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

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MOBILEPRO CORP.

NEOREACH ACQUISITION CORP.

And

NEOREACH, INC.

March 21, 2002

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

 

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

 

TABLE OF CONTENTS

    ARTICLE I CERTAIN DEFINITIONS 1

    ARTICLE II THE TRANSACTION 4

              2.1   The Merger     4   2.2   Consideration     4   2.3   The
Closing     5   2.4   Actions at the Closing     5   2.5   Effect on Capital
Stock     6   2.6   Dividends; Liquidation Preferences; and Other Distributions
    6   2.7   Certificate Legends     6   2.8   Certificate of Incorporation    
7   2.9   Bylaws     7   2.10   Directors and Officers     7   2.11   Closing of
Transfer Books     7   2.12   Tax and Accounting Consequences     7   2.13  
Additional Action     7   2.14   Taking of Necessary Action; Further Action    
7   2.15   Adjustment     8  

    ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8

                            3.1   Organization, Qualification and Corporate
Power     8   3.2   Capitalization     8   3.3   Authorization of Transaction  
  9   3.4   Noncontravention     9   3.5   Subsidiaries     10   3.6   Financial
Statements     10   3.7   Absence of Certain Changes     10   3.8   Undisclosed
Liabilities     10   3.9   Tax Matters     11   3.10   Assets     11   3.11  
Owned Real Property     11   3.12   Intellectual Property     11   3.13   Real
Property Leases     12   3.14   Contracts     12   3.15   Insurance     14  

 

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

 

              3.16   Litigation     15   3.17   Employees     15   3.18  
Employee Benefits     16   3.19   Permits     17   3.20   Brokers’ Fees     18  
3.21   Books and Records     18   3.22   Banking Relationships and Investments  
  18   3.23   Company Action     18   3.24   Disclosure     18  

    ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
    MERGER SUB 19

              4.1   Organization     19   4.2   Capitalization     19   4.3  
Authorization of Transaction     20   4.4   Noncontravention     20   4.5  
Reports and Financial Statements     21   4.6   Litigation     21   4.7   Legal
Compliance; Restrictions on Business Activities     21   4.8   Merger Shares    
22   4.9   Business of the Merger Sub     22   4.10   Company Action     22  
4.11   No Knowledge of Misrepresentations     22   4.12   Brokers’ Fees     22  
4.13   Qualification as a Reorganization     23   4.14   Disclosure     23  
4.15   Absence of Plans     23   4.16   Tax Matters     23  

    ARTICLE V COVENANTS 24

              5.1   Best Efforts     24   5.2   Securities Laws     24   5.3  
Reorganization     25   5.4   Reasonable Commercial Efforts and Further
Assurances     25  

    ARTICLE VI CONDITIONS TO CONSUMMATION OF MERGER 26

              6.1   Conditions to Each Party’s Obligations     25   6.2  
Conditions to Obligations of the Buyer and the Merger Sub     26  

ii

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

 

              6.3   Conditions to Obligations of the Company     27   6.4  
Certain Waivers     27  

    ARTICLE VII TERMINATION 28

              7.1   Termination of Agreement     28   7.2   Effect of
Termination     28   7.3   Amendment     29   7.4   Extension, Waiver     29  

    ARTICLE VIII MISCELLANEOUS 29

              8.1   No Third Party Beneficiaries     29   8.2   Entire Agreement
    29   8.3   Succession and Assignment     29   8.4   Counterparts, Facsimile
Signatures     30   8.5   Headings     30   8.6   Notices     30   8.7  
Governing Law     31   8.8   Severability     31   8.9   Expenses; Attorney’s
Fees     32   8.10   Letter of Intent     32   8.11   Disclosure Letters     32
  8.12   Construction     33   8.13   Incorporation of Exhibits and Schedules  
  33  

iii

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

 

EXHIBITS AND SCHEDULES

      Exhibit A   Audited balance sheet and statements of operations, changes in
stockholders’ equity and cash flows for the fiscal year ended December 31, 2001
  Schedule I   Consideration

 

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

 

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) entered into as of
March 21, 2002, by and among MOBILEPRO CORP., a Delaware corporation (the
“Buyer”), NEOREACH ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of the Buyer (the “Merger Sub”) and NEOREACH, INC., a Delaware
corporation (the “Company”). The Buyer, the Merger Sub and the Company each,
individually, a “Party” or, collectively, the “Parties.”

RECITALS

     WHEREAS, this Agreement contemplates a merger of the Merger Sub with and
into the Company (the “Merger”) in a transaction that is intended to qualify,
for federal income tax purposes, as a reverse triangular merger under Section
368(a)(2)(E) of the Code (as defined below), in which the stockholders of the
Company will receive capital stock of the Buyer in exchange for their shares of
capital stock of the Company.

     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, agreements and covenants herein contained, and for good and other
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     The following terms undefined in the text of this Agreement shall have the
following meanings:

     “Business Day” shall mean any day, other than a Saturday, Sunday or a day
on which banks located in Washington, D.C. shall be authorized or required by
law to close.

     “Buyer Stock” shall mean common stock, par value $0.001 per share, of the
Buyer. It is understood and agreed that the Merger Shares issued in connection
with the transactions contemplated by this Agreement shall be shares of common
stock of the Buyer that have not been registered under the Securities Act.

     “Closing Documents” shall mean documents, certificates or other instruments
delivered or to be delivered by or on behalf of the Company at the Closing
pursuant to Article VI, the Schedules and Exhibits of this Agreement.

     “Code” shall mean United States Internal Revenue Code of 1986, as amended.

 

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

 

     “Company Shares” shall mean all of the issued and outstanding shares of
capital stock of the Company, consisting of Twelve Million Three Hundred Fifty
Two Thousand One Hundred and Twenty Nine (12,352,129) shares of common stock,
par value $0.01 per share and a total of Two Million Four Hundred Three Thousand
Four Hundred Eighty (2,403,480) option shares of common stock.

     “Employee Benefit Plan” shall mean any “employee pension benefit plan” (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended), any “employee welfare benefit plan” (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including, without limitation, insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, options, or other forms of incentive compensation or post-retirement
compensation.

     “ERISA Affiliate” shall mean any entity which is a member of (i) a
controlled group of corporations (as defined in Section 414(b) of the Code),
(ii) a group of trades or businesses under common control (as defined in
Section 414(c) of the Code), or (iii) an affiliated service group (as defined
under Section 414(m) of the Code or the regulations under Section 414(o) of the
Code), any of which includes the Company.

     “GAAP” shall mean Generally Accepted Accounting Principles.

     “Governmental Entity” shall mean any court, arbitration tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.

     “including”, “include”, “includes”, shall be construed as if followed by
the phrase “without limitation”.

     “Intellectual Property” shall mean all intellectual property that the
Company owns or uses in the conduct of its business, as it is currently
conducted, including, but not limited to, (i) all United States and foreign
patents (both issued and applied for) listed on the Company Disclosure Schedule,
(ii) all trademarks, trade names, service marks, copyrights, and all
applications for such trademarks, trade names, service marks and copyrights, and
all patent rights in each case listed on the Company Disclosure Schedule and
(iii) all trade secrets, schematics, technology, know-how, computer software
programs or applications and tangible or intangible proprietary information or
material, and all third-party issued United States and foreign patents, patent
rights and patent applications (excluding packaged commercially available
licensed software programs sold to the public).

     “knowledge” shall mean, (a) when made with reference to the Company, the
actual knowledge of the executive officers of the Company and (b) when made with
reference to the Buyer, the actual knowledge of the executive officers of the
Buyer.

-2-

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

 

     “Material Adverse Effect” shall mean, when used with respect to any entity
or group of entities, any event, change or condition that causes a material
adverse effect on the financial condition, properties, assets (including
intangible assets), liabilities, business, operations or results of operations
of such entity or group of entities; provided, however, that the following will
not be considered a Material Adverse Effect: (i) any adverse effect that
primarily results from the execution, delivery or announcement (where such an
announcement is made pursuant to the terms and conditions of this Agreement) of
this Agreement or any of the transactions contemplated hereby or (ii) any
adverse effect that results from changes in the general economic condition or
financial markets of the United States.

     “Merger Shares” shall mean Twelve Million Three Hundred Fifty Two Thousand
One Hundred Twenty Nine (12,352,129) shares of common stock, par value $0.01 per
share and a total of Two Million Four Hundred Three Thousand Four Hundred and
Eighty (2,403,480) option shares of Buyer Stock, as such numbers may be
appropriately adjusted to reflect any recapitalization, reclassification,
subdivision, stock combination, split, reverse split, reorganization or similar
transaction affecting the Buyer or Buyer Stock.

     “Merger Sub Common Stock” shall mean the common stock, par value $0.001 per
share, of the Merger Sub.

     “Person” or “person” shall mean any individual, partnership, joint venture,
corporation, limited liability company, limited liability partnership, trust or
incorporated organization.

     “Security Interest” shall mean any mortgage, pledge, security interest,
encumbrance, charge, or other lien (whether arising by contract or by operation
of law), other than (i) mechanic’s, materialmen’s, and similar liens, (ii) liens
arising under worker’s compensation, unemployment insurance, social security,
retirement, and similar legislation, (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the ordinary
course of business of the Company and not material to the Company and (iv) liens
for current Taxes that are being contested in good faith, as set forth in
Section 3.9 of the Company Disclosure Schedule.

     “Taxes” shall mean all taxes, charges, fees, levies or other similar
assessments or liabilities, including, without limitation, income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof and any amounts of Taxes of
another person that the Company or any subsidiary of the Corp or the LLC is
liable to pay by law or otherwise.

-3-

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

 

     “Tax Returns” means all reports, returns, declarations, statements or other
information supplied or required to be supplied to a taxing authority in
connection with Taxes including, without limitation, any schedules, attachments
or amendments thereto.

     “Third Party Intellectual Property Rights” shall mean all material written
licenses, sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company is authorized to use any third party patents,
patent rights, trademarks, service marks, trade secrets or copyrights, including
software which is used in the business of the Company or which form a part of
any existing product or service of the Company, excluding commercially available
licensed software programs sold to the public.

     “Transaction” shall mean: (i) the acquisition of all or substantially all
of the assets of a company; (ii) the acquisition of more than 50% of the
outstanding capital stock of a company; or (iii) any merger, consolidation,
business combination, joint venture, tender offer, share exchange, or similar
transaction, if immediately after such transaction contemplated in this
subsection (iii) either (A) Buyer, or any of its subsidiaries controls the Board
of Directors, or (B) Buyer, or any of its subsidiaries holds a majority of the
voting capital stock of the company immediately after such transaction.

ARTICLE II

THE TRANSACTION

     2.1 The Merger.

     Upon and subject to the terms and conditions of this Agreement, Merger Sub
shall merge with and into the Company (with such merger is referred to herein as
the “Merger”) at the Effective Time. From and after the Effective Time, the
separate corporate existence of the Merger Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the “Surviving
Corporation”). The Surviving Corporation shall be operated as a wholly-owned
subsidiary of the Buyer. The “Effective Time” shall be the time at which the
Certificate of Merger of the Company and the Merger Sub, prepared and executed
in accordance with the relevant provisions of the Delaware General Corporation
Law (“DGCL”), is filed with and accepted by the Secretary of State of the State
of Delaware (the “Certificate of Merger”). The Merger shall have the effects
specified in this Agreement, the Certificate of Merger and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the property, rights, privileges,
powers and franchises of the Company and the Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
the Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.

-4-

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

 

     2.2 Consideration.

     (a)  Within ten (10) days after the Closing Date, the Buyer and the Merger
Sub shall deliver to the stockholders of the Company in connection with the
Merger and in consideration for the Company Shares, stock certificates
representing shares of Buyer Stock issued in the names of such stockholders, in
the amounts set forth in Schedule I.

     (b)  If any of the Merger Shares are to be issued in the name of a person
other than a stockholder of record of the Company, it shall be a condition to
the issuance of such Merger Shares that (A) the request shall be in writing and
properly documented (e.g., assigned, endorsed or accompanied by appropriate
stock powers), (B) such transfer shall otherwise be proper and in accordance
with all applicable federal and state laws, rules, regulations or orders and
(C) the person requesting such transfer shall pay to the Buyer any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Buyer that such taxes have been paid or are not required to be paid.
Notwithstanding the foregoing, none of the Buyer, the Merger Sub or any of their
affiliates, subsidiaries, directors, officers, agents and employees shall be
liable to a stockholder for any Merger Shares issuable to such stockholder
pursuant to this Section 2.2(b) that are delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.

     (c)  In the event any stock certificate representing any Company Shares
shall have been lost, stolen or destroyed, the Board of Directors of the Buyer
may, in its sole discretion and as condition precedent to the issuance of the
Merger Shares issuable in exchange therefor pursuant to this Agreement, require
the owner of such lost, stolen or destroyed stock certificate to submit to the
Buyer an affidavit stating that such stock certificate was lost, stolen or
destroyed and to give the Buyer an indemnity in customary form against any claim
that may be made against the Buyer with respect to the stock certificate alleged
to have been lost, stolen or destroyed.

     2.3 The Closing.

     The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the Washington, DC offices of Piper Marbury
Rudnick & Wolfe LLP, on or before March 21, 2002 or, if all of the conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby have not been satisfied or waived by such date, on the third Business Day
after the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than those
conditions which by their terms can only be satisfied on the date of the
Closing) (the “Closing Date”); provided, however, that the Closing shall take
place no later than March 31, 2002. If the Closing is consummated, the Buyer,
the Merger Sub and the Company will be deemed to have waived any of the
conditions set forth in Article VI to the extent not satisfied at or prior to
the Closing.

-5-

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

 

     2.4 Actions at the Closing.

     (a)  The Company shall deliver the following to the Buyer: (i) certificates
representing the Company Shares, accompanied by stock powers duly executed in
blank or duly executed instruments of transfer and any other documents that are
necessary to transfer to the Buyer good and valid title to the Company Shares
free and clear of all liens and (ii) the various certificates, instruments and
documents referred to in Section 6.2 to be delivered by the Company.

     (b)  The Buyer shall deliver the following to the Company: (i) the Merger
Shares in accordance with Section 2.3 and (ii) the various certificates,
instruments and documents referred to in Sections 6.1 and 6.3 to be delivered by
the Buyer or the Merger Sub.

     2.5 Effect on Capital Stock.

     (a)  At the Effective Time, the Company Shares shall, by virtue of the
Merger and without any action on the part of any Party or the holder thereof,
automatically be canceled and extinguished and converted into the right to
receive Merger Shares.

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

     (c)  Notwithstanding the foregoing, no fractional shares of Buyer Stock
shall be issued. All shares of Buyer Stock issued to the holders of the Company
Shares at the Effective Time pursuant to this Section 2.5 shall be rounded up to
the next whole number.

     2.6 Dividends; Liquidation Preferences; and Other Distributions.

     No dividends or other distributions that are, or may be, payable to the
holders of record of Company Shares as of a date on or after the Closing Date
shall be paid to any such holder by reason of the Merger.

     2.7 Certificate Legends.

     The Merger Shares to be issued pursuant to this Article II shall not have
been registered and shall be characterized as “restricted securities” under the
federal securities laws, and under such laws such shares may be resold without
registration under the Securities Act only in certain limited circumstances.
Each certificate evidencing Merger Shares to be issued pursuant to this Article
II shall bear the following legend:

      THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE

-6-

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

 

      SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION WITHOUT
AN EXEMPTION UNDER THE SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY
ACCEPTABLE TO MOBILEPRO CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.

     2.8 Certificate of Incorporation.

     At the Effective Time, the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until hereafter amended as provided
by the DGCL.

     2.9 Bylaws.

     The Bylaws of the Surviving Corporation shall be the same as the Bylaws of
the Company immediately prior to the Effective Time.

     2.10 Directors and Officers.

     The directors of the Company shall become the directors of the Surviving
Corporation after the Effective Time. The officers of the Company shall become
the officers of the Surviving Corporation after the Effective Time, retaining
their respective positions.

     2.11 Closing of Transfer Books.

     Upon execution of this Agreement, the stock transfer books of the Company
shall be closed and no transfer of Company Shares shall thereafter be made
except as may be required by this Agreement.

     2.12 Tax and Accounting Consequences.

     It is intended by the parties hereto that the Merger shall constitute a
reverse triangular merger reorganization within the meaning of Section
368(a)(2)(E) of the Code.

     2.13 Additional Action.

     The Surviving Corporation may, at any time after the Effective Time, take
any action, including executing and delivering any document, in the name and on
behalf of the Company, necessary to consummate the Merger and confirm the
effectiveness of the Merger, so long as such action is not inconsistent with
this Agreement.

     2.14 Taking of Necessary Action; Further Action.

     If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right,

-7-

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

 

title and possession to all assets, property, rights, privileges, powers and
franchises of the Company and the Merger Sub, the officers and directors of the
Company and the Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.

     2.15 Adjustment.

     In the event that, subsequent to the execution of this Agreement but prior
to the Effective Time, the Buyer or the Company shall effect a stock split,
reverse stock split, stock dividend, subdivision, reclassification, combination,
merger, exchange, recapitalization or other similar transaction (or a record
date shall have been set for such purpose), the provisions of this Article II
shall be appropriately adjusted.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Buyer and the Merger Sub
that, as of the date hereof, the statements contained in this Article III are
true and correct, except as set forth in the schedule provided by the Company to
the Buyer and the Merger Sub (the “Company Disclosure Schedule”).

     3.1 Organization, Qualification and Corporate Power.

     The Company is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware. The Company is
duly qualified to conduct business and is in corporate good standing under the
laws of each jurisdiction in which the nature of its businesses or the ownership
or leasing of its properties requires such qualification, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect on the Company. The Company has the corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. The Company has furnished or made available to the Buyer
true and complete copies of its Certificate of Incorporation and, Bylaws, each
as amended and as in effect on the date hereof (hereinafter the “Company
Charter” and “Bylaws”, respectively). The Company is not in default under or in
violation of any provision of the Company Charter or Bylaws.

     3.2 Capitalization.

     The authorized capitalization of the Company consists of 20,000,000 shares
of capital stock, consisting of 20,000,000 shares of common stock, $0.01 par
value per share (“Common Stock”), 12,352,129 shares of which are issued and
outstanding. Section 3.2 of the Company Disclosure Schedule sets forth a
complete and accurate list of all stockholders of the Company, indicating the
number of Company Shares held by each stockholder and their

-8-

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

 

respective addresses. All of the issued and outstanding Company Shares are duly
authorized, validly issued, fully paid and nonassessable. All of the issued and
outstanding Company Shares are free and clear of any liens, pledges,
encumbrances, charges, agreements adversely effecting title to such shares or
claims (other than those created by virtue of this Agreement or by the Buyer),
and the certificates evidencing the ownership of such shares are in proper form
for the enforcement of the rights and limitations of rights pertaining to said
shares which are set forth in the Company Charter and Bylaws. There are no
declared or accrued but unpaid dividends with regard to any issued and
outstanding Company Shares. Except as disclosed in Section 3.2 of the Company
Disclosure Schedule, there are no outstanding or authorized options, warrants,
rights, calls, convertible instruments, agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition or repurchase, redemption or acquisition of any of the
Company Shares. There are no outstanding or authorized appreciation rights,
phantom rights or similar rights with respect to the Company. There are no
agreements, voting trusts, proxies, or understandings with respect to the
voting, or registration under the Securities Act, of any Company Shares between
or among the Company and any of its stockholders. All of the issued and
outstanding Company Shares were issued in compliance with applicable federal and
state securities laws.

     3.3 Authorization of Transaction.

     Subject to the Requisite Stockholder Approval of the Merger and this
Agreement, the Company has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and, subject to the adoption of this Agreement
and the approval of the Merger by a majority of the votes represented by the
outstanding Company Shares entitled to vote on this Agreement and the Merger,
voting in accordance with the corporate laws of the State of Delaware and the
Company Charter (the “Requisite Stockholder Approval”), the performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Buyer and the Merger Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting the enforcement of creditors’ rights generally, and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.

     3.4 Noncontravention.

     Subject to receipt of the Requisite Stockholders Approval, compliance with
the applicable requirements of the Securities Act and any applicable state
securities laws and the filing of the Certificate of Merger as required by the
State of Delaware, neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the

-9-

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

 

transactions contemplated hereby, will: (a) conflict with or violate any
provision of the Company Charter or the Bylaws; (b) require on the part of the
Company any filing with, or any permit, authorization, consent or approval of,
any Governmental Entity, other than (i) those required solely by reason of the
Buyer’s or the Merger Sub’s participation in the transactions contemplated
hereby, (ii) those required to be made by the Buyer or the Merger Sub and
(iii) any filing, permit, authorization, consent or approval which if not made
or obtained would not have a Material Adverse Effect on the Company;
(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract listed in Section 3.4 of the
Company Disclosure Schedule, except for any conflict, breach, default,
acceleration, right to accelerate, termination, modification, cancellation,
notice, consent or waiver that would not reasonably be expected to have a
Material Adverse Effect on the Company; (d) result in the imposition of any
Security Interest upon any assets of the Company; or (e) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any of its properties or assets, other than such conflicts, violations,
defaults, breaches, cancellations or accelerations referred to in clauses
(a) through (e) (inclusive) hereof which would not have a Material Adverse
Effect on the Company.

     3.5 Subsidiaries.

     The Company does not have any direct or indirect subsidiaries or any equity
interest in any other firm, corporation, membership, joint venture, association
or other business organization.

     3.6 Financial Statements.

     Attached as Exhibit A is the audited balance sheet and statements of
operations, changes in total stockholders’ equity and cash flows for the fiscal
year ended December 31, 2001. Such financial statements (collectively, the
“Financial Statements”) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, fairly and accurately
present the financial condition, results of operations and cash flows of the
Company as of the respective dates thereof and for the periods referred to
therein and are consistent with the books and records of the Company; provided,
however, that the Financial Statements referred to above are subject to normal
recurring year-end adjustments (which will not in the aggregate be material) and
do not include footnotes.

     3.7 Absence of Certain Changes.

     Since December 31, 2001, the Company has conducted its business as
ordinarily conducted consistent with past practice and there has not occurred
any change, event or condition (whether or not covered by insurance) that has
resulted in, or would reasonably be expected to result in any Material Adverse
Effect on the Company.

-10-

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

 

     3.8 Undisclosed Liabilities.

     The Company has no liability (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities accrued, reflected, reserved against on the
Financial Statements, (b) liabilities which have arisen since December 31, 2001,
in the ordinary course of business, (c) contractual or statutory liabilities
incurred in the ordinary course of business and (d) liabilities which would not
have a Material Adverse Effect on the Company.

     3.9 Tax Matters.

     The Company has timely (taking into account extensions of time to file)
filed all Tax Returns that it was required to file and all such Tax Returns were
correct and complete in all material respects. All Taxes that the Company is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Entity or
deposited in accordance with the law.

     3.10 Assets.

     The Company has good and valid title to or, in the case of leased assets, a
valid leasehold interest in, all tangible assets necessary for the conduct of
its businesses as presently conducted. Each such tangible asset is suitable for
the purposes for which it presently is used. No asset of the Company (tangible
or intangible) is subject to any Security Interest.

     3.11 Owned Real Property.

     The Company does not own any real property.

     3.12 Intellectual Property.

     Section 3.12 of the Company Disclosure Schedule is a true and complete list
of (i) all Intellectual Property presently owned or held by the Company and
(ii) any license agreements under which Company has access to any confidential
information used by the Company in its business (such licenses and agreements,
collectively, the “Intellectual Property Rights”) necessary for the conduct of
the Company’s business as conducted and as currently proposed to be conducted by
the Company. The Company owns, or has the right to use, free and clear of all
Security Interests, all of the Intellectual Property and the Intellectual
Property Rights. There are no outstanding options, licenses or agreements of any
kind relating to the Intellectual Property and the Intellectual Property Rights,
nor is the Company bound by or a party to any options, licenses or agreements of
any kind with respect to any of the Intellectual Property, the Intellectual
Property Rights and the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of “off the shelf” or standard products.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as conducted and as currently proposed
to

-11-

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

 

be conducted by the Company, violates any Third Party Intellectual Property
Rights and to the Company’s knowledge, the business as conducted and as
currently proposed to be conducted by the Company will not cause the Company to
infringe or violate any Third Party Intellectual Property Rights. There is no
defect in the title to any of the Intellectual Property or, to the extent that
the Company has title to Intellectual Property Rights to any Intellectual
Property Rights. To the Company’s knowledge, no officer, employee or director is
obligated under any contract (including any license, covenant or commitment of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would conflict or interfere with the
performance of such person’s duties as an officer, employee or director of the
Company, the use of such person’s best efforts to promote the interests of the
Company or the Company’s business as conducted or as currently proposed to be
conducted by the Company. No prior employer of any current or former employee of
the Company has any right, title or interest in the Intellectual Property and to
the Company’s knowledge, no person or entity has any right, title or interest in
any Intellectual Property. It is not and will not be with respect to the
business as currently proposed to be conducted necessary for the Company to use
any inventions of any of its employees made prior to their employment by the
Company.

     3.13 Real Property Leases.

     Section 3.13 of the Company Disclosure Schedule lists all real property
leased or subleased to the Company. The Company has delivered or made available
to the Buyer correct and complete copies of the leases and subleases (as amended
to date) listed in Section 3.13 of the Company Disclosure Schedule. With respect
to each lease and sublease listed in Section 3.13 of the Company Disclosure
Schedule:

     (a)  the lease or sublease is legal, valid, binding, enforceable and in
full force and effect with respect to the Company and, to the Company’s
knowledge, is legal, valid, binding, enforceable and in full force and effect
with respect to each other party thereto, and will continue to be so following
the Closing in accordance with the terms thereof as in effect prior to the
Closing (in each case except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditor’s rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought);

     (b)  the Company is not in breach or default under any such lease or
sublease and, to the Company’s knowledge, no other party to the lease or
sublease is in breach or default, and, no event has occurred which, with notice
or lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;

     (c)  there are no oral agreements or forbearance programs in effect as to
the lease or sublease;

-12-

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

 

     (d)  the Company has not received any written notice of any dispute with
regards to any lease or sublease; and

     (e)  the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold.

     3.14 Contracts.

     Section 3.14 of the Company Disclosure Schedule lists the following written
arrangements (including, without limitation, written agreements) to which the
Company is a party:

     (a)  any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of $25,000 per annum including such lease arrangements with
purchase commitments or similar obligations known to the Company other than
those listed pursuant to Section 3.14 in excess of $25,000;

     (b)  any written arrangement (or group other than Reseller Agreements) of
related written arrangements) for the licensing or distribution of software,
products or other personal property or for the furnishing or receipt of
services, (i) which involves more than the sum of $25,000 per annum, (ii) in
which the Company has granted rights to license, sublicense or copy, “most
favored nation” pricing provisions or exclusive marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party and (iii) which calls for performance by the
Company that as of the date hereof has not been fully completed;

     (c)  any written arrangement establishing a partnership or joint venture;

     (d)  any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed or guaranteed (or may create,
incur, assume or guarantee) indebtedness (including capitalized lease
obligations) involving more than $25,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;

     (e)  a list of all parties to any written arrangement concerning
confidentiality, non-disclosure or noncompetition;

     (f)  any written arrangement involving any of the stockholders of the
Company or their affiliates, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (“Affiliates”);

     (g)  any written arrangement under which the consequences of a default or
termination could have a Material Adverse Effect on the Company;

-13-

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

 

     (h)  any other written arrangement (or group of related written
arrangements) either (i) involving (A) more than $25,000 and (B) performance by
the Company that as of the date hereof has not been fully completed, or (ii) not
entered into in the ordinary course of business;

     (i)  any written arrangement under which the Company provides maintenance
or support services to any third party with regard to the Company’s products and
any written arrangement containing a commitment by the Company to provide
support for any such products for more than one year from the date of this
Agreement involving, in each case, more than $25,000 (other than arrangements
which by their terms permit the customer to extend such services after the
expiration of the initial one year term or Reseller Agreements);

     (j)  any written arrangement by which the Company has agreed to make
available any consulting, enablement consulting, or education services (i)
having a value in excess of $25,000 and (ii) providing for performance by the
Company that as of the date hereof has not been fully completed; and

     (k)  any other material contract or agreement as such terms are defined in
Regulation S-K promulgated under the Securities Act, to which the Company is a
party.

     The Company has delivered to or made available to the Buyer a correct and
complete copy of each written arrangement. With respect to each such written
arrangement so listed: (i) the written arrangement is legal, valid, binding and
enforceable and in full force and effect with respect to the Company and, to the
Company’s knowledge, the written arrangement is legal, valid, binding and is
enforceable and in full force and effect with respect to each other party
thereto (in each case except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditor’s rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought); (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect against the Company, and to
the Company’s knowledge against each other party thereto, immediately following
the Closing in accordance with the terms thereof (in each case except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditor’s rights generally, and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought) as in effect prior to
the Closing; and (iii) the Company is not in breach or default, and, to the
Company’s knowledge, no other party thereto is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration, under the
written arrangement; except, in each case, for breaches, defaults and events
that would not have a Material Adverse Effect on the Company. The Company is not
a party to any oral contract, agreement or other arrangement which, if reduced
to written form, would be required to be listed in Section 3.14 of the Company
Disclosure Schedule under the terms of this Section 3.14.

-14-

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

 

     3.15 Insurance.

     Section 3.15 of the Company Disclosure Schedule lists each insurance policy
(including fire, theft, casualty, general liability, director and officer,
workers compensation, business interruption, environmental, product liability
and automobile insurance policies and bond and surety arrangements) to which the
Company is a party, a named insured, or otherwise the beneficiary of coverage at
any time within the past year. Section 3.15 of the Company Disclosure Schedule
lists each person or entity required to be listed as an additional insured under
each such policy. Each such policy is in full force and effect and by its terms
and with the payment of the requisite premiums thereon will continue to be in
full force and effect following the Closing.

     The Company is not in breach or default, and does not anticipate being in
breach or default after Closing (including with respect to the payment of
premiums or the giving of notices) under any such policy, and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default or permit termination, modification or acceleration, under such
policy; except for any breach, default, event, termination, modification or
acceleration that would not have a Material Adverse Effect on the Company; and
the Company has not received any written notice or to the Company’s knowledge,
oral notice, from the insurer disclaiming coverage or reserving rights with
respect to a particular claim or such policy in general. The Company has not
incurred any material loss, damage, expense or liability covered by any such
insurance policy for which it has not properly asserted a claim under such
policy.

     3.16 Litigation.

     (a)  There are no: (i) unsatisfied judgments, orders, decrees, stipulations
or injunctions; or (ii) claims, complaints, actions, suits, proceedings or
hearings or, to the Company’s knowledge, investigations in or before any
Governmental Entity or any arbitrator or to the Company’s knowledge expected to
be before any Governmental Entity or any arbitrator; to which the Company, any
officer, director, employee or agent of the Company (in such person’s capacity
as an officer, director, employee or agent of the Company and not personally) is
or was (for the two years prior to and including the date hereof) a party or, to
the knowledge of the Company, is threatened to be made a party.

     (b)  There are no material agreements or other documents or instruments
settling any claim, complaint, action, suit or other proceeding against the
Company.

     3.17 Employees.

     (a)  A written list of all employees of the Company, along with the
position and the current annual salary rate of each such person, as of the date
of this Agreement, is attached hereto as Section 3.17 of the Company Disclosure
Schedule. To the Company’s knowledge, no employee has any plans to terminate
employment with the Company within six months of the date hereof. The Company is
not a party to or bound by any collective bargaining agreement,

-15-

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

 

nor has it experienced any material strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes. The Company has no knowledge
of any organizational effort made or threatened, either currently or within the
past two years, by or on behalf of any labor union with respect to employees of
the Company. The Company is in compliance in all material respects with all
currently applicable laws and regulations respecting wages, hours, occupational
safety, or health, fair employment practices, and discrimination in employment
terms and conditions, and is not engaged in any unfair labor practice except, in
each case, where such practice or failure to comply would not reasonably be
expected to have a Material Adverse Effect. There are no pending claims against
the Company under any workers compensation plan or policy or for long term
disability. There are no proceedings pending or, to the Company’s knowledge,
threatened, between the Company and its employees, which proceedings have or
would reasonably be expected to have a Material Adverse Effect on the Company.

     (b)  Section 3.17 of the Company Disclosure Schedule contains a list of
employees whose employment has been terminated by the Company in the ninety
(90) days prior to Closing; including the name, address, date and reason for
such termination.

     3.18 Employee Benefits.

     (a)  Section 3.18(a) of the Company Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans maintained, or contributed to,
by the Company, or any ERISA Affiliate. Complete and accurate copies of (i) all
such Employee Benefit Plans which have been reduced to writing, (ii) written
summaries of all such unwritten Employee Benefit Plans, (iii) all related trust
agreements, insurance contracts and summary plan descriptions and (iv) all
annual reports filed on IRS Form 5500, 5500C or 5500R for the last three plan
years (or such shorter period with respect to which the Company or any ERISA
Affiliate has an obligation file Form 5500) for each Employee Benefit Plan, have
been delivered or made available to the Buyer. Each Employee Benefit Plan has
been administered in all material respects in accordance with its terms and each
of the Company, and the ERISA Affiliates has met its obligations in all material
respects with respect to such Employee Benefit Plan and has made all required
contributions thereto within the time frames as prescribed by ERISA and the
Code. The Company and all Employee Benefit Plans are in material compliance with
the currently applicable provisions of ERISA and the Code and the regulations
thereunder.

     (b)  To the Company’s knowledge, there are no investigations by any
Governmental Entity, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders), suits or
proceedings against or involving any Employee Benefit Plan or asserting any
rights or claims to benefits under any Employee Benefit Plan that could give
rise to any material liability.

     (c)  All the Employee Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Employee Benefit Plans are qualified and
the plans and the trusts related thereto

-16-

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

 

are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, or the remedial amendment period for requesting such
determination has not yet expired, no such determination letter has been revoked
and revocation has not been threatened, and no such Employee Benefit Plan has
been amended since the date of its most recent determination letter or
application therefor in any respect, and no act or omission has occurred, that
would adversely affect its qualification.

     (d)  Neither the Company nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.

     (e)  At no time has the Company or any ERISA Affiliate been obligated to
contribute to any “multi-employer plan” (as defined in Section 4001(a)(3) of
ERISA).

     (f)  There are no unfunded obligations under any Employee Benefit Plan
providing benefits after termination of employment to any employee of the
Company (or to any beneficiary of any such employee), including but not limited
to retiree health coverage and deferred compensation, but excluding continuation
of health coverage required to be continued under Section 4980B of the Code and
insurance conversion privileges under federal or state law.

     (g)  No act or omission has occurred and no condition exists with respect
to any Employee Benefit Plan maintained by the Company or any ERISA Affiliate
that would subject the Company or any ERISA Affiliate to any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code.

     (h)  No Employee Benefit Plan is funded by, associated with, or related to
a “voluntary employee’s beneficiary association” within the meaning of Section
501(c)(9) of the Code.

     (i)  No Employee Benefit Plan, plan documentation or agreement, summary
plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Employee Benefit Plan.

     (j)  Section 3.18(j) of the Company Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company (A) the benefits of which are contingent, or the terms of which are
altered, upon the occurrence of a transaction involving the Company of the
nature of any of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing severance
benefits or other benefits after the termination of employment of such director,
executive officer or key employee; (ii) agreement, plan or arrangement under
which any person may receive payments from the Company that may be subject to
the tax imposed by Section 4999 of the Code or included in the determination of
such person’s “parachute payment” under Section 280G of the Code; and
(iii) agreement or plan binding the Company, including, without limitation, any
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any Employee Benefit Plan, any of the
benefits of which will be increased, or the

-17-

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

 

vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.

     3.19 Permits.

     Section 3.19 of the Company Disclosure Schedule sets forth a list of all
material permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including, without limitation, those issued or
required under applicable export laws or regulations) (“Permits”) issued to or
held by the Company. Such listed Permits are the only Permits that are required
for the Company to conduct its business as presently conducted, except for those
the absence of which would not have a Material Adverse Effect on the Company.
Each such Permit is in full force and effect and to the Company’s knowledge, no
suspension or cancellation of such Permit is threatened and there is no basis
for believing that such Permit will not be renewable upon expiration. Each such
Permit will continue in full force and effect following the Closing.

     3.20 Brokers’ Fees.

     Except as provided in Section 20 of the Company Disclosure Schedule, the
Company has no liability or obligation to pay any fees or commissions to any
broker, investment banking firm, finder or agent with respect to the
transactions contemplated by this Agreement.

     3.21 Books and Records.

     The minute books and other similar records of the Company contain true and
complete records of all material actions taken at any meetings of the Board of
Directors or any committee thereof and of all written consents executed in lieu
of the holding of any such meetings.

     3.22 Banking Relationships and Investments.

     Section 3.22 of the Company Disclosure Schedule sets forth an accurate,
correct and complete list of all banks and financial institutions in which the
Company has an account, deposit, safe-deposit box or borrowing relationship,
factoring arrangement or other loan facility or relationship, including the
names of all persons authorized to draw on those accounts or deposits, or to
borrow under loan facilities, or to obtain access to such boxes. The Company
Disclosure Schedule sets forth an accurate, correct and complete list of all
certificates of deposit, debt or equity securities and other investments owned,
beneficially or of record, by the Company (the “Investments”). The Company has
good and legal title to all Investments.

     3.23 Company Action.

     The Board of Directors of the Company has (i) determined that the Merger is
fair and in the best interests of the Company and its stockholders, (ii) adopted
this Agreement in accordance with the provisions of the corporate laws of the
State of Delaware, as applicable, and (iii) directed that this Agreement and the
Merger be submitted to the stockholders for their adoption

-18-

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

 

and approval and resolved to recommend that the stockholders vote in favor of
the adoption of this Agreement and the approval of the Merger.

     3.24 Disclosure.

     No representation or warranty by the Company contained in this Agreement,
including any statement contained in the Company Disclosure Schedule or any
Closing Document contains any untrue statement of a material fact or omits to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE MERGER SUB

     Each of the Buyer and the Merger Sub, jointly and severally, represents and
warrants to the Company that, as of the date hereof, the statements contained in
this Article IV are true and correct, except as set forth in the schedule
provided by the Buyer and the Merger Sub to the Company and attached hereto (the
“Buyer Disclosure Schedule”):

     4.1 Organization.

     Each of the Buyer and the Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. Each of the Buyer and the Merger Sub is duly qualified to conduct
business and is in corporate good standing under the laws of each jurisdiction
in which the nature of its businesses or the ownership or leasing of its
properties requires such qualification, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect on the
Buyer or the Merger Sub. Each of the Buyer and the Merger Sub has the corporate
power and authority to carry on the business in which it is engaged and to own
and use the properties owned and used by it. The Buyer and the Merger Sub have
each furnished or made available to the Company true and complete copies of its
Certificates of Incorporation and Bylaws, each as amended and as in effect on
the date hereof. Neither the Buyer nor the Merger Sub is in default under or in
violation of any provision of its Certificate of Incorporation or Bylaws, as
amended.

     4.2 Capitalization.

     As of the Closing Date, the authorized capital stock of the Buyer consists
of 50,000,000 shares of Buyer Stock, 3,296,733 shares of which are issued and
outstanding and 5,000,000 shares of preferred stock, par value $0.001 per value,
35,425 shares of which have been designated as Series A Preferred Stock and all
of which are issued and outstanding. As of the

-19-

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

 

Closing Date, all of the issued and outstanding shares of Buyer Stock are duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. The authorized capital stock of the Merger Sub consists of one (1) share
of common stock, par value $0.001 per share, all of which are issued and
outstanding. All of the issued and outstanding shares of capital stock of Merger
Sub are duly authorized and validly issued, and fully paid and nonassessable,
and were issued in compliance with all applicable laws. There are no outstanding
or authorized options, warrants, rights, calls, convertible instruments,
agreements or commitments to which the Buyer or the Merger Sub is a party or
which are binding upon the Buyer or the Merger Sub providing for the issuance,
disposition or repurchase, redemption or acquisition of any of the Buyer’s or
the Merger Sub’s shares of capital stock. All of the Merger Shares will be, when
issued in accordance with this Agreement, duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights.

     4.3 Authorization of Transaction.

     Each of the Buyer and the Merger Sub has all corporate requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby by the Buyer and the Merger Sub (including the
Merger) have been duly and validly authorized by all necessary corporate action
on the part of the Buyer and the Merger Sub (including the sole stockholder of
Merger Sub). This Agreement has been duly and validly executed and delivered by
the Buyer and the Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of the Buyer
and the Merger Sub, enforceable against them in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors’ rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.

     4.4 Noncontravention.

     Subject to compliance with the applicable requirements of the Securities
Act and any applicable state securities laws, the Exchange Act and the filing of
the Certificate of Merger as required by the DGCL, neither the execution and
delivery of this Agreement, nor the consummation by the Buyer or the Merger Sub
of the transactions contemplated hereby or thereby, will: (a) conflict with or
violate any provision of the Certificate of Incorporation or Bylaws of the Buyer
or the Merger Sub; (b) require on the part of the Buyer or the Merger Sub any
filing with, or any permit, authorization, consent or approval of, any
Governmental Entity, other than those (i) required solely by reason of the
Company’s participation in the transactions contemplated hereby or (ii) to be
made by the Company or (iii) any filing, permit, authorization, consent or
approval which, if not made or obtained, would not have a Material Adverse
Effect on the Buyer; (c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any

-20-

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

 

contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other arrangement to which the Buyer or the Merger Sub is a party or
by which either is bound or to which any of their assets are subject, except for
any conflict, breach, default, acceleration, right to accelerate, termination,
modification, cancellation, notice, consent or waiver that would not reasonably
be expected to have a Material Adverse Effect on the Buyer or the Merger Sub;
(d) result in the imposition of any Security Interest upon any assets of the
Buyer or the Merger Sub; or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or the Merger Sub or any of
their properties or assets, except for any violation that would not have a
Material Adverse Effect on the Buyer or the Merger Sub.

     4.5 Reports and Financial Statements.

     The Buyer has filed all forms, reports, schedules, registration statements,
proxy statements and other documents (including any document required to be
filed as an exhibit thereto) required to be filed by the Buyer with the SEC on a
timely basis, and has made available to the Company such forms, reports and
documents in the form filed with the SEC. All such required forms, reports,
schedules, registration statements, proxy statements and other documents
(including those that the Buyer may file subsequent to the date hereof) are
referred to herein as the “SEC Reports.” As of their respective dates, the SEC
Reports (including, without limitation, any financial statements or schedules
included or incorporated by reference therein) (i) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such SEC
Reports and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as disclosed in the Buyer Disclosure Schedule, the SEC
Reports filed by the Buyer and publicly available prior to the date of this
Agreement, as of the date hereof, there has not been any Material Adverse Effect
with respect to the Buyer that would require disclosure under the Securities
Act.

     4.6 Litigation.

     There are no suits, arbitrations, actions, claims, complaints, grievances,
or to the Buyer’s knowledge, investigations or proceedings pending or, to the
Buyer’s knowledge, threatened against Buyer or its subsidiaries that, if
resolved against Buyer or its subsidiaries could be reasonably expected to have
a Material Adverse Effect on the Buyer, or the Buyer’s or the Merger Sub’s
ability to consummate the transactions contemplated by this Agreement.

     4.7 Legal Compliance; Restrictions on Business Activities.

     The Buyer and the conduct and operations of its business are in material
compliance with each law (including rules, regulations and requirements
thereunder) of any federal, state, local or

-21-

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

 

foreign government or any Governmental Entity which (a) affects or relates to
this Agreement or the transactions contemplated hereby or (b) is applicable to
the Buyer or the Merger Sub or their respective businesses, except, in each
case, where such non-compliance would not reasonably be expected to have a
Material Adverse Effect on the Buyer or the Merger Sub. There is no agreement,
judgment, injunction, order or decree binding upon the Buyer or the Merger Sub
which has or would reasonably be expected to have the effect of prohibiting or
materially impairing any current or future business practice of the Buyer or the
Merger Sub, as currently contemplated by the Buyer or the Merger Sub, and any
acquisition of property of the Buyer or the Merger Sub or the conduct of
business by the Buyer and the Merger Sub as currently conducted or proposed to
be conducted.

     4.8 Merger Shares.

     The Merger Shares have been duly authorized and when issued in exchange for
the Company Shares pursuant to the terms hereof, will be validly issued, fully
paid and non-assessable, and not subject to any liens, pledges, charges,
encumbrances, restrictions of any kind, preemptive rights or any other rights or
interests of third parties or any other encumbrances, except for applicable
securities law restrictions on transfer, including those imposed by Regulation D
or Section 4(2) of the Securities Act and Rule 144 promulgated under the
Securities Act and under applicable “blue sky” state securities laws. The offer
and sale of the Merger Shares under this Agreement will be exempt from the
registration requirements of the Securities Act and in compliance with all
federal and state securities laws.

     4.9 Business of the Merger Sub.

     The Merger Sub is not and has never been a party to any material agreements
and has not conducted any activities other than in connection with the
organization of the Merger Sub, the issuance of the Merger Sub Common Stock, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. The Merger Sub has not incurred or assumed any
expenses or liabilities prior to the Closing.

     4.10 Company Action.

     The Board of Directors and the stockholders of the Buyer and the Merger
Sub, (a) have determined that the Merger is fair and in the best interests of
the Buyer and the Merger Sub, and each of their stockholders, and (b) have
adopted this Agreement in accordance with the provisions of the Certificate of
Incorporation and the Bylaws of each of the Merger Sub and the Buyer, as the
case may be, and the corporate laws of the State of Delaware. No other corporate
action (including stockholder action) is required to be taken by the Buyer or
the Merger Sub in connection with the consummation of the Merger and the
transactions contemplated by this Agreement.

-22-

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

 

     4.11 No Knowledge of Misrepresentations.

     The Buyer and the Merger Sub are acquiring the Company based on the
independent judgment of the Buyer and the Merger Sub as to the future prospects
of the Company and not based on any projections or forecasts obtained from the
Company, the stockholders of the Company or any of their respective affiliates,
employees, agents, directors, officers or representatives.

     4.12 Brokers’ Fees.

     Neither the Buyer nor the Merger Sub has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.

     4.13 Qualification as a Reorganization.

     Neither the Buyer nor the Merger Sub has any plan or intention to both (a)
discontinue (or cause the Surviving Corporation to discontinue) the historic
business of the Surviving Corporation (assuming that the business of the Company
as of the date of the Merger is the Surviving Corporation’s historic business)
and (b) cease (or cause the Surviving Corporation to cease) to use a significant
portion of the Surviving Corporation’s historic business assets in a trade or
business (assuming that the assets of the Company as of the date of the Merger
constitute the Surviving Corporation’s historic business assets). Neither the
Buyer nor the Merger Sub has any plan or intention to cause the Surviving
Corporation to dispose of assets following the Merger such that after the Merger
the Surviving Corporation will no longer continue to hold (as such term is used
in Code Section 368(a)(2)(E)(i)) substantially all of its assets and the assets
of the Merger Sub. For purposes of the foregoing, the term “substantially all”
means at least 90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets of the Merger Sub
and the Surviving Corporation.

     4.14 Disclosure.

     No representation or warranty by the Buyer or the Merger Sub contained in
this Agreement, including any statement contained in the Buyer Disclosure
Schedule, or any Closing Document contains any untrue statement of a material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
not misleading.

     4.15 Absence of Plans.

     Since December 31, 2001, the Board of Directors of the Buyer has not
authorized any recapitalization, reclassification, spinoff, stock split, stock
combination, stock or extraordinary cash dividend, or reverse split with respect
to the Buyer Stock.

-23-

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

 

     4.16 Tax Matters.

     (a)  The Buyer (and any consolidated group for tax purposes of which the
Buyer has been a member) has timely (taking into account extensions of time to
file) filed all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all material respects. All Taxes owed by the Buyer,
or for which the Buyer may be liable (whether or not shown on any Tax Return),
have been or will be timely paid. The Buyer is not 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 the Buyer 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 the Buyer that arose in connection
with any failure (or alleged failure) to pay any Tax.

     (b)  The Buyer has withheld or collected and paid or deposited in
accordance with law all Taxes required to have been withheld or collected and
paid or deposited by the Buyer in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.

     (c)  There is no dispute or claim concerning any Tax liability of the Buyer
either (i) claimed or raised by any authority in writing or (ii) as to which the
Buyer has knowledge.

     (d)  The Buyer has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time nor has any such waiver or extension
been required with respect to a Tax assessment or deficiency.

     (e)  Buyer is in control of Merger Sub within the meaning of Section 368(c)
of the Code.

     (f)  Merger Sub is a newly-formed corporation and does not (nor has it ever
had) any assets.

ARTICLE V

COVENANTS

     5.1 Best Efforts.

     Each of the Parties shall use its best efforts, to the extent commercially
reasonable, to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement.

-24-

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

 

     5.2 Securities Laws.

     (a)  Prior to the Closing, the Company shall not take any action that would
cause the number of its stockholders who are not “accredited investors” pursuant
to Regulation D promulgated under the Securities Act to increase to more than
thirty-five (35) during the term of this Agreement or that would cause any
person who does not meet the standards of Regulation D required for “purchasers”
under Regulation D to become a stockholder; provided, however, that the Company
will not be precluded from issuing Company Shares upon the exercise of options
or warrants.

     (b)  The Buyer, the Merger Sub, and the Surviving Corporation shall take
such steps as may be necessary to comply with the securities and blue sky laws
of all jurisdictions which are applicable to the issuance of the Buyer Stock in
connection with the Merger. The Company shall use its best efforts, to the
extent commercially reasonable, to assist the Buyer as may be necessary to
comply with such securities and blue sky laws.

     (c)  So long as the Buyer or any successor entity has securities registered
under Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the “Securities Act”), or the Exchange Act, the Buyer or
such successor entity shall file all reports required to be filed by it under
the Securities Act and the Exchange Act, all to the extent required pursuant to
Rule 144 to enable stockholders who exchange Company Shares for Buyer Stock
pursuant to the terms of this Agreement to sell Buyer Stock pursuant to Rule 144
adopted by the Securities and Exchange Commission under the Securities Act (as
such rule may be amended from time to time) or any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission.

     (d)  If at any time after the Effective Time, the Buyer takes or fails to
comply with its obligations under the immediately preceding paragraph (c), or if
the Rule 144 is not available to the stockholders who exchange Company Shares
for Buyer Stock pursuant to the terms of this Agreement as a result of any
action taken or not taken by the Buyer, then the Buyer shall enter into a
registration rights agreement with each such stockholder in form and substance
reasonably acceptable to the Buyer and such stockholder.

     5.3 Reorganization.

     Except for the transactions contemplated by this Agreement neither the
Buyer nor the Merger Sub will take any action, or cause the Surviving
Corporation to take any action, which would have the result of disqualifying the
Merger as a reorganization pursuant to Section 368(a)(2)(E) of the Code. In
addition, neither the Buyer nor the Merger Sub will adopt any position (or cause
the Surviving Corporation to adopt any position) which is inconsistent with the
treatment of the Merger as a tax-free reorganization.

-25-

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

 

     5.4 Reasonable Commercial Efforts and Further Assurances.

     Each Party, at the reasonable request of another Party, and as soon as
practicable, shall execute and deliver at the requesting Party’s expense such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.

ARTICLE VI

CONDITIONS TO CONSUMMATION OF MERGER

     6.1 Conditions to Each Party’s Obligations.

     The respective obligations of each Party to consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions:

     (a)  this Agreement and the Merger shall have received the Requisite
Stockholder Approval;

     (b)  the Buyer and the Company shall be satisfied that the issuances of
Buyer Stock in the transaction shall be exempt under Regulation D of the
Securities Act and Section 4(2) of the Securities Act;

     (c)  no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the Merger
shall have been issued, nor shall any proceeding brought by any Governmental
Entity, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal; and

     (d)  no proceeding in which the Company, the Buyer or the Merger Sub shall
be a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against the Company,
the Buyer or the Merger Sub under any United States or state bankruptcy or
insolvency law.

     6.2 Conditions to Obligations of the Buyer and the Merger Sub.

     The obligation of each of the Buyer and the Merger Sub to consummate the
Merger is subject to the satisfaction of the following additional conditions:

     (a)  this Agreement and the Merger shall have been approved and adopted by
the Requisite Stockholder Approval;

     (b)  the Company shall have obtained all of the waivers, permits, consents,
assignments, approvals or other authorizations, and effected all of the
registrations, filings and

-26-

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

 

notices, referred to in the Company Disclosure Schedule, except for any which if
not obtained or effected would not have a Material Adverse Effect on the Company
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement;

     (c)  the representations and warranties of the Company set forth in Article
III shall be true and correct as of the Closing Date, except for representations
and warranties made as of a specified date, which shall be true and correct as
of such date;

     (d)  the Company shall have performed or complied with, in all material
respects, its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Effective Time;

     (e)  the Buyer and the Merger Sub shall have received from the Secretary of
the Company a certificate (i) certifying the Company Charter, (ii) certifying
the Bylaws of the Company, (iii) certifying the resolutions of the Board of
Directors of the Company, (vi) certifying the resolutions of the stockholders of
the Company and (v) attesting to the incumbency of the officers of the Company;
and

     (f)  all actions to be taken by the Company in connection with the
consummation of the transactions contemplated hereby, and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Buyer and the Merger Sub.

     6.3 Conditions to Obligations of the Company.

     The obligation of the Company to consummate the Merger is subject to the
satisfaction of the following additional conditions:

     (a)  the Buyer and the Merger Sub shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, except for any which if not obtained or
effected would not have a Material Adverse Effect on the Buyer or the Merger Sub
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement;

     (b)  each of the Buyer and the Merger Sub shall have performed or complied
with in all material respects its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Effective
Time;

     (c)  the representations and warranties of the Buyer and the Merger Sub set
forth in Article IV shall be true and correct as of the Closing Date, except for
representations and warranties made as of a specified date, which shall be true
and correct as of such date;

     (d)  the Company shall have received from the Secretary of the Buyer a
certificate (i) certifying the Certificate of Incorporation of the Buyer, (ii)
certifying the Bylaws of the Buyer,

-27-

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

 

(iii) certifying the resolutions of the Board of Directors of the Buyer and
(iv) attesting to the incumbency of the officers of the Buyer;

(e)  the Company shall have received from the Secretary of the Merger Sub a
certificate (i) certifying the Certificate of Incorporation of the Merger Sub,
(ii) certifying the Bylaws of the Merger Sub, (iii) certifying the resolutions
of the Board of Directors and the sole stockholder of the Merger Sub and (iv)
attesting to the incumbency of the officers of the Merger Sub; and

     (f)  all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby shall be reasonably satisfactory
in form and substance to the Company.

     6.4 Certain Waivers.

     The Parties acknowledge and agree that if a Party has knowledge of any
breach by any other Party of any representation, warranty, agreement or covenant
contained in this Agreement, and such Party proceeds with the Closing, such
Party shall be deemed to have irrevocably waived such breach for that particular
breach only and such Party and its successors and assigns shall not be entitled
to assert any right or to seek any remedy for any damages arising from any
matters relating to such breach, notwithstanding anything to the contrary
contained herein or in any certificate delivered pursuant hereto.

ARTICLE VII

TERMINATION

     7.1 Termination of Agreement.

     The Parties may terminate this Agreement prior to the Effective Time as
provided below:

     (a)  the Parties may terminate this Agreement by mutual written consent;

     (b)  any Party may terminate this Agreement by giving written notice to the
other Parties at any time after the Company’s stockholders have voted on whether
to approve this Agreement and the Merger, in the event that this Agreement or
the Merger failed to receive the Requisite Stockholder Approval;

     (c)  any Party may terminate this Agreement by giving written notice to the
other Parties upon the entry of any permanent injunction or other order of a
court or other competent authority preventing the consummation of the Merger
that has become final and nonappealable;

     (d)  the Buyer and the Merger Sub may terminate this Agreement by giving
written notice to the Company if the Closing shall not have occurred on or
before March      , 2002, by reason of the failure of any condition precedent
under Section 6.1 or 6.2 hereof (unless the failure

-28-

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

 

results primarily from a breach by the Buyer or the Merger Sub of any
representation, warranty, agreement or covenant contained in this Agreement);
and

     (e)  the Company may terminate this Agreement by giving written notice to
the Buyer and the Merger Sub if the Closing shall not have occurred on or before
March      , 2002, by reason of the failure of any condition precedent under
Section 6.1 or 6.3 hereof (unless the failure results primarily from a breach by
the Company of any representation, warranty, agreement or covenant contained in
this Agreement).

     7.2 Effect of Termination.

     If any party terminates this Agreement pursuant to Section 7.1, all
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party, including the directors, officers, employees,
agents, consultants, representatives, advisors, stockholders, members or
Affiliates of any Party. Notwithstanding the foregoing, the following
obligations shall survive termination of this Agreement: (i) the liability of
any Party for any breach of this Agreement; (ii) press releases and
announcements, as provided in Section 8.1; and (iii) each Party’s obligation to
bear its own fees and expenses incurred in connection with the preparation and
negotiation of this Agreement and the transactions contemplated herein as
provided in Section 8.10.

     7.3 Amendment.

     Subject to applicable law, the Parties may cause this Agreement to be
amended at any time by execution of an instrument in writing signed on behalf of
each of the Parties.

     7.4 Extension, Waiver.

     At any time prior the Effective Time, any Party may, to the extent legally
allowed (i) extend the time for the performance of any of the obligations or
other acts of the other Parties, (ii) waive any inaccuracies in the
representations and warranties made to such Party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such Party contained herein. Any
agreement on the part of a Party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such Party.

ARTICLE VIII

MISCELLANEOUS

     8.1 No Third Party Beneficiaries.

     This Agreement shall not confer any rights or remedies upon any person
other than the Parties and their respective successors and permitted assigns.

-29-

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

 

     8.2 Entire Agreement.

     This Agreement, the Company Disclosure Schedule, the Buyer Disclosure
Schedule, the Schedules, the Exhibits, the documents and instruments and other
agreements among the parties referred to herein constitute the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, with respect to the
subject matter hereof.

     8.3 Succession and Assignment.

     This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors, heirs, legal
representatives and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.

     8.4 Counterparts, Facsimile Signatures.

     This Agreement may be executed with counterpart signature pages or in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile signatures.

     8.5 Headings.

     The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

     8.6 Notices.

     All notices, requests, demands, claims, and other communications hereunder
(each a “Notice”) shall be in writing. Any Notice shall be (a) sent by
registered or certified mail, return receipt requested, postage prepaid, (b)
sent via a reputable nationwide overnight courier service, charges prepaid or
(c) sent via facsimile (with acknowledgment of complete transmission) with a
confirmation copy by registered or certified mail or overnight courier as
aforesaid, in each case to the intended recipient as set forth below:

     If to the Company:

  NEOREACH, INC 3204 Tower Oaks Blvd., Suite 350 Rockville, Maryland 20852
Attention: President Facsimile: 301-230-9126

     Copies to:

-30-

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

 

  Piper Marbury Rudnick & Wolfe LLP 1200 Nineteenth Street, N.W Washington, DC
20036 Attention: Ernest Stern, Esq Facsimile: 202-223-2085

     If to the Buyer:

  MOBILEPRO CORP 3204 Tower Oaks Blvd., Suite 350 Rockville, Maryland 20852
Attention: President Facsimile: 301-230-9126

     Copy to:

  Piper Marbury Rudnick & Wolfe LLP 1200 Nineteenth Street, NW Washington, DC
20036 Attention: Ernest Stern, Esq Facsimile: 202-223-2085

     If to the Merger Sub:

  NEOREACH ACQUISITION CORP 3204 Tower Oaks Blvd., Suite 350 Rockville, Maryland
20852 Attention: President Facsimile: 301-230-9126

     Copy to:

  Piper Marbury Rudnick & Wolfe LLP 1200 Nineteenth Street, NW Washington, DC
20036 Attention: Ernest Stern, Esq Facsimile: 202-223-2085

     Each Notice shall be deemed to have been given and effective upon receipt
(or refusal of receipt). Any Party may change the address to which Notices
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.

-31-

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

 

     8.7 Governing Law.

     This Agreement shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of Delaware. In
addition, each of the Parties hereto (a) consents to submit itself to the
personal jurisdiction of the any federal court or state court located in the
State of Maryland in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a federal court or a state court located in the State of
Maryland.

     8.8 Severability.

     Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed, provided that this Agreement shall not then
substantially deprive either Party of the bargained-for performance of the other
Party.

     8.9 Expenses; Attorney’s Fees.

     All fees and expenses (including all legal and accounting fees and expenses
and all other expenses) incurred by the Buyer and the Merger Sub in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the Buyer and the Merger Sub, as the case may be, whether or not the Merger is
consummated. All fees and expenses incurred by the Company in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
Company, whether or not the Merger is consummated. Notwithstanding the
foregoing, if any Party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party in such legal action shall
be entitled to recover from the other Party all reasonable attorney’s fees,
expert witness fees and expenses incurred by the prevailing party in connection
therewith.

     8.10 Letter of Intent.

     This Agreement shall supercede the Letter of Intent entered into by the
Parties in its entirety.

-32-

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

 

     8.11 Disclosure Letters.

     The Company Disclosure Schedule shall be arranged in separate parts
corresponding to the numbered and lettered sections contained in this Agreement,
and the information disclosed in any numbered or lettered part shall qualify
only (a) the corresponding section of this Agreement and (b) other sections of
Article III to the extent it is clear (notwithstanding the absence of a specific
cross reference) from a reading of the disclosure that such disclosure is
applicable to such other sections. The Buyer Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in this Agreement, and the information disclosed in any numbered or
lettered part shall qualify only (c) the corresponding section of this
Agreement, and (d) other sections of Article IV to the extent it is clear
(notwithstanding the absence of a specific cross reference) from a reading of
the disclosure that such disclosure is applicable to such other sections. The
inclusion of any information in the Company Disclosure Schedule or the Buyer
Disclosure Schedule shall not be deemed to be an admission or acknowledgment
that such information is required to be included herein, is material, has or
would have a Material Adverse Effect, or is outside the ordinary course of
business.

     8.12 Construction.

     The Parties agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise.

     8.13 Incorporation of Exhibits and Schedules.

     The Exhibits, the Schedules, the Buyer Disclosure Schedule and Company
Disclosure Schedule identified in this Agreement are incorporated herein by
reference and made a part hereof.

[Signatures begin on following page]

-33-

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

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.

      BUYER:   MOBILEPRO CORP.       By: /s/ Daniel
Lozinsky                        
Name: Daniel Lozinsky
Title: President and CEO   MERGER SUB:   NEOREACH ACQUISITION CORP.       By:
/s/ Daniel Lozinsky                        
Name: Daniel Lozinsky
Title: President and CEO   COMPANY:   NEOREACH, INC.       By:/s/ Arne
Dunhem                              
Name: Arne Dunhem
Title: President