AGREEMENT AND PLAN
OF MERGER


BY AND
AMONG


QUALITY SYSTEMS,
INC.


BUD MERGER SUB,
LLC


AND


LACKLAND
ACQUISITION II, LLC


dba Healthcare Strategic
Initiatives


May 16,
2008











TABLE OF
CONTENTS


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	



	
 


	
ARTICLE
  I THE MERGER

	
 

	
1

	
 


	
 

	
1.1

	
The
  Merger

	
 

	
1

	
 


	
 

	
1.2

	
The
  Closing

	
 

	
1

	
 


	
 

	
1.3

	
Actions
  at the Closing

	
 

	
1

	
 


	
 

	
1.4

	
Additional
  Action

	
 

	
2

	
 


	
 

	
1.5

	
Conversion
  of Membership Interests; Purchase Consideration

	
 

	
2

	
 


	
 

	
1.6

	
Closing
  Amount Adjustment

	
 

	
3

	
 


	
 

	
1.7

	
Earnout
  Payment

	
 

	
5

	
 


	
 

	
1.8

	
Escrow

	
 

	
10

	
 


	
 

	
1.9

	
Articles
  of Organization and Operating Agreement of Surviving Company

	
 

	
10

	
 


	
 

	
1.10

	
No
  Further Rights

	
 

	
10

	
 


	
 

	
1.11

	
Member
  Releases

	
 

	
10

	
 


	
 

	
1.12

	
Company
  Closing Expenses

	
 

	
11

	
 


	
 

	
1.13

	
Appointment
  of Member Representatives

	
 

	
11

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  II REPRESENTATIONS AND WARRANTIES OF THE COMPANY

	
 

	
12

	
 


	
 

	
2.1

	
Organization,
  Qualification and Corporate Power

	
 

	
12

	
 


	
 

	
2.2

	
Capitalization

	
 

	
13

	
 


	
 

	
2.3

	
Authorization
  of Transaction

	
 

	
13

	
 


	
 

	
2.4

	
Noncontravention

	
 

	
14

	
 


	
 

	
2.5

	
Subsidiaries

	
 

	
14

	
 


	
 

	
2.6

	
Financial
  Statements

	
 

	
14

	
 


	
 

	
2.7

	
Absence
  of Certain Changes

	
 

	
14

	
 


	
 

	
2.8

	
Undisclosed
  Liabilities

	
 

	
16

	
 


	
 

	
2.9

	
Taxes

	
 

	
16

	
 


	
 

	
2.10

	
Assets

	
 

	
18

	
 


	
 

	
2.11

	
Owned
  Real Property

	
 

	
19

	
 


	
 

	
2.12

	
Real
  Property Leases

	
 

	
19

	
 


	
 

	
2.13

	
Intellectual
  Property

	
 

	
20

	
 


	
 

	
2.14

	
Contracts

	
 

	
21

	
 


	
 

	
2.15

	
Accounts
  Receivable

	
 

	
23

	
 


	
 

	
2.16

	
Powers
  of Attorney

	
 

	
23

	
 


	
 

	
2.17

	
Insurance

	
 

	
23

	
 


	
 

	
2.18

	
Litigation

	
 

	
23

	
 


	
 

	
2.19

	
Warranties

	
 

	
23

	
 


	
 

	
2.20

	
Employees

	
 

	
24

	
 


	
 

	
2.21

	
Employee
  Benefits

	
 

	
24

	
 


	
 

	
2.22

	
Environmental
  Matters

	
 

	
27

	
 


	
 

	
2.23

	
Legal
  Compliance

	
 

	
28

	
 


	
 

	
2.24

	
Customers
  and Suppliers

	
 

	
29

	
 


	
 

	
2.25

	
Permits

	
 

	
29

	
 


	
 

	
2.26

	
Certain
  Business Relationships With Affiliates

	
 

	
29

	
 


	
 

	
2.27

	
Brokers’
  Fees

	
 

	
29

	
 





-i-







	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	



	
 


	
 

	
2.28

	
Books
  and Records

	
 

	
29

	
 


	
 

	
2.29

	
Compliance
  with Healthcare Laws and Regulations

	
 

	
30

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  III REPRESENTATIONS AND WARRANTIES OF THE PARENT

	
 

	
31

	
 


	
 

	
3.1

	
Organization
  and Corporate Power

	
 

	
31

	
 


	
 

	
3.2

	
Authorization
  of Transaction

	
 

	
31

	
 


	
 

	
3.3

	
Noncontravention

	
 

	
31

	
 


	
 

	
3.4

	
Financing

	
 

	
32

	
 


	
 

	
3.5

	
SEC
  Filings

	
 

	
32

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
  OF THE PARENT AND MERGER SUB REGARDING MERGER SUB

	
 

	
32

	
 


	
 

	
4.1

	
Organization
  and Corporate Power

	
 

	
32

	
 


	
 

	
4.2

	
Authorization
  of Transaction

	
 

	
32

	
 


	
 

	
4.3

	
Litigation

	
 

	
32

	
 


	
 

	
4.4

	
Noncontravention

	
 

	
33

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  V PRE-CLOSING AND POST-CLOSING COVENANTS

	
 

	
33

	
 


	
 

	
5.1

	
Closing
  Efforts

	
 

	
33

	
 


	
 

	
5.2

	
Governmental
  and Third-Party Notices and Consents

	
 

	
33

	
 


	
 

	
5.3

	
Operation
  of Business

	
 

	
33

	
 


	
 

	
5.4

	
Access
  to Information

	
 

	
35

	
 


	
 

	
5.5

	
Notice
  of Breaches

	
 

	
35

	
 


	
 

	
5.6

	
Exclusivity

	
 

	
36

	
 


	
 

	
5.7

	
Expenses

	
 

	
36

	
 


	
 

	
5.8

	
Proprietary
  Information

	
 

	
36

	
 


	
 

	
5.9

	
Confidentiality

	
 

	
37

	
 


	
 

	
5.10

	
Insurance
  Matters

	
 

	
37

	
 


	
 

	
5.11

	
Guarantees

	
 

	
37

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  VI CONDITIONS TO CONSUMMATION OF MERGER

	
 

	
37

	
 


	
 

	
6.1

	
Conditions
  to Obligations of the Parent and Merger Sub

	
 

	
37

	
 


	
 

	
6.2

	
Conditions
  to Obligations of the Company

	
 

	
39

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  VII INDEMNIFICATION

	
 

	
40

	
 


	
 

	
7.1

	
Indemnification
  by the Indemnifying Members

	
 

	
40

	
 


	
 

	
7.2

	
Indemnification
  by the Parent

	
 

	
41

	
 


	
 

	
7.3

	
Third
  Party Actions

	
 

	
42

	
 


	
 

	
7.4

	
Non-Third
  Party Actions

	
 

	
43

	
 


	
 

	
7.5

	
Survival
  of Representations and Warranties

	
 

	
44

	
 


	
 

	
7.6

	
Treatment
  of Indemnity Payments

	
 

	
45

	
 


	
 

	
7.7

	
Limitations

	
 

	
45

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  VIII TAX MATTERS

	
 

	
46

	
 


	
 

	
8.1

	
Tax
  Indemnification

	
 

	
46

	
 


	
 

	
8.2

	
Preparation
  and Filing of Tax Returns; Payment of Taxes

	
 

	
47

	
 





-ii-







	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	



	
 


	
 

	
8.3

	
Audits,
  Assessments, Etc

	
 

	
47

	
 


	
 

	
8.4

	
Termination
  of Tax Sharing Agreements

	
 

	
48

	
 


	
 

	
8.5

	
Indemnification
  Claims

	
 

	
48

	
 


	
 

	
8.6

	
Dispute
  Resolution

	
 

	
48

	
 


	
 

	
8.7

	
Limitations

	
 

	
49

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  IX TERMINATION

	
 

	
49

	
 


	
 

	
9.1

	
Termination
  of Agreement

	
 

	
49

	
 


	
 

	
9.2

	
Effect
  of Termination

	
 

	
49

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE
  X DEFINITIONS

	
 

	
50

	
 


	
 

	
 

	
 

	
 


	
ARTICLE
  XI MISCELLANEOUS

	
 

	
64

	
 


	
 

	
11.1

	
Press
  Releases and Announcements

	
 

	
64

	
 


	
 

	
11.2

	
No
  Third Party Beneficiaries

	
 

	
64

	
 


	
 

	
11.3

	
Entire
  Agreement

	
 

	
64

	
 


	
 

	
11.4

	
Succession
  and Assignment

	
 

	
64

	
 


	
 

	
11.5

	
Counterparts
  and Facsimile Signature

	
 

	
64

	
 


	
 

	
11.6

	
Headings

	
 

	
64

	
 


	
 

	
11.7

	
Notices

	
 

	
64

	
 


	
 

	
11.8

	
Governing
  Law

	
 

	
65

	
 


	
 

	
11.9

	
Amendments and Waivers

	
 

	
66

	
 


	
 

	
11.10

	
Severability

	
 

	
66

	
 


	
 

	
11.11

	
Construction

	
 

	
66

	
 


	
 

	
11.12

	
Attorneys Fees

	
 

	
66

	
 


	
 

	
11.13

	
Arbitration

	
 

	
66

	
 


	
 

	
[Signature page follows]

	
 

	
67

	
 





Disclosure
Schedule
Exhibit A - Member Transmittal Letter
Exhibit B – Membership Interest Conversion Calculation
Exhibit C – Calculations of Assumed Distributions to Members

Exhibit D – Accounting Policies
Exhibit E – Escrow Agreement
Exhibit F – Form of Legal Opinion of the Company’s Counsel

Exhibit G – InfoNow License Agreement (form of)
Exhibit H – Form of Legal Opinion of the Parent’s Counsel
Exhibit I – Earnout Calculation Examples

Exhibit J – Earnout Payment Definitions











-iii-








AGREEMENT AND PLAN OF MERGER


          This
Agreement and Plan of Merger (this “Agreement”) is entered into as of
May 16, 2008 by and among (i) QUALITY SYSTEMS, INC., a California corporation
(the “Parent”), (ii) BUD MERGER SUB, LLC, a Missouri limited liability
company and a wholly-owned subsidiary of the Parent (the “Merger Sub”),
(iii) LACKLAND ACQUISITION II, LLC, dba Healthcare Strategic Initiatives, a
Missouri limited liability company (the “Company”), and (iv) the Members
of the Company who have executed this Agreement (each an “Indemnifying
Member” and collectively, the “Indemnifying Members”). 


          This
Agreement contemplates a merger of the Merger Sub with and into the Company
with the Company as the surviving entity. In such merger, the Members will
receive cash and Parent Stock in exchange for their Membership Interests in the
Company. 


          Now,
therefore, in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows. 


ARTICLE I 

THE MERGER


          1.1
The
Merger. Upon and subject to the terms and conditions of this Agreement, the
Merger Sub shall merge with and into the Company. From and after the Effective
Time, the separate company existence of the Merger Sub shall cease and the Company
shall continue as the Surviving Company. The Merger shall have the effect set
forth in Section 347.133 of the Missouri Revised Statutes (the “MRS”). 


          1.2
The
Closing. The Closing shall take place at the offices of Rutan & Tucker,
LLP, Costa Mesa, California, or at such other place as the Company and Parent
may mutually agree in writing, commencing at 10:00 a.m. local time on the third
Business Day following the date on which the last of the conditions set forth
in Article VI have been satisfied or waived (other than conditions that may
only be satisfied on the Closing Date, but subject to the satisfaction of such
conditions) or on such other date as the Parent and the Company may mutually
agree in writing (the “Closing Date”). 


          1.3
Actions at the Closing. 


                    (a)
At the Closing: 


                              (i)
the Company shall deliver to the Parent the various certificates, instruments
and documents referred to in Section 6.1 of this Agreement; 


                              (ii)
the Parent and/or Merger Sub shall deliver to the Company the various
certificates, instruments and documents referred to in Section 6.2 of
this Agreement; and 


                              (iii)
the Surviving Company shall file the Notice of Merger with the Missouri
Secretary of State. 


-1-







                    (b)
At or prior to the Closing, each Member, shall deliver to the Parent an
appropriate letter of transmittal and instruction of any documentation or
certification, if any, of such Member’s Membership Interests (each, a “Member
Transmittal Letter”) substantially in the form attached hereto as Exhibit
A; 


                    (c)
Commencing at the Effective Time, immediately upon receipt of a properly
completed Member Transmittal Letter from a Member the Parent shall pay to such
Member: (A) by wire transfer of immediately available funds to an account
designated by such Member in the Member Transmittal Letter the cash portion of
the Closing Amount; and (B) by delivery (or electronic transfer) from the
Parent’s transfer agent, to each Member the Parent Stock portion of the Closing
Amount; into which such Member’s Membership Interests are converted or
exchanged pursuant to Section 1.5(a); 


                    (d)
At the Effective Time, the Parent shall deposit the cash and Parent Stock in to
the Escrow Fund account with the Escrow Agent in accordance with Section 1.8.



          1.4
Additional Action. The Surviving Company 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 or the Merger
Sub, in order to consummate the series of transactions contemplated by this
Agreement. 


          1.5
Conversion of Membership Interests; Purchase Consideration.
At the Effective Time, by virtue of the Merger without any further action on
the part of any Party or holder of any of the Membership Interests: 


                    (a)
Each Membership Interest shall be converted, in accordance with the formula set
forth in Exhibit B attached hereto, into the right to receive a pro-rata
portion, relative to all outstanding Membership Interests, of the Aggregate
Transaction Consideration which shall be payable, without interest, at any time
in which a portion of the Aggregate Transaction Consideration is distributed in
accordance with the provisions of this Agreement or the Escrow Agreement (each
a “Payment Date”). 


                    (b)
Whenever cash payments are due by the Parent under this Agreement, Parent shall
pay each Member by wire transfer of immediately available funds to the account
designated by such Member in his or her Member Transmittal Letter, the amount
determined in accordance with the preceding provision of Section 1.5(a).



                    (c)
One hundred percent (100%) of the membership interest of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
thereafter evidence one hundred percent (100%) of the Membership Interests of
the Surviving Company. 


                    (d)
For illustrative purposes only, a spreadsheet showing the calculations for the
assumed distributions to each Member is set forth on Exhibit C attached
hereto. 


-2-







          1.6
Closing Amount Adjustment. 


                    (a)
Estimated Net Debt. 


                              (i)
The Closing Amount will be adjusted downward by the amount, if any, by which
the Estimated Net Debt as of the Closing is greater than Three Million Six
Hundred Fifty-five Thousand Two Hundred Six Dollars ($3,655,206). 


                              (ii)
Two Business Days before the anticipated Closing Date, the Company will deliver
to Parent a certificate setting forth, as of the date thereof, an estimate of
the amount of Cash and Debt expected as of the Closing Date (on a pro forma
basis giving effect to the transactions contemplated by the Agreement)(the
difference between such Debt less Cash, the “Estimated Net Debt”). The
amount of Debt will be itemized by creditor, with supporting detail, and the
amount of Cash will specify cash on hand and each cash equivalent, with
supporting detail. If the amount of Estimated Net Debt as of the Closing Date
is more than Three Million Six Hundred Fifty-five Thousand Two Hundred Six
Dollars ($3,655,206) (the “Target Net Debt”), the cash portion of the
Closing Amount will be reduced by the amount of such excess (the amount of such
decrease, if any, shall be referred to as the “Estimated Net Debt Adjustment”).
Under no circumstances shall the amount of Debt be in excess of $3,750,000 (the
“Maximum Allowable Closing Debt”) unless such restriction is waived in
writing by Parent. 


                    (b)
Estimated Working Capital Adjustment


                              (i)
The Closing Amount will be adjusted downward by the amount by which Estimated
Closing Date Working Capital is less than a negative ($586,103) exclusive of
$385,000 subordinated member debt owing to Maxine Hirsch (the “Target
Working Capital”). 


                              (ii)
Two Business Days before the anticipated Closing Date, the Company will deliver
to Parent a certificate setting forth, as of the date thereof, an estimate of
the Closing Date Working Capital (the “Estimated Working Capital”), with
supporting detail. If the Estimated Working Capital set forth in such
certificate is less than the Target Working Capital, the cash portion of the
Closing Amount will be decreased by such shortfall (the amount of such decrease
shall be referred to as the “Estimated Working Capital Adjustment”). 


                    (c)
Closing Amount Adjustment. Within five (5) Business Days after the final
determination of the Final Balance Sheet pursuant to Section 1.6(d) of
this Agreement, the Closing Amount will be adjusted again (the amount of any
such adjustment shall be referred to as the “Closing Amount Adjustment”)
and the Members will make such payments to the Surviving Company as are
necessary, if any, as follows: (i) an amount equal to that amount by which the
Estimated Net Debt is less than the Net Debt reflected on such Final Balance
Sheet (only in the event that Net Debt is greater than the Target Net Debt);
and (ii) an amount equal to that amount by which the Estimated Working Capital
is greater than the Closing Date Working Capital reflected on such Final
Balance Sheet (only in the event that Closing Date Working Capital is less than
Target Working Capital). In the event a Closing Amount Adjustment is due to the
Parent hereunder, the amount shall be disbursed (i) first, from the cash
portion of the Escrow Fund, (ii) second, from the Parent Stock portion of the
Escrow Fund (valued using the Escrow Stock Valuation), (iii) third, to the
extent the Escrow Fund is insufficient to pay in full 


-3-







such Closing
Amount Adjustment, from any other amounts of the Aggregate Transaction
Consideration payable to the Members hereunder, whether by right of setoff or
otherwise upon notice of such election to the Member Representatives, or (iii)
fourth, if amounts of the Aggregate Transaction Consideration payable hereunder
are not sufficient, upon demand from the Indemnifying Members. No Closing
Amount Adjustment shall be paid or due to any of the Members. 


                    (d)
Adjustment Procedures. The adjustments described in Section 1.6(c)
will be determined as follows: 


                              (i)
Within fifty (50) days after the Closing Date, the Parent shall prepare, in
accordance with GAAP, and deliver to the Member Representatives a balance sheet
of the Company as of the Closing Date (the “Final Balance Sheet”). The
parties acknowledge and agree that, for purposes of determining the Closing
Amount Adjustment pursuant to this Section 1.6(d)(i), the Final Balance
Sheet shall be prepared on a basis consistent with and utilizing the same
principles, practices and policies of the Company, as those used in preparing
the Most Recent Balance Sheet, subject to the Accounting Policies. The Parties
acknowledge and agree that the items listed on Section 1.6(d)(i) of the
Disclosure Schedules shall be included on the Final Balance Sheet. 


                              (ii)
Upon receipt of the Final Balance Sheet, the Member Representatives and any
professionals chosen by them shall have the right to review the Surviving
Company’s books and records relating to, and the work papers of the Parent and
its advisors utilized in preparing the Final Balance Sheet. The Final Balance
Sheet shall be binding for purposes of the Closing Amount Adjustment unless the
Member Representatives present to the Parent within 20 Business Days after
receipt of the Final Balance Sheet from the Parent written notice of
disagreement specifying in reasonable detail the nature and extent of the
disagreement. 


                              (iii)
If the Member Representatives deliver a timely notice of disagreement, the
Parent and the Member Representatives shall attempt in good faith during the
thirty (30) days immediately following the Parent’s receipt of timely notice of
disagreement to resolve any disagreement with respect to the Final Balance
Sheet. If, at the conclusion of such 30-day period, the Parent and the Member
Representatives have not resolved their disagreements regarding the Final
Balance Sheet, the Parent and the Member Representatives shall refer the items
of disagreement for final determination to the Orange County, California office
of a regional accounting firm which is mutually acceptable to the Parent and
the Member Representatives (the “Adjustment Accountants”). However, if
the Parent and Member Representatives are unable to agree on such a firm which
is willing to so serve, the Parent shall deliver to the Member Representatives
a list of three independent California regional accounting firms with offices
in Orange County, California, that are not currently nor have they been during the
past five (5) years, auditors, tax advisors or other consultants to the Parent
(or Parent’s then current subsidiaries, officers, or directors), the Company or
the Member Representatives, and the Member Representatives shall select one of
such three firms to be the Adjustment Accountants within five (5) Business
Days. The parties will be reasonably available for such firm, and shall
instruct such firm to render a final determination within the 20 days
immediately following the referral to the Adjustment Accountants. The Final
Balance Sheet shall be deemed to be 


-4-







conclusive and
binding on the Parent and the Members upon (A) the failure of the Member
Representatives to deliver to the Parent a notice of disagreement within 20
Business Days of their receipt of the Final Balance Sheet prepared by the
Buyer, (B) resolution of any disagreement by mutual agreement of the Parent and
the Member Representatives after a timely notice of disagreement has been
delivered to the Parent, or (C) notification by the Adjustment Accountants of
their final determination of the items of disagreement submitted to them. 


                    (e)
The fees and disbursements of the Adjustment Accountants under this Section
1.6(e) shall be paid by the Parent, on the one hand, and the Members, on
the other hand, based on their Pro Rata Award. In the event the Members are
obligated to pay the fees and disbursements of the Adjustment Accountants
hereunder, such amounts shall be disbursed (i) first, from the cash portion of
the Escrow Fund, (ii) second, to the extent the cash portion of the Escrow Fund
is insufficient to pay in full such Closing Amount Adjustment, then from the
Parent Stock portion of the Escrow Fund (valued using the Escrow Stock
Valuation), (iii) third, from any other amounts of the Aggregate Transaction
Consideration payable to the Members hereunder, whether by right of setoff or
otherwise, or (iv) fourth, if amounts payable hereunder are not sufficient,
upon demand by Parent, from the Indemnifying Members. 


          1.7
Earnout Payment. 


                    (a)
 Within fifty (50) days after the
second anniversary of the Closing Date (which two year period from the Closing
Date shall be referred to as the “Earnout Period”), the Parent will
determine in good faith a contingent payment for such Earnout Period in an
amount not to exceed $1,000,000 (the “Earnout Payment”) (subject to the
additional $650,000 earnout override described below (the “Earnout Override”)
and deliver a written certificate containing a calculation of such amount
specifying in reasonable detail the elements of each component thereof (the “Earnout
Certificate”)) as set forth herein such that the Member Representatives can
confirm such calculation was made pursuant to the terms of this Agreement, GAAP
and subject to the Accounting Policies. The Earnout Payment and Earnout
Override shall be divided into two equal parts with each part separately earned
independent of the other part except as set forth in the criteria set forth
below: 


	
 

	
 


	
 

	
(i) the
 revenue earnout which shall account for 50% of the possible Earnout Payment
 and, if applicable, the Earnout Override, and 


	
 

	
 


	
 

	
(ii) the
 income earnout which shall account for the other 50% of the possible Earnout
 Payment and, if applicable, the Earnout Override. The determination of the
 Earnout Payment and Earnout Override shall be made in accordance with the
 following terms and conditions set forth in this Section 1.7: 





-5-







Earnout Payment Definitions:



                              The
definitions of (i) Fiscal Year 2009 Earnout Targets, (ii) Fiscal Year 2010
Earnout Targets, and (iii) Aggregate Fiscal Year 2009/2010 Earnout Target, are
each set forth on Exhibit J attached hereto. 


The Earnout calculation:



          1. If,
for Fiscal Year 2009, either: 


                    (i)
the Company’s gross revenues are less than 80% of the Fiscal Year 2009 Revenue
Target; or 


                    (ii)
the Company’s pre-tax income is less than 80% of the Fiscal Year 2009 Income
Target; 


                    (iii)
then, no Earnout Payment or Earnout Override shall be made at the end of the
Earnout Period. 


          2.
If, for Fiscal Year 2010, either: 


                    (i)
the Company’s gross revenues are less than 80% of the Fiscal Year 2010 Revenue
Target; or 


                    (ii)
the Company’s pre-tax income is less than 80% of the Fiscal Year 2010 Income
Target; 


                    (iii)
then, no Earnout Payment or Earnout Override shall be made at the end of the
Earnout Period. 


          3.
If: 


                    (i)
for Fiscal Year 2009, (A) the Company achieves at least 80% of the Fiscal Year
2009 Revenue Target, and (B) the Company achieves at least 80% of the Fiscal
Year 2009 Income Target; and 


                    (ii)
for Fiscal Year 2010, (A) the Company achieves at least 80% of the Fiscal Year
2010 Revenue Target, and (B) the Company achieves at least 80% of the Fiscal
Year 2010 Income Target, 


-6-







                    (iii)
then, the Earnout Payment shall be made at the end of the Earnout Period
according to the following (the amounts set forth are examples of data points
along the continuum; it being the intention of the parties that the amounts are
to be calculated on a continuous, linear basis – (for example, in the first
table immediately below, a percentage of Fiscal Year 2009/2010 Aggregate Gross
Revenue of 82.5 in the first column would result in percentage of Revenue
Earnout Earned of 56.25): 


          Revenue
Earnout Calculation 


	
 

	
 

	
 


	
Percentage of Fiscal Year

  2009/2010 Aggregate Gross

  Revenue

	
 

	
Percentage of Revenue

  Earnout Earned


	


	
 

	



	
80

	
 

	
50


	
85

	
 

	
62.5


	
90

	
 

	
75


	
95

	
 

	
87.5


	
100

	
 

	
100





          Income
Earnout Calculation 


	
 

	
 

	
 


	
Percentage of Fiscal Year

  2009/2010 Aggregate Pre-Tax

  Income

	
 

	
Percentage of Income

  Earnout Earned


	


	
 

	



	
80

	
 

	
50


	
85

	
 

	
62.5


	
90

	
 

	
75


	
95

	
 

	
87.5


	
100

	
 

	
100





-7-







The Earnout Override: 


          Subject
to the conditions of parts 1., 2. and 3. set forth under the “The Earnout calculation” paragraph of
this Section 1.7 (see above), the following Earnout Override Payments may be
made: 


          4.
If the Company achieves 115% or greater of its Fiscal Year 2009/2010 Aggregate
Revenue Target, $325,000 shall be paid pursuant to the Earnout Override; and 


          5.
If the Company achieves 115% or greater of its Fiscal Year 2009/2010 Aggregate
Pre-Tax Income Target, $325,000 shall be paid pursuant to the Earnout Override.



          6.
Provided, however, that in no case shall the total Earnout Payments (inclusive
of the Earnout Override set forth in parts 4 and 5 immediately above) under
this Agreement exceed, in the aggregate, $1,650,000. 


          7.
Examples of possible outcomes for the Earnout and Earnout Override are set
forth on Exhibit I attached hereto. 


                    (b)
Dispute Resolution. 


                              (i)
The amount of the Earnout Payment and Earnout Override set forth in the Earnout
Certificate shall be binding on the Members unless the Member Representatives
present to the Parent within thirty (30) days after receipt of the Earnout
Certificate written notice of disagreement specifying in reasonable detail the
nature and extent of the disagreement. Upon receipt of the Earnout Certificate,
the Member Representatives and any professionals chosen by them shall have the
right to review the Surviving Company’s books and records relating to any
information contained in or related to the Earnout Certificate. If the Member
Representatives deliver a timely notice of disagreement, Parent and the Member
Representatives shall attempt in good faith during the sixty (60) days
immediately following the Parent’s receipt of the Member Representatives’
timely notice of disagreement to resolve any disagreement with respect to such
Earnout Payment or Earnout Override. 


                              (ii)
If, at the end of the 60-day period referenced in subsection (i) above,
Parent and the Member Representatives have not resolved all disagreements with
respect to whether the calculation of the Earnout Payment or the Earnout
Override is in accordance with the terms of Section 1.7 of this
Agreement, GAAP, and the Accounting Policies, Parent and the Member
Representatives will refer the items of disagreement to the Orange County,
California office of a regional Orange County, California accounting firm
mutually acceptable to the Parent and the Member Representatives (the “Earnout
Accountants”) for final determination. However, if the Parent and the
Member Representatives are unable to agree on an accounting firm willing to so
serve, the Parent shall deliver to the Member Representatives a list of three
independent 


-8-







Orange County,
California regional accounting firms that are not (and have not been for the
past five (5) years) auditors, tax advisors or other consultants to the Parent
(or its then current subsidiaries, officers or directors) or any of its
Affiliates or the Company or the Member Representatives or their respective
Affiliates, and the Member Representatives shall select one of such three firms
to be the Earnout Accountants within five (5) Business Days. The parties will
be reasonably available for such firm, and shall instruct such firm to render a
final determination and work diligently to facilitate the Earnout Payment and
Earnout Override within the 30-day period immediately following the referral to
the Earnout Accountants. The Earnout Accountants, Parent and the Member
Representatives will enter into such engagement letters as required by the
Earnout Accountants to perform under this Section 1.7(c)(ii). The
determination of the Earnout Accountants will be final and binding on the
Parties. The fees and disbursements of the Earnout Accountants under this Section
1.7(c)(ii) will be paid by the Parent, on the one hand, and the Member, on
the other hand, based on their Pro Rata Award. If any amount is payable by the
Members, such amount will be (i) first deducted from the Earnout Payments and
Earnout Overrides, if any, (ii) second, from the cash portion of the Escrow
Fund, (iii) third, to the extent the cash portion of the Escrow Fund is
insufficient to pay in full such fees, then from the Parent Stock portion of
the Escrow Fund (valued using the Escrow Stock Valuation), and (iv) fourth, if
amounts payable in this Section 6(b)(ii) are still not sufficient, from
the Indemnifying Members. 


                    (c)
Conduct of Business. 


                              (i)
Parent is entitled to manage and operate the Surviving Company and its
businesses in its sole and absolute discretion; provided, however, that (i)
Parent will not make any special allocations of expenses or deferrals of
revenue with respect to the Surviving Company outside the historical, usual and
customary business and accounting practices of Parent with a view toward
negatively impacting the Earnout Payment and Earnout Override and (ii) Parent
will not cause the Surviving Company to share the burden of “Corporate”
allocations of overhead as historically accounted for by Parent. 


                              (ii)
The Parties acknowledge and agree that, unless otherwise agreed to in writing
by each of Parent and the Member Representatives, in its and their sole
discretion, during the Earnout Period, Parent will not cause to be operated
through the Surviving Company any business other than the Business as of the
Closing Date. 


                              (iii)
Parent will maintain or cause to be maintained separate or otherwise
identifiable (e.g., in the case
of a shared general ledger) books and records for the Surviving Company at all
times during the Earnout Period in a manner reasonably necessary for the
financial statements of the Surviving Company to be prepared in accordance with
GAAP (and in a manner consistent with the Accounting Policies) and the Earnout
Payment and Earnout Override to be readily calculable therefrom. In calculating
the Earnout Payment and Earnout Override, Parent shall use the same Accounting
Policies, procedures, policies, methods, elections and allocations as were used
in preparing the Final Balance Sheet. 


                    (d)
The Earnout Payment and the Earnout Override, if any, shall be paid to the
Members within fourteen (14) calendar days after such amounts have been
determined for the Earnout Period, in the manner set forth under Section
1.5(b). 


-9-







                    (e)
The Parties agree to discuss in good faith any issues concerning the Earnout
and Earnout Override as administered pursuant to this Section 1.7. 


          1.8
Escrow. 


                    (a)
Escrow Fund. On the Closing Date, the Parent or the Merger Sub shall
deposit with the Escrow Agent the Escrow Fund. The Escrow Fund shall represent
contingent Aggregate Transaction Consideration payable to the Members hereunder
to the extent the Escrow Fund has not been reduced by operation of this
Agreement or in accordance with the Escrow Agreement. The Escrow Fund shall be
held by the Escrow Agent under the Escrow Agreement pursuant to the terms
thereof. The Escrow Fund shall be held until the second anniversary of the
Closing Date (except as specifically provided in Section 1.8(a)(ii),
below) as a trust fund and shall not be subject to any lien, attachment trustee
process or any other judicial process of any creditor of any party, and shall
be held and disbursed solely for the purposes and in accordance with the terms
of the Escrow Agreement and as otherwise set forth herein; provided, however,
notwithstanding anything to the contrary contained in this Agreement or the
Escrow Agreement (i) one-third of all shares of Parent Stock then in the Escrow
Fund shall be released therefrom on the first anniversary of the Closing Date
and (ii) One Million Four Hundred Thousand Dollars ($1,400,000) of Escrowed
Parent Stock, valued using the Escrow Stock Valuation, shall be released on the
earlier of (A) the fifth anniversary of the Closing Date; or (B) upon joint
agreement of Parent and the Member Representatives confirming the termination
or other final resolution of the “Coding Activities” matter with respect to the
Company (as referenced in the Disclosure Schedule) has occurred. 


                    (b)
The adoption of this Agreement and the approval of the Merger by the Members
shall constitute approval of the Escrow Agreement and of all of the
arrangements relating thereto, including the placement of the Escrow Fund in
escrow and the appointment of the Member Representatives to act on behalf of
the Members. 


          1.9
Articles of Organization and Operating Agreement of
Surviving Company. 


                    (a)
The Articles of Organization of the Surviving Company immediately following the
Effective Time shall be the same as the Articles of Organization of the Company
immediately prior to the Effective Time. 


                    (b)
The Operating Agreement of the Company immediately following the Effective Time
shall be the same as the Operating Agreement of the Company immediately prior
to the Effective Time. 


          1.10
No Further Rights. From and after the Effective Time,
membership interests of the Merger Sub shall be deemed to be outstanding, and
holders of certificates, if any, or evidence of Merger Sub ownership shall
cease to have any rights with respect thereto except as provided herein or by
law. 


          1.11
Member Releases. 


                    (a)
Effective as of the Closing, each of the Indemnifying Members agrees not to sue
and fully releases and discharges the Company and its Members, managers,
officers, 


-10-







assigns and
successors, past and present (collectively, “Releasees”), with respect to and from
any and all claims, issuances of the Company’s units, notes or other
securities, any demands, rights, liens, contracts, covenants, proceedings,
causes of action, obligations, debts, and losses of whatever kind or nature in
law, equity or otherwise, whether now known or unknown, and whether or not
concealed or hidden, all of which each Indemnifying Member now owns or holds or
has at any time owned or held against Releasees connected with or relating to
any matter occurring on or prior to the Closing Date; provided, however, that
nothing in this Section 1.11 will be deemed to constitute a release by
any Indemnifying Member of any right or claim of such Indemnifying Member
arising out of this Agreement or any agreement entered into in connection with
this Agreement or any employee benefit plan of the Company which benefit is
separately disclosed on the Disclosure Schedule and identifying the
Indemnifying Member entitled to such benefit.  


                    (b)
It is the intention of each Indemnifying Member that such release be effective
as a bar to each and every claim, demand and cause of action hereinabove
specified. 


          1.12
Company Closing Expenses. At the Closing, subject to Section
5.7, Company shall cause the payment of the Company Closing Expenses
directly to those Persons designated in writing on Section 1.12 of the
Disclosure Schedule as being entitled thereto. The Company and the Member
Representatives hereby represents and warrants that there will be no other
Company Closing Expenses owed except to those parties set forth in Section 1.12
of the Disclosure Schedule as the same may be updated from time to time with
Parent’s prior written consent (which shall not be unreasonably withheld). The
Company Closing Expenses shall be taken in to account in the computation of the
Final Balance Sheet under Section 1.6(d). 


          1.13
Appointment of Member Representatives. 


                    (a)
The Member Representatives are hereby authorized to act as the Members’
representatives and agents for all purposes under this Agreement, including all
agreements and documents annexed as Exhibits hereto. 


                    (b)
Should either or both Member Representatives resign or be unable to serve, the
Member or Members having received a majority of the Aggregate Transaction
Consideration distributed as of the latest Payment Date shall appoint a single
substitute agent to take on the responsibilities of the Member Representatives,
whose appointment shall be effective on the date of the prior Members Representative’s
resignation or incapacity. 


                    (c)
By way of illustration only, and without limitation, the Member Representatives
shall have the authority to (i) execute on behalf of each Member, as fully as
if the Members were acting on their own behalf, any and all documents and
agreements referred to herein, including the Escrow Agreement as the Members’
representative, (ii) give and receive notice or instructions permitted or
required under this Agreement or the Escrow Agreement, (iii) authorize the
release of the amounts held in the Escrow Fund to pay any Claimed Amount, or
(iv) to undertake any actions with respect to the resolution of a Dispute or
any disagreement with respect to the amount of any Earnout Payment or Earnout
Override, including partaking in any dispute resolution process. 


-11-








                    (d)
Any notice, direction or communication received by Parent, Merger Sub or the
Surviving Company from the Member Representatives, or delivered to the Member
Representatives by Parent, Merger Sub or the Surviving Company, shall be binding
upon the Members, and each of them. The Member Representatives shall act in all
matters on behalf of the Members and Parent and Merger Sub and, after the
Effective Time, the Surviving Company shall be entitled to rely on the actions
of the Member Representatives hereunder acting in concert or alone as the
actions of the Members. Parent, Merger Sub and the Surviving Company may
deliver notices and communications to the Members hereunder through the Member
Representatives at the address set forth in this Agreement for notices, and
such delivery shall be deemed to have been made to any or all of the Members.
None of Parent, Merger Sub nor the Surviving Company shall pay any costs or
expenses incurred by the Member Representatives in carrying out their obligations
hereunder. Each of Parent, Merger Sub and the Surviving Company consents to the
appointment of the Member Representatives to act as described hereunder. 


ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 


          The
Company represents and warrants to the Parent that, except as set forth in the
Disclosure Schedule, the statements contained in this Article II are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing Date, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties will be true and correct as of such date). The Company shall
have the right to supplement and update the Disclosure Schedule to reflect
events that have occurred between the date of this Agreement and the Closing
and could not have been disclosed at the date of this Agreement; provided,
however, that no such supplemental or updated information shall be deemed to
avoid or cure any misrepresentation or breach of warranty or constitute an
amendment of any breach of representation or warranty made by the Company as of
the date of this Agreement; and provided, further, however, that such right
shall not be deemed in any way to waive, modify or amend the condition to
Closing set forth in Section 6.1(i) hereof unless the Parent expressly waives
the condition in writing. The Disclosure Schedule shall be arranged in sections
and subsections corresponding to the numbered and lettered sections and
subsections contained in this Article II. The disclosures in any section or
subsection of the Disclosure Schedule shall be deemed to be listed or disclosed
on other sections of the Disclosure Schedule to the extent such disclosure is
either (i) appropriately cross referenced in the other applicable sections or
(ii) clear and unambiguous that such disclosure is applicable to the other
sections and subsections of the Disclosure Schedule.  


          2.1
Organization, Qualification and Corporate Power. The Company
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Missouri. The Company is duly qualified
to conduct business and is in good standing under the laws of each jurisdiction
listed in Section 2.1 of the Disclosure Schedule, which jurisdictions
constitute the only jurisdictions in which the nature of the Company’s
businesses or the ownership or leasing of its properties requires such
qualification, except where the failure to be so authorized, qualified or
licensed would not result in a Material Adverse Effect. The Company has all
requisite company 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 to 


-12-







the Parent
true, complete and correct copies of its Articles of Organization and Operating
Agreement. The Company is not in default under or in violation of any provision
of its Articles of Organization or Operating Agreement.


          2.2
Capitalization.  


                    (a)
Section 2.2(a) of the Disclosure Schedule sets forth the authorized and
outstanding Membership Interests of the Company which consists of such
ownership interests in the Company as set forth in the Operating Agreement. 


                    (b)
Section 2.2(b) of the Disclosure Schedule sets forth a complete and accurate
list, as of the date of the Agreement, of the Members, showing the percentage
of Membership Interests, and the class or series, if any, of such Membership
Interests, held by each Member. No outstanding Membership Interests constitute
restricted Membership Interests or are otherwise subject to a repurchase or
redemption right, indicating the name of the applicable Member, the vesting
schedule (including any acceleration provisions with respect thereto), and the
repurchase price payable by the Company. All of the issued and outstanding
Membership Interests of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. All of the issued and outstanding
Membership Interests and securities of the Company have been offered, issued
and sold by the Company in compliance with all applicable federal and state
securities laws. None of the issued and outstanding Membership Interests are
certificated. 


                    (c)
The Company does not have any Membership Interest Purchase Plans. 


                    (d)
No subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any Membership Interest of the
Company is authorized or outstanding. The Company has no obligation (contingent
or otherwise) to issue any subscription, warrant, option, convertible security
or other such right, or to issue or distribute to holders of any Membership
Interest, any evidences of indebtedness or assets of the Company. The Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any Membership Interest or any subinterest therein or to pay any
dividend or to make any other distribution in respect thereof. There are no
outstanding or authorized Membership Interest appreciation, phantom Membership
Interest or similar rights with respect to the Company. 


                    (e)
Except as set forth in Section 2.2(e) of the Disclosure Schedule, there is no
outstanding agreement, written or oral, between the Company and any holder of
its securities, or, to the best of the Company’s Knowledge, among any holders of its securities,
relating to the sale or transfer (including agreements relating to rights of
first refusal, co-sale rights or “drag-along” rights), registration under the
Securities Act, or voting, of the Membership Interests of the Company. 


          2.3
Authorization of Transaction. The Company has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery 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  


-13-







company action
on the part of the Company, except for the Requisite Member Approval. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent such
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other law affecting or relating to creditors’
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). 


          2.4
Noncontravention. Subject to the filing of the Notice
of Merger as required by the MRS and the receipt of the Requisite Member
Approval, neither the execution and delivery by the Company of this Agreement,
nor the consummation by the Company of the transactions contemplated hereby,
will (a) conflict with or violate any provision of the Articles of Organization
or Operating Agreement of the Company, (b) require on the part of the Company
any notice to or filing with, or any permit, authorization, consent or approval
of, any Governmental Entity, (c) except as set forth in Section 2.4(c) of the Disclosure
Schedule, 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
obligations under, create in any party the right to terminate, modify or
cancel, or require any notice, consent or waiver under, any contract or
instrument of a value in excess of $50,000 per year or duration in excess of 12
months, to which the Company is a party or by which the Company is bound or to
which any of its assets is subject, (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
or any of its properties or assets. 


          2.5
Subsidiaries. Except as disclosed in Section 2.5 of the
Disclosure Schedule, neither the Company, nor its Members that are to become
employees of the Surviving Company as part of the transactions contemplated
hereby, have any direct or indirect equity participation or similar interest in
any corporation, partnership, limited liability company, joint venture, trust
or other business association or entity, other than (i) as a passive investor
who does no more than hold such investor’s investment in the entity and does not
directly or indirectly render services or advice to such entity, and (ii)
outside the area and market in which the Business is conducted. 


          2.6
Financial Statements. The Company has provided to the
Parent the Financial Statements, copies of which are attached to Section 2.6 of
the Disclosure Schedule. The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, fairly present in all material respects 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 are subject to normal recurring year-end adjustments (which will not
be material) and do not include notes.  


          2.7
Absence of Certain Changes. Since the Most Recent
Balance Sheet Date, the Company has operated its business only in the Ordinary
Course of Business, and, except as set forth on Section 2.7 of the Disclosure
Schedule: 


                    (a)
the Company has not incurred any Debt other than changes in the principal
balance of the Company’s line of credit; 


-14-







                    (b)
the Company has not made any acquisition (by merger, consolidation, or
acquisition of stock or assets or otherwise) of any other Person; 


                    (c)
the Company has not created any Security Interest on any of its assets,
tangible or intangible; 


                    (d)
except for sales to customers of the Company’s products and services in the
Ordinary Course of Business, the Company has not sold, assigned or transferred
any of its tangible assets; 


                    (e)
the Company has not entered into or amended (i) any customer agreement with a
Person that is a Significant Person or (ii) any
agreement, other than a customer agreement, that is or would be a Material
Contract; 


                    (f)
the Company has not (i) entered into or amended any employment or severance or
similar agreement with any employee or any collective bargaining agreement,
(ii) adopted or amended, or increased the payments to or benefits under, any
profit sharing, bonus, thrift, option, deferred compensation, savings, insurance,
restricted equity, pension, retirement, or other employee benefit plan for or
with any of its directors, officers or employees or (iii) granted any increase
in compensation payable or to become payable or the benefits provided to its
directors, officers or employees, other than in the Ordinary Course of
Business; 


                    (g)
the Company has not (i) made or changed any Tax election or (ii) made any
material change in any method of accounting or accounting practice used by it,
other than any such changes required by GAAP; 


                    (h)
the Company has conducted and reflected in its books and records each
transaction referenced in Section 2.26 of the Disclosure Schedule on an
arm’s-length basis; 


                    (i)
there has been no change, event or development that has individually or in the
aggregate, a Material Adverse Effect; 


                    (j)
there has not been any material casualty, loss, damage or destruction (whether
or not covered by insurance) to any asset of the Company; 


                    (k)
the Company has not made any single expenditure or commitment to purchase
personal property or for additions to property, plant and equipment in excess
of $10,000; 


                    (l)
the Company has not issued, sold or otherwise disposed of any debenture, note,
or Equity Interest or modified or amended any right of any holder thereof; 


                    (m)
the Company has not amended, terminated, waived, disposed of, or permitted to
lapse, any material Permit; 


                    (n)
there has not been any amendment to the Articles of Organization or Operating
Agreement of the Company; and 


-15-







                    (o)
the Company has not materially altered the nature of its business or business
plan. 


          2.8
Undisclosed Liabilities. Except as provided in Section
2.8 of the Disclosure Schedule, 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 shown or reserved for
on the Most Recent Balance Sheet, (b) liabilities which have arisen since the
Most Recent Balance Sheet Date in the Ordinary Course of Business, (c)
liabilities incurred in connection with the negotiation of this Agreement and
specifically set forth in Section 2.8 of the Disclosure Schedule and clearly
identified as “liabilities not reflected on the Most Recent Balance Sheet”, (d)
liabilities specifically and clearly set forth in other sections of the
Disclosure Schedule and clearly identified as “liabilities not reflected on the
Most Recent Balance Sheet”, and (e) contractual and other liabilities incurred
in the Ordinary Course of Business which are not required by GAAP to be
reflected on a balance sheet or that would not otherwise be required to be
disclosed in the notes of the Company’s financial statements if such notes had
been prepared. 


          2.9
Taxes. 


                    (a)
The Company has properly filed on a timely basis all material Tax Returns that
it is and was required to file, and all such Tax Returns were true, correct and
complete in all respects and it has set forth in Section 2.9(a) of the
Disclosure Schedule a list of all such Tax Returns that it is required to file.
Except as set forth in Section 2.9(a) of the Disclosure Schedule, the Company
has properly paid on a timely basis all Taxes, whether or not shown on any of
its Tax Returns, that were due and payable. All Taxes that the Company is or
was required by law to withhold or collect have been withheld or collected and,
to the extent required, have been properly paid on a timely basis to the
appropriate Governmental Entity. The Company has complied with all information
reporting and back-up withholding requirements including maintenance of the
required records with respect thereto, in connection with amounts paid to any
employee, independent contractor, creditor or other third party. 


                    (b)
Except as set forth on Section 2.9(b) of the Disclosure Schedule, the unpaid
Taxes of the Company for periods ended on or prior to the Most Recent Balance
Sheet Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Most Recent Balance
Sheet. 


                    (c)
The Company is not and has never been taxed as a corporation or association
taxable as a corporation under the Code or the laws of any state. The
Corporation is not and has never been a member of any group of corporations
with which it has filed (or been required to file) consolidated, combined, or
unitary Tax Returns. The Company has no actual or potential liability under
Treasury Regulation Section 1.1502-6 (or any comparable or similar provision of
federal, state, local, or foreign law), or as a transferee or successor, by
contract, or otherwise for any Taxes of any Person (including without
limitation any affiliated, combined, or unitary group of corporations or other
entities that included the Company during a prior Taxable period). The Company
is not a party to, bound by, or obligated under any Tax allocation, Tax
sharing, Tax indemnity or similar agreement. 


-16-









                    (d)
The Company has delivered to the Parent (i) complete and correct copies of all
income Tax Returns of the Company relating to income Taxes for all Taxable
periods for which the applicable statute of limitations has not yet expired beginning
on or after January 1, 2004, and (ii) complete and correct copies of all
private letter rulings, revenue agent reports, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements,
settlement agreements, and pending ruling requests submitted by, received by or
agreed to by or on behalf of the Company relating to Taxes for all Taxable
periods for which the applicable statute of limitations has not yet expired.
The income Tax Returns of the Company for the period beginning after January 1,
2004 have not been audited by the Internal Revenue Service or other applicable
Governmental Entity or are closed by the applicable statute of limitations for
all periods through and including the Taxable period specified in Section 2.9(d)
of the Disclosure Schedule. The Company has delivered or made available to the
Parent complete and correct copies of all other Tax Returns of the Company
relating to Taxes for all Taxable periods beginning on or after January 1,
2004. No examination or audit of any Tax Return of the Company by any
Governmental Entity is currently in progress or, to the Knowledge of the
Company, threatened or contemplated, and the Company does not know of any basis
upon which a Tax deficiency or assessment could reasonably be expected to be
asserted against the Company. The Company has not been informed in writing by
any jurisdiction that the jurisdiction believes that the Company was required
to file any Tax Return that was not filed. 


                    (e)
The Company has not (i) waived any statute of limitations which waiver is still
in effect with respect to Taxes or agreed to extend the period for assessment
or collection of any Taxes, (ii) requested any extension of time within which
to file any Tax Return, which Tax Return has not yet been filed, or (iii)
executed or filed any power of attorney relating to Taxes with any Governmental
Entity. 


                    (f)
The Company is not a party to any Tax litigation. The Company is not nor has it
ever been a party to any specific transaction which will result in the
imposition of penalties upon the Company by any taxing authority. 


                    (g)
There are no Security Interests or other encumbrances with respect to Taxes
upon any of the assets or properties of the Company, other than with respect to
Taxes not yet due and payable. 


                    (h)
The Company has not made any payments, nor is it obligated to make any
payments, nor is it a party to any agreement, contract, arrangement, or plan
that could obligate it to make any payments, that are or could be, separately
or in the aggregate, “excess parachute payments” within the meaning of Section
280G of the Code (without regard to Sections 280G(b)(4) and 280G(b)(5)
thereof). 


                    (i)
No Member holds Membership Interests that are non-transferable and subject to a
substantial risk of forfeiture within the meaning of Section 83 of the Code
with respect to which a valid election under Section 83(b) of the Code has not
been made, and no payment to any Member of any portion of the consideration
payable pursuant to this Agreement will result in compensation or other income
to such Member with respect to which the Parent or the Company would be
required to deduct or withhold any Taxes. 


-17-







                    (j)
None of the assets of the Company (i) is property that is required to be
treated as being owned by any other person pursuant to the provisions of former
Section 168(f)(8) of the Internal Revenue Code of 1954, (ii) is “tax-exempt use
property” within the meaning of Section 168(h) of the Code, (iii) directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code, or (iv) is subject to a lease under Section 7701(h) of the
Code or under any predecessor section. 


                    (k)
The Company is not subject to (i) any change in method of accounting for a
Taxable period ending on or prior to the Closing Date (or as a result of the
transactions contemplated by this Agreement) under Section 481 of the Code (or
any corresponding or similar provision of federal, state, local or foreign Tax
law); (ii) any “closing agreement” as described in Section 7121 of the Code (or
any corresponding or similar provision of state, local or foreign Tax law) executed
on or prior to the Closing Date; or (iii) any installment sale or open
transaction disposition made on or prior to the Closing Date. The Company will
include in its income tax returns for periods ending on or prior to the Closing
Date any prepaid amounts received on or prior to the Closing Date. The Company
currently utilizes, the cash method of accounting for income Tax purposes and
such method of accounting has not changed in the past five (5) years. 


                    (l)
The Company has not participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code. 


                    (m)
Section 2.9(m) of the Disclosure Schedule sets forth each jurisdiction (other
than United States federal) in which the Company files, or, is required to file
or has been required to file a Tax Return or is or has been liable for Taxes on
a “nexus” basis and each jurisdiction that has on or after January 1, 2004 sent
notices or communications of any kind requesting information relating to the
Company’s nexus with such jurisdiction. 


          2.10 Assets. 


                    (a)
Except as set forth in Section 2.10(a) of the Disclosure Schedule, the Company
is the true and lawful owner, and has good title to, all of the assets (tangible
or intangible) purported to be owned by the Company, free and clear of all
Security Interests. The Company owns or leases all tangible assets sufficient
for the conduct of its businesses as presently conducted and as presently
contemplated to be conducted by any business plans or projections delivered by
the Company to the Parent. Each such tangible asset material to the operation
of the Company’s business is free from material defects, has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear) and is suitable for the purposes for
which it presently is used and contemplated to be used per such business plan. 


                    (b)
Section 2.10(b) of the Disclosure Schedule lists (i) all fixed assets (within
the meaning of GAAP) of the Company having a book value greater than $5,000,
indicating the cost, accumulated book depreciation (if any) and the net book
value of each such fixed asset as of the Most Recent Balance Sheet Date, and
(ii) all other assets of a tangible nature (other than inventories) of the
Company whose book value exceeds $5,000. 


-18-







                    (c)
Each item of equipment, motor vehicle and other asset that the Company has
possession of pursuant to a lease agreement or other contractual arrangement is
in such condition that, upon its return to its lessor or owner under the
applicable lease or contract, the obligations of the Company to such lessor or
owner to maintain such item will have been discharged in full and no additional
amounts will be due and owing thereunder. 


          2.11 Owned Real
Property. The Company does not own, and has
never owned, any real property. 


          2.12 Real Property
Leases. Section 2.12 of the Disclosure
Schedule lists all Leases and lists the term of such Lease, any extension and
expansion options, and the rent payable thereunder. The Company has delivered
to the Parent complete and accurate copies of the Leases. With respect to each
Lease: 


                    (a)
such Lease is legal, valid, binding, enforceable and in full force and effect; 


                    (b)
except as disclosed on Section 2.12 of the Disclosure Schedule, such Lease will
continue to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect immediately prior to the Closing; 


                    (c)
the Company is not in material breach or violation of, or material default
under, any such Lease, and to the Company’s Knowledge no event has occurred, is
pending or, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Company or, to
the Knowledge of the Company, any other party under such Lease and to the
Knowledge of the Company, each parcel of Leased Real Property is in compliance
in all material respects with all applicable Laws and Governmental Orders. The
Lease for each parcel of Leased Real Property is in full force and effect,
there are no material defaults under such leases by the Company, or, to the
Knowledge of the Company, any other party to such leases; 


                    (d)
there are no disputes, oral agreements or forbearance programs in effect as to
such Lease; 


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


                    (f)
based on the Company’s experience during the past full fiscal year and up to
the Closing Date, all facilities leased or subleased thereunder are supplied
with utilities and other services adequate for the operation of said
facilities; 


                    (g)
to the Company’s Knowledge, there is not any Security Interest, easement,
covenant or other restriction applicable to the real property subject to such
Lease which materially impairs the current uses or the occupancy by the Company
of the property subject thereto; and 


-19-







                    (h)
other than the rental payment amounts set forth in Section 2.12 of the
Disclosure Schedule, no other amounts are owed by the Company with respect to
any parcel of Leased Real Property.


          2.13 Intellectual
Property. 


                    (a)
Section 2.13(a) of the Disclosure Schedule lists (i) each patent, patent
application, copyright registration or application therefor, and trademark,
service mark and domain name registration or application therefor owned or used
by the Company. 


                    (b)
The Company owns or has the right to use all Company Intellectual Property
reasonably necessary (i) to use, sell, market and distribute the Customer
Deliverables and (ii) to operate the Business. Each item of Company
Intellectual Property will be owned or available for use by the Surviving
Company immediately following the Closing on substantially identical terms and
conditions as it was owned or available for use by the Company immediately
prior to the Closing. The Company has taken commercially reasonable measures to
protect the proprietary nature of each item of Company Intellectual Property,
and to maintain in confidence all trade secrets and confidential information,
that it owns or uses. No other Person has any rights to any of the Company
Intellectual Property owned by the Company and, to the Knowledge of the
Company, no other Person is infringing, violating or misappropriating any of
the Company Intellectual Property. 


                    (c)
None of the Company Intellectual Property, Customer Deliverables, or the sale,
marketing, distribution, provision or use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
Person. No complaint, claim or notice, or threat thereof, has been received by
the Company alleging any infringement, violation or misappropriation. The
Company has provided to the Parent complete access to all written documentation
in the Company’s possession relating to claims or disputes known to the Company
concerning any Company Intellectual Property. 


                    (d)
The Company not has licensed, distributed or otherwise granted any rights to
any third party with respect to, any Company Intellectual Property or any
Intellectual Property owned by a party other than the Company. The Company has
not agreed to indemnify any Person against any infringement, violation or
misappropriation of any Intellectual Property rights with respect to any
Customer Deliverables. The Company is not, nor will it or any party hereto be
as a result of the execution and delivery of this Agreement or the performances
of its obligations under this Agreement, in breach of any license, sublicense
or other agreement relating to the Company Intellectual Property. 


                    (e)
Section 2.13(e) of the Disclosure Schedule identifies each item of Intellectual
Property used or possessed by the Company that is owned by a party other than
the Company, and the license or agreement pursuant to which the Company uses it
(excluding off-the-shelf software programs licensed by or to the Company
pursuant to nonnegotiable standard form, mass market or “shrink wrap”
licenses). The Company is a party to all necessary licenses or other agreements
necessary to properly use the Intellectual Property which it currently uses in
the Business (in both type and number of licenses and whether off-the-shelf,
shrink wrap or 


-20-







otherwise) and
all such licenses are fully paid (or accrued for) and cover all the software
and other Intellectual Property used by the Company in the Business. 


                    (f)
All of the copyrightable materials (but excluding materials created, developed
or otherwise provided by a third party) embedded in, or integrated in,
incorporated in or bundled with the Customer Deliverables have been created by employees
of the Company within the scope of their employment by the Company, or by
independent contractors of the Company who have executed agreements expressly
assigning all right, title and interest in such copyrightable materials to the
Company. No portion of such copyrightable materials was jointly developed with
any third party. 


                    (g)
The Customer Deliverables, the Internal Systems, and the Company Intellectual
Property are free from significant defects or programming errors, and conform
in all material respects to the written documentation and specifications
therefore. 


                    (h)
The Internal Systems, Customer Deliverables, and the Company Intellectual
Property currently used by the Company to provide products and services to
their customers are fully adequate for the business of the Company as of the
date of this Agreement. 


          2.14 Contracts.



                    (a)
Section 2.14 of the Disclosure Schedule lists the following agreements (written
or oral) to which the Company is a party as of the date of this Agreement
(each, a “Material Contract”): 


                              
(i) any agreement (or group of related agreements) for the lease of personal
property from or to third parties providing for lease payments in excess of
$10,000 per annum and the expiration date of the term of each such agreement; 


                              (ii)
any agreement (or group of related agreements) with software vendors,
distributors or sales agents allowing for the resale, marketing or distribution
of the Company’s services of products; 


                              (iii)
any agreement concerning confidentiality (A) with respect to such agreement’s
existence or the existence of an existing customer or vendor agreement, or (B)
containing covenants restraining or limiting the freedom of the Company to
engage in any line of business or compete with any Person including, without
limitation, by restraining or limiting the right to solicit customers or that
would be expected, following the Closing, to restrain or limit the freedom of
the Parent or the Surviving Company to engage in any line of business in which
it currently engages or, in the course of such activity, compete with any
Person; 


                              (iv)
any agreement containing a right of first refusal; 


                              (v)
any agreement (or group of related agreements) that is terminable upon or
prohibits a change in ownership or control of the Company, or that requires
consent in connection with a change in ownership or control of the Company; 


-21-







                              (vi)
any agreement (or group of related agreements) that provides for the Company to
be the exclusive or a preferred provider of any product or service to any
Person or the exclusive or a preferred recipient of any product or service of
any Person during any period of time or that otherwise involves the granting by
any Person to the Company of exclusive or preferred rights of any kind; 


                              
(vii) any agreement (or group of related agreements) that provides for any
Person to be the exclusive or a preferred provider of any product or service to
the Company, or the exclusive or a preferred recipient of any product or
service of the Company during any period of time or that otherwise involves the
granting by the Company to any Person of exclusive or preferred rights of any
kind; 


                              
(viii) any agreement (or group of related agreements) in which a party has
agreed to purchase at least $10,000 per year of goods or services or that includes
specific service level commitments; 


                              
(ix) any agreement (or group of related agreements) in which the Company has
granted manufacturing rights, “most favored nation” or similar pricing
provisions or marketing or distribution rights relating to any products or
territory; 


                              
(x) any agreement (or group of related agreements) under which it has created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
Debt or under which it has imposed (or may impose) a Security Interest on any
of its assets, tangible or intangible; 


                              
(xi) any agreement for the disposition of any significant portion of the assets
or business of the Company (other than sales of products in the Ordinary Course
of Business) or any agreement for the acquisition of the assets or business of
any other entity (other than purchases of inventory or components in the
Ordinary Course of Business); 


                              
(xii) any employment or consulting agreement; 


                              
(xiii) any agreement, still in effect, involving any current or former officer,
director or Member of the Company or an Affiliate thereof; 


                              
(xiv) any agreement which contains any provisions requiring the Company to
indemnify any other party; and 


                              
(xv) any other agreement (or group of related agreements) either (A) involving
more than $50,000 per year, or (B) that is otherwise material to the Company. 


                    (b)
The Company has made available to the Parent a complete and accurate copy of
each agreement listed in Section 2.13 or Section 2.14 of the Disclosure
Schedule, or with respect to each such unwritten agreement, the Company has
provided a detailed description of the terms of such unwritten agreement. With
respect to each agreement so listed: (i) the agreement is legal, valid, binding
and enforceable and in full force and effect; (ii) the agreement will continue
to be legal, valid, binding and enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect immediately prior to the 


-22-







Closing; and
(iii) neither the Company nor, to the Knowledge of the Company, any other
party, is in material breach or violation of, or material default under, any
material provision of such agreement, and no event has occurred, is pending or,
to the Knowledge of the Company, is threatened, which, after the giving of
notice, with lapse of time, or otherwise, would constitute a material breach or
material default of any material provision of such agreement by the Company or,
to the Knowledge of the Company, of any other party under such agreement. 


          2.15
Accounts Receivable. Each and all Accounts Receivable
are valid receivables enforceable and fully collectible in the ordinary course
of business as historically conducted, free and clear of any claim, right of
setoff or other dispute, demand or future obligation of any nature whatsoever
net of any applicable allowance for doubtful accounts reflected in the Most
Recent Balance Sheet. Except as set forth in Section 2.15 of the Disclosure
Schedule, the Company has not received any written notice from an account debtor
stating that any Account Receivable is subject to any contest, claim or setoff
by such account debtor. 


          2.16
Powers of Attorney. Except as set forth in Section
2.16 of the Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Company. 


          2.17
Insurance. Section 2.17 of the Disclosure Schedule
lists each insurance policy (including fire, theft/crime, casualty,
comprehensive general liability, workers compensation, business interruption,
environmental, errors and omissions, directors and officers fiduciary
liability, employment practices liability, product liability and automobile
insurance policies and bond and surety arrangements) to which the Company is a
party, all of which are in full force and effect including the name of the
insurer, policy numbers and whether such policy is a claims-made or occurrence
policy. Except as set forth in Section 2.17 of the Disclosure Schedule, there
is no claim pending or, if having been disclosed, no such claim or existing
facts were questioned, denied or disputed by the underwriter of such policy.
All premiums due and payable under all such policies have been paid. The
Company has not been denied insurance coverage at any time during the past five
years and no policies have been cancelled or have been refused to be renewed by
the insurer in the past five years except as set forth in Section 2.17 of the
Disclosure Schedule. The Company has no Knowledge of any threatened termination
of, or premium increase with respect to, any such policy except as set forth in
Section 2.17 of the Disclosure Schedule. Each such policy will continue to be
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the
Closing. The Company has not failed to timely give any notice required or
failed to satisfy any subjectivities under such insurance policies or binders
of insurance. 


          2.18
Litigation. Except as set forth in Section 2.18 of the
Disclosure Schedule, there is no Legal Proceeding which is pending or, to the
Knowledge of the Company, has been threatened in writing against the Company.
There are no judgments, orders or decrees outstanding against the Company. 


          2.19
Warranties. 


                    (a)
No Customer Deliverable is subject to any guaranty, warranty, right of credit
or other indemnity. Section 2.19 of the Disclosure Schedule sets forth the
aggregate expenses incurred by the Company in fulfilling its obligations under
its guaranty, warranty, right 


-23-







of credit and
other indemnity provisions during the fiscal year and the interim period
covered by the Financial Statements. 


                    (b)
The Company has no liability arising out of any injury to individuals or
property as a result of the ownership, possession, or proper use of any product
manufactured, sold, leased or delivered by the Company. 


          2.20
Employees. 


                    (a)
Section 2.20 of the Disclosure Schedule contains a list of all employees of the
Company, along with the position and the annual rate (or hourly rate, where
applicable) of compensation of each such person. 


                    (b)
The Company is not a party to or bound by any collective bargaining agreement,
and has not experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes during the past five years.
The Company has not committed any unfair labor practice during the past five
years. 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. 


                    (c)
All employee expenses and benefits have been accrued on the Most Recent Balance
Sheet for all periods prior to and up through the date thereof. 


                    (d)
To the Knowledge of the Company, no officer, or Key Employee has any plans to
terminate employment with the Company. 


          2.21
Employee Benefits. 


                    (a)
Section 2.21(a) of the Disclosure Schedule contains a complete and accurate
list of all Company Plans as of the date of this Agreement. Prior to the date
of this Agreement, Company has made available to Parent complete and accurate
copies of documents embodying each of the Company Plans and related plan
documents including (without limitation) plan documents, trust documents, group
annuity contracts, plan, plan amendments, insurance policies or contracts,
participant agreements, employee booklets, administrative service agreements,
summary plan descriptions, plan summaries or descriptions, minutes,
resolutions, compliance and nondiscrimination tests for the last three plan
years, standard COBRA forms and related notices, registration statements and
prospectuses, and, to the extent still in its possession, any material employee
communications relating thereto. With respect to the Company Plans which are
subject to ERISA reporting requirements, the Company has provided copies of the
Form 5500 reports and any applicable financial statements, including schedules
and reports filed for the last four years. The Company has furnished Parent
with the most recent Internal Revenue Service determination, advisory or
opinion letter issued with respect to each such Company Plan which is intended
to be a qualified plan as described in Code Section 401(a), and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of tax-qualified status of any Company Plan subject
to Code Section 401(a). 


-24-







                    (b)
Each Company Plan has been administered in accordance with its terms and in
compliance with the requirements prescribed by any and all statutes, rules and
regulations (including ERISA and the Code), except violations that would not
have, individually or in the aggregate, a Material Adverse Effect. The Company
and the ERISA Affiliates have performed all material obligations required to be
performed by them under, are not in any material respect in default under or in
violation of, and have no Knowledge of any material default or violation by any
other party to, any Company Plan. All contributions which are due and are
required to be made by the Company or any ERISA Affiliate have been made within
the time period prescribed by ERISA to each Company Plan which is subject to
ERISA. All filings and reports required to be made by each Company Plan subject
to ERISA were prepared in good faith and timely filed, and the Company has properly
and timely filed and distributed or posted all notices and reports to employees
or participants in the Company Plans that are required to be filed, distributed
or posted by law, other than violations that would not have, individually or in
the aggregate, a Material Adverse Effect. There has been no “prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code, with respect to any Company Plan that is not exempt under Section 408 of
ERISA. Neither the Company nor any ERISA Affiliate is subject to any liability
or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA
with respect to any Company Plan. With respect to each Company Plan, no
“reportable event” within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 of ERISA has occurred that would, individually or in
the aggregate, reasonably be expected to likely result in a Material Adverse
Effect. No Company Plan has assets that include securities issued by the
Company or any ERISA Affiliate and no Company Plan constitutes a security which
is required to be registered under applicable state or federal securities laws.



                    (c)
No suit, investigation, audit, administrative proceeding, governmental or legal
action, or other litigation (except claims for benefits payable in the normal
operation of the Company Plans and proceedings with respect to qualified
domestic relations orders and similar orders) is pending, or to the Knowledge
of the Company is threatened, against or relating to any Company Plan asserting
any rights or claims to benefits under any Company Plan, including audit or
investigation by the IRS or United States Department of Labor. 


                    (d)
With respect to each Company Plan that is intended to be qualified under
Section 401(a) of the Code, the Company Plan (i) has obtained a favorable determination
letter from the Internal Revenue Service as to the Company Plan’s qualified
status under the Code and as to the exemption from tax under the provisions of
Code Section 501(a) of the trust created thereunder, (ii) has been established
under a standardized master and prototype or volume submitter plan for which a
favorable Internal Revenue Service advisory letter or opinion letter has been
obtained by the plan sponsor and upon which the adopting employer may rely, or
(iii) has time remaining to apply under applicable Treasure Regulations or
Internal Revenue Service pronouncements for a determination letter or opinion.
Nothing has occurred since the issuance of each such letter that could
reasonably be expected to cause the loss of the tax-qualified status of any
Company Plan subject to Section 401(a) of the Code. Each Company Plan that is
required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been
tested for compliance with, and satisfies the requirements of Section 401(k)(3)
and Section 401(m)(2) of the Code for each plan year ending prior to the
Closing Date. 


-25-







                    (e)
The Company has not nor has any ERISA Affiliate ever maintained, established,
sponsored, participated in, contributed to, or is obligated to contribute to,
or otherwise incurred any obligation or liability (including, without
limitation, any contingent liability) under any “multiemployer plan” as defined
in Section 3(37) of ERISA or to any “pension plan” (as defined in Section 3(2)
of ERISA) subject to Section 412 of the Code or Title IV of ERISA. With respect
to each Company Plan that is a “multiemployer plan” (within the meaning of
Section 3(37) of ERISA), neither the Company nor any ERISA Affiliate has any
actual or potential withdrawal liability (including, without limitation, any
contingent liability) from any complete or partial withdrawal (as defined in
Sections 4203 and 4205 of ERISA) from any such multiemployer plan. 


                    (f)
With respect to each Company Plan, the Company and each of its ERISA Affiliates
have complied in all material respects with the following to the extent
applicable to such Company Plan: (i) the applicable health care continuation
and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”) and the regulations thereunder or any state law governing health
care coverage extension or continuation; (ii) the applicable requirements of
the Family Medical Leave Act of 1993 and the regulations thereunder; (iii) the
applicable requirements of the Health Insurance Portability and Accountability
Act of 1996 (“HIPAA”); and (iv) the applicable requirements of the Cancer
Rights Act of 1998 and the Newborn and Mother’s Health Protection Act of 1996. 


                    (g)
All anticipated contributions and funding obligations are accrued on the
Company’s financial statements to the extent required by GAAP. The Company has
expensed and accrued as a liability the present value of future benefits under
each applicable Company Plan for financial reporting purposes to the extent
required by GAAP. The assets of each Company Plan that is funded are reported
at their fair market value on the books and records of such Company Plan. The
Company has no obligation to provide retiree health coverage or other retiree
welfare benefits other than continuation coverage required under Section 4980B
of the Code or other applicable law and insurance conversion privileges under
state law. 


                    (h)
No act or omission has occurred and no condition exists with respect to any
Company Plan that would subject the Company or any ERISA Affiliate to (i) any
material fine, penalty, tax or liability of any kind imposed under ERISA or the
Code or (ii) any contractual indemnification or contribution obligation
protecting any fiduciary, insurer or service provider with respect to any
Company Plan. 


                    (i) No Company 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. 


                    (j)
Each Company Plan may be amended, terminated or otherwise discontinued
unilaterally by the Company at any time or after the specified amount of
required notice without liability or expense to the, Company (or after the
Closing Date, the Parent) or such Company Plan as a result thereof, except
insofar as benefits thereunder shall have vested and cannot be modified, in
respect of claims incurred prior to such amendment or termination, as may be
required under applicable requirements of law, and for reasonable
administrative expenses associated with such termination or amendment. No
Company Plan, plan documentation or agreement, summary plan description or
other written communication 


-26-







distributed
generally to employees by its terms prohibits the Company from amending,
terminating or otherwise discontinuing any such Company Plan. 



                    (k)
The Company does not have any (i) agreement with any Member, 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, absent the Member
vote to be taken pursuant to Section 5.9, 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 (without regard to Sections 280G(b)(4) and 280G(b)(5)
thereof); and (iii) agreement or plan binding the Company, including any option
plan, appreciation right plan, restricted equity plan, equity purchase plan,
severance benefit plan or Company Plan, any of the benefits of which will be
increased, or the 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. Any Company Plan which is a
“nonqualified deferred compensation plan” as defined in Code Section 409A is
either not subject to or exempt from Code Section 409A or is operated and
maintained by the Company in good faith compliance in all material respects
with Code Section 409A.  


                    (l)
Section 2.21(l) of the Disclosure Schedule sets forth the policy of the Company
with respect to accrued vacation, accrued sick time and earned time off and the
amount of such liabilities as of the date of this Agreement. The information
set forth in Section 2.21(l) of the Disclosure Schedule shall be updated by the
Company as of the Closing Date. 


                    (m)
The Company has correctly classified in all materials respects all individuals
who perform services for the Company under the Company Plans, ERISA and the
Code as common law employees, independent contractors, leased employees, and
exempt or non-exempt employees. 


                    (n)
With respect to any Company Plan, the Company has not engaged in any reportable
transaction under Treas. Reg. §1.6011-4(b), including any transaction that is
the same as or substantially similar to any transaction that the Internal
Revenue Service has determined to be a tax avoidance transaction and has
identified by notice, regulation, or other form of published guidance as a
listed transaction under Treas. Reg. §1.6011-4(b). 


          2.22
Environmental Matters. 


                    (a)
The Company has complied in all material respects with all applicable
Environmental Laws and Environmental Permits. There is no pending or to the
Company’s Knowledge, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law and Environmental Permits involving the Company or any properties owned or
leased by it. 


-27-







                    (b)
The Company is not, and shall not be, subject to any environmental liability of
any solid or hazardous waste transporter or treatment, storage or disposal
facility that has been used by the Company. 


                    (c)
There has been no Release of any Hazardous Material on any of the Leased Real
Property or on any property formerly owned, leased, used or occupied by the
Company in violation of any applicable Environmental Law. 


                    (d)
There are no Environmental Claims pending or to the Company’s Knowledge
threatened against the Company on any of the Leased Real Property. 


          2.23
Legal Compliance. 


                    (a)
Except as set forth in Section 2.23 of the Disclosure Schedule, the Company is
currently conducting, and has at all times conducted, its businesses in
compliance in all material respects with each applicable law (including rules
and regulations thereunder) of any federal, state, local or foreign government,
or any Governmental Entity. The Company (including any Affiliates) has not
received any written notice or communication from any Governmental Entity
alleging noncompliance with any applicable law, rule or regulation, including,
without limitation, but by way of example only, those laws, rules and
regulations governing immigration. 


                    (b)
Subject to paragraph (c) below, the Company complies with in all material
respects and has implemented all such measures required for it to comply, in
all material respects, with its obligations as a Covered Entity for its “Health
Plan” and as a Business Associate of its “Covered Entity” (as such capitalized
terms are defined in HIPAA and the regulations promulgated thereunder),
including without limitation, the privacy and security regulations (45 C.F.R.
160 and 164) and the transaction and code set regulations (45 C.F.R. 162)
promulgated under HIPAA. With respect to any HIPAA regulatory requirements,
including any contractual privacy and security commitments for “Protected
Health Information” (as that term is defined in the HIPAA privacy and security
regulations), for which the Company’s (including any Affiliates) compliance
with HIPAA is required (collectively, the “HIPAA Commitments”), 


                              (i)
the Company is in material compliance with the HIPAA Commitments; 


                              (ii)
the transactions contemplated by this Agreement will not violate any of the
HIPAA Commitments; 


                              (iii)
the Company has not received written inquiries from the U.S. Department of
Health and Human Services or any other Governmental Entity regarding the
Company’s compliance with the HIPAA Commitments; and 


                              (iv)
the HIPAA Commitments have not been rejected by any applicable certification
organization which has reviewed such HIPAA Commitments or to which any such
HIPAA Commitment has been submitted. 


-28-







                    (c)
The Company has either entered into or made reasonable and good faith efforts
to enter into valid, written Business Associate agreements with all customers
that are Covered Entities and with all contractors, agents, vendors, suppliers,
and service providers that are Business Associates of the Company. 


                    (d)
Except as set forth in Section 2.23 of the Disclosure Schedule, the Company has
not incurred any Damages as a result of or in connection with any matters,
legal, regulatory or otherwise, concerning illegal or improper medical coding
activities performed by the Company including, but not limited to, the
development and/or submission of CPT or other codes for the purposes of billing
for medical services to Medicare, Medicaid and/or any third party payer (the “Coding
Activities”). 


          2.24
Customers and Suppliers. Section 2.24 of the
Disclosure Schedule sets forth a list of (a) the top 25 customers of the
Company by revenue under contract for the fiscal year ended December 31, 2007
and (b) the top 10 suppliers by expenses incurred for the fiscal year ended
December 31, 2007 that are the sole supplier of any significant product or
service to the Company (each such customer or supplier, a “Significant Person”).  


          2.25
Permits. Section 2.25 of the Disclosure Schedule sets
forth a list of all material Permits issued to or held by the Company. Such
listed Permits are the only material Permits that are required for the Company
to conduct its Business as presently conducted or as contemplated to be
conducted by any business plans or projections delivered by the Company to the
Parent. Each such Permit is in full force and effect; the Company is in
compliance in all material respects with the terms of each such Permit; and, to
the Knowledge of the Company, no suspension or cancellation of such Permit is
threatened. The Company has no basis for believing that such Permit will not be
renewable upon expiration. No notice to or consent from any Person is required
under any Permit as a result of the transactions contemplated by this
Agreement. 


          2.26
Certain Business Relationships With Affiliates. Except
as set forth in Section 2.26 of the Disclosure Schedule, no Affiliate of the
Company (a) owns any property or right, tangible or intangible, which is used
in the business of the Company, (b) to the Company’s Knowledge has any claim or
cause of action against the Company, or (c) owes any money to, or is owed any
money by, the Company. Section 2.26 of the Disclosure Schedule describes any
transactions or relationships between the Company and any Affiliate thereof
which occurred or have existed since the beginning of the time period covered
by the Financial Statements. 


          2.27
Brokers’ Fees. Neither the Company, nor any Member nor
any other party with whom or for whom the Company or Members may have
contracted 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. 


          2.28
Books and Records. The minute books and other similar
records of the Company contain complete and accurate records of all actions
taken at any meetings of the Company’s Members, Board of Directors or any
committee thereof and of all written consents executed in lieu of the holding
of any such meeting. The books and records of the Company accurately reflect in
all material respects the assets, liabilities, business, financial condition
and results of operations of the Company and have been maintained in accordance
with good business and 


-29-







bookkeeping
practices. Section 2.28 of the Disclosure Schedule contains a list of all (i)
accounts and safe deposit boxes of the Company (including the name of each
bank, trust company, savings institution, brokerage firm, mutual fund or other
financial institution with which the Company has an account or safe deposit
box) and the names of persons having signature authority with respect thereto
or access thereto and (ii) fees and costs due and payable to third parties with
respect to the termination or expiration at any time of any banking, financing
or similar facility. 


          2.29
Compliance with Healthcare Laws and Regulations. 


                    (a)
Without limiting the generality of Section 2.23 or any other representation or
warranty made by the Company herein, the Company is conducting and has conducted
its business and operations in compliance in all material respects with, and
neither the Company nor any of its officers, directors or employees has engaged
in any activities prohibited under, all applicable civil or criminal statutes,
laws, ordinances, rules and regulations of any federal, state, local or foreign
Governmental Entity with respect to regulatory matters relating to the
provision, administration, and/or payment for healthcare products or services
(collectively, “Healthcare Laws”), including, without limitation, (i)
rules and regulations governing the operation and administration of Medicare,
Medicaid, or other federal health care programs; (ii) 42 U.S.C. § 1320a-7(b),
commonly referred to as the “Federal Anti-Kickback Statute,” (iii) 42 U.S.C. §
1395nn, commonly referred to as the “Stark Law,” (iv) 31 U.S.C. §§ 3729-33,
commonly referred to as the “False Claims Act” and (v) rules and regulations of
the U.S. Food and Drug Administration. 


                    (b)
The Company has not received any written notice or communication from any
Governmental Entity alleging noncompliance with any Healthcare Laws and to the
Company’s Knowledge it has not received any other notice or communication
(written or otherwise) from any Governmental Entity alleging noncompliance with
any Healthcare Laws. There is no civil, criminal or administrative action,
suit, demand, claim, complaint, hearing, investigation, notice, demand letter,
warning letter, proceeding or request for information pending against the Company
and the Company has no liability (whether actual or contingent) for failure to
comply with any Healthcare Laws. To the Company’s Knowledge, there is no act,
omission, event or circumstance that would reasonably be expected to give rise
to any such action, suit, demand, claim, complaint, hearing, investigation,
notice, demand letter, warning letter, proceeding or request for information or
any such liability. There has not been any violation of any Healthcare Laws by
the Company in its submissions or reports to any Governmental Entity that could
reasonably be expected to require investigation, corrective action or
enforcement action. There is no civil or criminal proceeding pending, or, to
the Knowledge of the Company, threatened, relating to the Company or any
Company director, officer or employee that involves a matter within or related
to Healthcare Laws. 


                    (c)
Any remuneration (including, without limitation, a “discount or reduction in
price,” as referenced in 42 U.S.C. § 1320a-7b(b)(3)(A)) exchanged between the
Company and its customers, contractors, or other entities with which it has a
business relationship (together, “Trading Partners”) has at all times
been commercially reasonable and represents the fair market value for rendered
services or purchased items or does not otherwise violate any Healthcare Laws.
No remuneration exchanged between the Company and its Trading Partners has
taken 


-30-







 into account, either directly or indirectly, the volume or
value of any referrals or any other federal health care program business
generated between the Company and such Trading Partners. 


                    (d)
Neither the Company nor any of its current directors, officers, employees or
Trading Partners has been debarred or subject to mandatory or permissive
exclusion from participation in Medicare, Medicaid, or any other federal or
state healthcare program. 


                    (e)
There has not been any material violation of any Healthcare Laws by the Company
in its maintenance of all records required under any Healthcare Laws that would
give rise to any Company liability for such violation. 


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARENT


          The
Parent represents and warrants to the Company and the
Indemnifying Members that the statements contained in this Article III are true
and correct as of the date of this Agreement and will be true and correct as of
the Closing as though made as of the Closing. 


          3.1
Organization and Corporate Power. The Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Parent has all requisite 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. 


          3.2
Authorization of Transaction. The Parent has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by the Parent of
this Agreement and the consummation by the Parent of the series of transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Parent. This Agreement has been duly and
validly executed and delivered by the Parent and constitutes a valid and
binding obligation of the Parent, enforceable against it in accordance with its
terms and conditions, except to the extent such enforceability is subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other law affecting or relating to creditors’ rights generally and general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). 


          3.3
Noncontravention. Neither the execution and delivery by
the Parent of this Agreement, nor the consummation by the Parent of the
transactions contemplated hereby, will (a) conflict with or violate any
provision of the Articles of Incorporation or Bylaws of the Parent, (b) require
on the part of the Parent or any Subsidiaries of Parent any notice to or filing
with, or any permit, authorization, consent or approval of, any Governmental
Entity not contemplated by this Agreement, (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 obligations under, create in any
party the right to terminate, modify or cancel, or require any notice, consent
or waiver under, any material contract or instrument to which the Parent or any
Subsidiaries of Parent is a party or by which the Parent or any Subsidiaries of
Parent is bound or to which any of their assets is subject the effect of which
would be to have a Parent Material Adverse Effect, (d) result in the imposition
of any Security Interest upon any assets of the Parent or any Subsidiaries of
Parent, or 


-31-







(e) to the
Parent’s knowledge, violate any written order, writ, injunction, decree,
statute, rule or regulation applicable to the Parent or any of its Subsidiaries
or any of their respective properties or assets. 


          3.4
Financing. At the Closing Date, Parent will have
sufficient cash to enable it to pay the cash portion of the Closing Amount. As
of the Closing Date, the Parent will have on hand cash amounts equal to the
maximum amount payable under the Earnout Payment and Earnout Override. The
Parties acknowledge that the immediately preceding sentence speaks only as of
the Closing Date and that no guarantee can be made concerning the financial
status of the Parent (cash or otherwise) as of the date amounts are due
pursuant to the Earnout Payment and the Earnout Override. 


          3.5
SEC Filings. Parent has timely filed all Parent SEC
Reports. 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB

REGARDING MERGER SUB 


          The
Parent and Merger Sub, jointly and severally represent and warrant to the
Company and the Members that the statements contained in this Article IV are
true and correct as of the date of this Agreement and will be true and correct
as of the Closing as though made as of the Closing. 


          4.1
Organization and Corporate Power. The Merger Sub is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Missouri. The Merger Sub has all requisite
company 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. 


          4.2
Authorization of Transaction. The Merger Sub has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by the Merger Sub
of this Agreement and the consummation by the Merger Sub of the series of
transactions contemplated hereby have been duly and validly authorized by all
necessary company action on the part of the Merger Sub. This Agreement has been
duly and validly executed and delivered by the Merger Sub and constitutes a
valid and binding obligation of the Merger Sub, enforceable against it in
accordance with its terms and conditions, except to the extent such
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other law affecting or relating to
creditors’ rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).



          4.3
Litigation. There is no action, suit, investigation or
proceeding pending against or, to the Merger Sub’s Knowledge, threatened
against or affecting Merger Sub or any of its respective officers or managers
in their capacity as officers or managers of Merger Sub before any court or
arbitrator or any governmental body, agency or official, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
series of transactions contemplated hereby.. 


-32-







          4.4
Noncontravention. Neither the execution and delivery by
the Merger Sub of this Agreement, nor the consummation by the Merger Sub of the
transactions contemplated hereby, will (a) conflict with or violate any
provision of the articles of organization or operating agreement of the Merger
Sub, (b) require on the part of the Merger Sub any notice to or filing with, or
any permit, authorization, consent or approval of, any Governmental Entity
except those filings contemplated hereby, under the Securities Act, and state
corporation/securities laws, if any, (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 obligations under, create in any party the
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which the Merger Sub is a party or by
which the Merger Sub is bound or to which any of its assets is subject, (d)
result in the imposition of any Security Interest upon any assets of the Merger
Sub, or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Merger Sub or any of its properties or assets. 


ARTICLE V

PRE-CLOSING AND POST-CLOSING COVENANTS 


          5.1
Closing Efforts. Each of the Parties shall use its
Reasonable Best Efforts to take all actions and to do all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement,
including using its Reasonable Best Efforts to ensure that (i) its
representations and warranties remain true and correct in all material respects
through the Closing Date and (ii) the conditions to the obligations of the
other Parties to consummate the Merger and its related transactions are
satisfied. 


          5.2
Governmental and Third-Party Notices and Consents. 


                    (a)
Each Party shall use its Reasonable Best Efforts to obtain, at its expense, all
waivers, permits, consents, approvals or other authorizations from Governmental
Entities, and to effect all registrations, filings and notices with or to
Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement. 



                    (b)
The Company shall use its Reasonable Best Efforts to obtain, at its expense,
all such waivers, consents or approvals from third parties, and to give all
such notices to third parties, as are required to be listed in the Disclosure
Schedule or resulting from the delivery requirements set forth in Section 6.
Parent will promptly advise the Company of any written notice from a third
Person alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement.  


          5.3
Operation of Business. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the Closing,
the Company shall conduct its operations in the Ordinary Course of Business and
in compliance with all applicable laws and regulations and, to the extent
consistent therewith, use its Reasonable Best Efforts to preserve intact its
current business organization, keep its physical assets in good working
condition, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing 


-33-







business shall
not be impaired in any material respect. Without limiting the generality of the
foregoing, prior to the Closing, the Company shall not, without the written
consent of the Parent (which consent shall not be unreasonably withheld): 


                    (a)
issue or sell any Membership Interest or other securities of the Company or any
options, warrants or rights to acquire any such Membership Interest or other
securities, or amend any of the terms of (including the vesting of) any
options, warrants or restricted Membership Interest agreements, or repurchase
or redeem any interest in the Company of any kind whatsoever or other
securities of the Company; 


                    (b)
[reserved]; 


                    (c)
create, incur or assume any indebtedness (including obligations in respect of
capital leases), other than changes in the principal balance of the Company
line of credit; assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other Person; or make any loans, advances or capital contributions to,
or investments in, any other Person; 



                    (d)
enter into, adopt or amend any Employee Benefit Plan or any employment or
severance agreement or arrangement of the type described in Section 2.21(k) or
increase in any manner the compensation or fringe benefits of, or materially
modify the employment terms of, its managers, officers or employees, generally
or individually, or pay any bonus or other benefit to its managers, officers or
employees (except for existing payment obligations listed in Section 2.21(a) of
the Disclosure Schedule) or hire any new officers or (except in the Ordinary
Course of Business) any new employees;  


                    (e)
acquire, sell, lease, license or dispose of any assets or property other than
purchases and sales of assets in the Ordinary Course of Business with a value
not in excess of $25,000; 


                    (f)
mortgage or pledge any of its property or assets or subject any such property
or assets to any Security Interest; 


                    (g)
discharge or satisfy any Security Interest or pay any obligation or liability
other than in the Ordinary Course of Business; 


                    (h)
amend its Articles of Organization, Operating Agreement or other organizational
documents; 


                    (i)
change its accounting methods, principles or practices, except insofar as may
be required by a generally applicable change in GAAP, or make any new
elections, or changes to any current elections, with respect to Taxes; 


                    (j)
enter into, amend, terminate, take or omit to take any action that would
constitute a violation of or default under, or waive any rights under, any
contract or agreement of a nature required to be listed in Section 2.12,
Section 2.13 or Section 2.14 of the Disclosure Schedule (other than new
customer agreements providing for the payment by the customer of not 


-34-







more than
$50,000 per annum individually or $100,000 per annum for all such agreements in
the aggregate); 


                    (k)
make or commit to make any capital expenditure in excess of $25,000 per item or
$50,000 in the aggregate; 


                    (l)
institute or settle any Legal Proceeding; 


                    (m)
take any action of a nature required to be listed in Section 2.7 of the Disclosure
Schedule; 



                    (n)
take any action or fail to take any action permitted by this Agreement with the
knowledge that such action or failure to take action would result in (i) any of
the representations and warranties of the Company set forth in this Agreement
becoming untrue or (ii) any of the conditions to the Merger set forth in
Article VI not being satisfied; or  


                    (o)
agree in writing or otherwise to take any of the foregoing actions. 


          5.4
Access to Information. From the date of this Agreement
until the Closing, the Company shall permit representatives of the Parent to
have access (at reasonable times, and in a manner so as not to unreasonably
interfere with the normal business operations of the Company) to all premises,
properties, financial, tax and accounting records (including the work papers of
the Company’s independent accountants), contracts, other records and documents,
and personnel, of or pertaining to the Company (other than attorney/client privileged
information or attorney work product). Parent shall not meet with the Company’s
customers and suppliers (in person or otherwise) to discuss, and shall use its
Reasonable Best Efforts not to discuss otherwise with such customers or
suppliers, the Company’s relationship with such customers or suppliers without
informing the Company reasonably in advance of such meeting and giving the
Company the opportunity to be present at such meeting. 


          5.5
Notice of Breaches. 


                    (a)
From the date of this Agreement until the Closing, the Company shall promptly
deliver to the Parent supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement in this Agreement or the Disclosure
Schedule inaccurate or incomplete at any time after the date of this Agreement
until the Closing. No such supplemental information shall be deemed to avoid or
cure any misrepresentation or breach of warranty or constitute an amendment of
any representation, warranty or statement in this Agreement or the Disclosure
Schedule unless Parent expressly agrees in writing. 


                    (b)
From the date of this Agreement until the Closing, the Parent shall promptly
deliver to the Company supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement of Parent or Merger Sub in this Agreement
inaccurate or incomplete at any time after the date of this Agreement until the
Closing. No such supplemental information shall be deemed to avoid or cure any
misrepresentation or breach of warranty or constitute an amendment of any 


-35-







 representation or warranty in this Agreement unless the
Member Representatives expressly agree in writing. 


          5.6
Exclusivity. 


                    (a)
From the date of this Agreement until the Closing or otherwise upon termination
of this Agreement, the Company shall not, and the Company shall require each of
its managers, officers, employees, representatives, and agents not to, directly
or indirectly, (i) initiate, solicit, encourage or otherwise facilitate any
inquiry, proposal, offer or discussion with any party (other than the Parent)
concerning any merger, acquisition, reorganization, consolidation,
recapitalization, business combination, liquidation, dissolution, equity
interest exchange, sale of Membership Interests, sale of material assets or
similar business transaction involving the Company or any division of the
Company, (ii) furnish any non-public information concerning the business,
properties or assets of the Company or any division of the Company to any party
(other than the Parent or its representatives) or (iii) engage in discussions or
negotiations with any party (other than the Parent) concerning any such
transaction. 


                    
(b) The Company shall immediately notify any party with which discussions or
negotiations of the nature described in paragraph (a) above were pending that
the Company is terminating such discussions or negotiations. If the Company or
any Member receives any inquiry, proposal or offer of the nature described in
paragraph (a) above, the Company shall, within one Business Day after such
receipt, notify the Parent of such inquiry, proposal or offer, including the
identity of the other party and the terms of such inquiry, proposal or offer. 


          5.7 Expenses. Except as expressly set forth in this
Agreement, each of the Parties shall bear its own costs and expenses (including
legal, investment banking and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. For
the avoidance of doubt, except as specifically set forth in this Agreement,
neither the Parent nor Merger Sub shall pay any costs and expenses of the
Company incurred in connection with this Agreement and the transactions
contemplated hereby including, but not limited to, those fees, costs and other
expenses of its brokers and its counsel, including without limitation, Lewis
Rice & Fingersh, L.C. Similarly, except as specifically set forth in this
Agreement, neither the Company nor any Member shall pay any costs and expenses
of Parent or Merger Sub incurred in connection with this Agreement and the
transactions contemplated hereby including, but not limited to, those fees,
costs and other expenses of its brokers and its counsel, including without
limitation, Rutan & Tucker, LLP. 


          5.8
Proprietary Information. From and after the Closing, no
Member shall disclose or make use of, and each Member shall cause all of his
Affiliates not to disclose or make use of, any knowledge, information or
documents of a confidential nature or not generally known to the public with
respect to the Company, Merger Sub or the Parent and their respective
businesses (including the financial information, technical information or data
relating to the Company’s services and names of customers of the Company),
except to the extent that such knowledge, information or documents shall have
become public knowledge other than through improper disclosure by any Member or
an Affiliate or such disclosure is required by process of Law. 


-36-







          5.9
Confidentiality. Each of the parties hereto agrees that
the information obtained in any investigation pursuant to the negotiation and
execution of this Agreement or the effectuation of the transaction contemplated
hereby, shall be governed by the terms of the Confidentiality Agreement between
the Company and Parent dated November 30, 2007, provided, however, that any
Party may make such disclosures as may be required under applicable law
including, without limitation, those applicable provisions of the Securities
Act and Exchange Act. 


          5.10
Insurance Matters. 


                    (a)
Prior to the Closing, Company shall maintain in effect at its expense an errors
and omissions liability insurance policy with a term which terminates no less
than three years after the Closing Date covering (i) the Members and (ii) all
officers, managers and employees of Company, as of immediately prior to the
Closing, with coverages in amount and scope at least as favorable as Company’s
errors and omissions liability insurance policy in effect on the Closing Date
(the “E&O Policy”). The E&O Policy will cover, by way of
appropriate tail insurance coverage or otherwise, all claims arising out of,
resulting from or pertaining to facts, events or matters existing or occurring
at or prior to the Closing Date, whether asserted or claimed prior to, at or
after the Closing Date. 


                    (b)
After the Effective Time, the Operating Agreement of the Company may not be
amended, repealed or otherwise modified for a period of three years from the
Effective Time in any manner that would affect materially and adversely the
rights thereunder of individuals who at or at any time prior to the Effective
Time were entitled to indemnification thereunder. 


          5.11
Guarantees. 


                    (a)
The Parent shall use its Reasonable Best Efforts to obtain no later than the
Closing Date, a release of any and all personal guarantees of Debt given by any
Member or their Affiliates set forth on Section 5.11 of the Disclosure
Schedule. 


                    (b)
The Indemnifying Members shall use their Reasonable Best Efforts to obtain no
later than fourteen (14) days after the Closing Date a release of the Company’s
guaranty of any Debt provided on behalf of InfoNow or any Company Affiliate. 


ARTICLE VI

CONDITIONS TO CONSUMMATION OF MERGER


          6.1
Conditions to Obligations of the Parent and Merger Sub.
The obligation of the Parent and Merger Sub to consummate the Merger is subject
to the satisfaction (or written waiver by the Parent) of the following
additional conditions: 


                    (a)
[reserved]; 


                    (b)
the Company shall have obtained at its own expense (and shall have provided
copies thereof to the Parent) all of the waivers, permits, consents, approvals,
novations or other authorizations, and effected all of the registrations,
filings and notices which are required on the part of the Company to consummate
the transactions contemplated by this 


-37-







Agreement,
including, but not limited to, the consents set forth in Section 2.4(c) of the
Disclosure Schedule, and to otherwise comply with all applicable laws and
regulations in connection with the consummation of the series of transactions
contemplated by this Agreement; 


                    (c)
the representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects as of the Closing except to
the extent they pertain to a different date as specifically indicated; 


                    (d)
the Company and each of the Indemnifying Members shall each 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
Closing; 


                    (e)
no Legal Proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the series of transactions contemplated by this Agreement or
any one of them, (ii) cause the series of transactions contemplated by this
Agreement or any one of them to be rescinded following consummation or (iii)
have, individually or in the aggregate, a Material Adverse Effect, and no such
judgment, order, decree, stipulation or injunction shall be in effect; 


                    (f)
the Company shall have delivered to the Parent the Company Certificate; 


                    (g)
the Parent shall have received the resignations, effective as of the Closing,
of each manager, managing member, director and officer of the Company specified
by the Parent; provided, however, that such resignation shall have no effect on
any employment agreement such individual may have as disclosed on the
Disclosure Schedule and or any benefits under any Company employee benefit plan
in effect with respect to such individual as of the Closing. 


                    (h)
Ben Tischler, Mike Noble, Mike Gerling, Monte Sandler, Deb Linder-Watts and
Adam Steinberg shall each have entered into an employment agreement (including
noncompete and non-solicitation provisions) with the Surviving Company that is
acceptable to the Surviving Company and Ben Tischler, Mike Noble, Mike Gerling,
Monte Sandler, Deb Linder-Watts and Adam Steinberg shall each have entered into
confidentiality, inventions assignment and nondisclosure agreements as may be
required by Parent providing to the Parent and Surviving Company the maximum
trade secret and intellectual property protection under the law of the state of
each such person’s residence and substantially in the form of the standard
agreements currently employed by Parent for such purposes; 


                    (i)
all Membership Interest Purchase Plans, if any, shall have been terminated; 


                    (j)
since the date of this Agreement, there will not have occurred and there will
have been no change, event or development that has had, individually or in the
aggregate, a Material Adverse Effect; 


                    (k)
all outstanding options to acquire a Membership Interest, if any, shall have
been terminated; 


-38-







                    (l)
the Company shall have obtained the Requisite Member Approval of the Members; 


                    (m)
the Company, if instructed by Parent, in Parent’s sole discretion, shall have
terminated all of Company’s banking facilities (provided, however, that the
Parent shall have caused to be paid any indebtedness outstanding under such
banking facilities. Parent will pay up to $5,000 of any pre-payment and/or
termination fees required to terminate such banking facilities and the Members
shall be responsible for any such fees in excess of $5,000; 


                    (n)
the Parent shall have received the legal opinion of the Company’s counsel
substantially in the form of Exhibit F, attached hereto, dated as of the
date of this Agreement; 



                    (o)
the amount of Debt at the Closing shall not exceed the Maximum Allowable
Closing Debt as set forth in Section 1.6(a)(ii);  


                    (p)
the Parent or one of its Affiliates shall have entered into the License
Agreement with InfoNow (concerning “PowerFlow”), in substantially the form
attached hereto as Exhibit G; and 


                    (q)
Each of Mike Noble and Ben Tischler shall have repaid in full all amounts owing
by each of them to the Company. 


          6.2
Conditions to Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction (or waiver by the Company) of the following additional conditions:



                    (a)
the Parent shall have obtained at its own expense (and shall have provided
copies thereof to the Company) all of the waivers, permits, consents, approvals
or other authorizations, and effected all of the registrations, filings and
notices which are required on the part of the Parent and/or the Merger Sub to
consummate the series of transactions contemplated by this Agreement and to
otherwise comply with all applicable laws and regulations in connection with
the consummation of the series of transactions contemplated by this Agreement; 


                    (b)
the representations and warranties of the Parent and Merger Sub set forth in
this Agreement shall be true and correct in all material respects as of the
Closing except to the extent they pertain to a different date as specifically
indicated herein; 


                    (c)
each of the Parent 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 Closing; 


                    (d)
no Legal Proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect or (iii) have, individually, or in the aggregate, a Parent
Material Adverse Effect; 


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                    (e)
the Parent shall have delivered to the Company the Parent Certificate; 


                    (f)
the Company shall have received such other certificates and instruments as it
shall reasonably request in connection with the Closing; 


                    (g)
the Surviving Company shall have entered into employment and confidentiality
agreements as set forth in Section 6.1(h); 


                    (h)
the Parent or one of its Affiliates shall have entered into the License
Agreement with InfoNow (concerning “PowerFlow”), in substantially the form
attached hereto as Exhibit G; 


                    (i)
the Company shall have obtained the Requisite Member Approval; 


                    (j)
since the date of this Agreement, there will not have occurred and there will
have been no change, event or development that has had, individually or in the
aggregate, a Parent Material Adverse Effect; 


                    (k)
the Members shall have received the releases of the personal guarantees of Debt
as contemplated by Section 5.11; 


                    (l)
the Members shall have received the legal opinion of the Parent’s counsel
substantially in the form of Exhibit H, attached hereto, dated as of the
date of this Agreement; and 


                    (m)
the subordinated debt to Maxine Hirsch shall be paid in full. 


ARTICLE VII

INDEMNIFICATION


          7.1
Indemnification by the Indemnifying Members. Except as
otherwise set forth in this Article VII, the Company (prior to Closing)
and the Indemnifying Members (after the Closing) shall severally and not
jointly based upon such Indemnifying Member’s Pro Rata Share indemnify the
Parent in respect of, and hold it harmless against any and all Damages incurred
or suffered by the Surviving Company or the Parent or any Affiliate thereof
resulting from, relating to or constituting the matters set forth in this Section
7.1. In addition to the foregoing, and not by way of limitation, the
Parent’s right to indemnification hereunder shall not be affected by (i) any
investigation conducted by Parent or any of its Affiliates or (ii) any
disclosures in the Disclosure Schedules related to (A) Capitalization (Section
2.2), (B) Taxes (Section 2.9), (C) Intellectual Property (Section 2.13), (D)
Litigation (Section 2.18), (E) Employee Benefits (Section 2.21), and (F) Legal
Compliance (Section 2.23). 


                    (a)
any breach of any representation or warranty of the Company contained in this
Agreement (other than any breach of Section 2.9 of this Agreement which
shall be resolved pursuant to Article VIII of this Agreement) or any
other agreement or instrument furnished by the Company or any Member to the
Parent pursuant to this Agreement), as though such representations and
warranties were restated and made at and as of the Closing Date; 


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                    (b)
any failure to perform any covenant or agreement of the Company or any Member
contained in this Agreement or any agreement or instrument furnished by the
Company or any Member to the Parent pursuant to this Agreement; 


                    (c)
any failure of any Member to have good, valid and marketable title to the
issued and outstanding Membership Interests registered in such Member’s name,
free and clear of all Security Interests (it being understood that the
indemnification obligation in this Section 7.1(c) shall be several, and
not joint, as to the Member with respect to whom the failure has occurred); 


                    (d)
any claim by a Member or former Member of the Company, or any other Person,
seeking to assert, or based upon: (i) ownership or rights to ownership of any
interest in the Company which differ from those set forth in the Disclosure
Schedule; (ii) any rights of a Member (other than the right to receive the
Aggregate Transaction Consideration pursuant to this Agreement), including any
option, preemptive rights or rights to notice or to vote; (iii) any rights
under the Articles of Organization or Operating Agreement of the Company; or
(iv) any claim that his, her or its shares were wrongfully involved in the
transactions contemplated by this Agreement or which concerns the entry into
this Agreement by any of the Parties or the process related thereto; 


                    (e)
any claim of any entity (private, Governmental Entity or otherwise) or Damages
as a result of the Coding Activities; or 


                    (f)
any Third Party Actions concerning matters related to the Company or any of the
Members which matter giving rise to the Third Party Action occurred prior to
the Closing Date, regardless of when such Third Party Action is filed or
otherwise instituted, including, without limitation, any claims concerning the
matter set forth in Section 7.1(f) of the Disclosure Schedule. 


          7.2
Indemnification by the Parent. The Parent shall
indemnify the Company (prior to the Effective Time) and the Members and their
Affiliates (after the Effective Time) in respect of, and hold them harmless
against, any and all Damages incurred or suffered by the Company (prior to the
Effective Time) or the Members or any Affiliate thereof (after the Effective
Time) resulting from, relating to or constituting: 


                    (a)
any breach of any representation or warranty of the Parent or the Merger Sub
contained in this Agreement or any other agreement or instrument furnished by
the Parent or the Merger Sub to the Company or the Member Representatives
pursuant to this Agreement; 


                    (b)
any failure to perform any covenant or agreement of the Parent or the Merger
Sub contained in this Agreement or any agreement or instrument furnished by the
Parent or the Merger Sub to the Company or the Member Representatives pursuant
to this Agreement; or 


                    (c)
any Third Party Actions concerning matters related to the Surviving Company
which matter giving rise to the Third Party Action occurred on or after the
Closing Date. 


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          7.3
Third Party Actions. 


                    (a)
Notice of Third Party Actions. An Indemnified Party shall give written
notification to the Indemnifying Party of the commencement of any Third Party
Action. Such notification shall be given within twenty (20) days after receipt
by the Indemnified Party of notice of such Third Party Action, and shall
describe in reasonable detail (to the extent known by the Indemnified Party)
the facts constituting the basis for such Third Party Action and the amount of
the claimed Damages; provided, however, that no delay or failure
on the part of the Indemnified Party in so notifying the Indemnifying Party
shall relieve the Indemnifying Party of any liability or obligation hereunder
except to the extent of any damage or liability caused by or arising out of
such failure. 


                    (b)
Indemnification by the Indemnifying Members of Third Party Actions. The
obligations and liabilities of the Indemnifying Members hereunder with respect
to a Third Party Action for which the Parent is entitled to indemnification
pursuant to this Article VII will be subject to the following terms and
conditions. 


                              (i)
The Indemnifying Members will have the right, but not the obligation, to defend
against and to direct the defense of any such Third Party Action and any
related Legal Proceeding at their sole cost and expense and with counsel of
their choosing (subject to the approval of the Parent, which will not be
unreasonably withheld or delayed) and the Parent will reasonably cooperate in
the defense thereof. The Parent may participate in such defense with counsel of
its own choosing, provided that the Indemnifying Members will not, following
written notice of its election to defend against and direct the defense of any
such Third Party Action, be liable to the Parent under this Article VII
for any fees of other counsel or any other expenses with respect to the defense
of such Legal Proceeding incurred by the Parent in connection with the defense
of such Legal Proceeding unless the Parent is also a party to such Third Party
Action and the Parent determines in good faith that it has available to it one
or more defenses or counterclaims that are inconsistent with those of the
Indemnifying Members. If the Indemnifying Members assume the defense of a Third
Party Action, no compromise, discharge or settlement of, or admission of
liability in connection with, such claims may be effected by the Indemnifying
Members without the written consent of the Parent (which consent will not be
unreasonably withheld or delayed) unless (x) there is no finding or admission
of any violation of law or any violation of the rights of any Person and no
effect on any other claims that may be made against the Parent, (y) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Members, and (z) such settlement is not disclosed to the public or available
for review by any third party. The Parent will have no liability with respect
to any compromise or settlement of such claims effected without its written
consent (which consent will not be unreasonably withheld or delayed). 


                              (ii)
Notwithstanding the provisions of Section 7.3(b)(i) of this Agreement,
if the Indemnifying Members fail or refuse to undertake the defense of such
Third Party Action within fourteen (14) days after delivery of written
notification to the Indemnifying Members of the commencement of such Third
Party Action or if the Indemnifying Members later withdraw from such defense,
the Parent will have the right to undertake the defense of such claim with
counsel of its own choosing, with the Indemnifying Members responsible for the 


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costs and
expenses of such defense and bound by any determination made in such Third
Party Action or any compromise or settlement effected by the Parent. 


                    (c)
Indemnification by the Parent of Third Party Actions. The obligations
and liabilities of Parent hereunder with respect to a Third Party Action for
which the Company, the Members or their Affiliates are entitled to
indemnification pursuant to this Article VII will be subject to the
following terms and conditions: 


                              (i)
The Parent will have the right, but not the obligation, to defend against and
to direct the defense of any such Third Party Action and any related Legal
Proceeding at the Parent’s sole cost and expense and with counsel of Parent’s
choosing (subject to the approval of the Member Representatives, which will not
be unreasonably withheld or delayed) and the Member Representatives will
reasonably cooperate in the defense thereof. The Member Representatives may
participate in such defense with counsel of their own choosing, provided that
the Parent will not, following written notice of its election to defend against
and direct the defense of any such Third Party Action, be liable to the Company,
the Members or their Affiliates under this Article VII for any fees of other
counsel or any other expenses with respect to the defense of such Legal
Proceeding incurred by the Company, the Members or their Affiliates in
connection with the defense of such Legal Proceeding unless such parties are
also a party to such Third Party Action and the Member Representatives
determines in good faith that they have available to them one or more defenses
or counterclaims that are inconsistent with those of the Parent. If the Parent
assumes the defense of a Third Party Action, no compromise, discharge or
settlement of, or admission of liability in connection with, such claims may be
effected by the Parent without the written consent of the Member Representatives
(which consent will not be unreasonably withheld or delayed) unless (x) there
is no finding or admission of any violation of law or any violation of the
rights of any Person and no effect on any other claims that may be made against
the Company, the Members or their Affiliates, (y) the sole relief provided is
monetary damages that are paid in full by the Parent, and (z) such settlement
is not disclosed to the public or available for review by any third party
except as required by law. The Company, the Members and their Affiliates will
have no liability with respect to any compromise or settlement of such claims
without their written consent (which consent will not be unreasonably withheld
or delayed). 


                              (ii)
Notwithstanding the provisions of Section 7.3(c)(i) of this Agreement,
if the Parent fails or refuses to undertake the defense of such Third Party
Action within fourteen (14) days after delivery of written notification to the
Parent of the commencement of such Third Party Action or if the Parent later
withdraws from such defense, the Member Representatives will have the right to
undertake the defense of such claim with counsel of their own choosing, with
the Parent responsible for the costs and expenses of such defense and bound by
any determination made in such Third Party Action or any compromise or
settlement effected by the Member Representatives. 


          7.4 Non-Third Party Actions. 


                    (a)
In order to seek indemnification under this Article VII, an Indemnified
Party shall deliver a Claim Notice to the Indemnifying Party. If the
Indemnified Party is the 


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Parent and is
seeking to enforce such claim pursuant to the Escrow Agreement, the
Indemnifying Party shall deliver a copy of the Claim Notice to the Escrow
Agent. 


                    (b)
Within 20 days after delivery of a Claim Notice, the Indemnifying Party shall
deliver to the Indemnified Party a Response, in which the Indemnifying Party
shall: (i) agree that the Indemnified Party is entitled to receive all of the
Claimed Amount (in which case the Response shall be accompanied by a payment by
the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check
or by wire transfer, provided that if the Indemnified Party is the Parent and
is seeking to enforce such claim pursuant to the Escrow Agreement, the
Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent,
within three (3) days following the delivery of the Response, a written notice
executed by both parties instructing the Escrow Agent to release the Claimed
Amount to the Parent from the Escrow Account); (ii) agree that the Indemnified
Party is entitled to receive the Agreed Amount (in which case the Response
shall be accompanied by a payment by the Indemnifying Party to the Indemnified
Party of the Agreed Amount, by check or by wire transfer, provided that if the
Indemnified Party is the Parent and is seeking to enforce such claim pursuant
to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall
deliver to the Escrow Agent, within three (3) days following the delivery of
the Response, a written notice executed by both parties instructing the Escrow
Agent to release the Agreed Amount to the Parent from the Escrow Fund); or
(iii) dispute that the Indemnified Party is entitled to receive any of the
Claimed Amount provided that any notice of such dispute shall identify the
matters set forth in the Claim Notice which are disputed and shall provide with
reasonable specificity the amount of the Claim which is in dispute and the
portion of the Escrow Fund specified in the Claim Notice that the Member
Representatives believe should not be delivered to Parent. 


                    (c)
During the 30-day period following the delivery of a Response that reflects a
Dispute, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve the Dispute. If the Dispute is not resolved within such
30-day period, such Dispute shall be resolved and a final determination
rendered pursuant to Section 11.13. If the Indemnified Party is the
Parent and is seeking to enforce the claim that is the subject of the Dispute
pursuant to the Escrow Agreement, the Indemnifying Party shall deliver to the
Escrow Agent, promptly following resolution of the Dispute (whether by mutual
agreement, or arbitration), a written notice executed by both parties
instructing the Escrow Agent as to what (if any) portion of the Escrow Fund
shall be released to the Parent and/or the Indemnifying Members (which notice shall
be consistent with the terms of the resolution of the Dispute). 


          7.5
Survival of Representations and Warranties. All
representations and warranties that are covered by the indemnification
agreements in Section 7.1(a) and Section 7.2(a) of this Agreement
shall (a) survive the Closing and (b) shall expire on the date which is the
second anniversary of the Closing Date except for those representations and
warranties of Company concerning Capitalization (Section 2.2), Taxes (Section
2.9), Intellectual Property (Section 2.13), Employee Benefits (Section 2.21)
and Environmental (Section 2.22), which shall be for their respective statute
of limitations. If an Indemnified Party delivers to an Indemnifying Party,
before expiration of a representation or warranty, either a Claim Notice based
upon a breach of such representation or warranty, or an Expected Claim Notice
based upon a breach of such representation or warranty, then the applicable
representation or warranty shall survive until, but only to the extent of, and
for purposes of the resolution of, the specific matter covered by such 


-44-







notice. If the
Legal Proceeding or written claim with respect to which an Expected Claim
Notice has been given is definitively withdrawn or resolved, the Indemnified
Party shall promptly so notify the Indemnifying Party and if the Indemnified
Party has delivered a copy of the Expected Claim Notice to the Escrow Agent
with respect to such Expected Claim Notice, the Indemnifying Party and the
Indemnified Party shall promptly deliver to the Escrow Agent a written notice
executed by both parties instructing the Escrow Agent to release such retained
funds of the Escrow Fund in accordance with the resolution of such matter
pursuant to the terms of the Escrow Agreement. The rights to indemnification
set forth in this Article VII shall not be affected by (i) any
investigation or due diligence conducted by or on behalf of an Indemnified
Party or any knowledge acquired (or capable of being acquired) by an
Indemnified Party, whether before or after the date of this Agreement or the
Closing Date, with respect to the inaccuracy or noncompliance with any
representation, warranty, covenant or obligation which is the subject of
indemnification hereunder or (ii) any waiver by an Indemnified Party of any
Closing condition relating to the accuracy of representations and warranties or
the performance of or compliance with agreements and covenants. 


          7.6
Treatment of Indemnity Payments. Any payments made to
an Indemnified Party pursuant to this Article VII shall be treated as an
adjustment to the Aggregate Transaction Consideration for Tax purposes. 


          7.7
Limitations. 


                    (a)
No claim for indemnity under this Agreement may be made unless (i) the amount
of determined indemnifiable Damages incurred with respect to such claim exceeds
fifteen thousand dollars ($15,000), and (ii) the aggregate of all claims for
Damages exceeds one hundred thousand dollars ($100,000) (the “Deductible”),
at which time claims may be made for the entire amount of the aggregate of all
claims for Damages in excess of such Deductible. By way of example only, if
there are a series of claims that aggregate $115,000, then Parent may make a
claim for indemnity in the amount of $15,000. Claims and adjustments pursuant
to Article I shall not be subject to the limitations of this Section
7.7. 


                    (b)
The Parent shall have the following rights in satisfying its adjustments,
holdbacks and claims for Damages under Section 1.6 and Article VII and VIII:



                              (i)
The Parent shall have the obligation to satisfy any indemnifiable Damages which
it may determine under Section 1.6 and Articles VII and VIII
hereof first from the Escrow Fund pursuant to the terms of the Escrow
Agreement. 


                              (ii)
To the extent that the Escrow Fund is insufficient to pay in full any
determined adjustments, holdbacks and indemnifiable Damages under Section
1.6 (Adjustments) and Articles VII and VIII hereof, the Parent shall
have the right to set off any determined adjustments, holdbacks and
indemnifiable Damages under Section 1.6 and Articles VII and VIII
hereof against any amounts payable to the Members under this Agreement. 


                              (iii)
The Parent shall also have the right to collect from each Indemnifying Member
his/its Pro Rata Share of any determined indemnifiable Damages under 


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Section 1.6 and Articles VII and VIII hereof
that are not otherwise satisfied under Sections 7.7(b)(i) and (ii)
above. 


                    (c)
Notwithstanding anything to the contrary contained in this Agreement, the
maximum amount of Damages that may be indemnified by the Company and the
Indemnifying Members pursuant to Section 7.1 shall not exceed the amount of the
Aggregate Transaction Consideration. 


                    (d)
In determining the amount of any indemnification obligations under this Article
VII, the amount of any obligation for which indemnification may be claimed by
any Indemnified Party shall be reduced by any insurance proceeds received by
the Indemnified Party (or by any Affiliate of the Indemnified Party) with
respect to the matter that is the subject of the indemnified claim or any tax
benefit actually received as a reduction in tax due or receipt of a tax refund.
Each Indemnified Party (on behalf of itself and its Affiliates) agrees to make
good faith, commercially reasonably efforts to obtain all such insurance
proceeds available to it; provided, however, that no claim for indemnification
shall be conditioned upon the final resolution of such insurance claim – the
proceeds of such claim to be paid back to the Indemnifying Party if collected
after the payment by the Indemnifying Party to the Indemnified Party concerning
such claim. 


                    (e)
Notwithstanding anything to the contrary contained in this Agreement, no claim
for indemnity under this Agreement may be made to the extent such claim relates
to amounts that are accrued for as current liabilities on the Final Balance
Sheet as determined by the parties pursuant to Section 1.6. 


                    (f)
The remedies set forth in this Article VII shall be the exclusive remedy of the
Parties with respect to the matters set forth in this Article VII. 


ARTICLE VIII 

TAX MATTERS


          8.1
Tax Indemnification. The Indemnifying Members shall
indemnify and hold harmless the Parent and the Surviving Company, and any
successors thereto or Affiliates thereof in respect of and against Damages
resulting from, relating to, or constituting (x) a breach of any representation
contained in Section 2.9 of this Agreement, (y) the failure to perform
any covenant or agreement set forth in this Article VIII, and (z)
without duplication, the following Taxes: 


                    (a)
Any Taxes for any Taxable period ending on or before the Closing Date due and
payable by the Company and not reserved for on the Final Balance Sheet; and 


                    (b)
Any Taxes for any Taxable period ending on or before the Closing Date for which
the Company has any liability as a transferee or successor, or pursuant to any
contractual obligation or otherwise and not reserved for on the Final Balance
Sheet; and 


                    (c)
Any transfer, sales, use, stamp, conveyance, value added, recording,
registration, documentary, filing and other non-income Taxes and administrative
fees (including, without limitation, notary fees) arising in connection with
the consummation of the series of 


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transactions
contemplated by this Agreement whether levied on the Parent, the Surviving
Company, the Company or any of the Members.


          8.2 Preparation and Filing of Tax Returns; Payment of Taxes.



                    (a)
Pre-Closing. The Company shall
prepare and timely file or shall cause to be prepared and timely filed all Tax
Returns for the Company for periods ending prior to Closing Date that are
required to be filed (taking into account extensions) prior to the Closing Date
and shall pay all Taxes with respect thereto. 


                    (b)
Filing Date Straddle of Closing Date.
The Member Representatives shall prepare and the Surviving Company shall file
or cause to be filed all Tax Returns for the Company for periods ending prior
to or on the Closing Date that are required to be filed (taking into account
extensions) after the Closing Date and the Surviving Company shall pay all
Taxes with respect thereto. To the extent that the Taxes attributable to the
periods beginning before the Closing Date have not been accrued for on the
Final Balance Sheet as determined by the parties pursuant to Section 1.6, the Indemnifying Members shall pay the Surviving Company the amount of such
Taxes that were not accrued by means of a withdrawal from the Escrow Fund. 



                    (c)
Taxable Period Straddle of Closing Date.
The Surviving Company shall prepare any Tax Return to be prepared and filed for
taxable periods beginning before the Closing Date and ending after the Closing
Date and Surviving Company shall file such returns and shall pay all Taxes with
respect thereto. Such returns shall be prepared on a basis consistent with the
last previous similar Tax Return to the extent permitted under applicable law.
To the extent that the Taxes attributable to the periods beginning before the
Closing Date have not been accrued for on the Final Balance Sheet as determined
by the parties pursuant to Section 1.6, the Indemnifying Members shall pay the
Surviving Company the amount of such Taxes that were not accrued by means of a
withdrawal from the Escrow Fund.  


                    (d)
Post-Closing. The Surviving
Company shall prepare and file all tax returns for periods beginning on and
after the Closing Date. 


          8.3
Audits, Assessments, Etc. Whenever any taxing authority
sends a notice of an audit, initiates an examination of the Company, or
otherwise asserts a claim, makes an assessment, or disputes the amount of Taxes
for which the Members are or may be liable under this Agreement, the recipient
of such notice shall promptly inform the other Parties. The failure of the
recipient to notify the other Parties promptly shall not relieve the Members of
any obligations under this Agreement except to the extent such failure
materially prejudices the Members. The Parent shall have the exclusive right to
control any resulting proceedings. The Member Representatives shall have the
right to participate at the Members’ own expense, in such proceeding, or
portion thereof, only to the extent such proceeding, or portion thereof, or
determination, or portion thereof, affects the amount of Taxes for which the
Members are liable under this Agreement, and the Parent may settle any such
proceeding or determination, or portion thereof, to the extent such proceeding
or determination affects the amount of Taxes for which the Members are liable
under this Agreement only with the prior written consent of the Member
Representatives, which consent shall not be unreasonably withheld. 


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          8.4
Termination of Tax Sharing Agreements. All Tax sharing,
Tax indemnity or Tax distribution agreements or similar arrangements, including
any such provisions in the Company’s Operating Agreement, with respect to or
involving the Company, if any, shall be terminated prior to the Closing Date
and, after the Closing Date, the Parent, the Company, the Surviving Company and
their Affiliates shall not be bound thereby or have any liability thereunder
for amounts due in respect of periods ending on or before the Closing Date. 


          8.5
Indemnification Claims. 


                    (a)
Scope of Article VIII. Any claim by any Party relating to a breach by
another Party of its obligations under this Article VIII shall be
pursued in accordance with the procedures for indemnification claims set forth
in this Article VIII, and shall not, except for Section 7.7,
otherwise be subject to the terms and conditions, set forth in Article VII.
To the extent there is any inconsistency between the terms of Article VII
and this Article VIII with respect to the allocation of responsibility
between the Company, the Members and the Parent for Taxes relating to the
business of the Company, the provisions of this Article VIII shall
govern. 


                    (b)
Claim Procedure. For purposes of clarification, (i) claims for a breach
of an obligation under this Article VIII may be made by a Party at any
time prior to the thirtieth (30th) day after the expiration of the
statute of limitations applicable to the Tax matter to which the claim relates,
(ii) in order to seek indemnification under this Article VIII, the
Parent shall deliver a Claim Notice to the Member Representatives, and if the
Parent is seeking to enforce such claim pursuant to the Escrow Agreement, the
Parent shall deliver a copy of the Claim Notice to the Escrow Agent in the form
prescribed by the Escrow Agreement, (iii) upon delivery of any Claim Notice
hereunder, the applicable representation or warranty shall survive until, but
only to the extent of, and for purposes of the resolution of, the specific
matter covered by such notice, and (iv) within twenty (20) days after delivery
of a Claim Notice, the Member Representatives shall deliver to the Parent a
Response in which the Member Representatives shall: (1) agree that the Parent
is entitled to receive all of the Claimed Amount (in which case the Member
Representatives and the Parent shall deliver to the Escrow Agent, within three
days following the delivery of the Response, a written notice executed by the
Member Representatives and the Parent instructing the Escrow Agent to release
the Claimed Amount (or, if lesser, the amount remaining in the Escrow Account)
to the Parent); (2) agree that the Parent is entitled to receive the Agreed
Amount (in which case the Member Representatives and the Parent shall deliver
to the Escrow Agent, within three (3) days following the delivery of the
Response, a written notice executed by the Member Representatives and the
Parent instructing the Escrow Agent to release the Agreed Amount (or, if
lesser, the amount remaining in the Escrow Account) to the Parent), or (3)
dispute that the Parent is entitled to receive any of the Claimed Amount. 


          8.6
Dispute Resolution. During the thirty (30) day period
following the delivery of a Response that reflects a Dispute, the Parent and
the Member Representatives shall attempt in good faith to resolve the Dispute.
If, at the end of the thirty (30) day period, the Parent and the Member
Representatives have not resolved such Dispute, the Parent and the Member
Representatives shall refer the Dispute for determination to the Adjustment
Accountants, and the parties will be reasonably available and work diligently
to facilitate the Adjustment Accountants to render a determination within a
twenty (20) day period immediately following the referral to them. A
determination by the Adjustment Accountants with respect to any item of Dispute



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submitted to
them will be binding on the Parent and the Members. The fees and expenses of
the Adjustment Accountants shall be borne by the Members on the one hand and
the Parent on the other hand based on the Pro Rata Award. 


          8.7
Limitations. The Members shall have no right of
contribution against the Company or the Surviving Company with respect to any
breach by the Company of any of its representations, warranties, covenants or
agreements. Any payments made to the Parent pursuant to this Article VIII
shall be treated as an adjustment to the Aggregate Transaction Consideration
for Tax purposes.


ARTICLE IX

TERMINATION


          9.1
Termination of Agreement. The Parties may terminate
this Agreement prior to the Closing, as provided below: 


                    
(a) the Company and Parent may terminate this Agreement by mutual written
consent; 


                    
(b) the Parent may terminate this Agreement by giving written notice to the
Company in the event the Company is in breach of any representation, warranty
or covenant contained in this Agreement, and such breach (i) individually or in
combination with any other such breach, would cause the conditions set forth in
clauses (b) or (c) of Section 6.1 not to be satisfied and (ii) is not
cured within twenty (20) days following delivery by the Parent to the Company
of written notice of such breach; 


                    
(c) the Company may terminate this Agreement by giving written notice to the
Parent in the event the Parent or the Merger Sub is in breach of any
representation, warranty or covenant contained in this Agreement, and such
breach (i) individually or in combination with any other such breach, would
cause the conditions set forth in clauses (b) and (c) of Section 6.2 not
to be satisfied and (ii) is not cured within twenty (20) days following
delivery by the Company to the Parent of written notice of such breach; 


                    
(d) the Parent may terminate this Agreement by giving written notice to the
Company if the Closing shall not have occurred on or before May 31, 2008 by
reason of the failure of any condition precedent under Section 6.1 and
such failure is not attributable to any action or inaction taken by Parent or
Merger Sub; or 


                    
(e) the Company may terminate this Agreement by giving written notice to the
Parent if the Closing shall not have occurred on or before May 31, 2008 by
reason of the failure of any condition precedent under Section 6.2 and
such failure is not attributable to any action or inaction taken by the
Company. 


          9.2
Effect of Termination. If any Party terminates this
Agreement pursuant to Section 9.1, all obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party; provided
that each Party shall remain liable for any breach of this Agreement prior to
its termination; and provided, further, that the provisions of Sections
5.8 (Proprietary Information) and 5.10 (Confidentiality), and this Section
9.2 shall remain in full  


-49-







force and
effect and survive any termination of this Agreement pursuant to the terms of
this Article IX. 


ARTICLE X

DEFINITIONS


          For
purposes of this Agreement, each of the following terms shall have the meaning
set forth below. 


          “Accounting
Policies” shall mean the cost accounting policies set forth in Exhibit D
to the Agreement. 


          “Accounts
Receivable” shall mean each and all accounts receivable of the Company
reflected on the Most Recent Balance Sheet (other than those paid since such
date). 


          “Adjustment
Accountants” shall have the meaning set forth in Section 1.6(d)(iii)
of this Agreement. 


          “Adverse
Consequences” shall have the meaning set forth in the definition of Claim
Notice. 


          “Affiliate”
shall mean any affiliate, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934. 


          “Agreed
Amount” shall mean part, but not all, of the Claimed Amount. 


          “Aggregate
Transaction Consideration” shall mean the sum of: 


                    (a)
the Closing Amount; 


                    (b)
any Closing Amount Adjustment payable to the Members in accordance with Section
1.6           hereof; 


                    (c)
the Earnout Payment and Earnout Override payable to the Members, if any; and 


                    (d)
any amount released to the Members from the Escrow Fund, both previously paid
and then           currently payable as of the applicable Payment Date. 


          “Agreement”
shall have the meaning set forth in the first paragraph of this Agreement. 


          “Articles
of Organization” shall mean the articles of organization of the Company
under the MRS. 


          “Business”
shall mean the provision of revenue cycle management services as provided by
the Company to physician groups and ambulatory care centers as of the Effective
Time, consisting of outsourced billing management services, claims denial
management, software sales, technology support services, account management
services and data management and decision support information technology. As of
the date of this Agreement, the Company 


-50-







conducts the
following functions and activities in order to provide such services to
healthcare providers: 


                    (i)
comprehensive billing and fee collection; 


                    (ii) printing
and mailing of claim forms and electronic submission of claims and printing and
          mailing of patient statements;


                    (iii)
posting of payments, management of adjustments and explanation of benefits
reviews;


                    (iv)
designing and automating provider-specific sets of decision criteria to bill,
correct and remedy,           collect and monitor revenue cycle trends using rules-based
analytics;


                    (v)
re-selling third-party practice management software;


                    (vi)
training with regards to and support of, selected third-party software;


                    (vii)
client implementation and customer support;


                    (viii)
providing data analytics, application interfaces, and application hosting;


                    (ix)
routine account manager client meetings and client performance reviews;


                    (x)
accounting services;


                    (xi)
credentialing services;


                    (xii)
coding review and education; and 


                    (xiii)
accounts receivable follow-up. 


          “Business
Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in the City of Los Angeles, California are required or
authorized by law to be closed. 


          “Cash”
shall mean all cash and cash equivalents of the Company as of the Closing
(including liquid debt instruments held as assets of the Company with
maturities of three months or less), calculated in accordance with GAAP and the
Accounting Policies. 


          “CERCLA”
shall mean the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended. 


          “Claim
Notice” shall mean written notification which contains (i) a description of
the Damages incurred by the Indemnified Party and the Claimed Amount of such
Damages, to the extent then known, (ii) a statement that the Indemnified Party
is entitled to indemnification under Article VII for such Damages and a
reasonable explanation of the basis therefor, and (iii) a demand for payment in
the amount of such Damages. Without limiting the foregoing, a Claim Notice
shall also include written notification which contains (i) claims dependent
upon the outcome of any actual proceeding, investigation, suit or action or any
proceeding, investigation, suit or action threatened in writing (a “Pending
Action”), and (ii) Parent’s good faith determination that there exists a
Pending Action and setting forth a reasonable estimate of any and all Damages,
net of any Tax benefit actually realized as a reduction in tax due or receipt
of tax refund or any insurance proceeds received by any party entitled to indemnification
as a result thereof (“Adverse Consequences”) reasonably anticipated to
be incurred in connection with such Pending Action, including, without
limitation, Adverse Consequences which may be incurred if such Pending Action
is determined adversely (such amount the “Pending Action Amount”), then
that portion of the Escrow Fund equal to the Pending Action Amount, less that
portion of the Deductible, to the extent applicable, if any remains that has
not been used to offset prior claims, 


-51-







shall be
deemed to be “Disputed Funds” under the terms of the Escrow Agreement. Upon all
or any portion of the Pending Action Amount becoming a Claimed Amount, Parent
and the Member Representatives shall comply with the terms hereof regarding
Claimed Amounts and such Claimed Amounts shall be deemed Claimed Amounts for
which notice has been timely given. 


          “Claimed
Amount” shall mean the amount of any Damages incurred by the Indemnified
Party. 


          “Closing”
shall mean the closing of the series of transactions contemplated by this
Agreement. 


          “Closing
Amount” shall mean the following: 


	
 

	
 


	
 

	
          (a)
 Cash: Eight Million Dollars
 ($8,000,000); 


	
 

	
 


	
 

	
          (b)
 Parent Stock: Seven Million
 Three Hundred Fifty Thousand Dollars ($7,350,000) of Parent’s unregistered,
 restricted Common Stock (the “Parent Stock”) delivered to the Members
 on the Closing Date valued based upon the average closing price of the Parent
 Stock as reported by the Nasdaq Global Select Market over the 45 trading days
 ending on the trading day immediately prior to the Closing Date (the “Parent
 Stock Valuation”) and subject to the Stock Restriction; and 


	
 

	
 


	
 

	
          (c)
 The Closing Amount shall be (i) reduced by the Estimated Net Debt Adjustment,
 if any, (ii) reduced by the Estimated Working Capital Adjustment, if any, and
 (iii) decreased by the cash and Parent Stock amounts (valued using the Parent
 Stock Valuation) to be deposited into the Escrow Fund. 





          “Closing
Amount Adjustment” shall have the meaning set forth in Section 1.6(c)
of this Agreement. 


          “Closing
Date” shall have the meaning set forth in Section 1.2. 


          “Closing
Date Working Capital” shall mean, as of the Closing Date and giving effect
to the consummation of the Merger, the difference of the Company’s total
current assets (including accounts receivable and prepaid expenses but
excluding Cash), minus the Company’s total current liabilities
(excluding the current portion of any Debt but including the Company Closing
Expenses to the extent not paid), determined in accordance with GAAP and the
Accounting Policies. 


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


          “Coding
Activities” shall have the meaning set forth in Section 2.23. 


          “Commitments”
shall have the meaning set forth in the definition of Equity Interest. 


          “Company”
shall have the meaning set forth in the first paragraph of this Agreement. 


-52-







          “Company
Certificate” shall mean a certificate to the effect that each of the
conditions specified in of Section 6.1 of this Agreement is satisfied in all
respects.  


          “Company
Closing Expenses” shall mean the expenses incurred by the Company in
connection with the consummation of the series of transactions contemplated
hereby, including, without limitation, transaction-related expenses of counsel
and accountants (but not including regular audit fees), printing, filing,
investment banking and financial advisory fees and commissions. 


          “Company
Intellectual Property” shall mean the Intellectual Property owned by the
Company and used in connection with the Business. 


          “Company
Plan” shall mean any Employee Benefit Plan maintained, or contributed to,
by the Company or any ERISA Affiliate for employees or Members of the Company
or an ERISA Affiliate. 


          “Customer
Deliverables” shall mean the services that the Company (i) currently
provides, or (ii) has provided within the previous five years. 


          “Damages”
shall mean any and all debts, obligations and other liabilities (whether
absolute, contingent, fixed or otherwise, or whether known or unknown, or due
or to become due or otherwise), diminution in value, monetary damages (but not
incidental, consequential or punitive damages), fines, fees, penalties,
interest obligations, deficiencies, losses and reasonable expenses (including
amounts paid in settlement, interest, court costs, reasonable costs of
investigators, investigation of allegations, defense of allegations, reasonable
fees and expenses of attorneys, accountants, financial advisors and other
experts, and other expenses of litigation or threatened litigation). 


          “Debt”
shall mean the sum of (a) all obligations of the Company for borrowed money, or
with respect to deposits or advances of any kind to the Company, (b) all
obligations of the Company evidenced by bonds, debentures, notes, preferred
equity or similar instruments, (c) all obligations of the Company upon which
interest charges are customarily paid, (d) all obligations of the Company under
conditional sale or other title retention agreements relating to property
purchased by the Company, (e) all obligations of the Company issued or assumed
as the deferred purchase price of property or services (excluding obligations
of the Company or creditors for raw materials, inventory, services and supplies
incurred in the Ordinary Course of Business), (f) all capitalized lease
obligations of the Company, (g) all obligations of others secured by any lien
on property or assets owned or acquired by the Company, whether or not the
obligations secured thereby have been assumed, (h) all obligations of the
Company under interest rate or currency hedging transactions (valued at the
termination value thereof), (i) all letters of credit issued for the account of
the Company, and (j) all guarantees and arrangements having the economic effect
of a guarantee by the Company of any indebtedness of any other person. For the
purposes of clarification, Debt does not include accounts payable or other
liabilities to the extent such amounts are taken into account in calculating
Estimated Working Capital or Closing Date Working Capital as contemplated under
Section 1.6 of this Agreement. 


          “Deductible”
shall have the meaning set forth in Section 7.7(a). 


-53-







          “Disclosure
Schedule” shall mean the disclosure schedule provided by the Company to the
Parent on the date hereof and accepted in writing by the Parent. A full set of
all contents of the Disclosure Schedule was delivered to the Parent no less
than three (3) Business Days prior to the execution of this Agreement. 


          “Dispute”
shall mean the dispute resulting if the Indemnifying Party in a Response
disputes its liability for all or part of the Claimed Amount. 


          “Earnout
Accountants” shall have the meaning set forth in Section 1.7(b). 


          “E&O
Policy” has the meaning set forth in Section 5.11 of the Agreement. 


          “Earnout
Certificate” shall have the meaning set forth in Section 1.7(a) of
this Agreement. 


          “Earnout
Override” shall have the meaning set forth in Section 1.7(c) of the
Agreement. 


          “Earnout
Payment” shall have the meaning set forth in Section 1.7(a) of this
Agreement. 


          “Earnout
Period” shall have the meaning set forth in Section 1.7(a) of this
Agreement. 


          “Effective
Time” shall mean the time at which the Missouri Secretary of State files
the Notice of Merger for record. 


          “Employee
Benefit Plan” shall mean any “employee pension benefit plan” (as defined in
Section 3(3) of ERISA), 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 insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, equity options, equity purchase, phantom equity, equity appreciation
or other forms of incentive compensation or post-retirement compensation. 


          “Environmental
Law” shall mean any federal, state or local law, statute, rule, order,
directive, judgment, Permit or regulation or the common law relating to the
environment, occupational health and safety, or exposure of persons or property
to Materials of Environmental Concern, including any statute, regulation,
administrative decision or order pertaining to: (i) the presence of or the
treatment, storage, disposal, generation, transportation, handling,
distribution, manufacture, processing, use, import, export, labeling,
recycling, registration, investigation or remediation of Materials of
Environmental Concern or documentation related to the foregoing; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release, threatened release, or accidental release into the environment, the
workplace or other areas of Materials of Environmental Concern, including
emissions, discharges, injections, spills, escapes or dumping of Materials of
Environmental Concern; (v) transfer of interests in or control of real property
which may be contaminated; (vi) community or worker right-to-know disclosures
with respect to Materials of Environmental Concern; (vii) the protection of
wild life, marine life and wetlands, and endangered and threatened species;
(viii) storage tanks, vessels, containers, abandoned or discarded barrels and
other closed receptacles; and (ix) health and safety of employees and other
persons. As used above, the term “release” shall have the meaning set forth in
CERCLA. 


-54-







          “Environmental
Permits” shall mean all permits, approvals, identification numbers,
licenses and other authorizations required under or issued pursuant to any
applicable Environmental Law. 


          “Equity
Interest” means (i) with respect to a limited liability company,
partnership, trust or similar Person, any and all units, membership interests
or other partnership/limited liability company interests, and any Commitments
with respect thereto, (ii) with respect to a corporation, any and all shares of
capital stock and any option, warrant, convertible security, subscription
right, conversion right, exchange right or other agreement that could require a
Person to issue any of its capital stock or sell any capital stock
(“Commitments”) with respect thereto, and (iii) any other equity ownership,
participation or security in a Person. 


          “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended. 


          “ERISA
Affiliate” shall mean any entity which is, or at any applicable time was, a
member of (1) a controlled group of corporations (as defined in Section 414(b)
of the Code), (2) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (3) 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 or included the Company. 


          “Escrow
Account” shall be the account holding the Escrow Fund established for the
purposes described under Section 1.8(a). 


          “Escrow
Agreement” shall mean an escrow agreement in substantially the form
attached hereto as Exhibit E. 


          “Escrow
Agent” shall mean the escrow agent under the Escrow Agreement, which shall
initially be US Bank, Los Angeles, California. 


          “Escrow
Fund” shall mean the fund established pursuant to the Escrow Agreement and
paid in to the Escrow Account at the Closing pursuant to Section 1.8
consisting of the sum of: 


                    (i)
Five Hundred Thousand Dollars ($500,000); plus 


                    (ii) shares
  of Parent Stock, equal to Seven Million Dollars ($7,350,000) of Parent Stock
  (valued                     using the Parent Stock Valuation).






          “Escrow
Stock Valuation” shall mean the value assigned to the shares of Parent
Stock in the Escrow Fund equal to the average closing price of the Parent Stock
as reported by the Nasdaq Global Select Market over the 45 trading days ending
on the trading day immediately prior to the date of the release of the Parent
Stock from the Escrow Fund. 


          “Estimated
Net Debt” shall have the meaning set forth in Section 1.6(a)(ii). 


          “Estimated
Net Debt Adjustment” shall have the meaning set forth in Section
1.6(a)(ii). 


          “Estimated
Working Capital” shall have the meaning set forth in Section 1.6(b)(ii).



-55-







          “Estimated
Working Capital Adjustment” shall have the meaning set forth in Section
1.6(b)(ii). 


          “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended. 


          “Expected
Claim Notice” shall mean a notice that, as a result of a Legal Proceeding
instituted by or written claim made by a third party, an Indemnified Party
reasonably expects to incur Damages for which it is entitled to indemnification
under Article VII. 


          “Final
Balance Sheet” shall have the meaning set forth in Section 1.6(d)


          “Financial
Statements” shall mean: 


                    (a)
the unaudited balance sheet and statement of income and cash flows of the
Company as of the end of and for the twelve months ended December 31, 2007; and



                    (b)
the unaudited balance sheets and unaudited statements of income and cash flows
of the Company as of and for the three (3) months ended as of March 31, 2008. 


          “Fiscal
Year 2009” shall the period from May 1, 2008 through March 31, 2009. 


          “Fiscal
Year 2010” shall the period from April 1, 2009 through March 31, 2010. 


          “GAAP”
shall mean generally accepted accounting principles in the United States of
America applied on a consistent basis and as set forth in the Accounting
Policies. 


          “Governmental
Entity” shall mean any government or any agency, bureau, board, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign. 


          “Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Entity. 


          “Hazardous
Materials” shall mean (a) petroleum and petroleum products, radioactive
materials, asbestos-containing materials, mold, urea formaldehyde foam
insulation, transformers or other equipment that contain polychlorinated
biphenyls and radon gas, (b) any other chemicals, materials or substances
defined as or included in the definition of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted
hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” or
“pollutants,” or words of similar import, under any applicable Environmental
Law, and (c) any other chemical, material or substance which is regulated by
any Environmental Law. 


          “Healthcare
Laws” shall have the meaning set forth in Section 2.29 of this
Agreement. 


          “HIPAA”
shall mean the Health Insurance Portability and Accountability Act of 1996, as
it may be amended from time to time, and any rules or regulations promulgated
pursuant thereto. 


-56-







          “HIPAA
Commitments” shall have the meaning set forth in Section 2.23(b) of
this Agreement. 


          “Indemnified
Party” shall mean a party entitled, or seeking to assert rights, to
indemnification under Article VII. 


          “Indemnifying
Party” shall mean the party from whom indemnification is sought by the
Indemnified Party. 


          “Indemnifying
Members” shall have the meaning set forth in the first paragraph of this
Agreement. 


          “InfoNow”
shall mean InfoNow Solutions, LLC, a Missouri limited liability company.


          “Intellectual
Property” shall mean all: 


                    (a)
patents, patent applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations; 


                    (b)
trademarks, service marks, trade dress, Internet domain names, logos, trade
names and corporate names and registrations and applications for registration
thereof; 


                    (c)
copyrightable works, copyrights and registrations and applications for
registration thereof; 


                    (d)
copyright, confidential information and trade secrets embodied in computer
software and documentation; 


                    (e)
inventions, trade secrets and confidential business information, whether
patentable or nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, research and development
information, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information; 


                    (f)
other proprietary rights relating to any of the foregoing (including remedies
against infringements thereof and rights of protection of interest therein
under the laws of all jurisdictions); and 


                    (g)
copies and tangible embodiments thereof. 


          “Internal
Systems” shall mean the internal computer systems of the Company that are
used in its and in connection with business or operations, including computer
hardware systems, software applications and embedded systems. 


          “Key
Employees” shall mean Mike Noble, Ben Tischler, Monte Sandler and Mike
Gerling. 


-57-







          “Knowledge”
of the Company shall mean the knowledge of the Key Employees and officers of
the Company. “Knowledge” of the Parent or the Merger Sub shall mean the
knowledge of Patrick Cline and Timothy Eggena. 


          “Law”
means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, requirement or rule of
law (including common law). 


          “Lease”
shall mean any lease or sublease pursuant to which the Company leases or
subleases from another party any real property. 


          “Leased
Real Property” means the real property leased by the Company as tenant,
together with, to the extent leased by the Company, all buildings and other
structures, facilities or improvements currently located thereon, all fixtures,
systems, equipment and items of personal property of the Company attached or
appurtenant thereto and all easements, licenses, rights and appurtenances
relating to the foregoing. 


          “Legal
Proceeding” shall mean any action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity or before any arbitrator or
mediator. 


          “Material
Adverse Effect” shall mean any material adverse change, event, circumstance
or development with respect to, or material adverse effect on, (i) the
business, assets, liabilities, capitalization, condition (financial or other),
or results of operations of the Company, or (ii) the ability of the Parent to
operate the business of the Company in the manner in which it is conducted at
the time of the Closing; provided, however, that none of the following will be
deemed to constitute, and none of the following will be taken into account in
determining whether there has been, a Material Adverse Effect as of the
execution of this Agreement and from such execution until the Closing Date: (a)
changes in GAAP, or (b) any adverse change, event, development, or effect
arising from or relating to (1) general business or economic conditions, (2)
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military
or terrorist attack upon the United States, or any of its territories,
possessions, or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (3) changes in
financial, banking or securities markets (including any disruption thereof and
any decline in the price of any security or any market index), (4) the taking
of any action contemplated by this Agreement or any of the other agreements
contemplated by this Agreement, (5) the public announcement of the execution of
this Agreement or the identification of Parent or the effect that such public
announcement or the consummation of the transactions contemplated by this
Agreement has on the business or continuing relationships of Company. For the
avoidance of doubt, the parties agree that the terms “material,” “materially”
or “materiality” as used in this Agreement with an initial lower case “m” shall
have their respective customary and ordinary meanings, without regard to the
meaning ascribed to Material Adverse Effect. 


          “Material
Contract” shall have the meaning set forth in Section 2.14 of this
Agreement. 


-58-







          “Materials
of Environmental Concern” shall mean any: pollutants, contaminants or
hazardous substances (as such terms are defined under CERCLA), pesticides (as
such term is defined under the Federal Insecticide, Fungicide and Rodenticide
Act), solid wastes and hazardous wastes (as such terms are defined under the
Resource Conservation and Recovery Act), chemicals, other hazardous,
radioactive or toxic materials, oil, petroleum and petroleum products (and
fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation,
order, Permit, or directive due to its potential, directly or indirectly, to
harm the environment or the health of humans or other living beings. 


          “Members”
shall mean the Members of record of the Company immediately prior to the
Effective Time. 


          “Member
Representatives” means Mike Noble and Ben Tischler and “Member
Representative” means each of Mike Noble and Ben Tischler. 


          “Membership
Interest Purchase Plan” shall mean any Membership Interest option plan or
other equity-related plan of the Company. 


          “Member
Transmittal Letter” shall have the meaning set forth in Section
1.3(b)(i) this Agreement. 


          “Membership
Interests” shall mean the interests in the Company held by the Members
under the terms of the Company’s Operating Agreement. 


          “Merger”
shall mean the merger of the Merger Sub with and into the Company in accordance
with the terms of this Agreement. 


          “Merger
Sub” shall have the meaning set forth in the first paragraph of this
Agreement. 


          “MRS”
shall have the meaning set forth in Section 1.1 of this Agreement. 


          “Most
Recent Balance Sheet” shall mean the unaudited balance sheet of the Company
as of the Most Recent Balance Sheet Date. 


          “Most
Recent Balance Sheet Date” shall mean February 29, 2008. 


          “Net
Debt” shall mean Debt minus any Cash as of the Closing. 


          “Notice
of Merger” shall mean the notice of merger or other appropriate documents
required to effect the Merger prepared and executed in accordance with the MRS
in form and substance satisfactory to the Company and Parent 


          “Operating
Agreement” shall mean the operating agreement of the Company. 


          “Ordinary
Course of Business” shall mean the ordinary course of business consistent
with recent past custom and practice (within the past 24 months) (including
with respect to frequency and amount). 


-59-







          “Parent”
shall have the meaning set forth in the first paragraph of this Agreement. 


          “Parent
Certificate” shall mean a certificate to the effect that each of the
conditions specified in Section 6.2 of this Agreement is satisfied in
all respects. 


          “Parent
Material Adverse Effect” means any material adverse change, event,
circumstance or development with respect to, or material adverse effect on, the
business, assets, liabilities, capitalization, financial condition, or results
of operations of the Parent; provided, however, that none of the following will
be deemed to constitute, and none of the following will be taken into account
in determining whether there has been, a Parent Material Adverse Effect: (a)
changes in GAAP, (b) any adverse change, event, development, or effect arising
from or relating to (1) general business or economic conditions, including such
conditions related to the business of Parent, (2) national or international
political or social conditions, including the engagement by the United States
in hostilities, whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist attack upon
the United States, or any of its territories, possessions, or diplomatic or
consular offices or upon any military installation, equipment or personnel of
the United States, (3) changes in financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (4) changes in any Law applicable to businesses
generally, (5) the taking of any action contemplated by this Agreement or any
of the other agreements contemplated by this Agreement, (6) the public
announcement of the execution of this Agreement or the identification of the
Company or the effect that such public announcement or the consummation of the
transactions contemplated by this Agreement has on the business or continuing
relationships of Parent. 


          “Parent
SEC Reports” means all forms, reports and documents required to be filed by
Parent with the Securities and Exchange Commission under the Securities Act and
the Securities Exchange Act since December 31, 2004. 


          “Parent
Stock” has the meaning set forth in the definition of Closing Amount. 


          “Parent
Stock Valuation” shall have the meaning set forth in the definition of
Closing Amount. 


          “Parties”
or “Party” shall mean individually and collectively (as the case may be)
the Parent, the Merger Sub, the Company and the Indemnifying Members. 


          “Payment
Date” shall have the meaning set forth in Section 1.5 of this
Agreement. 


          “Pending
Action” shall have the meaning set forth in the definition of Claim Notice.



          “Pending
Action Amount” shall have the meaning set forth in the definition of Claim
Notice. 


          “Permits”
shall mean all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights issued by or obtained from
any Governmental Entity (including those issued or required under Environmental
Laws and those relating to the occupancy or use of owned or leased real
property). 


-60-







          “Person”
shall mean any natural person, corporation, limited liability company, general
or limited partnership, proprietorship, other business, non-profit or
charitable organization, trust, union, association (whether or not incorporated
in any jurisdiction), or any court, arbitration tribunal, administrative agency
or commission or other governmental or regulatory authority or agency. 


          “Pro
Rata Award” means a fraction the numerator of which is the dollar amount of
disputes resolved by the Adjustment Accountants or the Earnout Accountants, as
the case may be, in favor of Parent or the Members, as the case may be, and the
denominator is the dollar amount of all disputes resolved by the Adjustment
Accountants or Earnout Accountants, as the case may be. 


          “Pro
Rata Share” of any particular Indemnifying Member shall mean the total
Membership Interests owned by such Indemnifying Member divided by the total
number of Membership Interests owned by all of the Indemnifying Members or if
such Membership Interest is expressed in the Operating Agreement as a
percentage, then such percentage of such particular Indemnifying Member. 


          “Reasonable
Best Efforts” shall mean best efforts, to the extent commercially
reasonable. 


          “Referred
Revenue” shall mean, for the fiscal year so indicated, the gross revenue
collected by the Company from agreements concerning the Business with entities
referred to the Company by Parent or its Affiliates during such fiscal year. 


          “Release”
means disposing, discharging, injecting, spilling, leaking, leaching, dumping,
emitting, escaping, emptying, seeping, placing, appearing and the like into or
upon any land, building, surface, subsurface or water or air or otherwise
entering into the Environment. 


          “Releasees”
shall have the meaning set forth in Section 1.12(a) of this Agreement. 


          “Requisite
Member Approval” shall mean the adoption of this Agreement and the approval
of the Merger by the Members as required by Section 347.079 of the MRS and the Company’s
Operating Agreement. 


          “Response”
shall mean a written response containing the information provided for in Section
7.4(b). 


          “Rule”
shall mean any constitution or statute or law or any judgment, decree,
injunction, order, ruling, ordinance or final regulation or rule of any
Governmental Entity, including, without limitation, those relating to
disclosure, usury, equal credit opportunity, equal employment, environment,
employee safety and health, fair credit reporting and anti-competitive
activities. 


          “SEC”
means the Securities and Exchange Commission. 


          “Securities
Act” shall mean the Securities Act of 1933, as amended. 


-61-







          “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, landlord’s and similar liens, (ii)
liens arising under worker’s compensation, unemployment insurance, social
security, retirement, and similar legislation, (iii) liens for taxes not yet
due and payable, and (iv) 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. 


          “Significant
Person” shall mean a Person listed in Section 2.24 of the Disclosure
Schedule. 


          “Software”
shall mean any of the software (including the documentation thereto) owned by
the Company and any software included with any of the Company’s products and/or
services or the Internal Systems. 


          “Stock
Restriction” shall mean the following restriction on the transferability of
the Parent Stock: subject to the requirements of applicable securities laws,
(i) one-third of the number of shares of Parent Stock held by any Member shall
become free from the imposition of restriction upon transfer imposed by this
Agreement upon the first anniversary of the Closing Date; and (ii) the
remaining two-thirds of the number of shares of Parent Stock held by any Member
shall become free from the imposition of restriction upon transfer imposed by
this Agreement upon the second anniversary of the Closing Date. Any transfer or
attempted transfer of the Parent Stock other than in compliance with the
foregoing shall be void and of no force or effect. Certificates representing
the Parent Stock shall bear a legend as follows for so long as such shares
remain in escrow but which shall be removed once such shares are released from
the Escrow Fund; provided that the first such legend set forth immediately
below is not required by Rule 144 under the Securities Act (the Parent’s
transfer agent will be similarly notified with respect to such certificates and
any electronic account entries): 


	
 

	
 

	
 


	
 

	
THESE SHARES
 HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
 SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF THE
 VARIOUS STATES, AND HAVE BEEN ISSUED AND SOLD PURSUANT TO AN EXEMPTION FROM
 THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY THE HOLDER
 THEREOF AT ANY TIME EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION
 STATEMENT FILED UNDER THE ACT COVERING THESE SHARES, OR (2) UPON DELIVERY TO
 THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
 THESE SHARES MAY BE TRANSFERRED WITHOUT REGISTRATION.

	
 


	
 

	
 

	
 


	
 

	
THE SHARES
 REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER
 AND RIGHTS AS SET FORTH IN AN AGREEMENT AND PLAN OF MERGER DATED May 16,
 2008, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.

	
 





-62-







          If
requested by a Member in writing to the Secretary of Parent, such legend shall
be removed from the appropriate certificates representing the Parent Stock on
the appropriate anniversary date. 


          “Subsidiary”
or “Subsidiaries” means any entity with respect to which any Person (or
a Subsidiary thereof) owns 50% or more of the outstanding Equity Interests or
has the power, through the ownership of Equity Interests or otherwise, to elect
a majority of the directors or similar management body or to direct the
business and policies of such entity. 


          “Surviving
Company” shall mean the Company, as the surviving entity in the Merger. 


          “Target
Net Debt” shall have the meaning set forth in Section 1.6(a)(ii) of
this Agreement. 


          “Target
Working Capital” shall have the meaning set forth in Section 1.6(b)(i)
of this Agreement. 


          “Taxes”
(including with correlative meaning “Tax” and “Taxable”) shall mean (a) any and
all taxes, and any and all other charges, fees, levies, duties, deficiencies,
customs or other similar assessments or liabilities in the nature of a tax,
including without limitation any income, gross receipts, ad valorem, net worth,
premium, value-added, alternative or add-on minimum, excise, severance, stamp,
occupation, windfall profits, real property, personal property, assets, sales,
use, capital stock, capital gains, documentary, recapture, transfer, transfer
gains, estimated, withholding, employment, unemployment insurance, unemployment
compensation, social security, business license, business organization,
environmental, workers compensation, payroll, profits, license, lease, service,
service use, gains, franchise and other taxes imposed by any federal, state,
local, or foreign Governmental Entity, (b) any interest, fines, penalties,
assessments, or additions resulting from, attributable to, or incurred in
connection with any items described in this paragraph or any contest or dispute
thereof, and (c) any items described in this paragraph that are attributable to
another person, but that the Company is liable to pay by law, by contract, or
otherwise. 


          “Tax
Returns” shall mean any and all reports, returns, declarations, statements,
forms, or other information required to be supplied to a Governmental Entity or
to any individual or entity in connection with Taxes and any associated
schedules, attachments, work papers or other information provided in connection
with such items, including any amendments, thereof. 


          “Third
Party Action” shall mean any suit, investigation or proceeding (private or
governmental) by a person or entity other than a Party for which
indemnification may be sought by a Party under Article VII.  


          “Trading
Partners” shall have the meaning set forth in Section 2.29(c). 


-63-







ARTICLE XI 

MISCELLANEOUS


          11.1
Press Releases and Announcements. The parties
acknowledge that the Parent is a public reporting company under the Securities
Act and the Exchange Act. Accordingly, the Parent will create the form of press
release to be issued promptly after the Closing which it shall issue at its sole
discretion. The Company agrees that it shall not issue any other press release
or public announcement or make any statement to third parties relating to the
subject matter of this Agreement (including disclosure of any terms of this
Agreement) without the prior written approval of the Parent. 


          11.2
No Third Party Beneficiaries. Except as otherwise set
forth herein, this Agreement shall not confer any rights or remedies upon any
person other than the Parties and their respective successors and permitted
assigns and the Members who are not also Indemnifying Members. 


          11.3
Entire Agreement. This Agreement (including the
documents referred to herein), constitutes the entire agreement among the
Parties with respect to the subject matter hereof, and supersedes any prior or
contemporaneous understandings, agreements or representations by or among the
Parties, written or oral, express or implied, which may have related to the
subject matter hereof in any way. 


          11.4
Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein, the Members,
and their respective successors 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; provided, however,
Parent may assign this Agreement to Affiliated parties as they exist now or in
the future; provided, further, that in the event of any such assignment, the
Parent remains ultimately liable for its obligations hereunder. 


          11.5
Counterparts and Facsimile Signature. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall be
deemed to be an original copy of this Agreement and all of which together shall
be deemed to constitute one and the same agreement. The exchange of copies of
this Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the Parties
and may be used in lieu of the original Agreement and signature pages thereof
for all purposes. 


          11.6
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. 


          11.7
Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly delivered
four business days after it is sent by registered or certified mail, return
receipt requested, postage prepaid, or one business day after it is sent for
next business day delivery via a reputable nationwide overnight courier
service, in each case to the intended recipient as set forth below: 


-64-









	
 

	
 


	
If to the Company and Indemnifying

 Members:

	
Copy to (which shall not constitute notice):


	

Ben Tischler

 947 Kimswick Manor Lane

 Ballwin, Missouri 63011

 Telecopy: (314) 810-1445

 Telephone: (314) 265-1444

	
Lewis, Rice
 & Fingersh, L.C.

 500 North Broadway, Suite 2000

 St. Louis, Missouri 63102-2147

 Attn: John J. Riffle

 Telephone: (314) 444-1349

 Telecopy: (314) 612-1349


	
 

	
 


	
and

	
 


	
 

	
 


	
Mike Noble

 115 Double Eagle Drive

 St. Charles, Missouri 63303

 Telecopy: (314) 810-1334

 Telephone: (314) 265-1333

	
 


	
If to the Merger Sub or the Parent:

	
Copy to (which shall not constitute notice):


	
 

	
 


	
Quality
 Systems, Inc.

 18191 Von Karman Avenue,

 Suite 450

 Irvine, California 92612

 Attn: Chief Executive Officer

 Telecopy: (949)255-2610

 Telephone: (949)255-2600

	
Rutan &
 Tucker, LLP

 611 Anton Boulevard, 14th Floor

 Costa Mesa, California 92626

 Attn: Thomas J. Crane

 Telecopy: (714)546-9035

 Telephone: (714)641-5100


	
 

	
 





          Any
Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telecopy or ordinary mail) other than electronic
mail, but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to
be delivered by giving the other Parties notice in the manner herein set forth.



          11.8
Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, and as to all
other matters (including the validity and applicability of the arbitration
provisions of this Agreement, the enforcement of any arbitral award made
hereunder and any other questions of arbitration law or procedure arising
hereunder) shall be governed by and construed in accordance with the internal
laws of the State of California without giving effect to any choice or conflict
of law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of laws of any jurisdictions
other than those of the State of California. 


-65-







          11.9 Amendments and Waivers. The Parties may mutually
amend any provision of this Agreement at any time prior to the Closing. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver of any right or
remedy hereunder shall be valid unless the same shall be in writing and signed
by the Party giving such waiver. No waiver by any Party with respect to any
default, misrepresentation or breach of warranty or covenant hereunder shall be
deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence. 


          11.10 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 limit 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. 


          11.11 Construction. 


                    (a)
The language used throughout this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party. 


                    (b)
All terms and words used in this Agreement, regardless of whether singular or
plural, or the gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require. 


                    (c)
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. 


                    (d)
Any reference herein to “including” shall be interpreted as “including without
limitation”. 


                    (e)
Any reference to any Article, Section or paragraph shall be deemed to refer to
an Article, Section or paragraph of this Agreement, unless the context clearly
indicates otherwise. 


          11.12 Attorneys Fees. Except as otherwise expressly set
forth herein, in the event of any litigation or arbitration proceeding arising
out of any disputes under this Agreement, the prevailing party shall be
entitled to recover their reasonable costs and expenses including, without
limitation, reasonable attorneys fees. 


          11.13 Arbitration. Except for the (i) adjustment resolution
process involving the Accountants in Section 1.6 and (ii) the dispute
resolution provisions set forth in Section 1.7, any 


-66-







claim arising
out of or related to this Agreement, or a breach hereof, is to be settled by
arbitration in accordance with the procedures set forth in this Section. The
parties agree that, in the event of a dispute between them relating to or
arising out of this Agreement, the parties will submit such dispute to binding
arbitration as provided herein. All arbitrations will be conducted in Orange
County, California, or at another location mutually approved by the parties,
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association except as provided herein. The arbitrator used will be selected
from arbitrators employed by the American Arbitration Association and the
decisions of the arbitrator are final and binding on the parties. All
arbitrations will be undertaken pursuant to the Federal Arbitration Act, where
applicable, and the decision of the arbitrator is enforceable in any court of
competent jurisdiction. Both parties agree to waive their respective rights to
further appeal or redress in any other court or tribunal except solely for the
purpose of obtaining execution of the decision resulting from the arbitration
proceeding. In the event of any arbitration or other legal proceeding brought
by either party against the other party with regard to any matter arising out
of or related to this Agreement, each party hereby expressly agrees that the final
determination and award decision will also provide for an allocation and
division between or among the parties to the arbitration, of: (i) reasonable
legal fees and expenses as set forth in Section 11.12; and (ii) all
other reasonable costs and expenses of the dispute, including court costs and
arbitrator’s, reasonable accountants’ and expert witness fees, costs and
expenses (including disbursements) incurred in connection with such
proceedings, on a basis which is just and equitable under the circumstances.
The arbitrator is directed by this Agreement to conduct the arbitration hearing
no later than three months from the service of the statement of claim and
demand for arbitration unless good cause is shown establishing that the hearing
cannot fairly and practically be so convened. Depositions will be taken only as
deemed appropriate by the arbitrator and only where good cause is shown. The
parties to the arbitration will be entitled to conduct document discovery by
requesting production of documents. Responses or objections will be served
twenty days after receipt of a request. The arbitrator will resolve any
discovery disputes by such pre-hearing conferences as may be needed. Both
parties agree that the arbitrator and any counsel of record to the proceeding
have the power of subpoena process as provided by law. Notices of demand for
arbitration must be filed in writing in accordance with Section 11.7. A
demand for arbitration is to be made within a reasonable time after the claim
has arisen, but in no event later than the date when institution of legal or
equitable proceedings based on such claim would be barred by the applicable
statute of limitations. The award rendered by the arbitrators, including as to
legal fees in accordance with Section 11.12, is final, and judgment may
be entered upon it in accordance with law in any court of competent
jurisdiction. 


[Signature page follows]


-67-







SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER


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


	
 

	
 

	
 

	
 


	
 

	
QUALITY SYSTEMS, INC.


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
 

	
Louis Silverman, Chief Executive Officer


	
 

	
 

	
 

	
 


	
 

	
and 

	
 


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
 

	
   Paul Holt,
 Secretary

	
 


	
 

	
 

	
 

	
 


	
 

	
BUD MERGER SUB, LLC


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
 

	
Louis Silverman, Chief Executive Officer


	
 

	
 

	
 

	
 


	
 

	
and 

	
 


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
 

	
Paul Holt, Secretary

	
 








	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
LACKLAND ACQUISITION II, LLC dba

 Healthcare Strategic Initiatives


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
Name:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
Title:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
and 


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
Name:

	
 

	
 


	
 

	
 

	 

	
 


	
 

	
Title:

	
 

	
 


	
 

	
 

	 

	
 





-68-







	
 

	
 

	
 

	
 


	
 

	
INDEMNIFYING MEMBERS:

	
 


	
 

	
 

	
 

	
 


	
 

	 

	
 


	
 

	
BEN TISCHLER

	
 


	
 

	
 

	
 

	
 


	
 

	 

	
 


	
 

	
MIKE NOBLE

	
 


	
 

	
 

	
 

	
 


	
 

	 

	
 


	
 

	
MONTE
 SANDLER

	
 


	
 

	
 

	
 

	
 


	
 

	 

	
 


	
 

	
MIKE GERLING

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
MEMBER
 REPRESENTATIVES

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	 


	
 

	
 

	
BEN TISCHLER, solely as a Member


	
 

	
 

	
Representative

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	 


	
 

	
 

	
MIKE NOBLE, solely as a Member


	
 

	
 

	
Representative

	
 





-69-