of Estimated Closing Balance Sheet. Parent and Federal, upon receipt
of the Estimated Closing Balance Sheet, shall (a) review the Estimated Closing
Balance Sheet and (b) to the extent deemed necessary, make a reasonable inquiry
of C-CUBED and its accountants (if any are used), relating to the preparation of
the Estimated Closing Balance Sheet. Parent, Federal and C-CUBED shall agree on
the Estimated Closing Balance Sheet. Parent and Federal shall not unreasonably
withhold their approval of the Estimated Closing Balance Sheet.

 

(c) Adjustments to the Purchase Price. At Closing, (a) the initial Direct
Payment in the amount of $29,500,000 (Twenty Nine Million Five Hundred Thousand
Dollars) shall be reduced by the amount, if any, by which the Net Worth in the
Estimated Closing Balance Sheet is less than $11,500,000 (Eleven Million Five
Hundred Thousand Dollars), which shall constitute an immediate adjustment of the
Purchase Price in such amount or (b) the initial Direct Payment in the amount of
$29,500,000 (Twenty Nine Million Five Hundred Thousand Dollars) shall be
increased by the amount, if any, by which the Net Worth in the Estimated Closing
Balance Sheet is greater than $11,500,000 (Eleven Million Five Hundred Thousand
Dollars), which shall constitute an immediate adjustment of the Purchase Price
in such amount.

 

2.5.2 Closing Balance Sheet.

 

(a) Preparation of Closing Balance Sheet. As soon as reasonably possible after
the Closing Date (but not later than 60 days thereafter), Federal shall prepare
or cause to be prepared and shall deliver to the Stockholders’ Representatives a
Closing Balance Sheet for C-CUBED as of the close of business on the Closing
Date (the “Closing Balance Sheet”). The

 

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Closing Balance Sheet shall be prepared in accordance with United States
generally accepted accounting principles (“GAAP”) and prepared in accordance
with presently disclosed C-CUBED accounting methodology provided it is
consistent with GAAP.

 

(b) Review of Closing Balance Sheet. The Stockholders’ Representatives, upon
receipt of the Closing Balance Sheet, shall (a) review the Closing Balance Sheet
and (b) to the extent he may deem necessary, make reasonable inquiry of C-CUBED,
Federal and its accountants (if any are used), relating to the preparation of
the Closing Balance Sheet. The Stockholders’ Representatives and their employees
and advisors shall have full access upon prior written notice and during normal
business hours to the books, papers and records of C-CUBED and its accountants
(if any are used), relating to the preparation of the Closing Balance Sheet in
connection with such inquiry and the preparation of the Objection thereto. The
Closing Balance Sheet shall be binding and conclusive upon, and deemed accepted
by, the Stockholders’ Representatives on behalf of the Stockholders unless the
Stockholders’ Representatives shall have notified Federal in writing of any
objections thereto (the “Objection”) within 30 days after receipt of the Closing
Balance Sheet.

 

(c) Disputes. In the event of the Objection, Federal shall have 20 days to
review and respond to the Objection, and Federal and the Stockholders’
Representatives shall attempt to resolve the differences underlying the
Objection within 20 days following completion of Federal’s review of the
Objection. Disputes between Federal and the Stockholders’ Representatives which
cannot be resolved by them within such 20-day period shall be referred no later
than such 20th day for decision to a nationally-recognized independent public
accounting firm mutually selected by the Stockholders’ Representatives and
Federal (the “Auditor”) (which firm shall not be either of (a) the independent
public accountants of Federal or (b) the independent public accountants used by
C-CUBED prior to the Closing Date) who shall act as arbitrator and determine,
based solely on presentations by the Stockholders’ Representatives and Federal
and only with respect to the remaining differences so submitted, whether and to
what extent, if any, the Closing Balance Sheet requires adjustment. The Auditor
shall deliver its written determination to Federal and the Stockholders’
Representatives no later than the 30th day after the remaining differences
underlying the Objection are referred to the Auditor, or such longer period of
time as the Auditor determines is necessary. The Auditor’s determination shall
be conclusive and binding upon the parties. The fees and disbursements of the
Auditor shall be allocated equally between Federal and the Stockholders. Federal
and the Stockholders shall make readily available to the Auditor all relevant
information, books and records and any work papers relating to the Closing
Balance Sheet and all other items reasonably requested by the Auditor. In no
event may the Auditor’s resolution of any difference be for an amount which is
outside the range of Federal’s and the Stockholders’ Representatives’
disagreement.

 

(d) Final Closing Balance Sheet. The Closing Balance Sheet shall become final
and binding upon the parties upon the earlier of (a) the Stockholders’
Representatives’ failure to object thereto within the period permitted under
Section 2.5.2(c), (b) the agreement between Federal and the Stockholders’
Representative with respect thereto and (c) the decision by the Auditor with
respect to any disputes under Section 2.5.2(c). The Closing Balance Sheet, as
adjusted pursuant to the agreement of the parties or decision of the Auditor,
when final and binding is referred to herein as the “Final Closing Balance
Sheet.”

 

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2.5.3 Adjustments to the Purchase Price. As soon as practicable (but not more
than five business days) after the date on which the Final Closing Balance Sheet
shall have been determined in accordance with this Section 2.5.3:

 

(a) the Escrow Agent shall:

 

(i) release from the ESOP Adjustments and Claims Escrow and pay to Federal an
amount in immediately available funds equal to the product of (1) the amount, if
any, by which the Net Worth (after the M Street Lease Adjustment) as set forth
in the Final Closing Balance Sheet is less than the amount of Net Worth (after
the M Street Lease Adjustment) as set forth in the Estimated Closing Balance
Sheet and (2) the ESOP Percentage. The difference between any payment to Federal
pursuant to this Section 2.5.3(a)(i) and the product of $2,000,000 (Two Million
Dollars) and the ESOP Percentage, shall be released to the ESOP Stockholders’
Representative; and

 

(ii) release from the Non-ESOP Adjustments and Claims Escrow and pay to Federal
an amount in immediately available funds equal to the product of (1) the amount,
if any, by which the Net Worth (after the M Street Lease Adjustment) as set
forth in the Final Closing Balance Sheet is less than the amount of Net Worth
(after the M Street Lease Adjustment) as set forth in the Estimated Closing
Balance Sheet and (2) the Non-ESOP Percentage. The difference between any
payment to Federal pursuant to this Section 2.5.3(a)(ii) and the product of
$2,000,000 (Two Million Dollars) and the Non-ESOP Percentage shall be released
to the Non-ESOP Stockholders’ Representative as Paying Agent; and

 

(b) Federal shall pay to:

 

(i) the ESOP Stockholder an amount in immediately available funds equal to the
product of (1) the amount, if any, by which the Net Worth (after the M Street
Lease Adjustment) as set forth in the Final Closing Balance Sheet is greater
than the Net Worth (after the M Street Lease Adjustment) as set forth in the
Estimated Closing Balance Sheet and (2) the ESOP Percentage; and

 

(ii) the Non-ESOP Stockholders’ Representative, as Paying Agent, an amount in
immediately available funds equal to the product of (1) the amount, if any, by
which the Net Worth (after the M Street Lease Adjustment) as set forth in the
Final Closing Balance Sheet is greater than the Net Worth (after the M Street
Lease Adjustment) as set forth in the Estimated Closing Balance Sheet and (2)
the Non-ESOP Percentage; and

 

(c) Pursuant to Section 2.5.3(b) following payment by Federal to the ESOP
Shareholder’s Representative and the Non-ESOP Stockholder’s Representative,
respectively, of any amount by which the Net Worth as set forth in the Final
Closing Balance Sheet is greater than the Net Worth as set forth in the
Estimated Closing Balance Sheet, the Escrow Agent shall:

 

(i) release from the ESOP Adjustments and Claims Escrow and pay to the ESOP
Stockholder’s Representative an amount in immediately available funds equal to
the product of (1) $2,000,000 (Two Million Dollars) and (2) the ESOP Percentage;
and

 

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(ii) release from the Non-ESOP Adjustments and Claims Escrow and pay to the
Non-ESOP Stockholders’ Representative as paying agent an amount in immediately
available funds equal to the product of (1) $2,000,000 (Two Million Dollars) and
(2) the Non-ESOP Percentage.

 

All payments made pursuant to this Section 2.5.3 shall constitute immediate
adjustments of the Purchase Price in such amounts.

 

Article 3

REPRESENTATIONS AND WARRANTIES OF C-CUBED AND THE STOCKHOLDERS

 

C-CUBED and each of the Stockholders jointly and severally represent and warrant
to Parent and Federal as follows. Except where the context requires otherwise,
all references to the “C-CUBED” in this Article 3 refer to both the C-CUBED and
each of its Subsidiaries.

 

3.1 Corporate Status of C-CUBED. Except as set forth on Schedule 3.1 hereto,
C-CUBED is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia, with the requisite corporate
power to own, operate and lease its properties and to carry on its business as
now being conducted. Except as set forth on Schedule 3.1 hereto, C-CUBED is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in all jurisdictions in which the character of the properties owned or
held under lease by it or the nature of the business transacted by it makes
qualification necessary, except where failure to be so qualified would not have
an C-CUBED Material Adverse Effect. All jurisdictions in which C-CUBED is
qualified to do business are set forth on Schedule 3.1 hereto.

 

3.2 Capital Stock.

 

3.2.1 Authorized Stock of C-CUBED. The authorized capital stock of C-CUBED
consists of 500,000 shares of C-CUBED Common Stock, of which 232,278 shares are
issued and outstanding or subject to options (excluding 0 shares held in
Treasury). All of the outstanding shares of C-CUBED Common Stock have been duly
authorized and validly issued, were not issued in violation of any Person’s
preemptive rights, and are fully paid and nonassessable. The Stockholders, and
the other owners who own C-CUBED Common Stock or will own C-CUBED Common Stock
at Closing pursuant to the exercise of their options and who are listed on
Schedule A, own together, and will own together at Closing, all the outstanding
shares of C-CUBED Common Stock.

 

3.2.2 Options and Convertible Securities of C-CUBED. Except as set forth on
Schedule 3.2.2, there are no outstanding subscriptions, options, warrants,
conversion rights or other rights, securities, agreements or commitments
obligating C-CUBED to issue, sell or otherwise dispose of shares of its capital
stock, or any securities or obligations convertible into, or exercisable or
exchangeable for, any shares of its capital stock. Except as set forth on
Schedule 3.2.2, there are no voting trusts or other agreements or understandings
to which C-CUBED or any Stockholder is a party with respect to the voting of the
shares of C-CUBED Common Stock and C-CUBED is neither a party to, nor bound by,
any outstanding restrictions, options or other obligations, agreements or
commitments to sell, repurchase, redeem or acquire any outstanding shares of
C-CUBED Common Stock or any other securities of C-CUBED.

 

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3.3 Subsidiaries. C-CUBED owns all of the capital stock of each of the
corporations named on Schedule 3.3, and the jurisdiction and date of
organization of each such corporation, as well as the date on which C-CUBED
acquired or organized each such corporation is listed opposite the name of such
corporation on such schedule. C-CUBED has no Subsidiaries other than those named
on Schedule 3.3. Except as set forth on Schedule 3.3, C-CUBED has not acquired,
sold, divested or liquidated any corporate entity or line of business. Except as
set forth on Schedule 3.3, CAC conducts no business and has no liabilities or
employees. On the date of this signing or Closing, the assets of CAC, if any,
that were CAC assets at the time CAC became a qualified subchapter S subsidiary,
have a gross value of zero.

 

3.4 Authority for Agreement; Noncontravention.

 

3.4.1 Authority. C-CUBED has the corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby to the
extent of its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, to the
extent of C-CUBED’s obligations hereunder, have been duly and validly authorized
by the board of directors of C-CUBED and no other corporate proceedings on the
part of C-CUBED are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, to the
extent of C-CUBED’s obligations hereunder. This Agreement and the other
agreements contemplated hereby to be signed by C-CUBED have been duly executed
and delivered by C-CUBED and constitute valid and binding obligations of
C-CUBED, enforceable against C-CUBED in accordance with their terms, subject to
the qualifications that enforcement of the rights and remedies created hereby
and thereby is subject to (a) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws of general application affecting the
rights and remedies of creditors and (b) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

 

3.4.2 No Conflict. Except as set forth on Schedule 3.4.2 hereto, none of the
execution, delivery or performance of this Agreement and the agreements
referenced herein, nor the consummation of the transactions contemplated hereby
or thereby will (a) conflict with or result in a violation of any provision of
C-CUBED’s charter documents or by-laws, (b) with or without the giving of notice
or the lapse of time, or both, conflict with, or result in any violation or
breach of, or constitute a default under, or result in any right to accelerate
or result in the creation of any lien, charge or encumbrance pursuant to, or
right of termination under, any provision of any note, mortgage, indenture,
lease, instrument or other agreement, permit, concession, grant, franchise,
license, judgment, order, decree, statute, ordinance, rule or regulation to
which C-CUBED is a party or by which C-CUBED or any of its assets or properties
are bound or which is applicable to C-CUBED or any of its assets or properties.
Except to the extent that novation is required as further described in Section
6.6.2 below, no authorization, consent or approval of, or filing with or notice
to, any United States or foreign governmental or public body or authority (each
a “Governmental Entity”) is necessary for the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for such consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have an C-CUBED Material Adverse Effect.

 

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3.5 Financial Statements. A copy of C-CUBED’s balance sheet as of June 30, 2003
and C-CUBED’s statements of operations, cash flows and changes in stockholders’
equity for the year then ended is attached hereto as Schedule 3.5A and a copy of
C-CUBED’s balance sheet as of July 31, 2003, prepared in the ordinary course of
business without footnotes, is attached hereto as Schedule 3.5B. Such balance
sheets and statements of operations, cash flows and changes in stockholder’s
equity are fairly presented and complete. The annual financial statements will
be audited by McGladrey Pullen LLP, certified public accountants. Collectively,
the financial statements referred to in the immediately preceding sentence are
sometimes referred to herein as the “C-CUBED Financial Statements” and C-CUBED’s
balance sheet as of July 31, 2003 is referred to herein as the “C-CUBED Balance
Sheet.” Each of the balance sheets included in the C-CUBED Financial Statements
(including any related notes) fairly presents in all material respects C-CUBED’s
financial position as of their respective dates, and the other statements
included in the C-CUBED Financial Statements (including any related notes)
fairly present in all material respects C-CUBED’s results of operations, cash
flows and stockholders’ equity, as the case may be, for the periods therein set
forth, in each case in accordance with GAAP and prepared in accordance with
C-CUBED accounting methodology provided it is consistent with GAAP, subject, in
the case of the one month period ended July 31, 2003, to normal year-end
adjustments (all except as otherwise stated therein).

 

3.6 Absence of Material Adverse Changes. Except as set forth on Schedule 3.6
hereto, since the date of the Letter of Intent, C-CUBED has not suffered any
C-CUBED Material Adverse Effect, and there has not occurred or arisen any event,
condition or state of facts of any character that could reasonably be expected
to result in an C-CUBED Material Adverse Effect.

 

3.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule 3.7,
C-CUBED has no Liabilities that are not fully reflected or provided for on, or
disclosed in the notes to, the balance sheets included in the C-CUBED Financial
Statements, except (a) Liabilities incurred in the ordinary course of business
since the date of the C-CUBED Balance Sheet, none of which individually or in
the aggregate has had or could reasonably be expected to have an C-CUBED
Material Adverse Effect, (b) Liabilities permitted or contemplated by this
Agreement, and (c) Liabilities expressly disclosed on the Schedules delivered
hereunder.

 

3.8 Compliance with Applicable Law, Charter and By-Laws. C-CUBED has all
requisite licenses, permits and certificates from all Governmental Entities
necessary to conduct its business as currently conducted, and to own, lease and
operate its properties in the manner currently held and operated (collectively,
“Permits”), except as set forth on Schedule 3.8 hereto and except for any
Permits the absence of which, in the aggregate, do not and could not reasonably
be expected to have an C-CUBED Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated hereby. All of such
Permits are in full force and effect. C-CUBED is in compliance in all material
respects with all the terms and conditions related to such Permits. There are no
proceedings in progress, pending or, to the Knowledge of C-CUBED, threatened,
which may result in revocation, cancellation, suspension, or any materially
adverse modification of any of such Permits. To the Knowledge of C-CUBED, the
business of C-CUBED is not being, and has not been, conducted in violation of
any

 

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applicable law, statute, ordinance, regulation, rule, judgment, decree, order,
Permit, concession, grant or other authorization of any Governmental Entity.
C-CUBED is not in default or violation of any provision of its charter documents
or its by-laws.

 

Set forth on Schedule 3.8 is a list of the jurisdictions in which C-CUBED is not
authorized to do business, but where C-CUBED nevertheless does business or has a
physical presence, or in which any of C-CUBED’s employees work.

 

3.9 Litigation and Audits. Except for any claim, action, suit or proceeding set
forth on Schedule 3.9 or Schedule 3.10.3 hereto, (a) no Governmental Entity has
indicated to C-CUBED an intention to conduct an investigation, (b) to the
Knowledge of C-CUBED there is no investigation by any Governmental Entity with
respect to C-CUBED pending or threatened, (c) there is no claim, action, suit,
arbitration or proceeding pending or, to the Knowledge of C-CUBED, threatened
against or involving C-CUBED or any of its assets or properties, at law or in
equity, or before any arbitrator or Governmental Entity, that, if adversely
determined, either singly or in the aggregate, would have an C-CUBED Material
Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated hereby; and (d) there are no judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator outstanding
against C-CUBED.

 

3.10 Tax Matters.

 

3.10.1 Filing of Returns. Each of C-CUBED and its Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by any of C-CUBED and its Subsidiaries
(whether or not shown on any Tax Return) have been paid. None of C-CUBED or its
Subsidiaries is currently the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where C-CUBED or any of its Subsidiaries does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of C-CUBED or its Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.

 

3.10.2 Payment of Taxes. Each of C-CUBED and its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.

 

3.10.3 Assessments or Disputes. None of Bednar, Teague, Lugar and Moe, nor any
director or officer (or employee responsible for Tax matters) of C-CUBED or its
Subsidiaries, expects any authority to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of C-CUBED or its Subsidiaries either (a) claimed
or raised by any authority or (b) as to which Bednar, Teague, Lugar, Moe or any
of the directors and officers (and employees responsible for Tax matters) of
C-CUBED or its Subsidiaries has knowledge based upon personal contact with any
agent of such authority. Schedule 3.10.3 lists all federal, state, local, and
foreign income Tax Returns filed with respect to C-CUBED and its Subsidiaries
for taxable periods ended on or after December 31, 1997, indicates those Tax
Returns that have been audited and indicates those Tax Returns that currently
are the subject of audit. C-CUBED and its Subsidiaries has delivered to Federal
correct and complete copies of all income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by C-CUBED or its
Subsidiaries.

 

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3.10.4 Waiver of Statute of Limitations. None of C-CUBED and its Subsidiaries
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.

 

3.10.5 Collapsible Corporations, Golden Parachutes, Real Property Holding
Corporations. None of C-CUBED and its Subsidiaries has filed a consent under
Code section 341(f) concerning collapsible corporations. None of C-CUBED and its
Subsidiaries has made any payments, is obligated to make any payments or is a
party to any agreement that under certain circumstances could obligate it to
make any payments, that will not be deductible under Code section 280G. None of
C-CUBED and its Subsidiaries has been a United States real property holding
corporation within the meaning of Code section 897(c)(2) during the applicable
period specified in Code section 897(c)(1)(A)(ii). None of C-CUBED and its
Subsidiaries is a party to any Tax allocation or sharing agreement. None of
C-CUBED and its Subsidiaries (A) has been a member of an Affiliated Group filing
a consolidated federal income Tax Return (other than a group the common parent
of which was C-CUBED) or (B) has any Liability for the Taxes of any Person
(other than C-CUBED and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

 

3.10.6 Tax Basis. Schedule 3.10.6 sets forth (a) the basis of C-CUBED in each of
the assets of C-CUBED and its qualified subchapter Subsidiaries, to the
Knowledge of C-CUBED the Fair Market Value of the total assets of C-CUBED on the
day C-CUBED became an S Corporation, to the Knowledge Of C-CUBED the Fair Market
Value of each of C-CUBED’s qualified subchapter S subsidiaries on the day each
such qualified subsidiary became a qualified subchapter S subsidiary (b) the
adjusted tax basis of each of the assets of C-CUBED on the day C-CUBED became an
S corporation and (c) the adjusted tax basis of each of the assets of each of
C-CUBED’s qualified subchapter S subsidiaries on the day each such qualified
subchapter S subsidiary became a qualified subchapter S subsidiary.

 

3.10.7 Unpaid Taxes. The unpaid Taxes of C-CUBED and its Subsidiaries (a) did
not, as of the date of the C-CUBED Balance Sheet, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
C-CUBED Balance Sheet (rather than in any notes thereto) and (b) do not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of C-CUBED in filing its Tax
Returns.

 

3.10.8 Unclaimed Property. None of C-CUBED and its Subsidiaries has any assets
that may constitute unclaimed property under applicable law. C-CUBED and its
Subsidiaries have complied in all material respects with all applicable
unclaimed property laws. Without limiting the generality of the foregoing,
C-CUBED and its Subsidiaries have established and followed procedures to
identify any unclaimed property and, to the extent required by applicable law,
remit such unclaimed property to the applicable governmental authority. The
records of C-CUBED and its Subsidiaries are adequate to permit a governmental
agency or authority or other outside auditor to confirm the foregoing
representations.

 

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3.10.9 No Changes in Accounting, Closing Agreement, Installment Sale. Except as
set forth on Schedule 3.10.9, none of C-CUBED and its Subsidiaries will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (a) change in method of accounting for a
taxable period ending on or prior to the Closing Date under Code section 481(c)
(or any corresponding or similar provision of state, local or foreign income Tax
law); (b) ”closing agreement” as described in Code section 7121 (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (c) deferred intercompany gain or any
excess loss account described in Treasury Regulations under Code section 1502
(or any corresponding or similar provision of state, local or foreign income Tax
law); (d) installment sale or open transaction disposition made on or prior to
the Closing Date; or (e) prepaid amount received on or prior to the Closing
Date.

 

3.10.10 S Corporation. C-CUBED (and any predecessor of C-CUBED) has been a
validly electing S corporation within the meaning of Code sections 1361 and 1362
at all times since July 1, 1998, and C-CUBED will be an S corporation up to and
including the Closing Date. Schedule 3.10.10 identifies each C-CUBED Subsidiary,
indicates each C-CUBED Subsidiary that is a “qualified subchapter S subsidiary”
within the meaning of Code section 1361(b)(3)(B), and the date each such C-CUBED
Subsidiary became a qualified subchapter S subsidiary. Each Subsidiary so
identified has been a qualified subchapter S subsidiary at all times since the
date shown on such schedule up to and including the Closing Date. None of the
assets of SIR has any unrecognized built-in gain.

 

3.10.11 Election. Except as set forth on Schedule 3.10.11, neither C-CUBED nor
any of its Subsidiaries has, in the past 10 years, (a) acquired assets from
another corporation in a transaction in which C-CUBED’s Tax basis for the
acquired assets was determined, in whole or in part, by reference to the Tax
basis of the acquired assets (or any other property) in the hands of the
transferor or (b) acquired the stock of any corporation which is a qualified
subchapter S subsidiary.

 

3.11 Employee Benefit Plans.

 

3.11.1 List of Plans. Schedule 3.11.1 hereto contains a correct and complete
list of all pension, profit sharing, retirement, deferred compensation, welfare,
legal services, medical, dental or other employee benefit or health insurance
plans, life insurance or other death benefit plans, disability, stock option,
stock purchase, stock compensation, bonus, vacation pay, severance pay and other
similar plans, programs or agreements, and every material written personnel
policy, relating to any persons employed by C-CUBED or in which any person
employed by C-CUBED is eligible to participate and which is currently maintained
by C-CUBED or any ERISA Affiliate of C-CUBED (collectively, the “C-CUBED
Plans”). C-CUBED has delivered to Parent (a) accurate and complete copies of all
C-CUBED Plan documents and all other material documents relating thereto,
including (if applicable) all documents establishing or constituting any related
trust, annuity contract, insurance contract or other funding instruments, and
summary plan descriptions relating to said C-CUBED Plans, (b)

 

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accurate and complete copies of the most recent financial statements and
actuarial reports with respect to all C-CUBED Plans for which financial
statements or actuarial reports are required or have been prepared, and (c)
accurate and complete copies of all annual reports and summary annual reports
for all C-CUBED Plans (for which annual reports are required or have been
prepared). C-CUBED has also delivered to Parent complete copies of other current
plan summaries, employee booklets, personnel manuals and other material
documents or written materials concerning the C-CUBED Plans that are in
possession of C-CUBED as of the date hereof. C-CUBED has no “defined benefit
plans” as defined in Section 3(35) of ERISA. C-CUBED has no current or
contingent obligation to contribute to any multiemployer plan (as defined in
Section 3(37) of ERISA).

 

3.11.2 ERISA. Except as set forth on Schedule 3.11.2, neither C-CUBED nor any
ERISA Affiliate of C-CUBED has incurred any “withdrawal liability” calculated
under Section 4211 of ERISA and there has been no event or circumstance which
would cause any of them to incur any such liability. No plan previously
maintained by C-CUBED or any ERISA Affiliate of C-CUBED which was subject to
ERISA has been terminated; no proceedings to terminate any such plan have been
instituted within the meaning of Subtitle C of Title IV of ERISA; and no
reportable event within the meaning of Section 4043 of said Subtitle C of Title
IV of ERISA with respect to which the requirement to file a notice with the
Pension Benefit Guaranty Corporation has not been waived has occurred with
respect to any such C-CUBED Plan, and no liability to the Pension Benefit
Guaranty Corporation has been incurred by C-CUBED or any ERISA Affiliate of
C-CUBED. Except as set forth on Schedule 3.11.2, with respect to all C-CUBED
Plans, C-CUBED and C-CUBED’s ERISA Affiliates are in material compliance with
all requirements prescribed by all statutes, regulations, orders or rules
currently in effect, and have in all material respects performed all obligations
required to be performed by them. All returns, reports and disclosure statements
required to be made under ERISA and the Code with respect to all C-CUBED Plans
have been timely filed or delivered. For any returns, reports or disclosures
attributable to, but not yet required to be filed for, the current or prior plan
years, C-CUBED will ensure that all resources necessary to complete the
outstanding returns, reports or disclosures are provided to Parent and will
ensure accurate and timely completion of said returns, reports or disclosures.
All fees required to be paid in connection with the administration of any ERISA
plan have been disclosed. All fees required to be paid as a result of the
termination of any plan recordkeeping agreements have been disclosed. To the
Knowledge of C-CUBED, neither C-CUBED nor any ERISA Affiliate of C-CUBED, nor
any of their directors, officers, employees or agents, nor any trustee or
administrator of any trust created under the C-CUBED Plans, has engaged in or
been a party to any “prohibited transaction” as defined in Section 4975 of the
Code or Section 406 of ERISA which could subject C-CUBED or any Affiliate of
C-CUBED, or any director or employee of any C-CUBED Plan or any trust relating
to any C-CUBED Plan, or any party dealing with any C-CUBED Plan or trust
relating thereto to any tax or penalty on “prohibited transactions” imposed by
Section 4975 of the Code. Except as set forth on Schedule 3.11.2, neither the
C-CUBED Plans nor any of the trusts created thereunder have incurred any
“accumulated funding deficiency,” as such term is defined in Section 412 of the
Code and regulations issued thereunder, whether or not waived.

 

3.11.3 Plan Determinations. Each C-CUBED Plan intended to qualify under Section
401(a) of the Code has been determined by the Internal Revenue Service to so
qualify, and the trusts created thereunder have been determined to be exempt
from tax under

 

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Section 501(a) of the Code; copies of all determination letters have been
delivered to Parent, and, to the Knowledge of C-CUBED, nothing has occurred
since the date of such determination letters which might cause the loss of such
qualification or exemption, or result in the imposition of any excise tax or
income tax on unrelated business income under the Code or ERISA with respect to
any C-CUBED Plan. With respect to each C-CUBED Plan which is a qualified profit
sharing plan, all employer contributions accrued for plan years ending prior to
the Closing under C-CUBED Plan terms and applicable law have been made.

 

3.11.4 Funding. Except as set forth on Schedule 3.11.4:

 

(a) all contributions, premiums or other payments due or required to be made to
C-CUBED Plans as of the date hereof have been made as of the date hereof or are
properly reflected on C-CUBED Balance Sheet;

 

(b) there are no actions, liens, suits or claims (other than routine claims for
benefits) pending or, to the Knowledge of C-CUBED, threatened, with respect to
any C-CUBED Plan, nor is any C-CUBED Plan the subject of any pending (or to the
Knowledge of C-CUBED, any threatened) investigation or audit by the Internal
Revenue Service, Department of Labor or the Pension Benefit Guaranty
Corporation;

 

(c) no event has occurred, and there exists no condition or set of
circumstances, which presents a material risk of a partial termination (within
the meaning of Section 411(d)(3) of the Code) of any C-CUBED Plan; and

 

(d) with respect to any C-CUBED Plan that is qualified under Section 401(k) of
the Code, individually and in the aggregate, no event has occurred, and there
exists no condition or set of circumstances in connection with which C-CUBED
could be subject to any liability (except liability for benefits claims and
funding obligations payable in the ordinary course) that is reasonably likely to
have an C-CUBED Material Adverse Effect under ERISA, the Code or any other
applicable law.

 

3.11.5 Certain Other Matters. Except as reserved for on the Estimated Closing
Balance Sheet or the Final Closing Balance Sheet, C-CUBED has no liability or
potential liability in any form whatsoever, and C-CUBED will not have liability
or potential liability in any form whatsoever, with regard to any C-CUBED Plan,
as a result of the any failure to perform non-discrimination testing on an
C-CUBED Plan or any failure to amend an C-CUBED Plan pursuant to the legislation
commonly known as “GUST” or the legislation commonly known as “EGTRRA.” All
employee contributions, including elective deferrals, to C-CUBED’s 401(k)
plan(s) have been segregated from C-CUBED’s general assets and deposited into
the trust(s) established pursuant to such 401(k) plan(s) in a timely manner in
accordance with the “plan asset” regulations of the Department of Labor.

 

3.11.6 Welfare Plans. With respect to any C-CUBED Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a “Welfare
Plan”) and except as set forth on Schedule 3.11.6, (a) each Welfare Plan for
which contributions are claimed by C-CUBED as deductions under any provision of
the Code is in material compliance with all applicable requirements pertaining
to such deduction, (b) with respect to any

 

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welfare benefit fund (within the meaning of Section 419 of the Code) related to
a Welfare Plan, there is no disqualified benefit (within the meaning of Section
4976(b) of the Code) that would result in the imposition of a tax under Section
4976(a) of the Code, (c) all C-CUBED Plans that are group health plans (within
the meaning of Section 4980B(g)(2) of the Code) comply, and in each and every
case have complied, with all of the applicable material requirements of COBRA,
the Family Medical Leave Act of 1993, the Health Insurance and Portability and
Accountability Act of 1996, the Women’s Health and Cancer Rights Act of 1996,
the Newborns’ and Mothers’ Health Protection Act of 1996, and all similar
provisions of state law or foreign law applicable to employees of C-CUBED or any
ERISA Affiliate of C-CUBED. None of the C-CUBED Plans promises or provides
retiree medical or other retiree welfare benefits to any person except as
required by applicable law, and neither C-CUBED nor any ERISA Affiliate of
C-CUBED has represented, promised or contracted (whether in oral or written
form) to provide such retiree benefits to any employee, former employee,
director, consultant or other person, except to the extent required by statute.
No C-CUBED Plan or employment agreement provides health benefits that are not
insured through an insurance contract. Each C-CUBED Plan is amendable and
terminable unilaterally by C-CUBED at any time without liability to C-CUBED as a
result thereof and no C-CUBED Plan, plan documentation or agreement, summary
plan description or other written communication distributed generally to
employees by its terms prohibits C-CUBED from amending or terminating any such
C-CUBED Plan, provided that no amendment or termination adversely effects or
extinguishes any accrued benefits under a C-CUBED Plan prior to such amendment
or termination.

 

3.12 Employment-Related Matters.

 

3.12.1 Labor Relations. Except to the extent set forth on Schedule 3.12.1
hereto: (a) C-CUBED is not a party to any collective bargaining agreement or
other contract or agreement with any labor organization or other representative
of employees of C-CUBED; (b) there is no labor strike, dispute, slowdown, work
stoppage or lockout that is pending or, to the Knowledge of C-CUBED, threatened
against or otherwise affecting C-CUBED, and C-CUBED has not experienced the
same; (c) C-CUBED has not closed any plant or facility, effectuated any layoffs
of employees or implemented any early retirement or separation program at any
time, nor has C-CUBED planned or announced any such action or program for the
future with respect to which C-CUBED has any material liability; and (d) all
salaries, wages, vacation pay, bonuses, commissions and other compensation due
from C-CUBED before the date hereof have been paid or accrued as of the date
hereof.

 

3.12.2 Employee List. C-CUBED has heretofore delivered to Parent a list (the
“Employee List”) dated as of September 17, 2003 containing the name of each
person employed by C-CUBED and each such employee’s position, starting
employment date and annual salary. The Employee List is correct and complete as
of the date of the Employee List. No third party has asserted any claim or, to
the Knowledge of C-CUBED, has any reasonable basis to assert any claim against
C-CUBED that either the continued employment by, or association with, C-CUBED of
any of the present officers or employees of, or consultants to, C-CUBED
contravenes any agreement or law applicable to unfair competition, trade secrets
or proprietary information.

 

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3.13 Environmental.

 

3.13.1 Environmental Laws. Except as set forth on Schedule 3.13.1 hereto, (a)
C-CUBED is and has been in compliance with all applicable Environmental Laws in
effect on the date hereof; (b) C-CUBED has not received any written
communication that alleges that it is or was not in compliance with all
applicable Environmental Laws in effect on the date hereof; (c) there are no
circumstances that may prevent or interfere with compliance in the future with
any applicable Environmental Laws; (d) all Permits and other governmental
authorizations currently held by C-CUBED pursuant to the Environmental Laws are
in full force and effect, C-CUBED is in compliance with all of the terms of such
Permits and authorizations, and no other Permits or authorizations are required
by C-CUBED for the conduct of its business on the date hereof; (e) such Permits
will not be terminated or impaired or become terminable, in whole or in part,
solely as a result of the transactions contemplated hereby; and (f) the
management, handling, storage, transportation, treatment, and disposal by
C-CUBED of all Materials of Environmental Concern is and has been in compliance
with all applicable Environmental Laws.

 

3.13.2 Environmental Claims. Except as set forth on Schedule 3.13.2 hereto,
there is no Environmental Claim pending or, to the Knowledge of C-CUBED,
threatened, against or involving C-CUBED or against any Person whose liability
for any Environmental Claim C-CUBED has or may have retained or assumed either
contractually or by operation of law.

 

3.13.3 No Basis for Claims. Except as set forth on Schedule 3.13.3 hereto, there
are no past or present actions or activities by C-CUBED, or any circumstances,
conditions, events or incidents, including the storage, treatment, release,
emission, discharge, disposal or arrangement for disposal of any Material of
Environmental Concern, whether or not by C-CUBED, that could reasonably form the
basis of any Environmental Claim against C-CUBED or against any Person whose
liability for any Environmental Claim C-CUBED may have retained or assumed
either contractually or by operation of law, including, without limitation, the
storage, treatment, release, emission, discharge, disposal or arrangement for
disposal of any Material of Environmental Concern or any other contamination or
other hazardous condition, related to the premises at any time occupied by
C-CUBED. Without limiting the generality of the foregoing, except as set forth
on Schedule 3.13.3 hereto, C-CUBED has not received any notices, demands,
requests for information, investigations pertaining to compliance with or
liability under Environmental Law or Materials of Environmental Concern, nor, to
the Knowledge of C-CUBED, are any such notices, demands, requests for
information or investigations threatened.

 

3.13.4 Disclosure of Information. C-CUBED has made, and during the period
between the date of this Agreement and the Closing Date will continue to make,
available to Parent and Federal all environmental investigations, studies,
audits, tests, reviews and other analyses conducted in relation to Environmental
Laws or Materials of Environmental Concern that are in the possession, custody,
or control of C-CUBED and pertain to C-CUBED or any property or facility now or
previously owned, leased or operated by C-CUBED.

 

3.13.5 Liens. No lien imposed relating to or in connection with any
Environmental Claim, Environmental Law, or Materials of Environmental concern
has been filed or has been attached to any of the property or assets which are
owned, leased or operated by C-CUBED.

 

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3.14 No Broker’s or Finder’s Fees. Except as provided for in Section 2.2.2,
C-CUBED has neither paid nor become obligated to pay any fee or commission to
any broker, finder, financial advisor or intermediary in connection with the
transactions contemplated by this Agreement.

 

3.15 Assets Other Than Real Property.

 

3.15.1 Title. C-CUBED has good and marketable title to all of the tangible
assets shown on the C-CUBED Balance Sheet, and such title is in each case free
and clear of any mortgage, pledge, lien, security interest, lease or other
encumbrance (collectively, “Encumbrances”), except for (a) assets disposed of
since the date of the C-CUBED Balance Sheet in the ordinary course of business
and in a manner consistent with past practices, (b) liabilities, obligations and
Encumbrances reflected in the C-CUBED Balance Sheet or otherwise in the C-CUBED
Financial Statements, (c) Permitted Encumbrances, and (d) liabilities,
obligations and Encumbrances set forth on Schedule 3.15.1 hereto. Each of
C-CUBED’s tangible assets that has a present value of $5,000 or more or that is
otherwise material to C-CUBED’s business is listed on Schedule 3.15.1.

 

3.15.2 Accounts Receivable. Except as set forth on Schedule 3.15.2, all
receivables shown on the Final Closing Balance Sheet are good, valid and
existing accounts and all represent an undisputed, bona fide sale and delivery
of goods or services. The C-CUBED receivables have been collected or are
collectible in all material respects in the aggregate amount shown.

 

3.15.3 Condition. All material facilities, equipment and personal property owned
by C-CUBED and used in its business are in good operating condition and repair,
ordinary wear and tear excepted, and all such wear and tear taken in the
aggregate is not material to C-CUBED and does not affect C-CUBED’s business or
its obligations to perform under this Agreement.

 

3.16 Real Property.

 

3.16.1 C-CUBED Real Property. C-CUBED neither owns nor has owned any real
property.

 

3.16.2 C-CUBED Leases. Schedule 3.16.2 hereto lists all C-CUBED Leases. Complete
copies of the C-CUBED Leases, and all material amendments thereto (which are
identified on Schedule 3.16.2), have been made available by C-CUBED to Parent.
The C-CUBED Leases grant leasehold estates free and clear of all Encumbrances
(except Permitted Encumbrances) and no Encumbrances (except permitted
Encumbrances) have been granted by or caused by the actions of C-CUBED. The
C-CUBED Leases are in full force and effect and are binding and enforceable
against each of the parties thereto in accordance with their respective terms
subject to (a) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general application affecting the rights and
remedies of creditors and (b) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law). Except
as set forth on Schedule 3.16.2, neither C-CUBED nor, to the Knowledge of
C-CUBED, any other party to an C-CUBED Lease, has committed a material

 

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breach or default under any C-CUBED Lease, nor has there occurred any event that
with the passage of time or the giving of notice or both would constitute such a
breach or default, nor, to the Knowledge of C-CUBED, are there any facts or
circumstances that would reasonably indicate that C-CUBED is likely to be in
material breach or default under any C-CUBED Lease. Schedule 3.16.2 correctly
identifies each C-CUBED Lease the provisions of which would be materially and
adversely affected by the transactions contemplated hereby and each C-CUBED
Lease that requires the consent of any third party in connection with the
transactions contemplated hereby. No material construction, alteration or other
leasehold improvement work with respect to the real property covered by any
C-CUBED Lease remains to be paid for or to be performed by C-CUBED. Except as
set forth on Schedule 3.16.2, no C-CUBED Lease has an unexpired term which
including any renewal or extensions of such term provided for in such C-CUBED
Lease could exceed ten years.

 

3.16.3 Condition. All buildings, structures, leasehold improvements and
fixtures, or parts thereof, used by C-CUBED in the conduct of its business are
in good operating condition and repair, ordinary wear and tear excepted.

 

3.17 Agreements, Contracts and Commitments.

 

3.17.1 C-CUBED Agreements. Except as set forth on Schedule 3.17.1 hereto or any
other Schedule hereto, C-CUBED is not a party to:

 

(a) any bonus, deferred compensation, pension, severance, profit-sharing, stock
option, employee stock purchase or retirement plan, contract or arrangement or
other employee benefit plan or arrangement;

 

(b) any employment agreement with any present employee, officer, director or
consultant (or former employees, officers, directors and consultants to the
extent there remain at the date hereof obligations to be performed by C-CUBED);

 

(c) any agreement for personal services or employment with a term of service or
employment specified in the agreement or any agreement for personal services;

 

(d) any agreement of guarantee or indemnification in an amount that is material
to C-CUBED taken as a whole;

 

(e) any agreement or commitment containing a covenant limiting or purporting to
limit the freedom of C-CUBED to compete with any Person in any geographic area
or to engage in any line of business;

 

(f) any lease other than the C-CUBED Leases under which C-CUBED is lessee;

 

(g) any joint venture or profit-sharing agreement (other than with employees);

 

(h) except for trade indebtedness incurred in the ordinary course of business
and equipment leases entered into in the ordinary course of business, any loan
or credit agreements providing for the extension of credit to C-CUBED or any
instrument evidencing or

 

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related in any way to indebtedness incurred in the acquisition of companies or
other entities or indebtedness for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale, guarantee, or
otherwise that individually is in the amount of $25,000 or more;

 

(i) any license agreement, either as licensor or licensee, involving payments
(including past payments) of $25,000 in the aggregate or more, or any
distributor, dealer, reseller, franchise, manufacturer’s representative, or
sales agency or any other similar material contract or commitment;

 

(j) any agreement granting exclusive rights to, or providing for the sale of,
all or any portion of the C-CUBED Proprietary Rights;

 

(k) any agreement or arrangement providing for the payment of any commission
based on sales other than to employees of C-CUBED;

 

(l) any agreement for the sale by C-CUBED of materials, products, services or
supplies that involves future payments to C-CUBED of more than $25,000;

 

(m) any agreement for the purchase by C-CUBED of any materials, equipment,
services, or supplies, that either (i) involves a binding commitment by C-CUBED
to make future payments in excess of $25,000 and cannot be terminated by it
without penalty upon less than three months’ notice or (ii) was not entered into
in the ordinary course of business;

 

(n) any agreement or arrangement with any third party for such third party to
develop any intellectual property or other asset expected to be used or
currently used or useful in the business of C-CUBED;

 

(o) any agreement or commitment for the acquisition, construction or sale of
fixed assets owned or to be owned by C-CUBED that involves future payments by
C-CUBED of more than $25,000;

 

(p) any agreement or commitment to which present or former directors, officers
or Affiliates of C-CUBED, or directors or officers of any Affiliate of any of
the foregoing, are also parties;

 

(q) any agreement not described above (ignoring, solely for this purpose, any
dollar amount thresholds in those descriptions) involving the payment or receipt
by C-CUBED of more than $25,000, other than the C-CUBED Leases;

 

(r) any agreement not described above that was not made in the ordinary course
of business and that is material to the financial condition, business,
operations, assets, results of operations or prospects of C-CUBED; or

 

(s) any agreement that provides for any continuing or future obligation of
C-CUBED, actual or contingent, including but not limited to any continuing
representation or warranty or any indemnification obligation, that arose in
connection with the disposition of any business or assets of C-CUBED.

 

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3.17.2 Validity. Except as set forth on Schedule 3.17.2, all contracts, leases,
instruments, licenses and other agreements required to be set forth on Schedule
3.17.1 are valid and in full force and effect; neither C-CUBED nor, to the
Knowledge of C-CUBED, any other party thereto, has breached any provision of, or
defaulted under the terms of any such contract, lease, instrument, license or
other agreement, except for any breaches or defaults that, in the aggregate,
would not be expected to have an C-CUBED Material Adverse Effect or have been
cured or waived; and C-CUBED has not received any “notice to cure” or a similar
notice from any Governmental Entity requesting performance under any contract,
instrument or other agreement between C-CUBED and such Governmental Entity.

 

3.17.3 Third-Party Consents. Schedule 3.17.3 identifies each contract and other
document set forth on Schedule 3.17.1 that requires the consent of a third party
in connection with the transactions contemplated hereby.

 

3.18 Intellectual Property.

 

3.18.1 No Conflicts. Except as set forth on Schedule 3.18.1 hereto, C-CUBED
owns, or has perpetual, fully paid, worldwide rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, net lists, schematics, technology, know-how, computer
software programs or applications (in both source code and object code form),
and tangible or intangible proprietary information or material (excluding
Commercial Software) that are used in the business of C-CUBED as currently
conducted (the “C-CUBED Proprietary Rights”). Except as set forth on Schedule
3.18.1, C-CUBED is the sole and exclusive owner or licensee of, with all right,
title and interest in and to (free and clear of any and all liens, claims and
encumbrances), all rights included among the C-CUBED Proprietary Rights, and
C-CUBED has sole and exclusive rights (and is not contractually obligated to pay
any compensation to any third party in respect thereof) to the use thereof or
the material covered thereby in connection with the services or products in
respect of which C-CUBED Proprietary Rights are being used or might reasonably
be used. No claims with respect to C-CUBED Proprietary Rights have been asserted
or, to the Knowledge of C-CUBED, are threatened by any Person nor are there any
valid grounds for any bona fide claims (a) to the effect that the manufacture,
sale, licensing or use of any of the products of C-CUBED as now manufactured,
sold or licensed or used or proposed for manufacture, use, sale or licensing by
C-CUBED infringes on any copyright, patent, trademark, service mark, trade
secret or other proprietary right, (b) against the use by C-CUBED of any
trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in
C-CUBED’s business as currently conducted or as proposed to be conducted, or (c)
challenging the ownership by C-CUBED, or the validity or effectiveness, of any
of C-CUBED Proprietary Rights. All material registered trademarks, service marks
and copyrights held by C-CUBED are valid and subsisting in the jurisdictions in
which they have been filed. There is no material unauthorized use, infringement
or misappropriation of any of C-CUBED Proprietary Rights by any third party,
including any employee or former employee of C-CUBED. No C-CUBED Proprietary
Right or product of C-CUBED is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the use, licensing or
transfer thereof by C-CUBED. Except as set forth in Schedule 3.18.1, C-CUBED has
not entered into any agreement under which C-CUBED is restricted from selling,
licensing or otherwise distributing any of its products to any class of
customers, in any

 

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geographic area, during any period of time or in any segment of the market.
C-CUBED’s products, packaging and documentation contain copyright notices
sufficient to maintain copyright protection on the copyrighted portions of the
C-CUBED Proprietary Rights. C-CUBED is not in violation of any license,
sublicense or agreement described on Schedule 3.18.2, except such violations as
do not materially impair C-CUBED’s rights under such license, sublicense or
agreement. Except as disclosed in this Article 3, the execution and delivery of
this Agreement by C-CUBED, and the consummation of the transactions contemplated
hereby, will neither cause C-CUBED to be in violation or default under any such
license, sublicense or agreement, nor entitle any other party to any such
license, sublicense or agreement to terminate or modify such license, sublicense
or agreement. The Commercial Software used in the business of C-CUBED in each
case has been acquired and used by C-CUBED on the basis of and in accordance
with a valid license from the manufacturer or the dealer authorized to
distribute such Commercial Software, free and clear of any claims or rights of
any third parties. C-CUBED is not in breach of any of the terms and conditions
of any such license and C-CUBED has not been infringing upon any rights of any
third parties in connection with its acquisition or use of the Commercial
Software.

 

3.18.2 Proprietary Rights; Licenses. Set forth on Schedule 3.18.2 is a complete
list of all patents, trademarks, registered copyrights, trade names and service
marks, and any applications therefor, included in C-CUBED Proprietary Rights,
specifying, where applicable, the jurisdictions in which each such C-CUBED
Proprietary Right has been issued or registered or in which an application for
such issuance and registration has been filed, including the respective
registration or application numbers and the names of all registered owners.
Except as set forth on Schedule 3.18.2, no software product currently marketed
by C-CUBED has been registered for copyright protection with the United States
Copyright Office or any foreign offices nor has C-CUBED been requested to make
any such registration. Set forth on Schedule 3.18.2 is a complete list of all
domain names, Secure Socket Layer (SSL) certificates and other World Wide Web
certificates owned by C-CUBED, which list includes all domain names used by
C-CUBED in its business and respective registrars. Set forth on Schedule 3.18.2
is a complete list of all material licenses, sublicenses and other agreements as
to which C-CUBED is a party and pursuant to which C-CUBED or any other Person is
authorized to use any C-CUBED Proprietary Right or trade secrets material to the
business of C-CUBED; such schedule includes the identity of all parties to such
licenses, sublicenses and other agreements, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof. A complete
list of the Commercial Software used in the business of C-CUBED is set forth on
Schedule 3.18.2.

 

3.18.3 Employee Agreements. Except as set forth on Schedule 3.18.3, no employee,
officer and consultant of C-CUBED has executed a C-CUBED Corporation
Acknowledgment of Duties and Responsibilities Relating to Ideas and Inventions
and a C-CUBED Corporation Confidentiality Agreement in substantially the form
attached hereto as Exhibit 3.18.3. To the Knowledge of C-CUBED no employee,
officer or consultant of C-CUBED is in violation of any term of any employment
or consulting contract, proprietary information and inventions agreement,
non-competition agreement, or any other contract or agreement relating to the
relationship of any such employee, officer or consultant with C-CUBED or any
previous employer.

 

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3.19 Insurance Contracts. Schedule 3.19 hereto lists all contracts of insurance
and indemnity in force at the date hereof with respect to C-CUBED. Such
contracts of insurance and indemnity and those shown in other Schedules to this
Agreement (collectively, the “C-CUBED Insurance Contracts”) insure against such
risks, and are in such amounts, as are appropriate and reasonable considering
C-CUBED’s property, business and operations. All of the C-CUBED Insurance
Contracts are in full force and effect, with no default thereunder by C-CUBED
which could permit the insurer to deny payment of claims thereunder. All
premiums due and payable thereon have been paid and C-CUBED has not received
notice from any of its insurance carriers that any insurance premiums will be
materially increased in the future or that any insurance coverage provided under
any of the C-CUBED Insurance Contracts will not be available in the future on
substantially the same terms as now in effect. C-CUBED has not received or given
a notice of cancellation with respect to any of the C-CUBED Insurance Contracts.

 

3.20 Banking Relationships. Schedule 3.20 hereto shows the names and locations
of all banks and trust companies in which C-CUBED has accounts, lines of credit
or safety deposit boxes and, with respect to each account, line of credit or
safety deposit box, the names of all Persons authorized to draw thereon or to
have access thereto, as well as the account or other numbers of designation
thereof.

 

3.21 No Contingent Liabilities. Except as set forth on Schedule 3.21, C-CUBED
has no contingent or conditional liabilities or obligations of any kind arising
from or relating to any acquisition of a Subsidiary or line of business.

 

3.22 Absence of Certain Relationships. Except as set forth on Schedule 3.22,
none of (a) C-CUBED, (b) any executive officer of C-CUBED, (c) any Stockholder,
or (d) any member of the immediate family of the Persons listed in (a) through
(c) of this sentence, has any financial or employment interest in any
subcontractor, supplier, or customer of C-CUBED (other than holdings in publicly
held companies of less than one percent (1%) of the outstanding capital stock of
any such publicly held company). C-CUBED has described in Schedule 3.17.1 each
and every agreement currently in effect between: (a) C-CUBED and/or its
Subsidiaries and (b) Del Rey Systems & Technology Inc.

 

3.23 Foreign Corrupt Practices. Neither C-CUBED, nor any Affiliate of C-CUBED,
nor any other Person associated with or acting for or on behalf of the any of
the foregoing, has directly or indirectly taken any action which would cause
C-CUBED to be in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, or any rules and regulations thereunder. To the Knowledge of
C-CUBED neither C-CUBED, nor any Affiliate of C-CUBED, nor any other Person
associated with or acting for or on behalf of any of the foregoing, has directly
or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kick-back, or other payment to any Person, private or public,
regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of C-CUBED or any Affiliate of
C-CUBED, or (iv) in violation of any law or regulation, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of C-CUBED.

 

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Article 4

REPRESENTATIONS AND WARRANTIES OF PARENT AND FEDERAL

 

Parent and Federal, jointly and severally, represent and warrant to C-CUBED as
follows:

 

4.1 Corporate Status of Parent and Federal. Each of Parent and Federal is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with the requisite corporate power to own, operate and
lease its properties and to carry on its business as now being conducted.

 

4.2 Authority for Agreement; Noncontravention.

 

4.2.1 Authority of Parent. Each of Parent and Federal has the corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the boards of directors of Parent and Federal and no other
corporate proceedings on the part of Parent or Federal are necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement and the other agreements
contemplated hereby to be signed by Parent or Federal have been duly executed
and delivered by Parent and/or Federal, as the case may be, and constitute valid
and binding obligations of Parent and/or Federal, as the case may be,
enforceable against Parent and/or Federal in accordance with their terms,
subject to the qualifications that enforcement of the rights and remedies
created hereby and thereby are subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws of general
application affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

 

4.2.2 No Conflict. Neither the execution and delivery of this Agreement by
Parent or Federal, nor the performance by Parent or Federal of its obligations
hereunder, nor the consummation by Parent or Federal of the transactions
contemplated hereby will (a) conflict with or result in a violation of any
provision of the Certificate of Incorporation or by-laws of either Parent or
Federal, or (b) with or without the giving of notice or the lapse of time, or
both, conflict with, or result in any violation or breach of, or constitute a
default under, or result in any right to accelerate or result in the creation of
any lien, charge or encumbrance pursuant to, or right of termination under, any
provision of any note, mortgage, indenture, lease, instrument or other
agreement, Permit, concession, grant, franchise, license, judgment, order,
decree, statute, ordinance, rule or regulation to which Parent, Federal or any
of Parent’s other Subsidiaries is a party or by which any of them or any of
their assets or properties is bound or which is applicable to any of them or any
of their assets or properties. No authorization, consent or approval of, or
filing with or notice to, any Governmental Entity is necessary for the execution
and delivery of this Agreement by Parent or Federal or the consummation by
Parent or Federal of the transactions contemplated hereby, except for such
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a Parent Material Adverse Effect.

 

4.3 SEC Statements, Reports and Documents. Parent has filed all required forms,
reports, statements and documents with the SEC since July 1, 2000. The documents
so filed by

 

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Parent and available in the public records of the SEC include (a) its Annual
Reports on Form 10-K for its fiscal years ended June 30, 2001 and June 30, 2002,
respectively, (b) its Quarterly Reports on Forms 10-Q for its fiscal quarters
ended September 30, 2002, December 31, 2002 and March 31, 2003, (c) all other
forms, reports, statements and documents filed or required to be filed by it
with the SEC since July 1, 2000, and (d) all amendments and supplements to all
such reports and registration statements filed by Parent with the SEC (the
documents referred to in clauses (a), (b), (c) and (d) being hereinafter
referred to as the “Parent Reports”). The consolidated balance sheet of Parent
and its subsidiaries at March 31, 2003, including the notes thereto, is
hereinafter referred to as the “Parent Balance Sheet.” Parent shall continue to
cause all required forms, reports, statements and documents to be filed with the
SEC and to cause such filings to be true and complete in all material respects,
to and through the Closing.

 

4.4 Absence of Material Adverse Changes. Since the date of the Parent Balance
Sheet, Parent has not suffered any Parent Material Adverse Effect, nor has there
occurred or arisen any event, condition or state of facts of any character that
would result in a Parent Material Adverse Effect.

 

4.5 Litigation. There are no lawsuits, actions, claims or administrative
proceedings pending or, to the knowledge of Parent or Federal, threatened,
against Parent or Federal or its subsidiaries that would have a Parent Material
Adverse Effect.

 

4.6 No Misrepresentations. The representations, warranties and statements made
by Parent or Federal in or pursuant to this Agreement are true, complete and
correct in all material respects. None of such representations, warranties or
statements contains any untrue statement of a material fact or omits to state
any material fact necessary to make any such representation, warranty or
statement, under the circumstances in which it is made, not misleading.

 

4.7 Investment Representations. Federal, who will acquire the Shares, (a) is an
“accredited investor” as defined under the Securities Act, (b) is acquiring the
Shares for its account without a view to any distribution thereof in violation
of the Securities Act or any applicable state securities law, (c) is experienced
in evaluating and making investments of this type, and has had access to, and
has received, all the information that it reasonably has required to evaluate
this investment, including, but not limited to, all C-CUBED corporate and
financial records, and access to the management of C-CUBED and the opportunity
to ask questions and to receive answers to such questions, and (d) is
financially able to bear the risks associated with the investment in the Shares
being acquired hereby.

 

4.8 Financing Arrangements. Parent and Federal have funds available to it
sufficient to consummate the Transaction in accordance with the terms of this
Agreement.

 

Article 5

CONDUCT PRIOR TO THE CLOSING DATE

 

5.1 Conduct of Business of C-CUBED. Except as set forth on Schedule 5.1 hereto,
between the date of this Agreement and the Closing Date or the date, if any, on
which this Agreement is earlier terminated pursuant to its terms, C-CUBED shall,
except to the extent that

 

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Parent shall otherwise consent in writing (such consent not to be unreasonably
withheld), (a) carry on its business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, except when subject to good faith
disputes over such obligations, and use all commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organizations, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers and others
having business relationships with it, to the end that C-CUBED’s goodwill and
ongoing business shall be unimpaired at the Closing Date, and (b) promptly
notify Parent of any event or occurrence which will have or could reasonably be
expected to have an C-CUBED Material Adverse Effect. In addition, between the
date of this Agreement and the Closing Date or the date, if any, on which this
Agreement is earlier terminated pursuant to its terms, C-CUBED and its
Subsidiaries shall not, except as set forth on Schedule 5.1 hereto or to the
extent that Parent shall otherwise consent in writing (such consent not to be
unreasonably withheld):

 

(a) amend its charter documents or by-laws;

 

(b) declare or pay any dividends or distributions on its outstanding shares of
capital stock or purchase, redeem or otherwise acquire for consideration any
shares of its capital stock or other securities except in accordance with
agreements existing as of the date hereof;

 

(c) issue or sell any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it exists on the date hereof, or issue,
grant, or sell any options, stock appreciation or purchase rights, warrants,
conversion rights or other rights, securities or commitments obligating it to
issue or sell any shares of its capital stock, or any securities or obligations
convertible into, or exercisable or exchangeable for, any shares of its capital
stock;

 

(d) borrow or agree to borrow any funds or voluntarily incur, or assume or
become subject to, whether directly or by way of guaranty or otherwise, any
obligation or Liability, except obligations incurred in the ordinary course of
business consistent with past practices;

 

(e) pay, discharge or satisfy any claim, obligation or Liability in excess of
$25,000 (in any one case) or $50,000 (in the aggregate), other than the payment,
discharge or satisfaction in the ordinary course of business of obligations
reflected on or reserved against in the C-CUBED Balance Sheet, or incurred since
the date of the C-CUBED Balance Sheet in the ordinary course of business
consistent with past practices;

 

(f) except as required by applicable law, adopt or amend in any material
respect, any agreement or plan (including severance arrangements) for the
benefit of its employees;

 

(g) sell, mortgage, pledge or otherwise encumber or dispose of any of its assets
which are material, individually or in the aggregate, to the business of
C-CUBED, except in the ordinary course of business consistent with past
practices;

 

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(h) acquire by merging or consolidating with, or by purchasing any equity or
partnership interest in or a material portion of the assets of, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire any assets which are material,
individually or in the aggregate, to the business of C-CUBED, except in the
ordinary course of business consistent with past practices;

 

(i) increase the following amounts payable or to become payable: (i) the salary
of any of its directors or officers, other than increases in the ordinary course
of business consistent with past practices and not exceeding, in any case, five
percent (5%) of the director’s or officer’s salary on the date hereof, (ii) any
other compensation of its directors or officers, including any increase in
benefits under any bonus, insurance, pension or other benefit plan made for or
with any of those persons, other than increases that are provided in the
ordinary course of business consistent with past practices to broad categories
of employees and do not discriminate in favor of the aforementioned persons, and
(iii) the compensation of any of its other employees, consultants or agents
except in the ordinary course of business consistent with past practices;

 

(j) dispose of, permit to lapse, or otherwise fail to preserve its rights to use
the C-CUBED Proprietary Rights or enter into any settlement regarding the breach
or infringement of, all or any part of the C-CUBED Proprietary Rights, or modify
any existing rights with respect thereto, other than in the ordinary course of
business consistent with past practices, and other than any such disposal,
lapse, failure, settlement or modification that does not have and could not
reasonably be expected to have an C-CUBED Material Adverse Effect;

 

(k) sell, or grant any right to exclusive use of, all or any part of the C-CUBED
Proprietary Rights;

 

(l) enter into any contract or commitment or take any other action that is not
in the ordinary course of its business or could reasonably be expected to have
an adverse impact on the transactions contemplated hereunder or that would have
or could reasonably be expected to have an C-CUBED Material Adverse Effect;

 

(m) amend in any material respect any agreement to which it is a party, the
amendment of which will have or could reasonably be expected to have an C-CUBED
Material Adverse Effect;

 

(n) waive, release, transfer or permit to lapse any claim or right (i) that has
a value, or involves payment or receipt by it, of more than $25,000 or (ii) the
waiver, release, transfer or lapse of which would have or could reasonably be
expected to have an C-CUBED Material Adverse Effect;

 

(o) take any action that would materially decrease C-CUBED’s Net Worth;

 

(p) make any change in any method of accounting or accounting practice other
than changes required to be made in order that C-CUBED’s financial statements
comply with GAAP; or

 

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(q) agree, whether in writing or otherwise, to take any action described in this
Section 5.1.

 

5.2 Conduct of Business of Parent. Between the date of this Agreement and the
Closing Date or the date, if any, on which this Agreement is earlier terminated
pursuant to its terms, Parent and Federal shall not, except to the extent that
C-CUBED shall otherwise consent in writing (such consent not to be unreasonably
withheld), contact any C-CUBED employees or customers or take any action that
would materially impair Federal’s ability to pay the aggregate Purchase Price or
otherwise to perform its obligations under this Agreement. Further, between the
date of this Agreement and the Closing Date or the date, if any, on which this
Agreement is earlier terminated pursuant to its terms, Parent and Federal shall,
except to the extent that C-CUBED shall otherwise consent in writing (such
consent not to be unreasonably withheld) promptly notify C-CUBED and the
Stockholders’ Representative of any event or occurrence which will have or could
reasonably be expected to have an adverse effect on the ability of Federal and
Parent to pay the aggregate Purchase Price and otherwise to perform their
respective obligations hereunder.

 

Article 6

ADDITIONAL AGREEMENTS

 

6.1 Exclusivity. From and after the date of this Agreement until the earliest of
(a) the Closing Date, (b) Parent’s notification of C-CUBED of Parent’s decision
not to complete the Transaction or (c) the termination of this Agreement in
accordance with Article 9 hereof, but in any event during the ninety (90) days
following the date of the Letter of Intent, neither C-CUBED nor any Stockholder
will, directly or indirectly, through their respective affiliates, agents,
officers and directors, directly or indirectly, solicit, initiate, or
participate in discussions or negotiations or otherwise cooperate in any way
with, or provide any information to, any corporation, partnership, person, or
other entity or group concerning any tender offer, exchange offer, merger,
business combination, sale of substantial assets, sale of shares of capital
stock, or similar transaction involving C-CUBED (all such transactions being
referred therein as “Acquisition Proposals”).

 

6.2 Expenses.

 

6.2.1 General. Except as provided in this Section 6.2, each party hereto shall
be responsible for its own costs and expenses in connection with the
Transaction, including fees and disbursements of consultants, brokers, finders,
investment bankers and other financial advisors, counsel and accountants
(“Expenses”).

 

6.2.2 Broker Fees. At the Closing, Federal shall pay approximately $900,000
(Nine Hundred Thousand Dollars) plus outstanding expenses to Broker, which
amount shall be deducted from the Direct Payment due to the Stockholders at the
Closing. An additional payment will be made pursuant to Section 2.2.4(a).

 

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6.2.3 Attorney Fees. At the Closing, Federal shall pay to C-CUBED’s Counsel an
amount to be confirmed by C-CUBED at Closing, which amount shall be deducted
from the Direct Payment due the Stockholders at the Closing.

 

6.2.4 Accountant Fees. At the Closing, Federal shall pay $11,050 (Eleven
Thousand Fifty Dollars) to C-CUBED’s Accountant, which amount shall be deducted
from the Direct Payment due the Stockholders at the Closing.

 

6.2.5 Uncovered Expenses. Except with respect to those expenses described in
6.2.2 to 6.2.3, C-CUBED and the Stockholders shall ensure that either: (a) any
Expenses incurred by C-CUBED or the Stockholders are paid at or before the
Closing from the aggregate Purchase Price so that such Expenses do not continue
to be or do not become the liability of C-CUBED after the Closing or (b)
provision is made for any such Expenses on C-CUBED’s books for payment after the
Closing (it being understood that in such event the Net Worth on the Closing
Balance Sheet shall be reduced by any such Expenses).

 

6.3 Indemnification. Subject to the terms of this Section 6.3, from and after
the Closing Date, Parent, Federal, C-CUBED, each of their respective
Subsidiaries and Affiliates and their respective directors, officers, employees,
Affiliates, representatives, successor and assigns (collectively “Parent
Indemnified Parties”) shall be entitled to payment and reimbursement from the
Stockholders and their respective successors (the “Parent Indemnifying
Parties”), jointly and severally, of the amount of any Loss suffered, incurred
or paid by any Parent Indemnified Party (subject to subsection 6.3.3), by reason
of, in whole or in part, any misrepresentation or inaccuracy in, or breach of,
any representation or warranty made by C-CUBED or any Stockholder in this
Agreement or any Exhibits or Schedules hereto or the certificates delivered
pursuant to this Agreement. Subject to the terms of this Section 6.3, from and
after the Closing Date, the Stockholders and each of their respective successors
(collectively the “Stockholder Indemnified Parties”) shall be entitled to
payment and reimbursement from Parent, Federal and C-CUBED (the “Stockholder
Indemnifying Parties”) of the amount of Loss suffered, incurred or paid by any
Stockholder Indemnified Party by reason of any breach of any representation or
warranty made by Parent or Federal in this Agreement, the breach or
nonperformance of any covenant or obligation to be performed by Parent or
Federal hereunder (or C-CUBED hereunder after the Closing Date) or under any
agreement executed in connection herewith, or any matter arising out of the
business of C-CUBED after the Closing. For the purpose of determining the
magnitude of a Loss suffered, incurred or paid, each representation and warranty
herein shall read as if all qualifications as to materiality and knowledge have
been deleted therefrom, it being understood, however, that such qualifications
are to be considered in determining whether a representation or warranty has
been breached.

 

6.3.1 Claims for Indemnification. Upon obtaining knowledge of any facts, claim
or demand which has given rise to, or could reasonably give rise to, a claim for
indemnification hereunder (referred to herein as an “Indemnification Claim”),
the party seeking indemnification hereunder, the Parent Indemnified Party or the
Stockholder Indemnified Party, as the case may be (the “Indemnified Party”),
shall promptly give written notice of such facts, claim or demand (“Notice of
Claim”) to the party from whom indemnification is sought, the Parent
Indemnifying Party or the Stockholder Indemnifying Party, as the case may be
(the “Indemnifying Party”). So long as the Notice of Claim is given by the
Indemnified Party in the

 

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Claims Period specified in Section 6.3.4, no failure or delay by the Indemnified
Party in the giving of a Notice of Claim shall reduce or otherwise affect the
Indemnified Party’s right to indemnification except to the extent that the
Indemnifying Party has been prejudiced thereby.

 

6.3.2 Defense by Indemnifying Party. In the event of a claim or demand asserted
by a third party (a “Third Party Claim”), the Indemnifying Party shall have the
right, but not the obligation, exercisable by written notice to the Indemnified
Party within 10 days of the date of the Notice of Claim concerning the
commencement or assertion of any Third Party Claim, to participate in the
defense of such Third Party Claim. If the Indemnifying Party gives such notice
of intent to defend, the Indemnifying Party shall assume the defense thereof as
follows: (a) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel compensated by and chosen by the Indemnifying Party,
which choice of counsel shall be subject to the reasonable satisfaction of the
Indemnified Party; (b) the Indemnified Party may retain separate co-counsel at
the sole cost and expense of Indemnified Party; (c) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the matter without the written consent of the Indemnifying Party; and
(d) the Indemnifying Party will not consent to the entry of any judgment with
respect to the matter, or enter into any settlement that does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party. If, however, (y) no Indemnifying Party
notifies the Indemnified Party within 10 days after the Indemnified Party has
given notice of the matter, that the Indemnifying Party is assuming the defense
thereof, or (z) the maximum liability under such Third Party Claim is greater
than the available indemnification amount for the Indemnifying Party (after
taking into account the amount of all other claims for which the Indemnifying
Party may be or may be claimed to be liable and any limitations contained in
Section 6.3.3 hereof), then the Indemnified Party shall defend against, or enter
into any settlement with respect to the matter. The Indemnified Party shall not
settle such Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

6.3.3 Limitation on Liability for Indemnity.

 

(a) The Parent Indemnified Parties shall not be entitled to indemnification
pursuant to this Section 6.3 until the aggregate amount of all Losses suffered
by the Parent Indemnified Parties exceed $100,000 (One Hundred Thousand Dollars)
(the “Parent Indemnity Deductible”) whereupon the Parent Indemnified Parties
shall be entitled to indemnification hereunder for the aggregate amount of all
of such Losses in excess of the Parent Indemnity Deductible. The Parent
Indemnity Deductible shall be determined without regard to any materiality
qualification contained in any representation or warranty.

 

(b) The Stockholder Indemnified Parties shall not be entitled to indemnification
pursuant to this Section 6.3 until the aggregate amount of all Losses, suffered
by the Stockholder Indemnified Parties exceeds $100,000 (One Hundred Thousand
Dollars) (the “Stockholder Indemnity Deductible”) whereupon the Stockholder
Indemnified Parties shall be entitled to indemnification hereunder for the
aggregate amount of all of such Losses in excess of the Stockholder Indemnity
Deductible. The Stockholder Indemnity Deductible shall be determined without
regard to any materiality qualification contained in any representation or
warranty.

 

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(c) For each indemnification claim made by the Parent Indemnified Parties
against the Stockholder Indemnifying Parties under this Section 6.3, the amount
of the indemnification claim made against the ESOP Adjustments and Claims Escrow
shall be the amount of the indemnification claim multiplied by the ESOP
Percentage, and the amount of the indemnification claim made against the
Non-ESOP Adjustments and Claims Escrow shall be the amount of the
indemnification claim multiplied by the Non-ESOP Percentage. The aggregate
liability of the Stockholder Indemnifying Parties for indemnification under this
Section 6.3 shall not exceed $3,500,000 (Three Million Five Hundred Thousand
Dollars). The aggregate liability of the Parent Indemnifying Parties for
indemnification under this Section 6.3 shall not exceed $3,500,000 (Three
Million Five Hundred Thousand Dollars). On the eighteen-month anniversary of the
Closing Date (or, if such day is not a business day, on the next business day),
the Escrow Agent shall disburse to ESOP Stockholders’ Representative and the
Non-ESOP Stockholder’s Representative, as paying agent, any amounts remaining in
the ESOP Adjustments and Claims Escrow Fund and Non-ESOP Adjustments and Claims
Escrow Fund, respectively, after any disbursements made to CACI. However, unless
Federal shall have notified the Escrow Agent that the SIR Contract (as defined
in Section 6.3.4 below) has been closed out by the eighteen-month anniversary
then the product of $500,000 and the ESOP Percentage will remain in the ESOP
Adjustments and Claims Escrow and the product of $500,000 and the Non-ESOP
Percentage will remain in the Non-ESOP Adjustments and Claims Escrow for a
period of time set forth in Section 6.3.4. Following the expiration of the
Claims Period specified in Section 6.3.4., subject to any disbursement in
relation to the NCIS investigation, the remainder of the money in the ESOP
Adjustments and Claims Escrow and the Non- ESOP Adjustments and Claims Escrow
shall be released by the Escrow Agent to the ESOP Stockholder’s Representative
and the Non-ESOP Stockholders’ Representative as paying agent pursuant to their
pro rata stock ownership interest. The sole recourse and exclusive remedy of the
Parent Indemnified Parties against the Stockholder Indemnifying Parties after
the Closing arising out of this Agreement or any certificate delivered in
connection herewith or otherwise arising from the Transaction, shall be for
Parent Indemnified Parties to assert a claim for indemnification against the
Stockholder Indemnifying Parties under the indemnification provisions of this
Agreement. The sole and exclusive source of repayment for an indemnification
claim by the Parent Indemnified Parties against the Stockholder Indemnifying
Parties under this Agreement shall be from the ESOP Adjustments and Claims
Escrow and the Non-ESOP Adjustments and Claims Escrow, respectively.

 

6.3.4 Claims Period. Any claim for indemnification under this Section 6.3, for
all matters unrelated to the NCIS investigation in connection with the Systems
Integration & Research Inc., contract no. N66604-95-D-A500 (the “SIR Contract”),
must be asserted by written notice on or before the date that is 18 months after
the Closing Date. In the event that the SIR Contract has not been fully
closed-out as of the date that is 18 months after the Closing Date, any claim
for indemnification under this Section 6.3 for all matters related to the NCIS
investigation in connection with the SIR Contract after Closing must be asserted
by written notice on or before the earlier of: (a) the date that is 54 months
after the Closing Date, and (b) the date that the SIR Contract has been fully
closed-out.

 

6.4 Access and Information. C-CUBED shall afford to Parent, Federal, and to a
reasonable number of their respective officers, employees, accountants, counsel
and other authorized representatives full and complete access, upon reasonable
advance telephone notice,

 

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during regular business hours, throughout the period prior to the earlier of the
Closing Date or the termination of this Agreement pursuant to its terms, to
C-CUBED’s executives, offices, properties, books and records, and C-CUBED shall
use reasonable efforts to cause its representatives and independent public
accountants to furnish to Parent such additional financial and operating data
and other information as to its business, customers, vendors and properties as
Parent may from time to time reasonably request. Notwithstanding the foregoing,
all visits to any office of C-CUBED will be coordinated and conducted so as to
not be disruptive to the operations of C-CUBED and to preserve the
confidentiality of the transactions contemplated hereby. In connection with
their due diligence investigations, Parent and Federal may employ the services
of a third party to provide document management and database services. As one of
the last matters of their due diligence investigations, immediately prior to
Closing, Parent and Federal shall be permitted to meet with C-CUBED’s
significant customers

 

6.5 Public Disclosure. Except as otherwise required by law, any press release or
other public disclosure of information regarding the proposed transaction
(including the negotiations with respect to the Transaction and the terms and
existence of this Agreement) shall be developed by Parent, subject to C-CUBED’s
review. C-CUBED and Parent agree that the non-disclosure obligations contained
in Section 11 of the Letter of Intent shall remain in full force and effect in
accordance with the terms thereof and hereof.

 

6.6 Further Assurances.

 

6.6.1 Generally. Subject to terms and conditions herein provided and to the
fiduciary duties of the board of directors and officers or representatives of
any party, each of the parties agrees to use its commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
hereby. In case at any time any further action, including, without limitation,
the obtaining of waivers and consents under any agreements, material contracts
or leases and the execution and delivery of any licenses or sublicenses for any
software, is necessary, proper or advisable to carry out the purposes of this
Agreement, the proper officers and directors or representatives of each party to
this Agreement are hereby directed and authorized to use commercially reasonable
efforts to effectuate all required action.

 

6.6.2 Novation of Contracts. Each party agrees to use commercially reasonable
efforts to effect the novation of each contract with a Governmental Entity that
may require novation under its terms or under applicable laws or regulations,
and further agrees to provide all documentation necessary to effect each such
novation, including, without limitation, all instruments, certifications,
requests, legal opinions, audited financial statements, and other documents
required by Part 42 of the Federal Acquisition Regulation to effect a novation
of any contract with the Government of the United States. In particular and
without limiting the generality of the foregoing, C-CUBED shall continue to
communicate with responsible officers of the Government of the United States
from time to time as may be appropriate and permissible, to request speedy
action on any and all requests for consent to novation.

 

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6.7 Certain Tax Matters.

 

6.7.1 338(h)(10) Election. C-CUBED and the Stockholders will join with Federal
in making an election under Section 338(h)(10) of the Code (and any
corresponding election under state, local, and foreign tax law) with respect to
the purchase and sale of the Shares hereunder (a “Section 338(h)(10) Election”).
Each Stockholder will include any income, gain, loss, deduction, or other tax
item resulting from the Section 338(h)(10) Election, excluding the built-in
gains tax, on his or her Tax Returns to the extent required by applicable law.

 

6.7.2 Allocation of Purchase Price. Federal, the Stockholders and C-CUBED agree
that the Purchase Price and the liabilities of C-CUBED and its qualified
subchapter S subsidiaries (plus other relevant items) will be allocated to the
assets of C-CUBED and its qualified subchapter S subsidiaries for all purposes
(including Tax and financial accounting purposes) in a manner consistent with an
allocation schedule to be prepared by Parent after the Closing. Federal shall
prepare such allocation schedule in accordance with Code section 1060 and the
Treasury regulations thereunder, and shall permit the Stockholders’
Representative an opportunity to review such allocation schedule. Federal,
C-CUBED, C-CUBED Subsidiaries and the Stockholders will file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation schedule.

 

6.7.3 S Corporation Status. C-CUBED and the Stockholders will not revoke
C-CUBED’s election to be taxed as an S corporation within the meaning of Code
sections 1361 and 1362. C-CUBED and the Stockholders will not take or allow any
action other than the sale of C-CUBED’s stock pursuant to this Agreement that
would result in the termination of C-CUBED’s status as a validly electing S
corporation within the meaning of Code sections 1361 and 1362.

 

The parties expect that consummation of the sale of C-CUBED’s stock pursuant to
this Agreement will result in termination of C-CUBED’s election to be taxed as
an S corporation, and none of C-CUBED and the Stockholders makes any
representation as to C-CUBED’s tax status after the Closing. Federal will
indemnify and hold the Stockholders harmless from any built-in gain tax incurred
as a result of the Section 338(h)(10) Election.

 

6.7.4 Tax Periods Ending on or before the Closing Date. Federal shall prepare or
cause to be prepared and file or cause to be filed all Tax Returns for C-CUBED
and its Subsidiaries for all periods ending on or prior to the Closing Date
which are filed after the Closing Date. Federal shall permit the Stockholders’
Representative to review and comment on each such Tax Return described in the
preceding sentence prior to filing. To the extent permitted by applicable law,
each Stockholder shall include any income, gain, loss, deduction or other tax
items for such periods on the Stockholder’s Tax Return in a manner consistent
with the Schedule K-1s furnished by C-CUBED to the Stockholder for such periods
and pay any resulting Tax.

 

6.7.5 Cooperation on Tax Matters.

 

(a) Federal, C-CUBED, C-CUBED’s Subsidiaries and the Stockholders shall
cooperate fully, as and to the extent reasonably requested by any party, in
connection with the

 

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filing of Tax Returns pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party’s request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. C-CUBED, its Subsidiaries, and the Stockholders agree (i) to retain
all books and records with respect to Tax matters pertinent to C-CUBED and its
Subsidiaries relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by Federal or the Stockholders’ Representative, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if the other so requests, C-CUBED or the Stockholders, as the
case may be, shall allow the other to take possession of such books and records.

 

(b) Federal and the Stockholders further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).

 

(c) Federal and the Stockholders further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to section 6043 of the Code and all Treasury regulations promulgated
thereunder.

 

6.7.6 Tax Sharing Agreements. All tax sharing agreements or similar agreements
with respect to or involving C-CUBED or any of its Subsidiaries shall be
terminated as of the Closing Date and, after the Closing Date, C-CUBED and its
Subsidiaries shall not be bound thereby or have any liability thereunder.

 

6.7.7 Certain Taxes. All transfer, documentary, sales, use, stamp, registration
and other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement, shall be paid by the Stockholders when due, and
each Stockholder will, at his or her own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Federal will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.

 

6.8 Notification. From the date hereof until the Closing Date, C-CUBED shall
promptly disclose to Parent and Federal in writing any material variances from
the representations and warranties contained in Article 3 promptly upon
discovery thereof, in the form of “Updated Schedules” delivered to Parent and
Federal. From the date hereof until the Closing Date, Parent and Federal shall
promptly disclose to C-CUBED in writing any material variances from Parent and
Federal representations and warranties contained in Article 4.

 

6.9 Future of the ESOP. C-CUBED’s Board of Directors will, by resolution,
terminate the ESOP effective as of the Closing Date. Approximately 90% of the
liquid assets of the ESOP will be distributed by the ESOP to its participants
promptly after the Closing Date.

 

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The remaining liquid assets of the ESOP will be distributed promptly after
receipt of a letter of determination from the Internal Revenue Service that the
ESOP forms a part of a qualified plan as of its termination. Any payments that
the ESOP receives from any escrow arrangement provided under this Agreement will
be distributed by the ESOP to its participants promptly following the later of
the receipt of such letter of determination or the receipt of such payment. The
request for such letter of determination from the Internal Revenue Service shall
be submitted by an attorney jointly selected by Lugar and the trustee of the
ESOP no later than 30 days after the Closing. Parent, Federal and C-CUBED will
take whatever actions are necessary to amend the ESOP in the manner required by
the Internal Revenue Service in order to secure such a favorable letter of
determination.

 

Article 7

CONDITIONS PRECEDENT

 

7.1 Conditions Precedent to the Obligations of Each Party. The obligations of
the parties hereto to effect the Transaction shall be subject to the fulfillment
at or prior to the Closing of the following conditions, any of which conditions
may be waived in writing prior to Closing by the party for whose benefit such
condition is imposed:

 

7.1.1 No Illegality. There shall not have been any action taken, and no statute,
rule or regulation shall have been enacted, by any state, federal or other
(including foreign) government agency since the date of this Agreement that
would prohibit or materially restrict the Transaction or any other material
transaction contemplated hereby.

 

7.1.2 Government Consents. All filings with and notifications to, and all
approvals and authorizations of, third parties (including, without limitation,
Governmental Entities) required for the consummation of the Transaction and the
other material transactions contemplated hereby shall have been made or obtained
and all such approvals and authorizations obtained shall be effective and shall
not have been suspended, revoked or stayed by action of any Governmental Entity.

 

7.1.3 No Injunction. No injunction or restraining or other order issued by a
court of competent jurisdiction that prohibits or materially restricts the
consummation of the Transaction contemplated hereby shall be in effect (each
party agreeing to use all reasonable efforts to have any injunction or other
order immediately lifted), and no action or proceeding shall have been commenced
or threatened in writing seeking any injunction or restraining or other order
that seeks to prohibit, restrain, invalidate or set aside consummation of the
transactions contemplated hereby.

 

7.1.4 Escrow Agreements. Each of the parties thereto, together with the Escrow
Agent, shall have entered into the Escrow Agreements.

 

7.1.5 Paying Agent Agreement. Each of the parties thereto shall have entered
into the Non-ESOP Paying Agent Agreement.

 

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7.2 Conditions Precedent to Obligation of Parent and Federal to Consummate the
Transaction. The obligation of Parent and Federal to consummate the Transaction
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions, any of which conditions may be waived in writing by
Parent or Federal prior to Closing:

 

7.2.1 Representations and Warranties. The representations and warranties of
C-CUBED contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date, except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such date), with the same force and effect as if made on and as of the Closing
Date, except, in all such cases, for such breaches, inaccuracies or omissions of
such representations and warranties which have neither had, nor reasonably would
be expected to have, an C-CUBED Material Adverse Effect (it being understood
that, for purposes of determining the accuracy of such representations and
warranties, any update of or modification to the Schedules made or purported to
have been made after execution of this Agreement, including the Updated
Schedules, shall be disregarded); and C-CUBED and the Stockholders shall have
delivered to Parent a certificate to that effect, dated the Closing Date and
signed on behalf of C-CUBED by the President and Chief Financial Officer of
C-CUBED as well as by the Stockholders in their respective individual
capacities.

 

7.2.2 Agreements and Covenants. C-CUBED shall have performed in all material
respects all of its agreements and covenants set forth herein that are required
to be performed at or prior to the Closing Date; and C-CUBED and the
Stockholders shall have delivered to Parent a certificate to that effect, dated
as of the Closing Date and signed on behalf of C-CUBED by the President and
Chief Financial Officer of C-CUBED as well as by Stockholders in their
respective individual capacities.

 

7.2.3 Legal Opinion. Parent and Federal shall have received an opinion from
Jaeger & Associates, P.C., counsel to C-CUBED, in substantially the form
attached hereto as Exhibit B-1. Parent and Federal shall have received an
opinion from McDermott, Will & Emery, counsel to the ESOP Stockholder, in
substantially the form attached hereto as Exhibit B-2. Parent and Federal shall
have received an opinion from Eric Moe, counsel to C-CUBED, in substantially the
form attached hereto as Exhibit B-3.

 

7.2.4 Closing Documents. C-CUBED and the Stockholders shall have delivered to
Parent the closing certificate described hereafter in this paragraph and such
other closing documents as the Parent shall reasonably request (other than
additional opinions of counsel). The closing certificate, dated as of the
Closing Date, duly executed by C-CUBED’s secretary, shall certify as to (a) the
signing authority, incumbency and specimen signature of the signatories of this
Agreement and other documents signed on behalf of C-CUBED in connection
herewith, (b) the resolutions adopted by the board of directors of C-CUBED
authorizing and approving the execution, delivery and performance of this
Agreement and the other documents executed in connection herewith and the
consummation of the transactions contemplated hereby and thereby and state that
such resolutions have not been modified, amended, revoked or rescinded and
remain in full force and effect, and (c) the charter documents and by-laws of
C-CUBED.

 

44

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7.2.5 Third Party Consents. All third party consents or approvals listed in
Schedule 7.2.5 hereto shall have been obtained by C-CUBED and shall be effective
and shall not have been suspended, revoked, or stayed by action of any such
third party.

 

7.2.6 Diligence Review. Parent and its accountants and attorneys shall have
conducted prior to the date of this Agreement a diligence investigation of all
matters (except employee and customer matters and certain stock ownership
matters) related to the business of C-CUBED deemed relevant by Parent or its
accountants and attorneys to such diligence investigation, and the results of
such investigation thus far have been satisfactory to Parent in its sole
discretion. After the date of this Agreement, Parent shall use commercially
reasonable efforts to continue and complete its diligence investigation solely
with respect to its entitlement to meet with C-CUBED’s employees and significant
customers, with respect to C-CUBED agreements to be scheduled under Sections
3.17.1(l), 3.17.1(m) and 3.17.1(q), and with respect to stock ownership by
Charles Randall and Jack Jones, to determine if such matters are also
satisfactory to Parent. As used in this Section 7.2.6 “satisfactory to Parent”
shall mean the following: (a) with respect to meetings with employees and
customers of C-CUBED and the stock ownership of Charles Randall and Jack Jones,
satisfactory to Parent shall mean satisfactory in Parent’s sole discretion; and
(b) with respect to the Agreements to be scheduled under Sections 3.17.1(l),
3.17.1(m) and 3.17.1(q), satisfactory to Parent shall mean that Parent is
reasonably satisfied that there is no problem with any such Agreement that would
have a material adverse affect on the continued performance of that Agreement.
The format of such meetings and the items of discussion at such meetings shall
be agreed to by Parent, Federal and C-Cubed in advance of such meetings.

 

7.2.7 Authority of the Trustee of the C-CUBED ESOP Stockholder. C-CUBED shall
have furnished to Parent and Federal evidence satisfactory to Parent and Federal
in their discretion as to of the authority of the ESOP Stockholder to dispose of
the Shares held by the ESOP Stockholder through the ESOP pursuant to the terms
of the Transaction.

 

7.2.8 Non-Compete, Non-Solicitation and Non-Disturbance Agreements. Federal
shall have entered into a non-compete, non-solicitation and non-disturbance
agreement with each of Bednar, Lugar and Teague, each in the form of Exhibit C.

 

7.2.9 Employment Agreements. Not less than three business days prior to the
Closing Date, Federal shall have entered into an Employment Agreement in the
form of Exhibit E with each of Hogan and Mead, as well as with (a) each of
William A. Bates, Walter S. Collins, Michael Quinn, Jerry W. Boykin, Carl E.
Rhudy, Frank C. Magnuson, H. Jim Miller and Jay S. Smith, (b) at least 95% of
C-CUBED’s full-time, billable employees (as of the date of the Letter of Intent)
and (c) at least 80% of C-CUBED’s part-time, billable employees (as of the date
of the Letter of Intent).

 

7.2.10 Updated Employee List. C-CUBED shall have delivered to Federal a list
dated as of the Closing Date containing the name of each person then employed by
C-CUBED and each such employee’s position and annual salary.

 

7.2.11 Material Adverse Effect. Since the date of this Agreement, C-CUBED shall
not have suffered an C-CUBED Material Adverse Effect, it being understood

 

45

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for the purpose of this Section 7.2.11 that conditions that generally affect the
industries in which C-CUBED participates or the economy of the United States as
a whole (including without limitation a general loss of consumer confidence)
shall neither constitute nor be taken into account in determining whether there
has occurred an C-CUBED Material Adverse Effect, provided, however, that an
adverse change in the financial or legal condition, business or prospects of
C-CUBED that is specific to C-CUBED (including without limitation the actual or
threatened cancellation or reduction of a program) may be taken into account in
determining whether there has occurred an C-CUBED Material Adverse Effect.

 

7.2.12 No Outstanding Options, Warrants, Etc.. There shall be no outstanding
subscriptions, options, warrants, conversion rights or other rights, securities,
agreements or commitments obligating C-CUBED to issue, sell or otherwise dispose
of shares of its capital stock, or any securities or obligations convertible
into, or exercisable or exchangeable for, any shares of its capital stock. All
options shall have been duly exercised pursuant to a Stock Option Exercise
Agreement substantially in the form of Exhibit G.

 

7.2.13 No Outstanding Notes. All promissory notes issued to C-CUBED or any
Subsidiary shall have been paid in full or will be paid by Federal concurrent
with Closing.

 

7.2.14 Intentionally Left Blank.

 

7.2.15 Individual Stock Purchase Agreements, Etc.. Each holder of Shares that is
not a party to this Agreement shall have executed and delivered to Parent an
Individual Stock Purchase Agreement substantially in the form of Exhibit H.

 

7.2.16 No Letters of Credit, Security Interests or Financing Statements. Subject
to Federal causing the payoff of SunTrust Bank Note and Line of Credit
obligations, all letters of credit issued for the benefit of C-CUBED or any
Subsidiary, all security interests in assets of C-CUBED or any Subsidiary and
all financing statements evidencing any of the same shall have been terminated
and no obligation of C-CUBED or any Subsidiary shall remain with respect to any
of the foregoing. C-CUBED shall have provided Federal with assurances
satisfactory to Federal in its sole discretion that all of the assets are free
and clear of all liens except for Permitted Encumbrances.

 

7.2.17 No Joint Venture. The joint venture between C-CUBED and American Systems
Corporation shall have been terminated in all respects and no obligation of
C-CUBED shall remain with respect to the same.

 

7.2.18 Subsidiaries. Except as set forth on Schedule 3.3, prior to closing CAC
shall not conduct any business or have any assets, liabilities or employees.

 

7.2.19 Resignations. C-CUBED shall have delivered to Parent and Federal
resignations of all members of the Boards of Directors of C-CUBED and
Subsidiaries effective as of Closing.

 

7.3 Conditions to Obligations of C-CUBED and the Stockholders to Consummate the
Transaction. The obligation of C-CUBED and the Stockholders to consummate the
Transaction shall be subject to the fulfillment at or prior to the Closing of
the following additional conditions, any of which may be waived in writing by
C-CUBED or the Stockholders’ Representative prior to Closing:

 

46

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7.3.1 Representations and Warranties. The representations and warranties of
Parent and Federal contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date, except for changes contemplated
by this Agreement and except for those representations and warranties which
address matters only as of a particular date (which shall remain true and
correct as of such date), with the same force and effect as if made on and as of
the Closing Date, except in all such cases, for such breaches, inaccuracies or
omissions of such representations and warranties which have neither had nor
reasonably would be expected to have a Parent Material Adverse Effect; and
Parent shall have delivered to C-CUBED a certificate to that effect, dated the
date of the Closing and signed on behalf of Parent by the Chief Executive
Officer and Chief Financial Officer of Parent.

 

7.3.2 Agreements and Covenants. Parent and Federal shall have performed in all
material respects all of their agreements and covenants set forth herein that
are required to be performed at or prior to the Closing Date; and Parent shall
have delivered to C-CUBED a certificate to that effect, dated as of the Closing
Date and signed on behalf of Parent by the Chief Executive Officer and Chief
Financial Officer of Parent.

 

7.3.3 Legal Opinion. C-CUBED shall have received an opinion from Parent in
substantially the form attached hereto as Exhibit F.

 

7.3.4 Closing Documents. Parent and Federal shall have delivered to C-CUBED
closing certificates of Parent and Federal and such other closing documents as
C-CUBED shall reasonably request (other than additional opinions of counsel).
Each of the closing certificates of Parent and Federal, dated as of the Closing
Date, duly executed by the secretary of Parent and Federal, respectively, shall
certify as to (a) the signing authority, incumbency and specimen signature of
the signatories of this Agreement and other documents signed on behalf of Parent
and Federal in connection herewith, (b) the resolutions adopted by the board of
directors of Parent and Federal authorizing and approving the execution,
delivery and performance of this Agreement and the other documents executed in
connection herewith and the consummation of the transactions contemplated hereby
and thereby and state that such resolutions have not been modified, amended,
revoked or rescinded and remain in full force and effect, and (c) the
Certificate of Incorporation and By-Laws of Parent and the Certificate of
Incorporation and By-Laws of Federal.

 

7.3.5 Material Adverse Effect. Since the date of this Agreement, Parent shall
not have suffered a Parent Material Adverse Effect, it being understood for the
purpose of this Section 7.3.5 that conditions that generally affect the
industries in which Parent participates or the economy of the United States as a
whole (including without limitation a correction in the public stock markets or
a general loss of consumer confidence) shall neither constitute nor be taken
into account in determining whether there has occurred an Parent Material
Adverse Effect, provided, however, that an adverse change in the financial or
legal condition, business or prospects of Parent that is specific to Parent
(including without limitation the actual or threatened cancellation or reduction
of a program) may be taken into account in determining whether there has
occurred an Parent Material Adverse Effect.

 

47

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7.3.6 Payment of Purchase Price. Parent shall have tendered the aggregate Direct
Payment to the Stockholders, and to the other owners who own C-CUBED Common
Stock or will own Common Stock at Closing pursuant to the exercise of their
options, in accordance with the provisions of Section 2.2.2 hereof and shall
have delivered the Escrow Payments to the Escrow Agent pursuant to the
provisions of Section 2.2.3 hereof.

 

7.3.7 ESOP Trustee. The ESOP Trustee shall have received an opinion from its
financial advisor, as of the date of Closing, that the transactions contemplated
by this Agreement are fair to the ESOP from a financial point of view.

 

Article 8

SURVIVAL OF REPRESENTATIONS

 

8.1 C-CUBED’s and the Stockholders’ Representations. All representations and
warranties made by C-CUBED and the Stockholders in this Agreement, or any
certificate or other writing delivered by C-CUBED or any of its Affiliates
pursuant hereto or in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of Parent and shall terminate on
the date which is 18 months after the Closing Date (except that Indemnified
Party claims pending on such date continue until resolved). The covenants made
by C-CUBED or the Stockholders in this Agreement or any certificate or other
writing delivered by C-CUBED or any of its Affiliates pursuant hereto or in
connection herewith shall survive the Closing pursuant to the terms of this
Agreement and any investigation at any time made by or on behalf of Parent.

 

8.2 Parent’s and Federal’s Representations. All representations and warranties
made by Parent and Federal in this Agreement or any certificate or other writing
delivered by Parent, Federal or any of their respective Affiliates pursuant
hereto or in connection herewith shall survive the Closing pursuant to the terms
of this Agreement.

 

Article 9

OTHER PROVISIONS

 

9.1 Termination Events. This Agreement may be terminated and the Transaction
abandoned at any time prior to the Closing Date, provided, however, that upon
any such termination the surviving obligations of the Parties under the Letter
of Intent, including the obligations of confidentiality and non-solicitation,
shall continue in full force and effect in accordance with the terms of the
Letter of Intent:

 

(a) by mutual written consent of Parent and C-CUBED;

 

(b) by Parent if there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of C-CUBED or any
Stockholder and such breach would have a C-CUBED Material Adverse Effect and
such breach has not been cured within ten business days after written notice to
C-CUBED (provided, that neither Parent

 

48

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nor Federal is in material breach of the terms of this Agreement, and provided
further, that no cure period shall be required for a breach which by its nature
cannot be cured) such that the conditions set forth in Section 7.2.1 or Section
7.2.2 hereof, as the case may be, will not be satisfied;

 

(c) by Parent, if C-CUBED, its board of directors or any Stockholder shall have
(i) withdrawn, modified or amended in any material respect the approval of this
Agreement or the transactions contemplated herein, or (ii) taken any public
position inconsistent with its approval or recommendation, including, without
limitation, having failed (without the consent of Parent) after a reasonable
period of time to reject or disapprove any Acquisition Proposal (or after a
reasonable period of time to recommend to its shareholders such rejection or
disapproval);

 

(d) by C-CUBED, if there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of Parent or
Federal and such breach has not been cured within ten business days after
written notice to Parent (provided, that C-CUBED is not in material breach of
the terms of this Agreement, and provided further, that no cure period shall be
required for a breach which by its nature cannot be cured) such that the
conditions set forth in Section 7.3.1 or Section 7.3.2 hereof, as the case may
be, will not be satisfied;

 

(e) by C-CUBED, if C-CUBED accepts an Acquisition Proposal for any reason,
including pursuant to a good-faith determination by its board of directors,
after consulting with counsel, that not to accept the Acquisition Proposal would
constitute a breach of the directors’ fiduciary duty under the law of the
Commonwealth of Virginia;

 

(f) by C-CUBED, if Parent or Federal or their respective boards of directors
shall have withdrawn, modified or amended in any material respect the approval
of this Agreement or the transactions contemplated herein (provided, that
neither C-CUBED nor any Stockholder is in material breach of the terms of this
Agreement);

 

(g) by any party hereto if: (i) there shall be a final, non-appealable order of
a federal or state court in effect preventing consummation of the Transaction;
(ii) there shall be any final action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Transaction by
any Governmental Entity which would make consummation of the Transaction illegal
or which would prohibit Parent’s or Federal’s ownership or operation of all or a
material portion of the stock or assets of C-CUBED, or compel Parent or Federal
to dispose of or hold separate all or a material portion of the business or
assets of C-CUBED or Parent or Federal as a result of the Transaction; or

 

(h) by any party hereto if the Transaction shall not have been consummated by
October 16, 2003, provided that the right to terminate this Agreement under this
Section 9.1(h) shall not be available to any party whose failure to fulfill any
material obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing Date to occur on or before such date.

 

9.2 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered by hand sent via a reputable nationwide
courier service or

 

49

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mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice) and shall be deemed given on the date on which so
hand-delivered or on the third business day following the date on which so
mailed or otherwise sent:

 

To Parent and Federal:

 

CACI International Inc

1100 North Glebe Road

Arlington, VA 22201

Attention: Dr. J. P. London, Chairman

 

with copies to:

 

Jeffrey P. Elefante

Executive Vice President, General Counsel and Secretary

CACI International Inc

1100 North Glebe Road

Arlington, VA 22201

 

and

 

David W. Walker

Foley Hoag LLP

155 Seaport Boulevard

Boston, MA 02210

 

To C-CUBED:

 

Before the Closing Date:

 

Edmund J. Bednar

President and Chief Executive Officer

C-CUBED Corporation

6800 Versar Center, Suite 300

Springfield, VA 22151

 

After the Closing Date:

 

Edmund J. Bednar

15101 Poplar Hill Road

Accokeek, MD 20607

 

with a copy to:

 

Philip W. Jaeger, Esq.

Jaeger & Associates, P.C.

1090 Vermont Avenue, NW, Suite 350

Washington, DC 20005

 

50

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Luis Granados, Esq.

McDermott, Will & Emery

600 13th Street, NW

Washington, DC 20005

 

To any Stockholder or either of the Stockholders’ Representatives: at the
addresses set forth on Schedule A.

 

9.3 Entire Agreement. Unless otherwise herein specifically provided, this
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, including the
Letter of Intent. Each party hereto acknowledges that, in entering this
Agreement and completing the transactions contemplated hereby, such party is not
relying on any representation, warranty, covenant or agreement not expressly
stated in this Agreement or in the agreements among the parties contemplated by
or referred to herein.

 

9.4 Assignability. This Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder, except as
otherwise expressly provided herein. Neither this Agreement nor any of the
rights and obligations of the parties hereunder shall be assigned or delegated,
whether by operation of law or otherwise, without the written consent of all
parties hereto.

 

9.5 Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.

 

9.6 Specific Performance. The parties hereto acknowledge that damages alone may
not adequately compensate a party for violation by another party of this
Agreement. Accordingly, in addition to all other remedies that may be available
hereunder or under applicable law, any party shall have the right to any
equitable relief that may be appropriate to remedy a breach or threatened breach
by any other party hereunder, including the right to enforce specifically the
terms of this Agreement by obtaining injunctive relief in respect of any
violation or non-performance hereof.

 

9.7 Settlement of Disputes. Any and all controversies, disputes, or claims
arising out of or relating to this Agreement, or any part hereof, including,
without limitation, the meaning, applicability, or scope of this Section 9.7 and
the performance, breach, interpretation, meaning, construction, or
enforceability of this Agreement, or any portion hereof, and all claims for
rescission or fraud in the inducement of this Agreement, shall, at the request
of any party, be settled or resolved by binding arbitration pursuant to the
commercial rules and regulations of the American Arbitration Association (the
“AAA”) for the resolution of commercial disputes. Any party requesting
arbitration under this Agreement shall make a demand on the other parties by

 

51

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registered or certified mail with a copy to the AAA. The parties consent and
agree to have any such arbitration proceedings heard in Arlington, Virginia. The
arbitration shall take place regardless of whether any party to the dispute or
controversy fails or refuses to participate. The arbitrators shall apply
Virginia substantive law and federal substantive law where state law is
preempted. The arbitrators shall have the power to grant all legal and equitable
remedies and award compensatory damages provided by Virginia law. The
arbitrators shall prepare in writing and provide to the parties an award
including factual findings and the reasons on which the decision is based.
Judgment upon any award may be entered in any court having jurisdiction thereof.

 

9.8 Counterparts. This Agreement may be executed in one or more counterparts,
all of which together shall constitute one and the same agreement.

 

* * * * *

 

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IN WITNESS WHEREOF, the parties have duly executed this Stock Purchase Agreement
under seal as of the date first above written.

 

 

   

CACI International Inc

        SEAL

 

By:

 

 

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

       

Stephen L. Waechter

        Executive Vice President, Chief Financial Officer, Treasurer, and
Director of Business Services    

CACI, INC. - FEDERAL

        SEAL

 

By:

 

 

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

       

Stephen L. Waechter

        Executive Vice President, Chief Financial Officer, Treasurer, and
Director of Business Service    

C-CUBED Corporation

        SEAL

 

By:

 

 

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

       

Edmund J. Bednar

President and CEO

   

C-CUBED Corporation Employee Stock Ownership Trust

   

By:

 

 

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

       

Kentucky Trust Bank, Trustee

                            (signature)

   

Name:

 

 

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

       

(printed)

 

   

Title:

 

 

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

 

[Signature Page to Stock Purchase Agreement]

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

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

Kentucky Trust Bank, as the ESOP Stockholder’s Representative

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

Rhonda L. Lugar, as the Non-ESOP Stockholders’ Representative

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

Edmund J. Bednar

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

Rhonda L. Lugar

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

S. Wesley Teague

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

E. Jackson Hogan

 

[Signature Page to Stock Purchase Agreement]

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

List of Exhibits and Schedules

 

Exhibit

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

  

Description

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

3.18.3    Form of C-CUBED Employee Agreement A-1    ESOP Adjustments and Claims
Escrow Agreement A-2    Non-ESOP Adjustments and Claims Escrow Agreement A-3   
ESOP Earn-Out Escrow Agreement A-4    Non-ESOP Earn-Out Escrow Agreement B   
Terms of Earn-Out B-1    Form of Opinion of Jaeger & Associates, P.C. B-2   
Form of Opinion of McDermott, Will & Emery B-3    Form of Opinion of Eric Moe C
   Form of Non-Compete, Non-Solicitation and Non-Disturbance Agreement (Ver. 1)
D    [Intentionally Omitted] E    Form of Standard Parent Employment Agreement F
   Form of Opinion of Counsel to CACI International Inc G    Form of Stock
Option Exercise Agreement H    Form of Individual Stock Purchase Agreement I   
Paying Agent Agreement J    Schedule of Liens

 

Schedule

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

  

Description

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

A    Stockholders. 3.1    Corporate Status of C-CUBED. 3.2.2    Capital Stock –
Options and Convertible Securities of C-CUBED. 3.3    Subsidiaries. 3.4.2   
Authority for Agreement; Noncontravention - No Conflict. 3.5A    Financial
Statements - June 30, 2003. 3.5B    Financial Statements – July 31, 2003. 3.6   
Absence of Material Adverse Changes. 3.7    Absence of Undisclosed Liabilities.
3.8    Compliance with Applicable Law, Charter and By-Laws. 3.9    Litigation
and Audits. 3.10.3    Tax Matters - Assessments or Disputes. 3.10.6    Tax
Matters - Tax Basis. 3.10.9    Tax Matters - No Changes in Accounting, Closing
Agreement, Installment Sale. 3.10.10    Tax Matters - S Corporation. 3.10.11   
Tax Matters - Election. 3.11.1    Employee Benefit Plans - List of Plans. 3.11.2
   Employee Benefit Plans – ERISA. 3.11.4    Employee Benefit Plans – Funding.
3.11.6    Employee Benefit Plans – Welfare Plans. 3.12.1    Employment-Related
Matters - Labor Relations. 3.13.1    Environmental - Environmental Laws. 3.13.2
   Environmental - Environmental Claims. 3.13.3    Environmental - No Basis for
Claims.

 

55

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Schedule

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

  

Description

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

3.15.1    Assets Other Than Real Property - Title. 3.15.2    Assets Other Than
Real Property - Accounts Receivable. 3.16.2    Real Property - C-CUBED Leases.
3.17.1    Agreements, Contracts and Commitments - C-CUBED Agreements. 3.17.2   
Agreements, Contracts and Commitments - Validity. 3.17.3    Agreements,
Contracts and Commitments - Third-Party Consents. 3.18.1    Intellectual
Property - No Conflicts. 3.18.2    Intellectual Property - Proprietary Rights;
Licenses. 3.18.3    Intellectual Property – Employee Agreements. 3.19   
Insurance Contracts. 3.21    No Contingent Liabilities. 3.20    Banking
Relationships. 3.22    Absence of Certain Relationships. 5.1    Conduct of
Business of C-CUBED. 7.2.5    Conditions Precedent to Obligation of Parent and
Federal to Consummate the Transaction.—Third Party Consents.

 

56