**Exhibit 2.2**

 

**STOCK PURCHASE AGREEMENT**

 

**THIS STOCK PURCHASE AGREEMENT** (this “Agreement”) is entered into as of this 8th dayof February, 2006, by and among (i) SI International, Inc., a Delawarecorporation (the “Buyer”), (ii) ZENTECHNOLOGY, INC., a Virginia corporation (the “Company”),(iii) DONALD E. REED, (iv) LESLIE W. BUTLER, (v) BARBARA M.REED and (vi) CINDY  A. ANDRE. Each Person named in (iii) through(vi) above is referred to herein individually as a “Seller”and collectively as the “Sellers.”  The Buyer, the Company and the Sellers arereferred to herein individually as a “Party”and collectively as the “Parties.”  The capitalized terms used herein and nototherwise defined herein have the meanings given to such terms as set forth in Appendix A hereto.

 

**WHEREAS**, the Sellers are the record andbeneficial owners of all of the issued and outstanding capital stock and otherequity securities of the Company (other than the Company Common Stock subjectto the Restricted Stock Repurchase Agreements);

 

**WHEREAS**, simultaneously herewith, the Companyand each Restricted Stock Participant (other than Cindy A. Andre) are enteringinto Restricted Stock Repurchase Agreements, pursuant to which, immediatelyprior to the Closing, the Company shall repurchase the shares of Company CommonStock held by such Restricted Stock Participants on the terms and conditionsset forth therein; and

 

**WHEREAS**, upon the terms and subject to theconditions set forth herein, the Buyer desires to purchase from the Sellers andthe Sellers desire to sell to the Buyer all of the then issued and outstandingcapital stock and other equity securities of the Company (the “StockPurchase”).

 

**NOW, THEREFORE**, in consideration of thepremises and the mutual promises herein made, and in consideration of therepresentations, warranties, and covenants herein contained, the Parties agreeas follows:

 

# **ARTICLE ISTOCK PURCHASE**

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## 1.1           Stock Purchase.On the terms and subject to the conditions of this Agreement, the Buyer agreesto purchase from each of the Sellers, and each of the Sellers agrees to sell tothe Buyer, the Shares owned by such Seller, free and clear of all Encumbrances,which Shares collectively constitute and shall constitute as of the ClosingDate all of the issued and outstanding shares of the capital stock of theCompany, for the consideration specified in Section 1.2.

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## 1.2           PurchasePrice. The aggregate maximum purchase price (the “PurchasePrice”) to be paid in exchange for the acquisition by Buyer of alloutstanding capital stock of the Company, including without limitation allshares of Restricted Stock to be repurchased by the Company before the Closingpursuant to the Restricted Stock Repurchase Agreements, and all outstandingunexpired and unexercised options, warrants or other rights to acquire orreceive any capital stock of the Company, whether vested or unvested, if any,shall be Sixty Million Dollars 

 

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## ($60,000,000), subject to adjustment as setforth in this Agreement. The Purchase Price shall be comprised of (i) an amountto be paid in cash at Closing as per the flow of fund memorandum, plus (ii) post-Closingpayments in cash equal to Fifty-Four Million Dollars ($54,000,000), in theaggregate, less any amount paid in cash at Closing, as adjusted pursuant toSection 1.4 hereof and as reduced by the amount of the AggregateRestricted Stock Repurchase Payments (the “FirstPost-Closing Payment”), and (iii) post-Closing payments in cashequal to Six Million Dollars ($6,000,000), in the aggregate, as adjustedpursuant to the terms and conditions hereof (the “SecondPost-Closing Payment”). Subject to the terms and conditions of thisAgreement, at the Closing, each Seller shall have the right to receive, withrespect to each of his or her shares of Company Common Stock issued andoutstanding immediately prior to the Closing, (i) in accordance with thisSection 1.2(a), an amount in cash equal to the First Per SharePost-Closing Amount, plus (ii) in accordance with Section 1.3 hereof,an amount in cash equal to the Second Per Share Post-Closing Amount. Subject tothe terms and conditions hereof, the Buyer shall pay the First Per SharePost-Closing Amount to each Seller, with respect to each of his or her sharesof Company Common Stock issued and outstanding immediately prior to theClosing, on the next business day following the Closing in cash by the deliveryof immediately available funds; provided, however, the SellerRepresentative may, by written notice delivered at least two (2) business daysprior to Closing, direct the Buyer to pay a portion of the Purchase Price toSellers at the Closing Date in accordance with the flow of funds memorandum, inan aggregate amount to all of the Sellers not greater than Twenty MillionDollars ($20,000,000). The Buyer shall pay the Second Per Share Post-ClosingAmount to each Seller, with respect to each of his or her shares of CompanyCommon Stock issued and outstanding immediately prior to the Closing, inaccordance with Section 1.3 hereof. “First Per Share Post-Closing Amount” means an amount per share of Company CommonStock equal to (i) the First Post-Closing Payment divided by (ii) theFully Diluted Share Number. “Second Per SharePost-Closing Amount” means an amount per share of Company CommonStock equal to (i) the Second Post-Closing Payment divided by(ii) the Fully Diluted Share Number. “Fully Diluted Share Number” means the result obtained by adding(A) the aggregate number of shares of Company Common Stock outstandingimmediately prior to the Closing, including, without limitation, the aggregatenumber of shares of Company Common Stock subject to any outstanding RestrictedStock Awards as of immediately prior to the Closing (excluding any shares thathave been repurchased pursuant to a Restricted Stock Repurchase Agreement), and(B) the aggregate number of shares of Company Common Stock into which alloptions, warrants or other convertible securities or other rights to acquire orreceive shares of Company Common Stock, whether vested or unvested, outstandingimmediately prior to the Closing, if any, could be converted.

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## 1.3           SecondPost-Closing Payment.

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### (a)           Subject to the termsand conditions hereof, including without limitation, offset as set forth inSection 9.3 below, the Buyer shall pay the Second Per Share Post-ClosingAmount to each Seller, with respect to each of his or her shares of CompanyCommon Stock issued and outstanding immediately prior to the Closing, on thedate that is fifteen (15) months after the Closing Date in cash by thedelivery of immediately available funds.

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### (b)           Notwithstandinganything herein contained to the contrary, as of the Closing, the Buyer’sobligation to pay the Second Per Share Post-Closing Amount to each Seller, withrespect to each of his or her shares of Company Common Stock issued andoutstanding 

 

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### immediately prior to the Closing, shall besubordinate and subject in right of payment to the prior payment in full of allSenior Debt (as defined in the Subordination Agreement in substantially theform attached hereto as Exhibit A,to be entered into as of the Closing Date by and among Buyer, each Seller andWachovia Bank, National Association (or any assignor, successor or other Personwho assumes such Senior Debt or replaces Wachovia Bank, National Association orprovides indebtedness for borrowed money to the Buyer) (the “Subordination Agreement”)) as further set forthin the Subordination Agreement, and each Seller, by signing this Agreement,agrees to execute and deliver the Subordination Agreement on or prior to theClosing and agrees to take such action as may be necessary or appropriate toeffectuate the subordination as provided in the Subordination Agreement.

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## 1.4           Adjustments toFirst Post-Closing Payment.

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### (a)           At leastfive (5) business days prior to the Closing, the Company and the Buyershall finalize an Estimated Closing Balance Sheet as of the Closing Date on apost-Closing basis (the “Estimated Closing BalanceSheet”), which shall be prepared in accordance with Modified GAAP.

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### (b)           The First Post-ClosingPayment shall be reduced or increased, as indicated below, without duplication,by the following amounts, if any, as set forth on the Estimated Closing BalanceSheet:  (i) the First Post-ClosingPayment shall be reduced by the amount of any indebtedness of the Company forborrowed money as of the Closing Date, including without limitation, the amountof any indebtedness owed by the Company pursuant to the Company’s promissorynotes, dated December 30, 2005, to Donald E. Reed and Leslie W. Butler and theamount of any Qualified Accounts Payable as of the Closing Date (“Indebtedness for Borrowed Money”);(ii) the First Post-Closing Payment shall be reduced by the amount of allliabilities not incurred in the ordinary course of business of the Company in existenceas of the Closing Date, including, without limitation, (x) any amount paidor payable under the Restricted Stock Plan, any amount paid or payable underthe Restricted Stock Repurchase Agreements, any other Liability for severanceor other compensation provided or payable to employees or consultants of theCompany in connection with the Stock Purchase and any Liability for tenureawards, directed performance awards and severance payments described in Schedule3.6 (and, in each case, any employee withholding Taxes and any employerpayroll Taxes thereon) and (y) any unpaid transaction fees and expensesrelated to the Stock Purchase and the transactions contemplated hereby incurredby the Company or any Seller, including without limitation financial advisoryfees, legal fees and expenses, broker and finder fees and expenses ofaccountants (collectively, the “Non-Ordinary CourseLiabilities”); (iii) the First Post-Closing Payment shall bereduced by the amount of the Estimated Working Capital Deficit, if any; and(iv) the First Post-Closing Payment shall be increased by the amount ofthe Estimated Working Capital Surplus, if any. Such adjustments shall bereferred to herein collectively as the “EstimatedClosing Adjustment”. The Estimated Closing Adjustment shall bedetermined without regard to the limitations set forth in Sections 9.4 and9.5 hereof.

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### (c)           At leasttwo (2) business days prior to the Closing, the Parties shall agree upon aflow of funds memorandum which shall set forth all payments required to be madeby or on behalf of all Parties at the Closing, including for each such paymentan identification of the payor, the payee, the amount and the wire transferinformation.

 

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## 1.5           Restricted StockPlan. As of the Closing, the Restricted Stock Plan and all Restricted StockAwards granted by the Company pursuant to the Restricted Stock Plan orotherwise shall have been terminated and cancelled. The Company shall terminatethe Restricted Stock Plan and all other equity-related plans prior to theClosing, and neither Buyer nor the Company shall have any Liability thereunder.The Company agrees that, pursuant to this Section 1.5, (a) the Company andeach Restricted Stock Participant (other than Cindy A. Andre) shall consummatethe transactions contemplated by the Restricted Stock Repurchase Agreement inaccordance with the terms thereof, (b) upon the consummation thereof, thecertificates for all issued and outstanding shares of Company Common Stocksubject to such Restricted Stock Awards shall be surrendered to the Company bythe holder thereof and (c) upon the consummation thereof, the shares ofCompany Common Stock repurchased pursuant to the Restricted Stock RepurchaseAgreements shall cease to be outstanding and shall become authorized andunissued capital stock. The Company shall not amend or terminate any RestrictedStock Repurchase Agreement, or waive any provision thereof, without the Buyer’sprior written consent. The Company shall execute or cause to be executed suchfurther documents, assignments and assurances, and take or cause to be takensuch further actions, as may reasonably be requested by the Buyer to consummatethe closings under each Restricted Stock Repurchase Agreement and thetransactions contemplated thereby with each Restricted Stock Participant (otherthan Cindy A. Andre). Subject to the terms and conditions hereof, the shares ofCompany Common Stock subject to the Restricted Stock Award granted to Cindy A. Andreshall be purchased pursuant to Section 1.2 above.

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## 1.6           Post-ClosingAdjustment.

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### (a)           Within seventy-five(75) days following the Closing Date, the Buyer shall furnish the SellerRepresentative with a balance sheet of the Company as of the Closing Date on apost-Closing basis (the “Closing Balance Sheet”)prepared in accordance with Modified GAAP, which shall set forth the ClosingWorking Capital of the Company, the Indebtedness for Borrowed Money, theNon-Ordinary Course Liabilities and, as applicable, the Closing Working CapitalDeficit or the Closing Working Capital Surplus (collectively, the “Closing Adjustments”). Each Seller shall assistthe Buyer in the preparation of the Closing Balance Sheet if reasonablyrequested by the Buyer.

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### (b)           The SellerRepresentative shall have a period of fifteen (15) days after receipt ofthe Closing Balance Sheet to notify the Buyer of its election to accept orreject the Closing Balance Sheet. In the case of a rejection, such notice mustcontain the reasons for such rejection in reasonable detail and must set forththe amount of the requested adjustment (or a reasonable estimate thereof). Inthe event no notice is received by the Buyer during such fifteen (15) dayperiod, the Closing Balance Sheet and any required adjustments resultingtherefrom shall be deemed accepted by the Seller Representative and the Sellersand final and binding on the Parties hereto. In the event that the SellerRepresentative shall timely reject the Closing Balance Sheet, the Buyer and theSeller Representative shall promptly (and in any event within thirty (30)days following the date upon which the Seller Representative shall reject theClosing Balance Sheet), attempt to make a joint determination of the ClosingAdjustments and such determination and any required adjustments resultingtherefrom shall be final and binding on the Parties hereto solely for purposesof this Section 1.6.

 

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### (c)           In the event theSeller Representative and the Buyer shall be unable to agree upon a jointdetermination of Closing Adjustments within one hundred twenty (120) days fromthe Closing Date, then within one hundred thirty (130) days from the ClosingDate, the Buyer and the Seller Representative shall submit the dispute to theAccounting Firm. The Buyer and the Seller Representative shall request that theAccounting Firm render its determination prior to the expiration of one hundredsixty (160) days from the Closing Date and such determination and any requiredadjustments resulting therefrom shall be final and binding on all the Partieshereto solely for purposes of this Section 1.6. The fees and expenses of theAccounting Firm shall be allocated to be paid by the Buyer and/or the Sellers,respectively, based upon the percentage which the portion of the total amountcontested and not awarded to such party bears to the total amount contested, asdetermined by the Accounting Firm. Nothing stated or disclosed in the ClosingBalance Sheet or in connection with the determination thereof shall waive or bedeemed to waive any inaccuracy or breach of any representation or warranty madeby the Company or any Seller or any right to indemnification hereunder andshall be without prejudice to any other right or remedy of the Buyer under thisAgreement, at equity or at law.

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### (d)           If the ClosingWorking Capital as finally determined in accordance with the provisions of thisSection 1.6 is less than the Estimated Working Capital, then the amount ofthe difference shall be paid by the Sellers to the Buyer, in proportion totheir respective First Per Share Post-Closing Amounts, as an adjustment to thePurchase Price by wire transfer in immediately available funds withinseven (7) days after such determination. If the Closing Working Capital asfinally determined in accordance with the provisions of this Section 1.6is more than the Estimated Working Capital, then the amount of the differenceshall be paid by the Buyer to the Sellers as an adjustment to the PurchasePrice by wire transfer in immediately available funds in proportion to theirrespective First Per Share Post-Closing Amounts within seven (7) daysafter such determination.

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### (e)           If the Indebtednessfor Borrowed Money and/or the Non-Ordinary Course Liabilities determinedpursuant to this Section 1.6 exceed the Indebtedness for Borrowed Moneyand/or the Non-Ordinary Course Liabilities, respectively, set forth on theEstimated Closing Balance Sheet, such excess shall be paid as an adjustment tothe First Post-Closing Payment by the Sellers to the Buyer by wire transfer inimmediately available funds within seven (7) days after such determination.If the Indebtedness for Borrowed Money and/or the Non-Ordinary CourseLiabilities determined pursuant to this Section 1.6 are less than theIndebtedness for Borrowed Money and/or the Non-Ordinary Course Liabilities,respectively, set forth on the Estimated Closing Balance Sheet, such deficitshall be paid as an adjustment to the First Post-Closing Payment by the Buyerto the Sellers, in proportion to their respective First Per Share Post-ClosingAmounts, by wire transfer in immediately available funds within seven (7)days after such determination. The adjustments described inSections 1.6(d) and (e) shall be referred to collectively as the “Post-Closing Adjustment”. If either Party doesnot so pay to the other Party by the due date, such amounts shall be deemedDamages under Article IX hereof which shall be paid in full without regardto the limitations set forth in Sections 9.4 and 9.5 hereof.

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## 1.7           Stock Options andWarrants. Prior to the Closing, the Sellers shall cause the Company toterminate and cancel any options to purchase Company Common Stock (“Company Stock Options”) and any warrants topurchase Company Common Stock (“Company Warrants”).

 

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## Buyer shall neither assume any options orwarrants nor be required by the terms of this Agreement to replace any optionsor warrants with comparable options or warrants. The Company shall terminateall stock option plans and other stock or equity-related plans of the Companyprior to the Closing, and neither Buyer nor the Company shall have anyliability or obligation thereunder. No adjustment shall be made in the PurchasePrice paid in the Stock Purchase as a result of any cash proceeds received bythe Company from the date hereof to the Closing Date pursuant to the exerciseof options, warrants or other rights to acquire or receive Company CommonStock.

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## 1.8           Withholding ofTax. Buyer will be entitled (but not obligated) to deduct and withhold fromthe consideration otherwise payable pursuant to this Agreement to any holder ofCompany Common Stock such amounts as Buyer (or any Affiliate thereof) shalldetermine in good faith that they are required to deduct and withhold with respectto the making of such payment under the Code or any provision of federal,state, local or foreign Tax Law. To the extent that amounts are so withheld byBuyer, such withheld amounts will be treated for all purposes of this Agreementas having been paid to the holder of the Company Common Stock in respect ofwhom such deduction and withholding were made by Buyer.

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## 1.9           Lost, Stolen orDestroyed Certificates. In the event any certificates representingoutstanding shares of Company Common Stock shall have been lost, stolen ordestroyed, Buyer shall pay in exchange for such lost, stolen or destroyedcertificates, upon the making of an affidavit of that fact by the holderthereof, the applicable Purchase Price; provided, however, thatBuyer may, in its discretion and as a condition precedent to the paymentthereof, require the holder of such lost, stolen or destroyed certificates todeliver a bond in such sum as Buyer may reasonably direct as indemnity againstany claim that may be made against Buyer with respect to the certificatesalleged to have been lost, stolen or destroyed.

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# **ARTICLE IICLOSING**

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## 2.1           Time and Place ofthe Closing. The Closing shall take place at the offices ofMorrison & Foerster LLP, 1650 Tysons Boulevard, Suite 300,McLean, Virginia, as soon as practicable following the satisfaction or waiverof the conditions set forth in Articles VII and VIII hereof and in anyevent within three (3) business days thereafter, or on such other date asthe Buyer and the Seller Representative may mutually determine.

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## 2.2           Deliveries. Atthe time of the Closing, (i) each of the Sellers will deliver to the Buyerstock certificates representing all of the Shares owned by such Seller,endorsed in blank or accompanied by duly executed assignment documents,(ii) the Company, the Seller Representative and each of the Sellers willdeliver to the Buyer the various certificates, instruments, and documentsreferred to in Section 7.8 below, and (iii) the Buyer will deliver tothe Seller Representative and the Sellers the certificates, instruments anddocuments referred to in Section 8.4 below.

 

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## 2.3           SellerRepresentative.

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### (a)           Each Sellerdesignates Donald E. Reed (the “SellerRepresentative”) as his or her representative for purposes of thisAgreement. The Sellers and their respective successors shall be bound by anyand all actions taken by the Seller Representative on their behalf under orotherwise relating to this Agreement and the other documents contemplatedhereby and the transactions contemplated hereunder and thereunder as if suchactions were expressly ratified and confirmed by each of them in writing. Inthe event any Seller Representative is unable or unwilling to serve or shallresign, a successor Seller Representative shall be selected by the Sellersholding a majority of the shares of Company Common Stock outstandingimmediately prior to the Closing. A Seller Representative may not resign,except upon 30 days prior written notice to Buyer. In the event of a noticeof proposed resignation, or any death, disability or other replacement of aSeller Representative, a successor shall be appointed effective immediatelythereafter (and, in the case of a death of a Seller Representative, thesuccessor shall be deemed to be the executor or other representative of suchSeller Representative’s estate) and Buyer shall be notified promptly of suchappointment by the successor Seller Representative. No resignation, nor anyother replacement, of any Seller Representative is effective against the Buyeruntil selection of a successor and prior written notice to the Buyer of suchselection (such consent not to be unreasonably withheld). Each successor SellerRepresentative shall have all the power, rights, authority and privileges herebyconferred upon the original Seller Representative.

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### (b)           The Buyer shall beentitled to rely upon any actions, communication or writings taken, given orexecuted by the Seller Representative on behalf of the Sellers. Allcommunications or writings to be sent to the Sellers pursuant to this Agreementmay be addressed to the Seller Representative and any communication or writingso sent shall be deemed notice to all of the Sellers hereunder. The Sellersconsent and agree that the Seller Representative is authorized to acceptdeliveries, including any notice, on behalf of each Seller pursuant hereto.

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### (c)           The SellerRepresentative is hereby appointed and constituted the true and lawfulattorney-in-fact of each Seller, with full power of substitution in such Seller’sname and on such Seller’s behalf to act according to the terms of thisAgreement and the other documents contemplated hereby in the absolutediscretion of the Seller Representative; and in general to do all things and toperform all acts including, without limitation, executing and delivering allagreements, certificates, receipts, instructions, notices and other instrumentscontemplated by or deemed advisable in connection with this Agreement and theother documents contemplated hereby, including without limitationArticle IX hereof. This power of attorney and all authority herebyconferred is granted subject to the interest of the other Sellers hereunder andin consideration of the mutual covenants and agreements made herein, and shallbe irrevocable and shall not be terminated by any act of any Seller, byoperation of law, whether by such Seller’s death or disability or by any otherevent.

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### (d)           The SellerRepresentative hereby acknowledges and agrees to serve as the SellerRepresentative in accordance with the applicable terms hereof and to be boundby such terms. At Buyer’s request, the Seller Representative shall enter intoan agreement in form and substance reasonably satisfactory to Buyer and theSeller Representative in which the Seller 

 

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### Representative acknowledges and agrees toserve as a Seller Representative and to be bound by the applicable terms ofthis Agreement.

 

# **ARTICLE IIIREPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY**

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As a material inducement to the Buyer to enter into this Agreement andto consummate the transactions contemplated hereby, the Company and each of theSellers, jointly and severally, represent and warrant to the Buyer, as of thedate hereof and as of the Closing, as follows:

 

## 3.1           Organization andCorporate Power. The Company is a corporation duly organized, validlyexisting and in good standing under the laws of the Commonwealth of Virginiaand the Company is qualified to do business and in good standing in the Stateof Maryland and each other jurisdiction where the character or location of itsassets or its properties owned, leased or operated by it, or the nature of itsactivities makes such qualification necessary, except to the extent that thefailure to so qualify or be in good standing has not had and would notreasonably be expected to have a Material Adverse Effect. All suchjurisdictions in which the Company is qualified are set forth on Schedule 3.1. The Company has fullcorporate power and authority necessary to own and operate its properties, toconduct its business as now conducted and to perform its obligations underContracts to which it is a party or by which it is bound. The stock records andminute books of the Company are accurate, up to date and complete, and havebeen maintained in accordance with prudent business practices and allapplicable Laws. The Company has provided the Buyer with true, correct andcomplete copies of the stock records and minute books of the Company and suchrecords reflect that every material transaction of the Company has been dulyapproved or ratified by the Company. The minute books of the Company contain amaterially complete and accurate summary of all meetings of directors orshareholders or actions by written consent since the time of incorporation ofthe Company. The Company has not taken any corporate action without theapproval or ratification of the board of directors or shareholders where suchaction required the approval of the board of directors or shareholders underthe Virginia Stock Corporation Act, as amended (the “VSCA”).The stock ledger or stock records of the Company accurately reflect alltransactions involving the capital stock of the Company. The Company is not indefault under or in violation of any provision of its Articles of Incorporationor Bylaws or any resolution adopted by the Company’s board of directors orshareholders. The Company has not conducted any business under or otherwiseused, for any purpose or in any jurisdiction, any fictitious name, assumedname, trade name or other name, other than the names set forth on Schedule 3.1.

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## 3.2           Authority forAgreement. The Company has full power, authority and legal right to enterinto and perform its obligations under this Agreement and the other documentscontemplated hereby to which the Company is or will be a party and toconsummate the transactions contemplated hereby and thereby. The board ofdirectors of the Company and the stockholders of the Company have unanimouslyapproved the Stock Purchase, this Agreement and the other documentscontemplated hereby and the transactions contemplated hereby and thereby andauthorized the execution, delivery and performance of this Agreement and theother documents contemplated hereby and the consummation of the transactionscontemplated hereby and thereby. No other corporate proceedings on the part ofthe Company or any shareholder of 

 

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## the Company are, or will be, necessary toapprove and authorize the execution, delivery and performance of this Agreementand the other documents contemplated hereby and the consummation of thetransactions contemplated hereby and thereby. This Agreement and the otherdocuments contemplated hereby have been duly executed and delivered by theCompany and are legal, valid and binding obligations of the Company,enforceable against it in accordance with their respective terms, except asenforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or other similar laws affecting the enforcement ofcreditors’ rights in general. As of the date hereof, the holders of the CompanyCommon Stock that are parties to this Agreement and the other Persons listed onSchedule 3.4(a) own (beneficially and of record) and have the right tovote, in the aggregate, 100% of the total issued and outstanding Company CommonStock.

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## 3.3           No Violation toResult. Except as set forth on Schedule 3.3,the execution, delivery and performance by the Company of this Agreement andthe other documents contemplated hereby and the consummation by the Company ofthe transactions contemplated hereby and thereby and the fulfillment by theCompany of the terms hereof and thereof, do not and will not, directly orindirectly (with or without notice or lapse of time):  (i) violate, breach, conflict with,constitute a default under, accelerate or permit the acceleration of theperformance required by (x) any of the terms of the Articles of Incorporationor Bylaws of the Company or any resolution adopted by the board of directors ofthe Company or shareholders of the Company, or (y) any Contract orEncumbrance to which the Company is a party or by which it is bound, or(z) any law, judgment, decree, order, rule, regulation, permit, license orother legal requirement of any Government Authority applicable to the Company;(ii) give any Person the right to declare a default, exercise any remedyor accelerate the performance or maturity under any such Contract or cancel,terminate or modify any such Contract; (iii) give any Government Authorityor other Person the right to challenge any of the transactions contemplated bythis Agreement; (iv) give any Government Authority the right to revoke,withdraw, suspend, cancel, terminate or modify, any permit or license that isheld by the Company or that otherwise relates to the Company’s business or toany of the assets owned or used by the Company; or (v) result in thecreation or imposition of any Encumbrance, possibility of Encumbrance, orrestriction in favor of any Person upon the Shares or any of the properties orassets of the Company, except in the case of (i)(y) and (ii) as would not,individually or in the aggregate, reasonably be expected to result in anyLiability to the Company in excess of $25,000. Other than as set forth on Schedule 3.3, no notice to, filingwith, or consent of, any Person is necessary in connection with, and no “changeof control” provision is triggered by, the approval, adoption, execution,delivery or performance by the Company of this Agreement and the otherdocuments contemplated hereby or the consummation by the Company of thetransactions contemplated hereby or thereby. The Company has given all notices,made all filings and obtained all consents set forth on Schedule 3.3 or will have done soprior to the Closing.

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## 3.4           Capitalization.

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### (a)           The authorizedcapital stock of the Company consists of One Hundred Thousand (100,000) sharesof Company Common Stock, of which (x) Six Hundred Sixty-Six and 67/100 (666.67)shares have been issued, (y) Thirty-Three and 34/100 (33.34) shares shall berepurchased by the Company prior to the Closing pursuant to Section 1.5 hereofand (z) Six Hundred Thirty-Three and 33/100 (633.33) shares shall beoutstanding as of the Closing. There 

 

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### are no shares of the Company’s capital stockheld in the Company’s treasury. Schedule 3.4(a)sets forth the names of the Company’s shareholders, the addresses of theCompany’s shareholders in their respective states of legal residence and thenumber of shares of Company Common Stock owned of record and beneficially byeach of such shareholders.

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### (b)           All of the issuedand outstanding shares of capital stock of the Company have been dulyauthorized and validly issued, and are fully paid and non-assessable. Except asset forth on Schedule 3.4(b),no restrictions on transfer, repurchase option, preemptive rights or rights offirst refusal exist with respect to any shares of capital stock of the Company,and no such rights arise by virtue of or in connection with the transactionscontemplated hereby; and, to the extent permitted by Law, the Sellers havewaived (or hereby waive) any and all such rights.

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### (c)           There is no:  (i) outstanding subscription, option,call, warrant or right (whether or not currently exercisable) to acquire orsell or issue, or otherwise relating to, any shares of the capital stock orother securities of the Company; (ii) outstanding security, instrument orobligation that is or may become convertible into or exchangeable for anyshares of the capital stock or other securities of the Company;(iii) Contract under which the Company is or may become obligated to sellor otherwise issue any shares of its capital stock or any other securities; or(iv) condition or circumstance that may give rise to or provide a basisfor the assertion of a claim by any Person to the effect that such Person isentitled to acquire or receive any shares of capital stock or other securitiesof the Company. There are no outstanding stock appreciation, phantom stock,profit participation or other similar rights with respect to the Company. Schedule 3.4(c) sets forth(i) the total number of Restricted Stock Awards issued and outstanding and(ii) the following information with respect to each Restricted Stock Awardoutstanding as of immediately prior to the Closing:  (A) the name and address of the holderof the Restricted Stock Award, (B) the number of Restricted Stock Awardsheld by such holder and the number of such Restricted Stock Awards that arevested and unvested, (C) the vesting schedule applicable to suchRestricted Stock Awards and (D) the date on which such Restricted StockAward was granted.

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### (d)           Except as set forthon Schedule 3.4(d), there areno proxies, voting rights, shareholders agreements or other agreements orunderstandings with respect to the voting or transfer of the capital stock ofthe Company. All shares of Company Common Stock have been issued in compliancewith (i) all applicable federal and state securities laws and otherapplicable legal requirements, and (ii) any pre-emptive rights, rights offirst refusal or other requirements set forth in applicable Contracts. Anyshares of capital stock or other securities repurchased, redeemed or otherwisereacquired by the Company were validly reacquired in compliance with(A) the applicable provisions of the corporate law of the Commonwealth ofVirginia and all other applicable Laws, and (B) any requirements set forthin applicable Contracts. The Company is not obligated to redeem or otherwiseacquire any of its outstanding shares of capital stock.

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### (e)           The Company has no(i) direct or indirect debt, equity or other investment or interest in anyPerson or any joint venture or (ii) except for the teaming agreements setforth on Schedule 3.4(e), strategic alliance or teaming agreements withany Person (either pursuant to a written Contract or a Contract in the processof being negotiated). The Company has no commitments to contribute to thecapital of, make loans to or share losses of, any Person (either pursuant to awritten Contract or a Contract in the process of being negotiated).

 

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## 3.5           FinancialStatements.

##  

### (a)           Schedule 3.5(a) includes true,complete and correct copies of (i) the Year-End Financials and(ii) the Interim Financials. Each of the Financial Statements (includingin all cases the notes thereto, if any) is accurate and complete in allmaterial respects, is consistent with the Company’s books and records (which,in turn, are accurate and complete in all material respects), presents fairlythe Company’s financial condition and results of operations as of the times andfor the periods referred to therein, and has been prepared in accordance withGAAP (subject, in the case of Interim Financials, to normal and recurringadjustments which shall not be material in the aggregate, and the absence ofnotes). During the periods covered by the Financial Statements and since theBalance Sheet Date, there has been no material change in the Company’saccounting policies. There have been no transactions involving the business ofthe Company which properly should have been set forth in the FinancialStatements and which have not been accurately so set forth. Schedule 3.5(a) sets forth a list ofany off-balance sheet financing arrangements of the Company and anynon-operating assets, prepaid items and deposits. Since December 31, 2001,the Company’s accounting firm has not informed the Company that it has anymaterial challenges or disagreements regarding or pertaining to the Company’saccounting policies or practices. The Company has made available to the Buyercopies of each management letter or other letter delivered to the Company byits accounting firm in connection with the Financial Statements or relating toany review by such accounting firm of the internal controls of the Company.

###  

### (b)           Schedule 3.5(b) provides an accurateand complete breakdown and aging of all accounts receivable, notes receivableand other receivables of the Company as of the Balance Sheet Date. Except asset forth on Schedule 3.5(b),all existing accounts receivable, billed and unbilled, of the Company(including those accounts receivable reflected on the Balance Sheet that havenot yet been collected and those accounts receivable that have arisen since theBalance Sheet Date and have not yet been collected) (i) represent validobligations of customers of the Company arising from bona fide transactionsentered into in the ordinary course of business, and (ii) are current andwill be collected in full, without any counterclaim or set off, when due (andin no event later than ninety (90) days after the Closing Date). Except asdisclosed on Schedule 3.5(b),no Person has any Encumbrance on such receivables or any part thereof, and noagreement for deduction, free goods, discount or other deferred price orquantity adjustment shall have been made with respect to any such receivables.

###  

### (c)           Schedule 3.5(c) identifies therevenues received from each customer of the Company and from each other Personfrom whom the Company generated revenues in the fiscal year endedDecember 31, 2004 and in the first eleven (11) months of 2005. To theKnowledge of the Company, the relationship of the Company with each of its customersis a reasonably good working relationship, and since the fiscal year endedDecember 31, 2004, there has not been any material adverse change in thebusiness relationship of the Company with any of its customers. No customer ofthe Company has terminated or threatened in writing to terminate itsrelationship with the Company or has during the last twelve (12) monthsmaterially decreased, limited or otherwise changed the terms and conditions forthe purchase of goods or services from the Company, or threatened in writing todo so. All revenues recognized by the Company have been recognized inaccordance with GAAP.

 

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### (d)           The accounts, booksand records of the Company have recorded therein in all material respects theresults of operations and the assets and liabilities of the Company and each ofits Subsidiaries, required to be reflected under GAAP. To the Knowledge of theCompany, the Company maintains a system of accounting and internal controls andprocedures as are reasonably necessary, in light of the Company’s size and thenature of its business, to provide assurances that (i) transactions areexecuted with management’s authorization; (ii) transactions are recordedas necessary to permit preparation of the financial statements of the Companyand to maintain accountability for the Company’s assets; (iii) access tothe Company’s assets is permitted only in accordance with management’sauthorization; (iv) the reporting of the Company’s assets is compared withexisting assets at regular internals and appropriate action is taken withrespect to any differences; (v) accounts, notes and other receivables andinventory are recorded accurately, and proper and adequate procedures areimplemented to effect the collection thereof on a current and timely basis; and(vi) material information regarding the Company and its financialcondition is accumulated and communicated to the Company’s management. There isno fraud that involves management or, to the Knowledge of the Company, otheremployees who have a significant role in the Company’s internal controls.

###  

## 3.6           Liabilities. Thereare no Liabilities of the Company, other than: (i) Liabilities reflected on the Balance Sheet and not previouslypaid or discharged; (ii) Liabilities incurred after the Balance Sheet Datearising in the ordinary course of business and consistent with past practice;and (iii) immaterial Liabilities in no case to exceed $50,000 in theaggregate (none of which in the case of (i), (ii) or (iii) results from, arisesout of, relates to, is in the nature of or was caused by any breach ofcontract, breach of warranty, tort, infringement or violation of law). TheCompany is not a guarantor or otherwise liable for any Liabilities of any otherPerson other than endorsements for collection in the ordinary course ofbusiness. Schedule 3.6provides an accurate and complete breakdown and aging as of the Balance SheetDate of all accounts payable of the Company. Except as set forth on Schedule3.6, all of which shall be repaid at or prior to Closing, the Company hasno notes payable nor any indebtedness for borrowed money.

##  

## 3.7           Adverse Changes.Except as set forth on Schedule 3.7,since December 31, 2004, the Company has operated its business in theordinary course and consistent with past practice and the Company has not:  (i) suffered a Material Adverse Effect;(ii) suffered any theft, damage, destruction, or casualty loss in excessof $50,000, or suffered any interruption in the use of the Company’s assets orbusiness (other than in the ordinary and usual course of business) (whether ornot covered by insurance) or suffered any destruction of its books and records;(iii) declared, set aside or paid any dividend (whether in cash, stock orproperty) with respect to any capital stock of the Company or repurchased anycapital stock of the Company; (iv) granted any current or former director,officer, employee or consultant of the Company any bonus opportunity orincrease in compensation or benefits, (v) disclosed any confidentialinformation (other than to legal advisors of the Company or pursuant toagreements requiring the recipient to maintain the confidentiality of, andpreserving all rights of the Company in, such confidential information);(vi) made any capital expenditures that aggregate in excess of $200,000;(vii) taken any action, omitted any action or entered into any agreementor understanding which, if taken, omitted or entered into during the periodfrom the date of this Agreement until the Closing Date, would constitute abreach or violation of Section 6.2 hereof; or (viii) committed oragreed to any of the foregoing set forth in (i) through (vii) above.

 

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## 3.8           Employee BenefitPlans.

##  

### (a)           Schedule 3.8(a) lists:  (i) each plan fund, program, agreementor arrangement for the provision of executive compensation, deferred orincentive compensation, profit sharing, stock bonus, bonus, stock option,restricted stock, phantom stock, stock purchase, termination, salarycontinuation, employee assistance, supplemental retirement, severance,vacation, sickness, disability, death, fringe benefit, insurance, medical orother benefits (whether provided through insurance, on a funded or unfundedbasis, or otherwise) to any current or former employee, director, consultant orindependent contractor, or any dependent, survivor or beneficiary with respectto any of the foregoing, which is maintained, administered or contributed to(directly or indirectly through a professional employer organization orotherwise) by the Company or any ERISA Affiliate of the Company, whether or notlegally binding; (ii) each Employee Pension Benefit Plan which has beenmaintained, administered or contributed to (directly or indirectly through aprofessional employer organization or otherwise) by the Company or any ERISAAffiliate in the past six (6) years (the “PensionPlans”); and (iii) each Employee Welfare Benefit Plan which iscurrently maintained, administered or contributed to (directly or indirectlythrough a professional employer organization or otherwise) by the Company orany ERISA Affiliate (such plans, together with Employee Welfare Benefit Planswhich were previously maintained, administered or contributed to by the Companyor an ERISA Affiliate, collectively, the “WelfarePlans”) (collectively, all arrangements described in thisSection 3.8(a) are hereinafter referred to as the “Benefit Plans”).

###  

### (b)           Each Pension Planwhich is intended to qualify under Section 401(a) of the Code so qualifies(i) with respect to the form of its plan documents and (ii) inoperation and each related trust is exempt from taxation under CodeSection 501(a). Each Benefit Plan (and each related trust, insurancecontract or fund) has been maintained, funded and administered in all materialrespects in accordance with its governing instruments and all applicable Laws,including but not limited to, ERISA and the Code. No Pension Plan has ever heldCompany Common Stock or other Company securities. No Pension Plan has ever beenmerged with or accepted Code Section 414(l) transfers from anotherEmployee Pension Benefit Plan. With respect to any applicable CompanyEmployees, the Company has provided wages and fringe benefits under the BenefitPlans or otherwise in compliance with the Service Contract Act of 1965 and itsrelated regulations at 29 C.F.R. Part 4.

###  

### (c)           All contributions,premiums or other payments due under the terms of each Benefit Plan or requiredby applicable Law have been made within the time due. All unpaid amountsattributable to any such Benefit Plan for any period prior to the Closing Datewill be accrued on the Company’s consolidated books and records in accordancewith GAAP and, except to the extent of such accruals, the Company has nomaterial Liability arising out of or in connection with the form or operationof the Benefit Plans or benefits accrued thereunder on or prior to the ClosingDate.

###  

### (d)           There have been noProhibited Transactions with respect to any Benefit Plan which could result inLiability to the Company, its ERISA Affiliates, or, to the Knowledge of theCompany, any of their respective employees. There has been no breach offiduciary duty (including violations under Part 4 of Title I of ERISA)with respect to any Benefit Plan which could result in Liability to theCompany, its ERISA Affiliates or, to the Knowledge of the 

 

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### Company, any of their respective employees. Noaction, suit, proceeding, hearing or investigation relating to any Benefit Plan(other than routine claims for benefits) is pending or, to the Knowledge of theCompany, has been threatened, and neither the Company nor any Seller hasKnowledge of any fact that would reasonably be expected to form the basis forsuch action, suit, proceeding, hearing or investigation. No matters arecurrently pending with respect to any Benefit Plan under the Employee PlansCompliance Resolution System maintained by the IRS or any similar programmaintained by any other Government Authority.

###  

### (e)           Neither the Company,nor any ERISA Affiliate has ever sponsored, maintained, contributed to, had anyobligation to contribute to, or had any other Liability under or with respectto any Employee Pension Benefit Plan covered by Title IV of ERISA,Section 302 of ERISA or Section 412 of the Code. Neither the Companynor any ERISA Affiliate has ever had any Liability under or with respect to any“multiemployer plan” as defined in ERISA Section 3(37) or any “multipleemployer welfare arrangement” as defined in Section 3(40)(A) of ERISA.

###  

### (f)            Neither theCompany, nor any ERISA Affiliate has ever sponsored, maintained, administered,contributed to, had any obligation to contribute to, or had any other Liabilityunder or with respect to any Employee Welfare Benefit Plan which provideshealth, life or other coverage for former directors, officers or employees (orany spouse or former spouse or other dependent thereof), other than benefitsrequired by COBRA.

###  

### (g)           Neither the Company,nor any ERISA Affiliate has ever maintained a “voluntary employees beneficiaryassociation” within the meaning of Section 501(c)(9) of the Code or anyother “welfare benefit fund” as defined in Section 419(e) of the Code.

###  

### (h)           All reports andinformation relating to each Benefit Plan required to be filed with aGovernment Authority have been timely filed and are accurate in all materialrespects; all reports and information relating to each such Benefit Planrequired to be disclosed or provided to participants or their beneficiarieshave been timely disclosed or provided, and there are no restrictions on theright of the Company or any ERISA Affiliate to terminate or decrease(prospectively) the level of benefits under any Benefit Plan after the ClosingDate without Liability to any participant or beneficiary thereunder.

###  

### (i)            There has beendelivered to Buyer, with respect to each Benefit Plan, the following:  (i) a copy of the annual report (ifrequired under ERISA) with respect to each such Scheduled Benefit Plan for thelast three (3) years (including all schedules and attachments);(ii) a copy of the summary plan description, together with each summary ofmaterial modification required under ERISA with respect to such Benefit Plan;(iii) a true and complete copy of each written Benefit Plan and, withrespect to Pension Plans, each written plan document and all amendments theretowhich have been adopted since the inception of such plan; (iv) all trustagreements, insurance contracts, and similar instruments with respect to eachfunded or insured Benefit Plan; (v) copies of all nondiscrimination andtop-heavy testing reports for the last three (3) plan years with respectto each Benefit Plan that is subject to nondiscrimination and/or top-heavytesting; and (vi) any investment management agreements, administrativeservices contracts or similar agreements relating to the ongoing administrationand investment of any Benefit Plan.

 

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### (j)            Each ERISAAffiliate is identified on Schedule 3.8(j).

###  

### (k)           Each Benefit Plansponsored by the Company is terminable at the discretion of such entity with nomore than thirty (30) days advance notice and without cost to such entity.No Employee Pension Benefit Plan, including the assets of such plan, is subjectto any charge, market value adjustment, deferred rules charge or other fee thatis payable by reason of the termination of such plan or investment. The Companymay, without cost, withdraw their employees, directors, officers andconsultants from any Benefit Plan which is not sponsored by such entity. NoBenefit Plan has any provision which would reasonably be expected to increaseor accelerate benefits or any provision which would reasonably be expected toincrease Liability to the Company or the Buyer as a result of the transactionscontemplated hereby, alone or together with any other event. No Benefit Planimposes withdrawal charges, redemption fees, contingent deferred sales chargesor similar expenses triggered by termination of the plan or cessation ofparticipation or withdrawal of employees thereunder. No officer, director,agent or employee of the Company or any ERISA Affiliate has made any oral orwritten representation which is inconsistent with the terms of any Benefit Planwhich may be binding on such plan, the Company or any ERISA Affiliate.

###  

### (l)            Neither the Companynor any ERISA Affiliate sponsors, maintains, or contributes to a nonqualifieddeferred compensation plan within the meaning of Section 409A of the Code.

###  

## 3.9           Employee Matters.

##  

### (a)           Schedule 3.9(a)(i) contains acomplete and correct list of all Company Employees as of November 30, 2005,their respective titles as of the date hereof, the 2004 compensation paid toeach such employee, the 2005 compensation paid to each such employee through December1, 2005, the date and amount of each such employee’s most recent salaryincrease, the date of employment of each such employee and the accrued vacationtime and sick leave or other paid time off of each such employee. The Companyhas paid all bonuses due to any Company Employee with respect to work performedby such Company Employee in calendar year 2005. Except as set forth on Schedule 3.9(a)(ii), (i) theterms of employment or engagement of all directors, officers, CompanyEmployees, agents, consultants and professional advisers of the Company aresuch that their employment or engagement may be terminated at will with noticegiven at any time and without Liability for payment of compensation or damages,(ii) there are no severance payments which are or could become payable bythe Company to any such person under the terms of any oral or written agreementor commitment or any Law, custom, trade or practice, (iii) there are noother agreements, contracts or commitments, oral or written, between theCompany and any such person, (iv) as of the date hereof, to the Knowledgeof the Company, no executive officer or material number of management level orsenior technical employees of the Company has any plans to terminate his, heror their employment or relationship with the Company and (v) to theKnowledge of the Company, there are no agreements between any Company Employeeand any other Person which would restrict, in any manner, such Person’s abilityto perform services for the Company or the Buyer or the right of any of them tocompete with any Person or the right of any of them to sell to or purchase fromany other Person.

 

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### (b)           The Company has not,nor has it ever been, bound by or subject to (and none of its assets orproperties are bound by or subject to) any arrangement with any labor union orother collective bargaining representative. No employee of the Company is orhas ever been represented by any labor union or covered by any collective bargainingagreement while employed by the Company and no campaign to establish suchrepresentation is in progress. With respect to the Company, there is no pendingor, to the Knowledge of the Company, threatened (i) strike, slowdown,picketing, work stoppage or employee grievance process, (ii) materialcharge, grievance proceeding or other claim against or affecting the Companyrelating to the alleged violation of any law pertaining to labor relations oremployment matters, including any charge or complaint filed by an employee orunion with the National Labor Relations Board, the Equal Employment OpportunityCommission or any comparable Government Authority, (iii) unionorganizational activity or other labor or employment dispute against oraffecting the Company, or (iv) application for certification of acollective bargaining agent.

###  

### (c)           Except as set forthon Schedule 3.9(c), theCompany is and has been in material compliance with all applicable Lawsrespecting employment and employment practices, terms and conditions ofemployment, and wages and hours, including, without limitation, any such lawsregarding employment documentation, equal employment opportunities, fairemployment practices, plant closings and mass layoffs, sexual harassment,discrimination based on sex, race, disability, health status, pregnancy,religion, national origin, age or other tortious conduct, workers’compensation, family and medical leave, the Immigration Reform and Control Act,the Service Contract Act of 1965 and occupational safety and healthrequirements, and the Company has not engaged in any unfair labor practice. TheCompany is not nor has it been liable for the payment of any compensation,damages, taxes, fines, penalties or other amounts, however designated, forfailure to comply with any of the foregoing. All Persons classified by theCompany as independent contractors do satisfy and have satisfied therequirements of law to be so classified, and the Company has fully andaccurately reported its compensation on IRS Forms 1099 when required to doso. No individual who has performed services for or on behalf of the Companyand who has been treated by the Company as an independent contractor, isclassifiable as a “leased employee” within the meaning ofSection 414(n)(2) of the Code with respect to the Company.

###  

### (d)           To the Knowledge ofthe Company, except as set forth in Schedule 3.9(d), no third party hasclaimed or has reason to claim that any person employed by or affiliated withthe Company has (i) violated any of the terms or conditions of his or heremployment, non-competition, non-solicitation or non-disclosure agreement withsuch third party, (ii) disclosed or utilized any trade secret orproprietary information or documentation of such third party, or (iii) interferedin the employment relationship between such third party and any of its presentor former employees. To the Knowledge of the Company, no person employed by oraffiliated with the Company has employed or has proposed to employ any tradesecret or any information or documentation proprietary to any former employeror violated any confidential relationship which such person may have had withany third party, in connection with the development, manufacture or sale of anyProduct or proposed Product or the development or sale of any service orproposed service of the Company.

###  

### (e)           Schedule 3.9(e) lists all theCompany Employees who are currently on leave relating to work-related injuriesand/or receiving disability benefits under any Benefit Plan.

 

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## 3.10         Taxes.

##  

### (a)           The Company hasfiled (or has had filed on its behalf) on a timely basis all Tax Returns it isrequired to have filed. All such Tax Returns are materially correct andcomplete in all respects. Except as set forth on Schedule 3.10(a), allTaxes required to have been paid by the Company (whether or not shown on anyTax Return) have been paid on a timely basis. No claim has ever been made inwriting (or to the Knowledge of the Company or any Seller, in any other manner)by a Government Authority in a jurisdiction where the Company does not file TaxReturns that it is or may be subject to taxation by that jurisdiction. TheCompany has not commenced activities in any jurisdiction which would reasonablybe expected to require the Company to make an initial filing of any Tax Returnwith respect to Taxes imposed by a Government Authority that it had notpreviously been required to file in the immediately preceding taxable period. TheCompany has not requested or obtained any extension of time within which tofile any Tax Return, which Tax Return has not since been filed. There are noEncumbrances on any of the assets of the Company that arose in connection withany failure (or alleged failure) to pay any Tax.

###  

### (b)           The Company hascomplied in all material respects with all applicable Laws, rules andregulations relating to withholding Taxes including, without limitation, thewithholding and reporting requirements under Sections 1441 through 1464,3401 through 3406, and 6041 through 6048 of the Code, as well as any similarprovisions under any other laws, and has, within the time and manner prescribedby law, withheld from employee wages and other payments and paid over to theproper Government Authority all amounts required to have been so withheld andpaid.

###  

### (c)           There are noexisting circumstances which reasonably may be expected to result in theassertion of any claim for Taxes against the Company by any GovernmentAuthority with respect to any period for which Tax Returns are required to havebeen filed or Tax is required to have been paid. There is no audit or otherproceeding presently pending or threatened with regard to any Tax Liability orTax Return of (i) the Company or (ii) any Seller relating to theCompany. Neither the Company nor any Seller has received a written ruling fromor entered into a written agreement with a Government Authority relating to anyTax if such ruling or agreement could have a continuing effect with respect toany taxable period of the Company for which the Company has not filed a TaxReturn. No issue has been raised by any Government Authority with respect toTaxes of the Company in any prior examination which, by application of the sameor similar principles, would reasonably be expected to result in a proposeddeficiency for any other taxable period.

###  

### (d)           No agreement, waiveror other document or arrangement extending, or having the effect of extending,the period for assessment or collection of Taxes (including, but not limitedto, any applicable statute of limitation), has been executed or filed with anyGovernment Authority by or on behalf of the Company that has continuing effect;and no power of attorney with respect to any Tax matter relating to the Companyis currently in force.

###  

### (e)           The Company has notfiled any consent or entered into any agreement under Section 341(f) ofthe Code with respect to any of its assets.

 

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### (f)            The Company is nota party to any agreement, contract, arrangement or plan that under certaincircumstances could require any payment (within the meaning ofSection 280G of the Code) of any employee remuneration after the ClosingDate that would be a “parachute payment” within the meaning ofSection 280G of the Code.

###  

### (g)           The Company has notmade or agreed to make, and is not required to make (other that pursuant toSection 448 of the Code by reason of the consummation of the Merger), anychange in method of accounting of the Company used by it in any Tax Return filedby the Company which change in method would require the Company to make anadjustment to its income pursuant to Section 481(a) of the Code (or anysimilar provision) on any Tax Return for any taxable period for which theCompany has not yet filed a Tax Return; and neither is there any applicationpending with any Government Authority requesting permission for the Company tomake any change in any accounting method, nor has the Company received anynotice that a Government Authority proposes to require a change in method ofaccounting used in any Tax Return which has been filed by the Company.

###  

### (h)           The Company is notand has not been a party to any Tax allocation, Tax sharing or similaragreement or arrangement (other than any such agreement created by theexecution of this Agreement). The Company (i) is not and has not been amember of an “affiliated group” (within the meaning of Section 1504 of theCode) or similar group of entities with which the Company joined, or was or maybe required to join, for any taxable period in making a consolidated federalincome Tax Return or other Tax Return in which Tax Liability was or would becomputed on a consolidated, combined, unitary or similar basis, and(ii) does and has not had a relationship to any other Person which wouldcause it to be liable for Taxes owing by any other Person, including, withoutlimitation (A) under Treasury Regulation Section 1.1502-6 (or anysimilar provision of state, local, or foreign law), (B) as a transferee orsuccessor, or (C) by contract.

###  

### (i)            The Company has nottaken any action not in accordance with past practice that would have theeffect of deferring a measure of Tax from a period (or portion thereof) endingon or before the Closing Date to a period (or portion thereof) beginning afterthe Closing Date. The Company has no deferred income or Tax Liability arisingout of any transaction, including without limitation, any (i) intercompanytransaction (as defined in Treasury Regulation Section 1.1502-13),(ii) the disposal of any property in a transaction accounted for under theinstallment method pursuant to Section 453 of the Code (other than anyobligations of Buyer to make payments in respect of the Purchase Price pursuantto this Agreement which are deemed to have been received by the Companypursuant to the Section 338(h)(10) Elections), (iii) use of the long-termcontract method of accounting, or (iv) receipt of any prepaid amount on orbefore the Closing Date, except to the extent adequately reserved for on itsBalance Sheet.

###  

### (j)            Schedule 3.10(j) identifies all TaxReturns that the Company has filed on or after January 1, 2001 and the taxableperiod covered by each such Tax Return, and identifies all Tax Returns orperiods (regardless of when filed) that have been audited or are currently thesubject of an audit by a Government Authority. The Company has provided to theBuyer complete and accurate copies of all of the following materials thatrelate to Tax periods ending after January 1, 2001:  (i) all income Tax Returns filed by orwith respect to the Company, (ii) all 

 

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### elections relating to Taxes which havecontinuing effect for taxable years ending after the Closing Date filed by oron behalf of the Company with any Government Authority (other than electionswhich are included in or apparent from Tax Returns referred to in (i) above),(iii) all examination reports relating to Taxes of the Company issued as aresult of audits, examinations or asserted failures to file Tax Returns or payTaxes, and (iv) all statements of Taxes assessed against the Company thatwere not shown on Tax Returns filed by the Company before such assessment. Tothe extent requested, the Company has made available to Buyer complete andaccurate copies of all Tax documents.

###  

### (k)           The Company has notbeen a United States real property holding corporation within the meaning ofSection 897(c)(2) of the Code at any time during the precedingfive (5) years.

###  

### (l)            No property ownedby the Company is (i) property required to be treated as being owned byanother Person pursuant to the provisions of Section 168(f)(8) of theInternal Revenue Code of 1954, as amended and in effect immediately prior tothe enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property”within the meaning of Section 168(h)(1) of the Code or (iii) is “tax-exemptbond financed property” within the meaning of Section 168(g) of the Code.

###  

### (m)          The Company has notconstituted either a “distributing corporation” or a “controlled corporation”within the meaning of Section 355(a)(1)(A) of the Code in a distributionqualifying (or intended to qualify) under Section 355 of the Code (or somuch of Section 356 as relates to Section 355).

###  

### (n)           The Company has beena “small business corporation” within the meaning of Section 1361(b) ofthe Code at all times since January 1, 1995. For all taxable years beginning onor after January 1, 1995, the Company has had in effect a valid election underSection 1362(a) of the Code, and during all such taxable years has validlybeen treated in a similar manner for purposes of the income tax laws of allstates in which it has been subject to taxation where such treatment is legallyavailable. The Company has not at any time made any election or filing to betreated as a Subchapter C corporation for state income Tax purposes in any ofthose states since its election under Section 1362(a) of the Code becameeffective.

###  

### (o)           The Company has nothad at any time any “net unrealized built-in gain” within the meaning of Section 1374(d)of the Code that would give rise to taxation pursuant to Section 1374 ofthe Code (or comparable provisions of state law) if all of the assets of theCompany were disposed of as of the Closing Date at their respective fair marketvalues. The Company has not, in the past 10 years, (i) acquiredassets from another corporation in a transaction in which the Company’s Taxbasis for the acquired assets was determined, in whole or in part, by referenceto the Tax basis of the acquired assets (or any other property) in the hands ofthe transferor, (ii) acquired the stock of any corporation which wastreated for federal income tax purposes as having transferred its assets to theCompany in a transaction to which Section 381 of the Code applied, whetherby reason of election of qualified subchapter S subsidiary status (within themeaning of Section 1361(b)(3)(B) of the Code) or otherwise, or(iii) become a successor to any Person by reason of any acquisition of asubstantial part of the 

 

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### assets of such Person, whether by contract orby operation of Law pursuant to a merger or consolidation or similartransaction.

###  

### (p)           Neither the Companynor any Seller knows or has reason to believe, after consultation with taxcounsel, that the Buyer’s acquisition of the Company’s capital stock pursuantto this Agreement would not qualify as a “qualified stock purchase” within themeaning of Section 338 of the Code and Treasury Regulations thereunder, asto which an election properly may be made under Section 338(h)(10).

###  

### (q)           The Company does nothave a “permanent establishment” in any foreign country as such term is definedin any applicable Tax treaty or convention between the United States and suchforeign country and has not otherwise taken steps or conducted businessoperations that have exposed, or will expose it to the taxing jurisdiction of aforeign country. The Company has complied with all applicable tax laws andregulations of each country (including political subdivisions thereof) in whichthe Company, has performed services, even where such services relate or areprovided solely to agencies of the United States government.

###  

### (r)            Neither Company norany of its Subsidiaries is or has been a beneficiary or has otherwiseparticipated in any “reportable transaction” within the meaning ofSection 1.6011-4(b)(1) of the Treasury Regulations that was, is or to theKnowledge of the Company will ever be required to be disclosed underSection 1.6011-4 of the Treasury Regulations, and no Tax Return of Companyor any of its Subsidiaries has (i) contained a disclosure statement underSection 6662 of the Code (or any predecessor provision or comparableprovision of Law), or (ii) been filed with respect to which the Companywas advised by its return preparer to consider making disclosure with respectto Section 6662 of the Code, which disclosure was not made.

###  

### (s)           The Company has notparticipated in, or cooperated with, an international boycott within themeaning of Section 999 of the Code.

###  

### (t)            The Company(i) is not a party to any joint venture, partnership or other agreement orarrangement which is treated as a partnership for federal income Tax purposesor (ii) does not own any interest in an entity that is treated as an entitydisregarded as separate from its owner for federal Tax purposes, or as to whichan election pursuant to Treasury Regulation Section 301.7701-3 has beenmade.

###  

## 3.11         Property.

##  

### (a)           The Company owns noreal property and has never owned any real property. Schedule 3.11(a) sets forth anaccurate and complete list of all real property leased by the Company or towhich the Company may have any leasehold rights (collectively, the “Facilities”). True, complete and correct copiesof all leases of real property listed on Schedule 3.11(a)have been delivered to the Buyer. Except as otherwise disclosed on Schedule 3.11(a), to the Knowledgeof the Company, no person, firm or corporation, other than the owner of suchreal property and the Company, has any rights (including rights arising underan installment contract, option to purchase, easement, right-of-way, lease,sublease or otherwise) with respect to the Facilities or any part thereof. Allleases set forth on Schedule 3.11(a)are in 

 

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### full force and effect and constitute validand binding agreements of the Company and, to the Knowledge of the Company, theother party or parties thereto in accordance with their respective terms.

###  

### (b)           Schedule 3.11(b) sets forth an accuratelist of all owned and leased personal property included on the Balance Sheetand all other personal property owned or leased by the Company (i) as ofthe Balance Sheet Date, or (ii) acquired since the Balance Sheet Date, inthe case of (i) and (ii) valued in excess of Ten Thousand Dollars($10,000). True, complete and correct copies of all leases of personal propertyand equipment listed on Schedule 3.11(b)have been delivered to the Buyer. All of the personal property listed on Schedule 3.11(b) is in good workingorder and condition, ordinary wear and tear excepted. All personal propertyused by the Company is either owned by the Company or leased under an agreementlisted on Schedule 3.11(b). Allleases set forth on Schedule 3.11(b)are in full force and effect and constitute valid and binding agreements of theCompany and, the other party or parties thereto in accordance with theirrespective terms.

###  

### (c)           The Company has goodand marketable title to the Company’s assets, free and clear of any and allEncumbrances and defects in title (other than Permitted Encumbrances). To theKnowledge of the Company, the Company’s assets, taken together, are adequateand sufficient for the operation of its business as currently conducted. Thereare no facts or conditions affecting the Company’s assets which would,individually or in the aggregate, reasonably be expected to interfere in anymaterial respect with the use, occupancy or operation thereof as currentlyused, occupied or operated, or their adequacy for such use.

###  

## 3.12         Contracts.

##  

### (a)           Schedule 3.12(a) sets forth anaccurate and complete list of each Material Contract. To the Knowledge of theCompany, no Contract has been breached or cancelled by the other party, and theCompany has no Knowledge of any anticipated breach by any other party to anyContract (with or without notice or lapse of time). The Company has performedall the obligations required to be performed by it in connection with theContracts and is not in default under or in breach of any Contract, and noevent has occurred which with the passage of time or the giving of notice orboth would reasonably be expected to (i) result in a default or breachthereunder; (ii) give any Person the right to declare a default orexercise any remedy under any Contract, (iii) give any Person the right toaccelerate the maturity or performance of any Contract, or (iv) give anyPerson the right to cancel, terminate or materially modify any Contract. TheCompany has not waived any of its material rights under any Contract. TheCompany has no present expectation or intention of not fully performing anyobligation pursuant to any Contract. Each Contract is legal, valid, binding,enforceable and in full force and effect, except as enforceability may belimited by applicable bankruptcy, insolvency, reorganization, moratorium orother similar laws affecting the enforcement of creditors’ rights in general,and shall continue as such following the consummation of the transactionscontemplated hereby. Except as set forth on Schedule 3.12(a),no Contract obligates the Company to process, manufacture or deliver productsor perform services that shall result in a loss to the Company upon completionof performance.

 

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### (b)           The Company hasprovided the Buyer with a true and correct copy of all written Contracts whichare required to be disclosed on Schedule 3.12(a),in each case together with all amendments, waivers or any other changes thereto(all of which are disclosed on Schedule 3.12(a)).Schedule 3.12(b) contains anaccurate and complete description of all material terms of all oral MaterialContracts.

###  

### (c)           No Person iscurrently renegotiating, or has the right to renegotiate, any amount paid orpayable to the Company under any Contract or any other term or provision of anyContract.

###  

### (d)           Schedule 3.12(d) identifies andprovides an accurate and complete description of each proposed Contract as towhich any pending bid, offer, written proposal, term sheet or similar documenthas been submitted or received by the Company.

###  

## 3.13         Litigation. Exceptas set forth on Schedule 3.13,there is no litigation, suit, proceeding, action, claim, demand orinvestigation, at law or in equity or in any administrative or arbitrationproceeding, pending or, to the Knowledge of the Company, threatened against oraffecting the Company before any court, agency, authority or arbitrationtribunal. To the Knowledge of the Company, there are no facts that would bereasonably likely to result in any such litigation, suit, proceeding, action,claim or investigation. The Company is not subject to or in default withrespect to any notice, order, writ, injunction or decree of any GovernmentAuthority or arbitration tribunal.

##  

## 3.14         Compliance withLaws. The Company has complied and is currently in compliance in allmaterial respects with all applicable Laws, regulations, rules, orders,permits, judgments, decrees and other requirements and policies imposed by anyGovernment Authority and there are no violations of any other ethicalrequirement applicable to the Company. Neither the Company, nor any Seller, norany of the employees, partners, principals, agents or assignees of the Companyor any Seller have committed (or taken any action to promote or conceal) anyviolation of the Foreign Corrupt Practices Act, 15 U.S.C.sections 78dd-1, -2. The Company has all licenses, permits, approvals,qualifications or the like, from any Government, Government Authority or Personnecessary for the conduct of its business as conducted all such items are infull force and effect and the Company is and has at all times been incompliance with the terms thereof (other than immaterial licenses, permits,approvals, qualifications or the like required by any state or local GovernmentAuthority). Schedule 3.14 setsforth all licenses and permits held by the Company which terminate or becomerenewable at any time prior to the first anniversary of the date of thisAgreement. Except as set forth on Schedule 3.14,to the Knowledge of the Company, there are no facts or circumstances inexistence which are reasonably likely to prevent the Company from renewing eachsuch license and permit. The Company has not received any written notice orcitation for any actual or potential noncompliance with any of the foregoing inthis Section 3.14, and, to the Knowledge of the Company, there exists nocondition, situation or circumstance, nor has there existed such a condition,situation or circumstance, which, after notice or lapse of time, or both, wouldreasonably be expected to constitute noncompliance with or give rise to futureLiability with regard to any of the foregoing in this Section 3.14.

 

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## 3.15         GovernmentContracts.

##  

### (a)           Schedule 3.15(a) lists all GovernmentContracts and Government Bids as of November 30, 2005, including the nameand number of the Government Contract and the applicable solicitation name andnumber for the Government Bid; the name of the other contracting party; thename of the Government Authority that is the customer (if different from thecontracting party); for task orders and delivery orders, the name and number ofthe Government Contract (including any blanket purchase agreement) under whichthe order was issued or the Government Bid was submitted; the date theGovernment Contract was awarded; and the scheduled end date of the GovernmentContract. Except as set forth on Schedule 3.15(a),the Company has not entered into any Government Contract that has not beenclosed out or submitted any outstanding Government Bid that remains outstanding.The Company has made available to the Buyer correct and complete copies of allGovernment Contracts and outstanding Government Bids. All Government Contractsconstitute valid and binding obligations of the Company and, to the Knowledgeof the Company, of the other party or parties thereto, and are fullyenforceable in accordance with their terms, except as enforceability may belimited by applicable bankruptcy, insolvency, reorganization, moratorium orother similar laws affecting the enforcement of creditors’ rights in general. Tothe extent required with respect to any of the Government Contracts that havenot been closed out, except as set forth on Schedule 3.15(a),the Company has obtained each novation or other consents from any GovernmentAuthority for (or has provided notice of) the assignment or transfer to theCompany of all right, title and interest in and to such Government Contract.

###  

### (b)           Schedule 3.15(b) sets forth, as ofNovember 30, 2005, for each Government Contract, each project with a firmorder whereby the contractual value of work not yet performed (funded orunfunded) exceeds $50,000; the contractual value of such work not yet performedthereunder as of such date; and any dollar amounts included that are not yetfunded.

###  

### (c)           With respect to eachGovernment Contract or Government Bid, (i) the Company has complied in allmaterial respects with all terms and conditions of such Government Contract,including all provisions incorporated by reference or by operation of lawtherein, (ii) the Company has complied in all material respects with allrequirements of all Laws pertaining to such Government Contract, (iii) allrepresentations and certifications executed by the Company pertaining to suchGovernment Contract or Government Bid were complete and correct in all materialrespects as of their effective date and the Company has complied with allrepresentations and certifications, (iv) the Company has not submitted anymaterially inaccurate, untruthful or misleading cost or pricing data,certification, bid, proposal, report, invoice, claim, or other information to aGovernment Authority, prime contractor, subcontractor, vendor or any otherPerson relating to any Government Contract or Government Bid, (v) neithera Government Authority nor any prime contractor, subcontractor, or any otherPerson has notified the Company, either in writing or orally, that the Companyhas breached or violated any law, certification, representation, clause, provisionor requirement pertaining to such Government Contract or Government Bid,(vi) no cancellation, termination for convenience, termination fordefault, suspension, stop work order, cure notice, or show cause notice iscurrently in effect nor, to the Knowledge of the Company, is any such actionbeing proposed or threatened, pertaining to such Government Contract,(vii) no cost claimed or proposed by the Company pertaining to anyGovernment Contract or Government Bid is the subject of any audit or investigationnor, to the 

 

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### Knowledge of the Company, has any such auditor investigation been threatened, (viii) no Seller nor the Company hasinformation that any option with respect to such Government Contract will notbe exercised or that any Government Contract will be terminated, cancelled, orwill otherwise come to an end prior to the end of its stated term (includingall option periods), (ix) there are no pending recommendations by anyGovernment auditor that any cost claimed by the Company is unallowable, and(x) all amounts previously charged to or presently carried as chargeableto any cost-reimbursable Government Contract are allowable pursuant to48 C.F.R. Part 31. The Company is not in receipt or possession of anycompetitor or Government Authority’s proprietary or procurement sensitiveinformation under circumstances where there is reason to believe that suchreceipt or possession is unlawful or unauthorized. The Company has not misusedor disclosed any classified information or any records subject to the PrivacyAct (5 U.S.C. § 552a).

###  

### (d)           (i) Neither theCompany nor any of the Company’s directors, officers, employees, or (to theKnowledge of the Company) any consultants or agents is or has, during the pastthree (3) years, been under administrative, civil or criminal audit,indictment or information by any Government Authority or, to the Knowledge ofthe Company, subject to any pending internal investigation by the Company withrespect to any alleged act or omission arising under or relating to anyGovernment Contract or Government Bid. (ii) During the past three (3)years, the Company has not conducted or initiated any internal investigation ormade a voluntary disclosure to any Government Authority with respect to anyalleged act or omission arising under or relating to a Government Contract orGovernment Bid.

###  

### (e)           Schedule 3.15(e) lists each draftand final audit report received by the Company during the past five (5)years with respect to the audit by any Government Authority of any GovernmentContract or of any indirect cost, other cost or cost accounting practice of theCompany. The Company has made available to the Buyer correct and completecopies of each such report.

###  

### (f)            There exist(i) no outstanding claims against the Company, either by any GovernmentAuthority or by any prime contractor, subcontractor, vendor or other Person,arising under or relating to any Government Contract or Government Bid,(ii) no material delivery or performance problems with respect to anyGovernment Contract, (iii) no claims or disputes between the Company andany Government Authority or between the Company and any prime contractor,subcontractor, vendor, or other Person, in each case arising under or relatingto any Government Contract or Government Bid, (iv) no circumstances inwhich the Company or any other party to a Government Contract has terminated,cancelled or waived any material term or condition of any Government Contract,(v) no material projected cost overruns on any of the Government Contractsand (vi) to the Knowledge of the Company, no circumstances in which theCompany has an interest in any pending or potential claim against anyGovernment Authority or any prime contractor, subcontractor or vendor arisingunder or relating to any Government Contract or Government Bid.

###  

### (g)           No money due to theCompany in an amount in excess of $50,000 pertaining to any Government Contracthas been withheld or set off nor has any claim been made to withhold or set offmoney and the Company is entitled to all progress payments received with 

 

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### respect thereto, and the Company has notreceived nor expects to receive any requests with respect to any GovernmentContract for equitable adjustment.

###  

### (h)           The Company hasneither been disqualified, debarred, or suspended from participation in theaward of contracts with the Government or any Government Authority (excludingfor this purpose ineligibility to bid on certain contracts due to generallyapplicable bidding requirements) nor, to the Knowledge of the Company, arethere facts or circumstances that would reasonably be expected to warrant theinstitution of disqualification, suspension, or debarment proceedings or thefinding of nonresponsibility or ineligibility on the part of the Company or anydirector, officer, or employee of the Company.

###  

### (i)            The Company’s costaccounting, estimating proposal and indirect rate proposal, confidential andclassified information access and maintenance, time-keeping and labor charging,wage classification and Fair Labor Standards Act exemption, and procurementsystems and the associated entries reflected in the Company’s financialstatements with respect to the Government Contracts and Government Bids are inmaterial compliance with all applicable Laws and Government Contractprovisions, including, without limitation, applicable cost principles andapplicable cost accounting standards.

###  

### (j)            Schedule 3.15(j) contains a completeand correct list of all government-owned property at the Company’s facilitiesprovided under, necessary to perform the obligations under, or for which theCompany is accountable under the Government Contracts. All suchgovernment-owned property is administered, maintained, identified, tracked,used, managed, accounted for and disposed of in accordance with agovernment-approved property management system and is in the conditiondescribed therein.

###  

### (k)           The Company hasdelivered or made available to the Buyer copies of all written negative pastperformance evaluations, comments or reviews by any Government Authority or anyother Person in connection with any Government Contract which copies werereceived by or made accessible to the Company in the last three (3) years.

###  

### (l)            Each employee,agent, consultant, or representative of the Company required to possess aGovernment security clearance (“Security Clearance”)to engage in the performance of any Government Contract currently possesses avalid Security Clearance, and, to the Knowledge of the Company, has not takenor failed to take any action which would reasonably be expected to result inthe termination of such valid Security Clearance, and has possessed suchSecurity Clearance since the date it was required.

###  

### (m)          Except as set forthon Schedule 3.15(m), none ofthe Company’s current Government Contracts between the Company and the U.S.Government or a Governmental Authority was based in part on the Company’sstatus as a small business (including without limitation, a small disadvantagedbusiness (“SDB”), a woman-owned smallbusiness (“WOSB”), or a Small BusinessAdministration (“SBA”) Section 8(a)program participant). The Company is not claiming eligibility as a smallbusiness, including eligibility as an SDB, a WOSB or Section 8(a) Programparticipant, with respect to any pending Government Bid. The Company has neverbeen the subject of an SBA certificate of competency, size determination, sizeprotest, size appeal or a review of eligibility for SDB or 8(a) status afterinitial entry into such program.

 

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### (n)           Except for thoseliens listed on Schedule 3.15(n),made in accordance with 31 U.S.C. § 3727 (as amended), otherwiseknown as the Assignment of Claims Act, and 41 U.S.C. § 15 (asamended), otherwise known as the Assignment of Contracts Act, the Company hasnot assigned or otherwise conveyed or transferred, or agreed to assign, convey,or transfer to any Person, any right, title or interest in or to any of theGovernment Contracts or Government Bids, or any account receivable relatingthereto, whether as a security interest or otherwise.

###  

### (o)           All technical data,computer software and computer software documentation (as those terms aredefined under the Federal Acquisition Regulation and its supplementalregulations) developed, delivered, or used under or in connection with theGovernment Contracts have been properly and sufficiently marked and protectedso that no more than the minimum rights or licenses required under applicableregulations and Government Contract terms, if any, have been provided. Alldisclosures, elections, and notices required by applicable regulations andcontract terms to protect ownership of inventions developed, conceived or firstactually reduced to practice under Government Contracts have been made andprovided.

###  

### (p)           Schedule 3.15(p) sets forth all ofthe Company’s contingent fee agreements relating to its Government sales andmarketing efforts. Except as set forth on Schedule 3.15(p),each such arrangement has been properly disclosed to the appropriate GovernmentAuthority.

###  

## 3.16         Environmental andSafety Matters. The Company has conducted its business in compliance in allmaterial respects with all applicable Environmental Laws. None of theproperties currently or, to the Knowledge of the Company, formerly owned oroperated by the Company contain any Hazardous Substance in amounts exceedingthe levels permitted by applicable Environmental Laws. The Company has notreceived any written notices, demand letters or requests for information fromany Government Authority or other Person, which has not heretofore beenresolved with such Government Authority or other Person, indicating that theCompany may be in violation of, or liable under, any Environmental Law. Thereare no civil, criminal or administrative actions, suits, demands, claims,hearings, investigations or proceedings pending or, to the Knowledge of theCompany, threatened against the Company relating to any violation, or allegedviolation, of any Environmental Law. No reports have been filed, or arerequired to be filed, by the Company concerning the Release of any HazardousSubstance or the threatened or actual violation of any Environmental Law whichhave not heretofore been resolved. No Hazardous Substance has been disposed of,Released or transported in violation of any applicable Environmental Law fromany properties owned by the Company. To the Knowledge of the Company, noremediation or investigation of Hazardous Substances is occurring at anyproperty operated or formerly operated by the Company. To the Knowledge of theCompany, the Company and any of its properties are not subject to anyliabilities or expenditures (fixed or contingent) relating to any suit,settlement, court order, administrative order, regulatory requirement, judgmentor claim asserted or arising under any Environmental Law.

##  

## 3.17         Insurance. Schedule 3.17 lists and brieflydescribes each insurance policy maintained by, on behalf of, for the benefit ofor at the expense of the Company and any claims 

 

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## made thereunder. The Company has providedcopies to the Buyer of all such insurance policies. All of such insurancepolicies are in full force and effect, and the Company is not nor has it everbeen in default with respect to its obligations under any such insurancepolicies and the Company has never been denied insurance coverage. The Companyis current in all of its premiums for its insurance policies. Neither theCompany nor any Seller knows of any threatened termination of, or materialpremium increase in excess of industry norms with respect to, any such policies.The Company has no self-insurance or co-insurance programs.

##  

## 3.18         IntellectualProperty.

##  

### (a)           The Company has soletitle to and ownership of, or possesses legally enforceable rights to use undervalid and subsisting written license agreements, all Company IntellectualProperty Rights, and the Company has not misappropriated, is not in conflictwith and is not infringing upon the Intellectual Property Rights of any Person.The Company is the sole and exclusive owner of the Company IntellectualProperty Rights free and clear of any Encumbrances or other rights or claims ofothers, except for Third Party Intellectual Property Rights. To the Knowledgeof the Company, none of the Company Intellectual Property Rights is beinginfringed by activities, products or services of, or is being misappropriatedby, any other Person.

###  

### (b)           Schedule 3.18(b)lists or describes (i) all registered and pending applications for registrationof Company Intellectual Property Rights; (ii) all written agreements pursuantto which the Company is permitted to use Third Party Intellectual PropertyRights excluding commercial-off-the shelf products that are used pursuant to ashrink wrap or other similar agreements; (iii) all material agreements or otherarrangements under which the Company has provided or agreed to provide or makeavailable object or source code to any Product to any Person, including,without limitation, to end-users (other than End-User Licenses); and (iv) eachMaterial Contract, other than a Material Contract entered into by the Companyin the ordinary course of business, pursuant to which the Company has grantedto any Person any rights with respect to any Company Intellectual PropertyRights. The Company has made available to the Buyer correct and complete copiesof all registrations and applications and all licenses, sublicenses andagreements (excluding shrink wrap license agreements) relating to the CompanyIntellectual Property Rights, each as amended to date. The Company is not aparty to any oral license, sublicense or other agreement which, if reduced towritten form, would be required to be listed in Schedule 3.18(b) under theterms of this Section 3.18(b).

###  

### (c)           Except as set forthon Schedule 3.18(c), withrespect to each item of Third Party Intellectual Property Rights, there are noroyalty, commission or other executory payment agreements, arrangements orunderstandings relating to such item.

###  

### (d)           The Company has madeavailable to the Buyer copies of the Company’s standard forms of end-userlicense agreements (“End-User Licenses”). Except as set forth on Schedule3.18(d), to the Knowledge of the Company, there are no material errors,omissions, issues or defects in the Products. Except as set forth on Schedule3.18(d), the Company has not made any material oral or writtenrepresentations or warranties with respect to its Products or services.

 

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### (e)           The Company has usedreasonable efforts to protect and enforce its trade secrets and otherwise tosafeguard and maintain the secrecy and confidentiality of all CompanyIntellectual Property Rights. Except as set forth on Schedule 3.18(e),all officers, employees and consultants of the Company who have had access toproprietary information or Company Intellectual Property Rights have executedand delivered to the Company agreements (copies of which have been provided tothe Buyer) to maintain the confidentiality of the Company Intellectual PropertyRights and to assign to the Company all Intellectual Property Rights arisingfrom the services performed for the Company by such persons. No current orprior officers, employees or consultants of the Company have claimed anyownership interest in any Company Intellectual Property Rights as a result ofhaving been involved in the development of such property while employed by orconsulting to the Company, or otherwise. To the Knowledge of the Company, therehas been no violation of any confidentiality or nondisclosure agreementrelating to the Company Intellectual Property Rights. Except as set forth on Schedule 3.18(e) and except for theThird Party Intellectual Property Rights, all Company Intellectual PropertyRights have been developed by employees of the Company, within the course andscope of their employment.

###  

### (f)            No Federal, state,local or other government funding or university or college facilities were usedin the development of the Products and such Products were not developedpursuant to any contract or other agreement with any Person except pursuant tocontracts or agreements listed in Schedule 3.18(f).

###  

## 3.19         Related PartyTransactions. Except as set forth on Schedule 3.19,the Company has not, since December 31, 2001, extended or maintainedcredit, arranged for the extension of credit, or renewed an extension ofcredit, in the form of a personal loan to or for any director or officer (orequivalent thereof) of the Company. No officer or director of the Company hasreceived since December 31, 2001, nor is entitled to receive, any materialcompensation from any Person that has engaged in or is engaging in any materialtransaction with the Company. The Company is not a party to or bound by anyContract or other commitment or transaction with any Related Party, nor do anyRelated Parties have any legal or beneficial interest in the assets or propertyowned or used by the Company, in any Contracts to which the Company is a party,or in any other Person with which the Company is or has been party to aContract. Except as set forth on Schedule 3.19,there are no outstanding claims, accounts payable or receivable, intercompanyloans, indebtedness, or other Liabilities, between the Company and any Selleror any Related Parties, and all such Liabilities have been, or will be prior toClosing, repaid in full.

##  

## 3.20         Brokers. Exceptas set forth on Schedule 3.20,no Person has or will have, as a result of the transactions contemplated bythis Agreement, any right, interest or claim against or upon the Buyer, theCompany or any Seller for any commission, fee or other compensation payable asa finder or broker because of any act or omission by the Company or any Seller.

##  

## 3.21         Bank Accounts;Powers of Attorney. Schedule 3.21sets forth a true, correct and complete list of the names and locations of allbanks and other financial institutions at which the Company maintains anaccount or safe deposit box, the names of all Persons authorized to withdraw therefromor have access thereto and the names of all Persons holding powers of attorneyfrom the Company as of the date of this Agreement.

 

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## 3.22         Disclosure. Tothe actual knowledge of the Company, no representation or warranty by theCompany or any Seller contained in this Agreement, and no representation,warranty or statement contained in any list, certificate, schedule or otherinstrument, document, agreement or writing furnished or to be furnished to theBuyer pursuant hereto, contains or will contain any untrue statement of a factor omits or will omit to state any material fact necessary to make anystatement herein or therein not misleading.

 

# **ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE SELLERS**

#  

As a material inducement to the Buyer to enter into this Agreement,each Seller, jointly and severally, represents and warrants to the Buyer, as ofthe date hereof and as of the Closing, as follows:

 

## 4.1           Authority forAgreement. Each Seller has full power, authority and legal right andcapacity to enter into and perform such Seller’s obligations under thisAgreement and each other document contemplated hereby to which such Seller isor will be a party and to consummate the transactions contemplated hereby andthereby. This Agreement and the other documents contemplated hereby to whichsuch Seller is a party have been duly executed and delivered by such Seller andare legal, valid and binding obligations of such Seller, enforceable againstsuch Seller in accordance with their respective terms, except as enforceabilitymay be limited by applicable bankruptcy, insolvency, reorganization, moratoriumor other similar laws affecting the enforcement of creditors’ rights ingeneral.

##  

## 4.2           No Violation toResult. Except as set forth on Schedule 4.2,the execution, delivery and performance by each Seller of this Agreement andthe other documents contemplated hereby and the consummation by each Seller ofthe transactions contemplated hereby and thereby, do not and will not, directlyor indirectly (with or without notice or lapse of time):  (i) violate, breach, conflict with,constitute a default under, accelerate or permit the acceleration of theperformance required by any (x) contract or Encumbrance to which suchSeller is a party or by which it is bound or (y) any Law, judgment,decree, order, rule, regulation, permit, license or other legal requirement ofany Government Authority applicable to such Seller; (ii) give anyGovernment Authority or other Person the right to challenge any of thetransactions contemplated by this Agreement; or (iii) result in thecreation or imposition of any Encumbrance, possibility of Encumbrance, orrestriction in favor of any Person upon any Shares or any of the properties orassets of the Company. Other than as set forth on Schedule 3.3 or 4.2, no notice to, filing with, orconsent of, any Person is necessary in connection with, nor is any “change ofcontrol” provision triggered by, the approval, adoption, execution, delivery orperformance by each Seller of this Agreement and the other documentscontemplated hereby nor the consummation by such Seller of the transactionscontemplated hereby or thereby. Each Seller has given all notices, made allfilings and obtained all consents set forth on Schedule 4.2or will have done so prior to Closing.

##  

## 4.3           Company Stock.The Sellers and the other Persons listed on Schedule 3.4(a) are the soleholders of the issued and outstanding shares of capital stock of the Companyand each Seller and other Person listed on Schedule 3.4(a) holds ofrecord and beneficially the number of 

 

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## shares of Company Common Stock as are setforth opposite such Seller’s or other Person’s name on Schedule 3.4(a), free and clear ofany Encumbrance (other than restrictions imposed by federal and statesecurities laws). All other information in Section 3.4(a) and on Schedule 3.4(a) with respect to suchSeller or other Person is true, correct and complete. Except as set forth inthis Agreement in Section 6.14 or on Schedule 3.4(d),there are no proxies, voting rights, shareholders agreements or otheragreements or understandings, to which any Seller is a party or by which anySeller is bound, with respect to the voting or transfer of the capital stock ofthe Company.

##  

## 4.4           Brokers. Exceptas set forth on Schedule 3.20,no Person has or will have, as a result of the transactions contemplated bythis Agreement, any right, interest or claim against or upon the Buyer, theCompany or any Seller for any commission, fee or other compensation payable asa finder or broker because of any act or omission by any Seller.

##  

## 4.5           Disclosure. Tothe actual knowledge of any Seller, no representation or warranty by any Sellercontained in this Agreement, and no representation, warranty or statementcontained in any list, certificate, schedule or other instrument, document,agreement or writing furnished or to be furnished to, or made with, the Buyerpursuant hereto, contains or will contain any untrue statement of a fact oromits or will omit to state any material fact necessary to make any statementherein or therein not misleading.

##  

# **ARTICLE VREPRESENTATIONS AND WARRANTIES OF BUYER**

#  

The Buyer represents and warrants to the Sellers, as of the date hereofand as of the Closing, as follows:

 

## 5.1           Organization.The Buyer is a corporation, duly organized, validly existing and in goodstanding under the laws of the State of Delaware and is qualified to dobusiness and in good standing in each jurisdiction where the character orlocation of its assets or properties owned, leased or operated by it or thenature of its activities makes such qualification necessary. The Buyer has fullcorporate power and authority necessary to own and operate its properties andto conduct its business as conducted.

##  

## 5.2           Authority forAgreement. The Buyer has full power, authority and legal right to enterinto and perform its obligations under this Agreement and the other documentscontemplated hereby to which the Buyer is or will be a party and to consummatethe transactions contemplated hereby and thereby. Upon due approval by theboard of directors of the Buyer, the execution, delivery and performance ofthis Agreement and the other documents contemplated hereby and the consummationof the transactions contemplated hereby and thereby shall be authorized. Otherthan due approval by the board of directors of the Buyer, no other corporateproceedings on the part of the Buyer are necessary to approve and authorize theexecution, delivery and performance of this Agreement and the other documentscontemplated hereby and the consummation of the transactions contemplatedhereby and thereby. Upon due approval by the board of directors of the Buyer,this Agreement and the other documents contemplated hereby to which Buyer is aparty shall be legal, valid and binding obligations of the Buyer, 

 

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## enforceable against the Buyer in accordancewith their respective terms, except as enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium or similar lawsaffecting the enforcement of creditors’ rights in general.

##  

## 5.3           No Violation toResult. Except as set forth on Schedule 5.3,the execution, delivery and performance by the Buyer of this Agreement and theother documents contemplated hereby and the consummation by the Buyer of thetransactions contemplated hereby and thereby, do not and will not, directly orindirectly (with or without notice or lapse of time):  (i) violate, breach, conflict with,constitute a default under, accelerate or permit the acceleration of theperformance required by, (x) any of the terms of the Certificate ofIncorporation or Bylaws of the Buyer or any resolution adopted by the board ofdirectors of the Buyer or stockholders of the Buyer, or (y) any Contractor Encumbrance to which the Buyer is a party or by which it is bound; or(z) any law, judgment, decree, order, rule, regulation, permit, license orother legal requirement of any Government Authority applicable to the Buyer;(ii) give any Government Authority or other Person the right to challengeany of the transactions contemplated by this Agreement; or (iii) result inthe creation or imposition of any Encumbrance, possibility of Encumbrance, orrestriction in favor of any Person, upon any of the properties or assets of theBuyer. Other than as set forth on Schedule 5.3or as otherwise expressly set forth herein, no notice to, filing with, orconsent of, any Person is necessary in connection with the execution, deliveryor performance by the Buyer of this Agreement and the other documentscontemplated hereby nor the consummation by the Buyer of the transactionscontemplated hereby or thereby.

##  

## 5.4           Litigation. Asof the date hereof, there is no litigation, suit, proceeding, action, claim,demand or investigation, at law or in equity or in any administrative orarbitration proceeding, pending or, to the Knowledge of the Buyer, threatenedagainst or affecting the Company before any court, agency, authority orarbitration tribunal that questions the validity of this Agreement or seeks toprohibit, enjoin or otherwise challenge the transactions contemplated hereby.

##  

## 5.5           Investment Intent.The Buyer is acquiring the capital stock of the Company for its own account,for investment purposes, and not with a view to resale or distribution of thecapital stock of the Company within the meaning of Section 2(11) of theSecurities Act of 1933, as amended.

##  

## 5.6           No AdditionalRepresentations. Buyer acknowledges that, except as expressly set forth inthis Agreement or in any certificate, schedule or other instrument or agreementdelivered or required to be delivered to the Buyer pursuant hereto (or anyother document delivered to the Buyer as a condition to the Closing pursuant toArticle VII hereof), none of the Sellers, the Company or any Person acting ontheir behalf makes, or shall be deemed to have made, any representation orwarranty, express or implied, as to the accuracy or completeness of any of theinformation or documents, financial or otherwise, regarding Sellers or theCompany that have been prepared and furnished in good faith and based onreasonable assumptions (including, without limitation, any estimates,projections, forecasts, budgets or other forward-looking information) and havebeen provided or otherwise made available to Buyer or any Person acting onbehalf of Buyer (including, without limitation, in any managementpresentations, information or offering memorandum, supplemental information or othermaterials or information with respect to any of the above) on or prior to thedate hereof.

 

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## 5.7                                 Brokers.No Person has or will have, as a result of the transactions contemplated bythis Agreement, any right, interest or claim against or upon any of the Sellersfor any commission, fee or other compensation payable as a finder or brokerbecause of any act or omission by the Buyer.

##  

## 5.8                                 Disclosure.To the actual knowledge of the Buyer, no representation or warranty by theBuyer contained in this Agreement, and no representation, warranty or statementcontained in any list, certificate, schedule or other instrument,document, agreement or writing furnished or to be furnished to the Sellerpursuant hereto, contains or will contain any untrue statement of a fact oromits or will omit to state any material fact necessary to make any statementherein or therein not misleading.

 

# **ARTICLE VIADDITIONAL AGREEMENTS**

#  

## 6.1                                 Accessto Properties and Records. The Company shall afford to the officers,employees, attorneys, accountants and other authorized representatives of theBuyer reasonable access during regular business hours to all of its assets,properties, books and records and employees in order to afford the Buyer asfull an opportunity of review, examination and investigation as it shallreasonably request of the affairs of the Company, and the Buyer and itsrepresentatives shall be permitted to make extracts from, or take copies of,such books, records (including the stock record and minute books) or otherdocumentation as may be reasonably necessary; providedthatno such access shall unreasonably interfere with the operations or business ofthe Company. The Company shall furnish or cause to be furnished to the Buyersuch reasonable financial and operating data and other information about theCompany, its business as presently conducted, as conducted in the past and asproposed to be conducted in the future, and properties and assets which any ofthe officers, employees, attorneys, accountants or other authorizedrepresentatives of the Buyer may reasonably request. No information orknowledge obtained in any investigation pursuant to this Section 6.1 shallaffect or be deemed to modify any representation or warranty of any Seller orthe Company contained herein or the conditions to the obligations of theparties to consummate the transactions contemplated by this Agreement or anyprovision hereof.

##  

## 6.2                                 InterimCovenants of the Company and the Sellers. From the date of this Agreementuntil the Closing Date, except to the extent expressly permitted by thisAgreement or otherwise consented to by an instrument in writing signed by theBuyer or as otherwise set forth on Schedule 6.2,the Company and the Sellers shall (i) use their reasonable best efforts tokeep intact the Company and its business, as presently conducted or asconducted in the past, and shall not take or permit to be taken or do or sufferto be done anything other than in the ordinary course of its business as thesame is presently being conducted; (ii) use their reasonable best effortsto keep available the services of the directors, officers, employees,independent contractors and agents of the Company and retain and maintain goodrelationships with its clients and maintain the Company’s assets and theFacilities in good condition; (iii) perform their obligations underthe Contracts and Government Contracts; (iv) use their reasonable bestefforts to maintain the goodwill and reputation associated with the Company;and (v) on or prior to the Closing Date, to the extent requested by theBuyer, take such actions as may be required to 

 

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## terminate, contingent on theClosing, any or all of the Benefit Plans and withdraw Company Employees fromparticipation in any Benefit Plans that it does not sponsor. Without limitingthe generality of the foregoing, the Company shall not (and the Sellers shallnot cause or permit the Company to), except as permitted in writing by theBuyer or as set forth on Schedule 6.2:

##  

### (a)                                  adoptor propose any change to the Company’s Articles of Incorporation, Bylaws orother organizational documents;

###  

### (b)                                 merge or consolidate with any other Person oracquire a material amount of stock or assets of any other Person or effect anybusiness combination, recapitalization or similar transaction;

###  

### (c)                                  purchase,sell, lease or dispose of or make any contract for the purchase, sale, lease ordisposition of or make subject to a security interest or any other Encumbrance(other than a Permitted Encumbrance), any of the Company’s properties orassets, other than in the ordinary and usual course of its business, consistentwith the representations and warranties contained herein, and not in breach ofany of the provisions of this Section 6.2, in each case for aconsideration at least equal to the fair value of such property or asset;

###  

### (d)                                 grantany salary increase to, or increase the draw of, any of the officers,directors, or, except in the ordinary and usual course of its business or asset forth on Schedule 6.2(d),employees or agents of the Company, or grant or amend any Restricted StockAwards, or enter into any new, or amend or alter any existing, employment,bonus, incentive compensation, deferred compensation, profit sharing,retirement, pension, stock option, group insurance, death benefit or otherfringe or other Benefit Plan, trust agreement or other similar or dissimilararrangement, or any employment or consulting agreement;

###  

### (e)                                  incurany bank indebtedness or borrowings, whether or not in the ordinary course ofits business, or issue any commercial paper;

###  

### (f)                                    enterinto any leases of real property;

###  

### (g)                                 enterinto any leases of equipment and machinery except in the ordinary course ofbusiness;

###  

### (h)                                 enterinto any Contract (i) which would be required to be listed on Schedule 3.12 had it been enteredinto prior to the date hereof (without the Buyer’s prior written consent whichshall not be unreasonably withheld) or (ii) in which any Affiliate of theCompany or any Seller has any beneficial interest;

###  

### (i)                                     amendor prematurely terminate, or waive any material right or remedy under, any Contract(without the Buyer’s prior written consent which shall not be unreasonablywithheld);

###  

### (j)                                     write-offas uncollectible, or establish any extraordinary reserve with respect to, anyaccount receivable or other receivable (without the Buyer’s prior writtenconsent which shall not be unreasonably withheld);

 

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### (k)                                  authorizefor issuance, issue, sell, deliver or agree or commit to issue, sell or deliver(whether through the issuance or granting of options, warrants, convertible orexchangeable securities, commitments, subscriptions, rights to purchase orotherwise) any shares of the Company’s capital stock or any other securities;

###  

### (l)                                     redeem,purchase or otherwise acquire, directly or indirectly, any shares of theCompany’s capital stock or debt securities or any option, warrant or otherright to purchase or acquire any such shares, or declare, accrue, set aside orpay any dividend or other distribution (whether in cash, stock or otherproperty) with respect to such capital stock;

###  

### (m)                               create,incur or assume any liability or indebtedness, except in the ordinary course ofbusiness consistent with past practices; or postpone or defer the creation,incurrence, or assumption of any liability or indebtedness that would otherwisebe created, incurred or assumed in the ordinary course of business absent theexecution of this Agreement;

###  

### (n)                                 payor apply any of the Company’s assets to the direct or indirect payment,discharge, satisfaction or reduction of any amount, directly or indirectly, toor for the benefit of any Seller or any Affiliate thereof;

###  

### (o)                                 changeany of its methods of accounting or accounting practices in any respect;

###  

### (p)                                 commenceor settle any legal proceeding, action, demand, or claim involving $10,000 ormore;

###  

### (q)                                 make,amend or revoke any election with respect to Taxes, amend any Tax Return, orsettle or compromise any Tax Liability;

###  

### (r)                                    takeany action, fail to take any action or enter into any agreement orunderstanding that causes the Company or any Seller to be in breach orviolation of any of the representations or warranties made in this Agreement orcommit a breach of or amend or terminate any Material Contract or any permit,license or other right; and

###  

### (s)                                  agree or commit to do any of the foregoing.

###  

## 6.3                                 Publicityand Disclosure. The Buyer and the Company shall agree with each other as tothe form and substance of any press release, publicity or othercommunication related to this Agreement or the transactions contemplated hereby.No Party shall make any disclosure of this Agreement or the existence, termsand conditions hereof (whether or not in response to an inquiry about theexistence or subject matter of this Agreement) to any Person unless previouslyapproved by the Buyer. Notwithstanding the foregoing, nothing contained hereinshall prohibit the Buyer from making any disclosure which the Buyer in goodfaith believes is required by, or advisable according to, applicable Laws,regulations or stock market rules, after using reasonable efforts to givenotice to the Seller Representative and an opportunity to comment on suchdisclosure.

 

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## 6.4                                 NoSolicitation; No Trading.

##  

### (a)                                  The Company and each Seller shall not, andshall not authorize or knowingly permit any director, trustee, officer,employee, consultant, agent or any representative thereof, including withoutlimitation, any broker disclosed in Article III or Article IV hereof(collectively, “Representatives”), to, during the period commencing on thedate of this Agreement and ending with the earlier to occur of the Closing orthe termination of this Agreement in accordance with its terms, directly orindirectly:  (a) solicit, accept,approve, encourage (including by way of furnishing information), initiate, orrespond to the submission of proposals or offers from any Person for, (b) participatein any discussions or negotiations pertaining to, or (c) furnish anyinformation to any Person, other than the Buyer, relating to, any acquisitionor purchase of all or a material amount of the assets of, or any equityinterest in, the Company or a merger, consolidation or business combinationinvolving the Company. The Company and each Seller shall discontinue any andall negotiations with any Person with whom any of them is currently engagedregarding any of the above. If the Company or any Seller receives anyunsolicited offer or proposal relating to any of the above, the Company or suchSeller shall promptly notify the Buyer thereof, including the identity of theparty making such offer or proposal and the specific terms of such offer orproposal, and provide the Buyer with a copy thereof.

###  

### (b)                                 The Company and each of the Sellersacknowledge and agree that each is aware (and that each of their respectiveRepresentatives is aware or, upon receipt of any material nonpublic informationof Buyer, will be advised) of the restrictions imposed by the United Statesfederal securities laws and other applicable foreign and domestic laws on aPerson possessing material nonpublic information about a public company. TheCompany and each of the Sellers hereby agree that while any of them are inpossession of such material nonpublic information, none of such Person orPersons shall purchase or sell any securities of the Buyer, communicate suchinformation to any third parties, take any other action in violation of suchlaws, or cause or encourage any third party to do any of the foregoing.

###  

## 6.5                                 Notificationof Certain Matters. The Company and the Sellers shall give prompt notice tothe Buyer of (a) the occurrence or non-occurrence of any event theoccurrence or non-occurrence of which would be likely to cause anyrepresentation or warranty of the Company or the Seller contained herein to beuntrue or inaccurate in any material respect at or prior to the Closing and (b) anymaterial failure of the Company or any Seller to comply with or satisfy anycovenant, condition or agreement to be complied with or satisfied by theCompany or any Seller hereunder. The delivery of any notice pursuant to this Section 6.5shall not, without the express written consent of the Buyer, be deemed to(x) modify the representations or warranties hereunder of the Company orany Seller, (y) modify the conditions set forth in Article VII or (z) limitor otherwise affect the remedies available hereunder to the Buyer.

##  

## 6.6                                 TaxMatters.

##  

### (a)                                  Post-Closing Tax Returns; Tax Indemnity. Buyer shall properly and accuratelyprepare (or cause to be prepared) and file (or cause to be filed) each TaxReturn required to be filed by the Company after the Closing Date for a taxableperiod beginning before the Closing Date, providedthat ifrequested by Seller Representative, Buyer shall make 

 

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### commercially reasonable effortsto engage Watkins, Meegan, Drury & Company, L.L.C. to prepare theincome Tax Returns of the Company for any taxable period ending on or beforethe Closing Date. To the extent any Tax shown as due on such Tax Return ispayable by any Seller (taking into account indemnification obligationshereunder), (i) such Tax Return shall be prepared in a manner consistentwith the prior practice of the Company, unless otherwise required by applicableTax Laws; (ii) such Tax Return shall be provided to the SellerRepresentative at least twenty (20) days prior to the due date for filingsuch return (or, if required to be filed within twenty (20) days of theClosing or within forty-five (45) days of the end of the taxable period towhich such Tax Return relates, as soon as possible following the Closing or theend of the taxable period, respectively); and (iii) the SellerRepresentative shall have the right to review and comment on such Tax Returnand Buyer and Seller Representative shall cooperate to resolve anydisagreements regarding reporting positions to be taken in such Tax Returns. Inthe case of a disagreement concerning a reporting position that is notcontrolled by clause (i) of Section 6.6(a)(i) above, SellerRepresentative may select the reporting position with respect to suchmatter if (w) there is substantial authority for such position within themeaning of Section 6662 of the Code, (x) no reserve for Tax liabilitywould be required to be established in the financial statements relating to theBuyer or the Company as a result of potential Tax liability that is not shownas due on such Tax Return, (y) such reporting position will not be binding onthe Buyer or the Company in the preparation of Tax Returns in any taxableperiod ending after the Closing Date and (z) adequate security (determinedwithin the sole reasonable discretion of Buyer) is provided to the Buyer tosecure the indemnification obligations of the Sellers under Section 9.1(a)(vii) forDamages which could result from the failure to sustain such Tax reportingposition. Pursuant to Section 9.1(a)(vii), promptly upon request by Buyer,the Sellers shall pay to the applicable Buyer Indemnified Party the amount ofany Taxes paid or required to be paid by the Company that are attributable toany taxable period beginning on or before the Closing Date; provided, however,that with respect to a taxable period ending after the Closing Date, suchindemnity shall be limited to the Taxes attributable to the portion of suchperiod ending on the Closing Date as described in Section 6.6(b). Foravoidance of doubt, all Taxes attributable to the Section 338(h)(10) Electionsshall be considered to be allocable to the taxable period or portion thereofending on the Closing Date, and subject to the foregoing indemnification by theSellers. To the extent permitted by applicable law, the Sellers shall includeany income, gain, loss, deduction or other Tax items for such periods on theirTax Returns in a manner consistent with the Schedule K-1s filed with theTax Returns of the Company filed pursuant to this Section 6.6. The Buyershall prepare (or cause to be prepared) and file (or cause to be filed) eachTax Return required to be filed by the Company after the Closing Date for ataxable period beginning after the Closing Date, and pay (or cause to be paid)all Taxes required to be paid by the Company with respect to any taxable periodbeginning after the Closing Date; providedthat the Buyer’sobligations to prepare and file such Tax Returns and pay such Taxes shall notprevent recovery of Damages to which any Indemnified Party is entitled under Section 9.1in connection therewith.

###  

### (b)                                 Allocationof Taxes. The Sellers, the Buyer and the Company shall, to the extentpermitted by applicable law, cause the taxable period of the Company to end asof the close of the Closing Date. The Buyer shall not cause the Company to takeany actions on the Closing Date after the Closing that are out of the ordinarycourse of business, except as contemplated by this Agreement. For purposes ofthis Agreement, Company Taxes incurred with respect to a taxable period thatincludes but does not end on the Closing Date, shall be 

 

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### allocated to the portion of theperiod ending on the Closing Date (i) except as provided in (ii) and (iii) below,to the extent feasible, on a specific identification basis, according to thedate of the event or transaction giving rise to the Tax, and (ii) exceptas provided in (iii) below, with respect to periodically assessed advalorem Taxes and Taxes not otherwise feasibly allocable to specifictransactions or events, in proportion to the number of days in such periodoccurring before the Closing Date compared to the total number of days in suchperiod, and (iii) in the case of any Tax based upon or related to incomeor receipts, in an amount equal to the Tax which would be payable if therelevant taxable period ended on the Closing Date (for the elimination ofdoubt, Taxes incurred by reason of the transactions contemplated by thisAgreement shall be allocated to the portion of the period ending on the ClosingDate). Any credits relating to a taxable period that begins before and endsafter the Closing Date shall be taken into account as though the relevant taxableperiod ended on the Closing Date. All determinations necessary to give effectto the foregoing allocations shall be made in a manner consistent with priorpractices of the Company.

###  

### (c)                                  TransferTaxes, Etc. Notwithstanding any provision to the contrary in thisAgreement, all Transfer Taxes incurred by Sellers in connection with thetransactions contemplated by this Agreement shall be paid by the Sellers whendue. The Sellers shall, at their own expense, file all necessary Tax Returnsand other documentation with respect to all such Transfer Taxes. If required byapplicable law, the Buyer shall, and shall cause its Affiliates to, join in theexecution of any such Tax Returns and other documentation.

###  

### (d)                                 TaxElections; Amended Returns. Exceptin connection with an audit resolved pursuant to Section 6.6(h) ofthis Agreement, no Party may amend a Tax Return of the Company, or file oramend any Tax election of the Company, in each case, with respect to a taxableperiod beginning before the Closing Date without the consent of the otherParties, which consent shall not be unreasonably withheld or delayed.

###  

### (e)                                  Cooperation,Access to Information, and Record Retention. The Sellers, the Company andthe Buyer shall cooperate, and shall cause their representatives to cooperate,as and to the extent reasonably requested by any other Party hereto inconnection the preparation and filing of Tax Returns as provided herein and anyaudit, litigation or other proceeding with respect to Taxes. Such cooperationshall include the provision of records and information which are reasonablyrelevant to any such Tax Return, audit, litigation or other proceeding andmaking employees available on a mutually convenient basis to provide additionalinformation and explanation of any material provided hereunder. The Sellers,the Buyer and the Company shall (i) retain all books and records withrespect to Company Taxes (including Tax Returns) relating to any taxable periodbeginning before the Closing Date until the expiration of the statute oflimitations for assessment of Taxes for such respective taxable period and (ii) givethe other Parties hereto reasonable written notice prior to transferring,destroying or discarding any such books and records and, if another Party sorequests, allow the other Party to take possession of such books and records.

###  

### (f)                                    TaxCertificates, Etc. The Parties further agree, upon request, to usereasonable efforts to obtain any certificate or other document from anyGovernment Authority or any other Person as may be necessary to mitigate,reduce or eliminate any Tax that could be imposed.

 

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### (g)                                 Terminationof Tax Sharing Agreements. All Tax sharing agreements or similar agreementswith respect to or involving the Company (other than any such agreement createdby the execution of this Agreement) shall be terminated as of the Closing Dateand, after the Closing Date, the Company shall not be bound thereby or have anyLiability thereunder.

###  

### (h)                                 TaxProceedings. Any Party who receives any notice of a pending or threatenedTax audit, assessment, or adjustment against or with respect to the Companywhich may give rise to Liability of another Party hereto (includingpursuant to the indemnification provisions of this Agreement), shall promptlynotify such other Party within ten (10) business days of the receiptof such notice. The Parties each agree to consult with and to keep the otherParties hereto informed on a regular basis regarding the status of any Taxaudit or proceeding to the extent that such audit or proceeding could affect aLiability of such other Parties which could reasonably be a basis for a claimpursuant to the indemnity obligations hereunder. The Seller Representativeshall have the right to represent the Company’s interests in any Tax audit oradministrative or judicial proceeding and to employ counsel of its choice, butreasonably satisfactory to Buyer, at the Sellers’ expense, but only to theextent such audit or other proceeding pertains to Tax periods ending on orbefore the Closing Date. Buyer shall have the right to participate in suchproceeding at its own expense, and shall be entitled to control the dispositionof any issue involved in such proceeding which does not affect a potentialLiability of the Sellers (including any indemnity obligation under thisAgreement). Both the Buyer and the Sellers (through the Seller Representative)shall be entitled to represent their respective interests in light of theirresponsibilities (including indemnity obligations) for the related Taxes, attheir own expense, in any audit or administrative or judicial proceedingsinvolving a Tax period that includes but does not end on the Closing Date. Notwithstandingthe foregoing provisions of this Section 6.6, the Seller Representativeshall not, without the Buyer’s consent, agree to any settlement with respect toany Tax if such settlement could adversely affect any Tax Liability of theBuyer, any Affiliate of the Buyer, or (with respect to any taxable period (orportion thereof) beginning after the Closing Date) the Company. Except asprovided in this Section 6.6 the provisions of Article IX includingthe provisions therein addressing settlement authority, shall govern the mannerin which Tax audit or administrative or judicial proceedings are resolved.

###  

### (i)                                     Section 338(h)(10) Elections.The Sellers will join with the Buyer in making an election under Section 338(h)(10) ofthe Code (and any corresponding elections under state or local Tax law)(collectively, the “Section 338(h)(10) Elections”)with respect to the Stock Purchase under this Agreement. The Buyer shall beresponsible for the timely and accurate preparation and filing of all forms anddocuments required in connection with the Section 338(h)(10) Electionsand shall provide the Sellers with properly completed copies of Form 8023(and any corresponding state or local Tax forms) prior to the Closing Date. TheSellers agree to execute and deliver to the Buyer on the Closing Date any suchforms that are or have been provided by the Buyer for execution and to promptlyexecute such other forms as may be reasonably requested by the Buyerthereafter in connection with making or perfecting the Section 338(h)(10) Elections.The Parties shall cooperate fully with each other and make available to eachother such Tax data and other information as may be reasonably required bythe Buyer or the Sellers in order to timely file the Section 338(h)(10) Elections.The Company and Sellers shall not revoke the Company’s election to be taxed asan S corporation within the meaning of Sections 1361 and 1362 of the Code. TheCompany and the Sellers shall not take or 

 

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### allow any action other than theStock Purchase pursuant to this Agreement that would result in the terminationof the Company’s status as a validly electing S corporation within the meaningof Sections 1361 and 1362 of the Code.

###  

### (j)                                     Purchase Price Allocation. The Parties agree that the consideration tobe paid pursuant to Article I of this Agreement and other items properlyincludible in the deemed sales price of the assets of the Company pursuant tothe Section 338(h)(10) Elections shall be allocated, for Taxpurposes, among the Company’s assets in a manner consistent with the provisionsof Section 338 and Section 1060 of the Code and all regulationspromulgated thereunder. The Buyer shall prepare IRS Form 8883 forinclusion with the federal income Tax Return of the Company ending on theClosing Date and any similar allocation required under state, local, or foreignlaw (collectively, “IRS Form 8883”). The Buyer shall permit the SellerRepresentative to review and comment on IRS Form 8883. The Company, theSellers and the Buyer agree to report this transaction for federal Tax purposesas a valid election under Section 338(h)(10) of the Code and inaccordance with IRS Form 8883 as ultimately filed, and shall not take anyposition or action inconsistent therewith upon examination of any Tax Return,in any refund claim, in any litigation, investigation or otherwise; provided,however, that if, in any audit of any Tax Return of the Sellers, theCompany or the Buyer by a Government Authority, the fair market values arefinally determined to be different from IRS Form 8883, as adjusted, theBuyer, the Company and the Sellers may (but shall not be obligated to)take any position or action consistent with the fair market values as finallydetermined in such audit. Schedule 6.6(j) sets forth the fairmarket value of the assets of the Company that the Parties agree will be usedto allocate such consideration.

###  

### (k)                                  Characterizationof Indemnity Payments. The Buyer and the Sellers agree to treat any paymentmade by the Sellers to the Buyer hereunder as an adjustment to the PurchasePrice.

###  

## 6.7                                 LitigationSupport. In the event and for so long as any Party actively is contestingor defending against any charge, complaint, action, suit, audit, proceeding,hearing, investigation, claim, or demand in connection with (i) anytransaction contemplated under this Agreement or (ii) any fact, situation,circumstance, status, condition, activity, practice, plan, occurrence, event,incident, action, failure to act, or transaction on or prior to the ClosingDate involving the Company, each of the other Parties will cooperate with suchParty or its counsel in the contest or defense, make available its personnel,and provide such testimony and access to its books and records as shall benecessary in connection with the contest or defense, all at the sole cost andexpense of the contesting or defending Party (unless the contesting ordefending Party is entitled to indemnification therefor under Article IXbelow).

##  

## 6.8                                 ReasonableEfforts. Each Party agrees to use all reasonable efforts promptly to take,or cause to be taken, all actions and do or cause to be done all thingsnecessary, proper or advisable under applicable Laws to (a) obtain allconsents, approvals or actions of, make all filings with and give all noticesto Government Authorities or any other Person required to consummate the StockPurchase and the other matters contemplated hereby, (b) provide such otherinformation and communications to such Government Authorities or other publicor private Persons as the other Party or such Government Authorities or otherpublic or private Persons may reasonably request in connection therewith,and (c) execute such further documents, deeds, 

 

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## bills of sale, assignments andassurances and take such further actions as may reasonably be required toconsummate and make effective the transactions contemplated by this Agreementincluding the satisfaction of all conditions hereto. If applicable, the Partiesshall file all notices and other information and documents required under theHart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, as promptly aspracticable after the date hereof.

##  

## 6.9                                 Paymentof Obligations. Prior to the Closing, each Seller and each of the officers,directors, employees and Affiliates of the Company shall repay in full, inaccordance with their terms, all debts and other obligations, if any, owed tothe Company (except that, with respect to the promissory note evidencing Cindy A.Andre’s obligation to reimburse the Company for the withholding Tax related tothe grant to her of a Restricted Stock Award, Cindy A. Andre shall repay theamounts due under such promissory note in full on the first business dayfollowing the Closing by directing Buyer to pay to the Company, out of theFirst Per Share Post-Closing Payments to be paid to her, an amount equal to theamount payable to the Company under such promissory note).

##  

## 6.10                           CompanyEmployees. Each of the Company and the Sellers agrees that promptly afterthe date hereof it shall allow the Buyer to make a presentation to the CompanyEmployees and to interview such employees for continued employment with theCompany after the Closing. Each of the Company and the Sellers will use allreasonable efforts to cause such Company’s employees to make available theiremployment services to the Company after the Closing.

##  

## 6.11                           FurtherAssurances. Each Seller and the Company will, either prior to or after theClosing, execute such further documents, deeds, bills of sale, assignments andassurances and take such further actions as may reasonably be required byBuyer to consummate the Stock Purchase, to vest the Buyer with full title toall capital stock of the Company and all assets, properties, privileges,rights, approvals, immunities and franchises of the Company and its business orto effect the other purposes of this Agreement.

##  

## 6.12                           BenefitPlans. Upon Buyer’s request, the Company shall take action prior to theClosing Date to terminate the Benefit Plans that it sponsors and to withdrawCompany Employees from participation in any Benefit Plans that it does notsponsor. The Buyer expects to review the total compensation and benefits thatthe Company Employees have received as employees of the Company before theClosing. From and after the Closing Date, the Buyer will make available tocontinuing Company Employees a package of compensation and employee benefitsthat in the aggregate are substantially similar to that made available to theBuyer’s own similarly-situated employees; provided, however, thatthe Buyer shall in no event be obligated to provide any particular benefit tosuch Company Employees and shall retain full discretion to modify, amend, orterminate any of the benefits it makes available. Nothing in this Agreementshall be construed to create a right in any Company Employee to employment withthe Company, the Buyer or any of its subsidiaries, and, subject to any writtenagreement between a Company Employee and the Company, the Buyer or any of itssubsidiaries, the employment of each Company Employee who continues employmentwith the Company, the Buyer or any of its subsidiaries after the Closing Dateshall be “at will” employment.

##  

## 6.13                           SellerWaiver and Termination. For the benefit of the Buyer, each of the Sellersand the Company hereby waive (and none shall be of any further force or effect)all provisions of 

 

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## Section 13.1-651 of theVSCA with respect to this Agreement and the transactions contemplated hereby.

##  

## 6.14                           DisclosureSchedules.

##  

## (a)                            TheDisclosure Schedules shall be arranged by the Sellers in paragraphscorresponding to the subsections contained herein. Nothing in the DisclosureSchedules shall be deemed to disclose an exception to any representation orwarranty made in Article III unless it describes the relevant facts insuch reasonable detail as the context requires. A fact or matter disclosed inthe Disclosure Schedules with respect to one section or subsection shallbe deemed to be disclosed with respect to each other section or subsection wheresuch disclosure is appropriate to the extent it is clear from reading the faceof such Disclosure Schedule (and not any other agreement or other documentreferred to therein or attached thereto) that such disclosure is applicable tosuch other sections or subsections of the Disclosure Schedules and providedthat an agreement or other document which is merely listed or identified in anysection or subsection of the Disclosure Schedules shall not be deemedto be disclosure with respect to any other section or subsection ofthe Disclosure Schedules.

##  

## (b)                           To theextent that any matter arises or comes into existence between the date hereofand the Closing that is required to be described by the Company or Sellers inthe Seller Disclosure Schedules in order for such schedules to be true, correctand complete in all material respects at and as of the Closing, it isunderstood and agreed that, from time to time prior to the Closing, the SellerRepresentative may propose to amend, supplement or revise the SellerDisclosure Schedules with respect to any such matter. If the Buyer reasonablydetermines that an amendment, supplement or revision proposed by the SellerRepresentative satisfies the terms and conditions of this Section 6.14,such amendment, supplement or revision shall be effective for purposes of theindemnification obligations set forth in Section 9.1(a)(i) withrespect to representations made at the Closing, but shall in no way beeffective for purposes of amending, supplementing or revising anyrepresentation made as of the date hereof, or otherwise curing anymisrepresentation made as of the date hereof, and shall be disregarded forpurposes of Section 7.1 and Section 11.1(a)(iii).

##  

## (c)                            To theextent that any matter arises or comes into existence between the date hereofand the Closing that is required to be described by the Buyer in the BuyerDisclosure Schedules in order for such schedules to be true, correct andcomplete in all material respects at and as of the Closing, it is understood andagreed that, from time to time prior to the Closing, the Buyer may proposeto amend, supplement or revise the Buyer Disclosure Schedules with respect toany such matter. If the Seller Representative reasonably determines that anamendment, supplement or revision proposed by the Buyer satisfies the terms andconditions of this Section 6.14, such amendment, supplement or revisionshall be effective for purposes of the indemnification obligations set forth inSection 9.1(b)(i) with respect to representations made at the Closing,but shall in no way be effective for purposes of amending, supplementing orrevising any representation made as of the date hereof, or otherwise curing anymisrepresentation made as of the date hereof, and shall be disregarded for purposesof Section 8.1 and Section 11.1(a)(i).

##  

## 6.15                           SelectedAR. If the Buyer actually collects any portion of the Selected AR after theClosing and on or before the first (1st) anniversary of the Closing Date, Buyershall be 

 

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## obligated to pay the Per Share SelectedAR Amount to each Seller, with respect to each of his or her shares of CompanyCommon Stock issued and outstanding immediately prior to the Closing. Suchpayment, if any, shall be made in cash by the delivery of immediately availablefunds on a quarterly basis ending on the first (1st) anniversary of the ClosingDate.

 

# **ARTICLE VIICONDITIONS TO THE OBLIGATIONS OF THE BUYER**

#  

Allobligations of the Buyer under this Agreement are subject to the fulfillmentand satisfaction, prior to or at the time at which the Closing Date isscheduled to occur, of each of the following conditions precedent, any one ormore of which may be waived, in part or in full, by the Buyer inwriting.

 

## 7.1                                 Representationsand Warranties True at the Closing Date. All of the representations andwarranties of the Company and each of the Sellers contained in this Agreementshall be true, correct and complete in all material respects (except that allrepresentations and warranties in Section 3.4 and all representations andwarranties qualified by the words “material” or “in all material respects” orsimilar words shall be true, correct and complete in all respects), in eachcase when made on the date hereof and on and as of the Closing Date with thesame effect as though such representations and warranties had been made on andas of the Closing Date (provided that those representations and warranties thatare specifically made as of a particular calendar date or as of the date hereofshall be true, correct and complete in all material respects as of such date,except that any such representations and warranties in Section 3.4 and anysuch representations and warranties qualified by the words “material” or “inall material respects” or similar words shall be true, correct and complete inall respects as of such date) and each Seller and the Company shall haveexecuted and delivered to Buyer a certificate as of the Closing as to theforegoing.

##  

## 7.2                                 Performance.All of the terms, covenants, agreements and conditions of this Agreement to becomplied with, performed or satisfied by the Company or any Seller on or beforethe Closing Date shall have been duly complied with, performed or satisfied onor before such date and each Seller and the Company shall have executed anddelivered to Buyer a certificate as of the Closing as to the foregoing.

##  

## 7.3                                 NoLitigation. No temporary restraining order, preliminary or permanentinjunction or other order or judgment issued by any court of competent jurisdictionor other legal or regulatory restraint or provision challenging thetransactions contemplated hereunder or limiting or restricting the conduct oroperation of the Company or any Seller following the Closing shall be ineffect, nor shall any proceeding brought by an administrative agency orcommission or other Government Authority or other instrumentality, domestic orforeign, seeking any of the foregoing be pending. There shall be no action,suit, claim or proceeding of any nature pending or threatened, against theBuyer, the Company or any Seller, their respective properties or any of theirrespective officers or directors, that could have a Material Adverse Effect onthe Company or the Buyer.

 

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## 7.4                                 NoMaterial Adverse Change. There shall have been (i) no effect, event orchange which, individually or in the aggregate, has had or could reasonably beexpected to have a Material Adverse Effect on the Company and (ii) noresignations or terminations of, or indications of an intention or plan toresign, employment by an executive officer or any material number of managementlevel or senior technical employees of the Company.

##  

## 7.5                                 Governmental,Regulatory and Other Consents and Approvals. All consents, approvals,assignments and actions of, filings with and notices to any GovernmentAuthority or any other public or private Persons required of any Seller, theCompany or the Buyer to consummate the Closing and the other matterscontemplated hereby shall have been obtained, including, without limitation,the expiration or termination without the objection of any of the relevantfederal authorities of all applicable waiting periods (and any extensionsthereof) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, asamended, as well as those listed or required to be listed on Schedule 3.3 or Schedule 4.2. The board of directorsof the Buyer shall have adopted and approved this Agreement and thetransactions contemplated hereby.

##  

## 7.6                                 CreditAgreement Consent. The Buyer shall have received the Credit AgreementConsent; provided, however, the condition in this Section 7.6shall expire on the fifteenth (15th) day after the date hereof.

##  

## 7.7                                 RestrictedStock Awards, Company Stock Options and Company Warrants. The RestrictedStock Plan and each Restricted Stock Award shall have been terminated and eachshare of Company Common Stock subject to any Restricted Stock Award (other thanshares of Company Common Stock subject to the Restricted Stock Award to Cindy A.Andre) shall have been repurchased by the Company pursuant to a RestrictedStock Repurchase Agreement. Each Company Stock Option, if any, and each CompanyWarrant, if any, shall have been exercised or terminated. The Company shallhave delivered to the Buyer executed copies of all agreements, documents andcertificates related to the foregoing.

##  

## 7.8                                 ClosingDeliveries of the Sellers and the Company. At the Closing, the Company, theSeller Representative and each of the Sellers, as appropriate, shall have performedand delivered the following, subject to waiver, in part or in full, by theBuyer:

##  

### (a)                                  theSellers shall have delivered the certificate(s) representing all issued andoutstanding shares of capital stock of the Company, all of which shall be freeand clear of any Encumbrance, accompanied by stock powers duly endorsed inblank or accompanied by duly executed instruments of transfer;

###  

### (b)                                 theCompany and the Sellers shall have repaid or satisfied all of the Indebtednessfor Borrowed Money and all other Liabilities of the Company set forth orrequired to be set forth on the Estimated Closing Balance Sheet; and theCompany shall have delivered full releases of record, to the reasonablesatisfaction of the Buyer, of all Encumbrances securing any such Liabilities ofthe Company which have been paid in full prior to or at the Closing, and shalldeliver termination statements relating to all financing statements coveringsuch Liabilities, if any;

 

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### (c)                                  eachSeller shall have executed and delivered a Subordination Agreement in the form attachedhereto as Exhibit A;

###  

### (d)                                 eachof Donald E. Reed, Leslie W. Butler and Cindy A. Andre shall have executed anddelivered to the Company a Consulting Agreement with the Company in the formsattached hereto as Exhibits C-1, C-2 andC-3, respectively;

###  

### (e)                                  eachof the Sellers and all of the officers, directors, employees and Affiliates ofthe Company shall have delivered to Buyer evidence of repayment in full inaccordance with their terms all debts and other obligations, if any, owed byany of them to the Company (except for Cindy A. Andre solely with respect tothe promissory note described in Section 6.9);

###  

### (f)                                    eachdirector and officer of the Company shall have delivered to the Company his orher respective resignation as a director and officer of the Company, whichshall be effective as of the Closing;

###  

### (g)                                 theCompany and the Sellers shall have delivered to the Buyer the original stockrecords of the Company, books of account, minute books, minutes and otherrecords of all meetings of the Company, the corporate seal of the Company andsuch other documents, records, keys and other items as shall be necessary forthe operation of the business of the Company;

###  

### (h)                                 theCompany shall have executed and delivered to the Buyer a certificate of itssecretary, setting forth the organizational documents of the Company and theresolutions of its board of directors and shareholders (or other evidencereasonably satisfactory to the Buyer) authorizing the execution, delivery andperformance of this Agreement and the other documents contemplated hereby andthe consummation of the transactions contemplated hereby and thereby, andcertifying that such organizational documents and resolutions have not beenamended or rescinded and are in full force and effect;

###  

### (i)                                     theCompany shall have delivered to the Buyer a good standing certificate from thejurisdiction of its incorporation and from each state in which it is qualifiedto do business, and its certified charter documents, each dated as of a datereasonably close to the date hereof;

###  

### (j)                                     theCompany shall have delivered to the Buyer all consents, licenses, permits andapprovals as set forth on Schedule 3.3and each Seller shall have delivered such consents as set forth on Schedule 4.2, each as required inconnection with the execution, delivery, performance, validity andenforceability of this Agreement and the continued conduct of the business ofthe Company as conducted or proposed to be conducted as of the Closing;

###  

### (k)                                  anycreditor of the Company shall have delivered to the Company full writtenreleases, to the reasonable satisfaction of Buyer, of all Liabilities andEncumbrances arising from, relating to or securing any indebtedness for borrowedmoney of the Company, including without limitation duly executed UCC filings,releases of any assignment of payments with respect to any Government Contractand an agreement to forward and otherwise cooperate with respect to anypayments received after the Closing Date;

 

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### (l)                                     theSellers and the Company shall have delivered an opinion of counsel in the form attachedhereto as Exhibit D; and

###  

### (m)                               eachSeller shall have executed and delivered a FIRPTA Certification, which (i) statesthat such Seller is not a foreign person, (ii) sets forth such Seller’sname, identifying number and address, and (iii) is signed by such Sellerunder penalties of perjury, meeting the requirement of Treasury Regulation Section 1.1445-2(b)(2).

###  

# **ARTICLE VIIICONDITIONS TO THE COMPANY’S AND THE SELLERS’ OBLIGATIONS**

#  

Allobligations of the Company and the Sellers under this Agreement are subject tothe fulfillment and satisfaction, prior to or at the time at which the ClosingDate is scheduled to occur, of each of the following conditions precedent, anyone or more of which may be waived, in part or in full, by the SellerRepresentative in writing.

 

## 8.1                                 Representationsand Warranties True at the Closing Date. All of the representations andwarranties of the Buyer contained in this Agreement shall be true, correct andcomplete in all material respects (except that all representations andwarranties qualified by the words “material” or “in all material respects” orsimilar words shall be true, correct and complete in all respects), in eachcase when made on the date hereof and on and as of the Closing Date with thesame effect as though such representations and warranties had been made on andas of the Closing Date (provided that those representations and warranties thatare specifically made as of a particular calendar date or as of the date hereofshall be true, correct and complete in all material respects as of such date,except that any such representations and warranties qualified by the words “material”or “in all material respects” or similar words shall be true, correct andcomplete in all respects as of such date) and the Buyer shall have executed anddelivered to each Seller a certificate as of the Closing as to the foregoing.

##  

## 8.2                                 Performance.All of the terms, covenants, agreements and conditions of this Agreement to becomplied with, performed or satisfied by the Buyer on or before the ClosingDate shall have been duly complied with, performed or satisfied on or beforesuch date and Buyer shall have executed and delivered to each Seller acertificate as of the Closing as to the foregoing.

##  

## 8.3                                 NoLitigation. No temporary restraining order, preliminary or permanentinjunction or other order issued by any court of competent jurisdiction orother legal or regulatory restraint or provision challenging the transactionscontemplated hereunder shall be in effect, nor shall any proceeding brought byan administrative agency or commission or other Government Authority orinstrumentality, domestic or foreign, seeking any of the foregoing be pending.

##  

## 8.4                                 ClosingDeliveries of the Buyer. At the Closing, the Buyer shall have performed anddelivered the following, subject to waiver, in part or in full, by theSeller Representative:

##  

### (a)                                  theBuyer shall have executed and delivered a certificate of its secretary, settingforth the organizational documents of the Buyer and the resolutions of itsboard of 

 

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### directors (or other evidencereasonably satisfactory to the Seller Representative) authorizing the executionand delivery of this Agreement and the documents contemplated hereby and theconsummation of the transactions contemplated hereby and thereby, andcertifying that such organizational documents and resolutions have not beenamended or rescinded and are in full force and effect; and

###  

### (b)                                 theBuyer shall have executed and delivered to each of Donald E. Reed, Leslie W.Butler and Cindy A. Andre a Consulting Agreement in the forms attached heretoas Exhibit C-1, C-2 and C-3,respectively.

###  

# **ARTICLE IXINDEMNITY**

#  

## 9.1                                 GeneralIndemnification.

##  

### (a)                                  EachSeller, jointly and severally, covenants and agrees to indemnify, defend,protect and hold harmless the Buyer Indemnified Parties from, against and inrespect of all Damages suffered, sustained, incurred or paid by any BuyerIndemnified Party, in each case in connection with, resulting from or arisingout of, directly or indirectly (whether or not involving a third party claim):  (i) the inaccuracy or breach of anyrepresentation or warranty made by the Company or any Seller set forth in thisAgreement or in any other agreement or any certificate delivered or provided inconnection with or related to the consummation of the transactions contemplatedby this Agreement; (ii) the nonfulfillment of any covenant or agreement onthe part of the Company or any Seller set forth in this Agreement or inany agreement or certificate executed and delivered by the Company or anySeller pursuant to this Agreement or in the transactions contemplated hereby; (iii) anyLiabilities which arise out of, relate to or are associated with the RestrictedStock Plan, any Restricted Stock Award or any repurchase under any RestrictedStock Repurchase Agreement; (iv) any Liability with respect to any matteror matters described on Appendix C; (v) the Benefit Plans and anyand all benefits accrued under the Benefit Plans as of the Closing Date and anyand all other Liabilities arising out of, or in connection with the form oroperation of the Benefit Plans on or prior to the Closing Date; (vi) anyand all Liabilities resulting from any litigation, suit, proceeding, action,claim, demand or investigation pending or threatened against the Company whicharises out of the operations of the Company on or prior to the Closing Dateincluding, without limitation, any such matter listed on Schedule 3.13; and (vii) anyand all Liabilities for Taxes (x) in connection with or arising out of theCompany’s activities or business on or prior to the Closing Date (determined,with respect to Tax periods that begin before and end after the Closing Date,in accordance with the allocation provisions of Section 6.6(b)) in excessof the amount of such Taxes reflected as a current liability in the computationof Closing Working Capital, or (y) owing by any Person other than theCompany for which the Company may be liable, including, without limitation(A) under Treasury Regulation Section 1.1502-6 (or any similarprovision of state, local, or foreign law), (B) as a transferee orsuccessor, or (C) by contract.

###  

### (b)                                 TheBuyer covenants and agrees to indemnify, defend, protect and hold harmless theSeller Indemnified Parties from, against and in respect of all Damagessuffered, sustained, incurred or paid by any Seller Indemnified Party, in eachcase in connection with, 

 

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### resulting from or arising outof, directly or indirectly (whether or not involving a third party claim):  (i) the inaccuracy or breach of anyrepresentation or warranty made by the Buyer set forth in this Agreement or inany other agreement or any certificate delivered or provided in connection withor related to the consummation of the transactions contemplated by thisAgreement; and (ii) the nonfulfillment of any covenant or agreement on thepart of the Buyer set forth in this Agreement or in any agreement orcertificate executed and delivered by the Buyer pursuant to this Agreement orin the transactions contemplated hereby.

###  

## 9.2                                 IndemnificationProcedures. In the event of the assertion or commencement by any Person ofany claim or legal proceeding (whether against Buyer or against any otherPerson) with respect to which any Indemnified Party may be entitled toindemnification pursuant to this Article  IX, the Indemnified Party shallhave the right, at its election, to proceed with the defense (includingsettlement or compromise) of such claim or legal proceeding on its own; provided,however, that if the Indemnified Party settles or compromises any suchclaim or legal proceeding without the consent of the Indemnifying Party, suchsettlement or compromise shall not be conclusive evidence of the amount ofDamages incurred by the Indemnified Party in connection with such claim orlegal proceeding (it being understood that if the Indemnified Party requeststhat the Indemnifying Party consent to a settlement or compromise, theIndemnifying Party shall act reasonably in determining whether to provide suchconsent). The Indemnified Party shall give the Indemnifying Party prompt noticeafter it becomes aware of the commencement of any such claim or legalproceeding against the Indemnified Party; provided, however, anyfailure on the part of Indemnified Party to so notify the IndemnifyingParty shall not limit any of the obligations of the Indemnifying Party (or theSellers), or any of the rights of any Indemnified Party, under this Article IX (except to the extent such failure materially adversely prejudices thedefense of such claim or legal proceeding). If the Indemnified Party does notelect to proceed with the defense (including settlement or compromise) of anysuch claim or legal proceeding, the Indemnifying Party may proceed withthe defense of such claim or legal proceeding with counsel reasonablysatisfactory to the Indemnified Party; provided, however, thatthe Indemnifying Party may not settle or compromise any such claim orlegal proceeding without the prior written consent of the Indemnified Party(which consent may not be unreasonably withheld). No Buyer IndemnifiedParty (other than Buyer or any successor thereto or assign thereof) and noSeller Indemnified Party (other than the Seller Representative or any successorthereto or assign thereof) shall be permitted to assert any indemnification claimor exercise any other remedy under this Agreement unless, in the case of theBuyer Indemnified Parties, Buyer (or any successor thereto or assign thereof)or, in the case of the Seller Indemnified Parties, the Seller Representative(or successor thereto or assign thereof), shall have consented to the assertionof such indemnification claim or the exercise of such other remedy. Nothingherein shall be deemed to prevent the Indemnified Party from making a claim,and an Indemnified Party may make a claim hereunder, for potential orcontingent claims or demands; providedthat the notice of suchclaim sets forth the specific basis for any such potential or contingent claimor demand to the extent then reasonably feasible and the Indemnified Party hasreasonable grounds to believe that such a claim or demand may be made.

##  

## 9.3                                 Rightof Offset. In the event that any Seller shall have an indemnificationobligation for Damages to the Buyer or any Buyer Indemnified Party, the Buyershall have the right (but not the obligation) to offset the amount of suchDamages against any portion of the Purchase Price owed to such Seller,including without limitation, any portion of the Second Post-Closing 

 

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## Payment. If the SellerRepresentative has contested any claim for Damages by any Buyer IndemnifiedParty in accordance herewith, the Buyer shall have the right (but not theobligation) to offset the amount of such Damages against any portion of thePurchase Price owed to such Seller, including without limitation, any portionof the Second Post-Closing Payment, until the Buyer receives (1) a writtensettlement agreement entered into by the Buyer and the Seller Representative, (2) anarbitration award issued in accordance with Section 12.9 hereof or (3) afinal order or decision issued by a court of competent jurisdiction from whichno appeal may be taken or for which the time to appeal has expired, asapplicable, in any of which cases the Buyer will release the amount of such Damagesoffset pursuant hereto, if at all, in accordance therewith. No limitation onthe Buyer’s ability to exercise the rights set forth in this Section shallaffect such Buyer Indemnified Party’s rights hereunder or otherwise. Suchremedy shall be in addition to and not in limitation of any injunctive reliefor other rights or remedies to which the Buyer or any Buyer Indemnified Partyis or may be entitled at law or equity or in any administrative orarbitration proceeding or under this Agreement (including any exhibits hereto).

##  

## 9.4                                 Survivalof Representations, Warranties and Covenants. Each covenant and agreementcontained in this Agreement or in any agreement or other document deliveredpursuant hereto shall survive the Closing and be enforceable until suchcovenant or agreement has been fully performed. All representations andwarranties contained in this Agreement or in any agreement or other documentdelivered pursuant hereto shall survive the Closing until the date that isfifteen (15) months after the Closing Date and shall thereafter expire. Thelimitations on survivorship set forth in the preceding sentence of this Section 9.4shall not apply to (i) the representations and warranties set forth inSections 3.2 (Authority), 3.4 (Capitalization), 3.20 (Brokers), 4.3(Company Shares), 4.4 (Brokers) and 5.7 (Brokers), all of which shall survivewithout limitation (and in no event less than six (6) years), (ii) claimsbased on criminal matters, fraud or intentional misrepresentation, which shallsurvive without limitation (and in no event less than six (6) years), (iii) therepresentations and warranties set forth in the Selected Government ContractsSections, which shall survive for six (6) years after the Closing, or(iv) the representations and warranties set forth in Sections 3.8(Employee Benefit Plans) and 3.10 (Taxes), which shall survive until the end ofthe applicable statute of limitations (or any extension thereof) plusninety (90) days. Notwithstanding the foregoing, any representation orwarranty with respect to which a claim has been made for a breach thereon priorto the end of the applicable survival period shall survive past the applicablesurvival period, if necessary, at least until such claim is resolved.

##  

## 9.5                                 Limitationson Indemnification.

##  

### (a)                                  Thereshall be no liability for Damages for breaches of representations andwarranties unless and until the aggregate amount of all Damages for all claimsasserted by the Buyer Indemnified Parties exceeds Five Hundred Thousand Dollars($500,000); provided, however, after such amount of Damagesexceeds Five Hundred Thousand Dollars ($500,000), all Damages, excluding thefirst Two Hundred Fifty Thousand Dollars ($250,000), shall be recoverable bythe Buyer Indemnified Parties. There shall be no liability for Damages forbreaches of representations and warranties unless and until the aggregateamount of all Damages for all claims asserted by the Seller Indemnified Partiesexceeds Five Hundred Thousand Dollars ($500,000); provided, however,after such amount of Damages exceeds Five Hundred Thousand Dollars ($500,000),all Damages, excluding the first Two Hundred Fifty Thousand Dollars 

 

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### ($250,000), shall berecoverable by the Seller Indemnified Parties. The limitations set forth inthis Section 9.5(a) shall not apply to (i) the representationsand warranties set forth in Section 3.2 (Authority), Section 3.4(Capitalization), Section 3.8 (Employee Benefit Plans), Section 3.10(Taxes), the Selected Government Contracts Sections, Section 3.20(Brokers), Section 4.3 (Company Shares), Section 4.4 (Brokers) and Section 5.7(Brokers), (ii) claims regarding Buyer’s obligation to pay the Second Per SharePost-Closing Amount or (iii) claims based on criminal matters, fraud orintentional misrepresentation, with respect to which, in each case, all Damagesshall be recoverable from the first dollar and shall be counted in determiningwhether the thresholds in this Section 9.5(a) have been exceeded.

###  

### (b)                                 Theindemnification obligations of the Sellers for breaches of representations andwarranties shall be limited to an amount equal to Ten Million Dollars($10,000,000). The indemnification obligations of the Buyer for breaches ofrepresentations and warranties shall be limited to an amount equal to TenMillion Dollars ($10,000,000). The foregoing limitations in this Section 9.5(b) aboveshall not apply to (i) the representations and warranties set forth in Section 3.2(Authority), Section 3.4 (Capitalization), Section 3.8 (EmployeeBenefit Plans), Section 3.10 (Taxes), the Selected Government ContractsSections, Section 3.20 (Brokers), Section 4.3 (Company Shares), Section 4.4(Brokers) and Section 5.7 (Brokers), (ii) claims regarding Buyer’sobligation to pay the Second Per Share Post-Closing Amount or (iii) claimsbased on criminal matters, fraud or intentional misrepresentation, with respectto which, in each case, no Damages shall be counted in determining whether thecap in this Section 9.5(b) has been exceeded.

###  

### (c)                                  Forpurposes of determining any breach of any representation or warranty forpurposes of indemnification under this Article IX, all representations andwarranties shall be treated as if the words “materially,” “in all materialrespects” or similar words were omitted from such representations andwarranties. The indemnification obligations of the parties hereto and therights and remedies that may be exercised by an Indemnified Party shallnot be limited or otherwise affected by or as a result of any informationfurnished to, or any investigation made by or knowledge of any of theIndemnified Parties or any of their Representatives.

###  

### (d)                                 Theamount that may be recovered hereunder by an Indemnified Party shall bereduced by an amount equal to any insurance recovery actually received by theIndemnified Party (except to the extent of any repayment or increase in past,present or future insurance premiums or other similar repayment mechanismspayable following the date of the claim giving rise to such increase, determinedon a present value basis) and shall be appropriately adjusted for calculationsof the related Tax consequences and for the time value of money. The Buyershall have the right to determine in its sole discretion whether to pursue anysuch insurance or Tax recovery.

###  

## 9.6                                 Waiver,Release and Discharge. Effective upon the Closing, except as expressly setforth in this Agreement, each Seller hereby irrevocably waives, releases anddischarges the Company, the Buyer and their respective Affiliates, directors, officers and employees,from any and all Liabilities and obligations to the Seller of any kind ornature whatsoever, whether in his or her capacity as a Seller hereunder, as ashareholder, officer, director or employee of the Company or otherwise (including,without limitation, in respect of rights of contribution or indemnification asa director or officer of the Company under Section 13.1 Chapter 9 of the 

 

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## VSCA or under the Articles ofIncorporation or Bylaws of the Company or otherwise), in each case whetherabsolute or contingent, liquidated or unliquidated, known or unknown, andwhether arising hereunder or under any other agreement or understanding orotherwise at law or equity or in any administrative or arbitration proceeding,and each Seller shall not seek to recover any amounts in connection therewithor thereunder from the Company. Each Seller waives, and acknowledges and agreesthat he or she shall not have and shall not exercise or assert (or attempt toexercise or assert), any right of contribution, right of indemnity or othersimilar right or remedy against the Company, the Buyer and their respectiveAffiliates, directors, officers andemployees, in connection with any actual or alleged breach by theCompany or any Seller of any representation, warranty or obligation set forthin this Agreement.

##  

## 9.7                                 ExclusiveRemedy. The provisions of this Article IX shall constitute the soleand exclusive remedy from and after the Closing with respect to any Damagessuffered, sustained, incurred or paid by any Indemnified Party resulting fromor arising out of any breach of any representation or warranty made in thisAgreement or in any other agreement or any certificate delivered or providedpursuant hereto, except for specific performance and equitable remedies as setforth in Article X and Section 12.3 and except in the case ofcriminal matters, fraud or intentional misrepresentation.

##  

# **ARTICLE XCOVENANT NOT TO COMPETE**

#  

## 10.1                           ProhibitedActivities. For the period commencing with Closing and ending on the laterof the third (3rd) anniversary of the Closing and two (2) yearsafter the date of termination of any employment or consulting arrangement withthe Buyer, the Company or the Buyer’s Affiliates, no Seller shall, for anyreason whatsoever, directly or indirectly, for himself or herself, or on behalfof or in conjunction with any other Person:

##  

### (a)                                  engageas a stockholder, officer, director, owner, partner, joint venturer, or in amanagerial capacity, whether as an employee, independent contractor, consultantor advisor, in any business selling any products or services in direct orindirect competition with the Buyer, the Company or the Buyer’s Affiliates; provided,however, that no Seller nor any of such Seller’s respective Affiliatesshall be precluded from the ownership of securities of corporations that arelisted on a national securities exchange or traded in the nationalover-the-counter market in an amount that shall not exceed one percent (1%) ofthe outstanding shares of any such corporation;

###  

### (b)                                 employ,or call upon for the purpose or with the intent of enticing or soliciting awayfrom or out of the employ of the Buyer, the Company or any of the Buyer’sAffiliates, any person who is at that time, or was within one (1) yearprior to that time, an employee of the Buyer, the Company or any of the Buyer’sAffiliates;

###  

### (c)                                  sellproducts or services to, or call upon for the purpose of soliciting or sellingproducts or services to, any Person who is at that time, or has been withinone (1) year prior to that time, a customer or prospective customerof the Buyer, the Company or any of the Buyer’s Affiliates; or

 

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### (d)                                 publishany statement or make any statement (under any circumstances reasonably likelyto become public) critical of the Buyer, the Company or any of the Buyer’sAffiliates, or in any way adversely affecting or otherwise maligning thereputation of the Buyer, the Company or any of the Buyer’s Affiliates.

###  

The partiesintend that the covenants contained in this Section 10.1 shall be deemedto be a series of separate covenants, one for each county in each state ofthe United States and, except for geographic coverage, each such separatecovenant shall be identified in terms to the covenant contained in this Section 10.1.

 

## 10.2                           Confidentiality.

##  

### (a)                                  EachSeller and each of their respective Affiliates, (i) shall treat and holdas confidential all information concerning this Agreement (except such informationas is necessary to be disclosed to such Seller’s advisors who agree or who havefiduciary obligations to treat such information as confidential) and thebusiness and affairs of the Buyer, the Company and the Buyer’s Affiliates thatis not already generally available to the public (the “ConfidentialInformation”), (ii) shall not disclose, transfer, transmit oruse any of the Confidential Information except in connection with thisAgreement or in connection with their employment duties to the Buyer or theCompany as authorized by the Buyer or the Company and (iii) shall deliverpromptly to the Buyer, at the request and option of the Buyer, all tangibleembodiments (and all copies) of the Confidential Information which are in hisor her possession or under his or her control. Each Seller hereby acknowledgesthat such Confidential Information constitutes proprietary and trade secretinformation of the Buyer or the Company, as the case may be.

###  

### (b)                                 Inthe event that any Seller is requested or required (by oral question or requestfor information or documents in any legal proceeding, interrogatory, subpoena,civil investigative demand, or similar process) to disclose any ConfidentialInformation, such Seller shall notify the Buyer promptly of the request or requirementso that the Buyer may seek an appropriate protective order or waivecompliance with the provisions of this Section 10.2. If, in the absence ofa protective order or the receipt of a waiver hereunder, any Seller is, on theadvice of counsel, compelled to disclose any Confidential Information to anytribunal or other Government official or agency, such Seller may disclosethe Confidential Information to the tribunal; providedthat suchSeller shall use his or her best efforts to obtain, at the request and expenseof the Buyer, an order or other assurance that confidential treatment shall beaccorded to such portion of the Confidential Information required to bedisclosed as the Buyer shall designate.

###  

## 10.3                           Damages.Because of the difficulty of measuring economic losses to the Buyer and itsAffiliates as a result of a breach of the foregoing covenants in this Article X,and because of the immediate and irreparable damage that could be caused to theBuyer and its Affiliates for which it would have no other adequate remedy, eachSeller agrees that the foregoing covenant may be enforced by the Buyer inthe event of breach by such Seller, in addition to, but not in lieu of, anyother available remedies, by injunctions and restraining orders and other equitableremedies.

 

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## 10.4                           ReasonableRestraint. It is agreed by the Parties that the foregoing covenants in thisArticle X impose a reasonable restraint on the applicable Seller in lightof the activities and business of the Buyer and its Affiliates on the date ofthe execution of this Agreement and the current plans of the Buyer and itsAffiliates; but it is also the intent of the Parties, that such covenants beconstrued and enforced in accordance with the changing activities and businessof the Buyer, the Company and the Buyer’s Affiliates throughout the term ofthis covenant.

##  

## 10.5                           IndependentCovenant. All of the covenants in this Article X shall be construed asan agreement independent of any other provision in this Agreement, and theexistence of any claim or cause of action of any Seller against the Buyer,whether predicated on this Agreement or otherwise, shall not constitute adefense to the enforcement by the Buyer of such covenants. It is understood bythe Parties hereto that the covenants contained in this Article X areessential elements of this Agreement and that, but for the agreement of theSellers to comply with such covenants, the Buyer would not have agreed to enterinto this Agreement. Each Seller and the Buyer have independently consultedwith their respective counsel and have been advised concerning thereasonableness and propriety of such covenants with specific regard to thenature of the business conducted by the Buyer. Each Seller hereby agrees thatall covenants contained in this Article X are material, reasonable andvalid and waive any requirement of the Buyer to post a bond to strictly enforcethe terms hereof. The covenants in this Article X are severable andseparate, and the unenforceability of any specific covenant shall not affectthe provisions of any other covenant. Moreover, in the event any court ofcompetent jurisdiction shall determine that the scope, time or territorialrestrictions set forth are unreasonable, then it is the intention of theParties that such restrictions be enforced to the fullest extent which thecourt deems reasonable, and the Agreement shall thereby be reformed. Thecovenants contained in Article X hereof shall not be affected by anybreach of any other provision hereof by any Party hereto but shall have noeffect if this Agreement is terminated pursuant to Article XI.

 

# **ARTICLE XITERMINATION**

#  

## 11.1                           Termination.

##  

### (a)                                  ThisAgreement may, by notice given on or prior to the Closing Date, in the mannerhereinafter provided, be terminated and abandoned at any time prior to theClosing Date:

###  

#### (i)                                     bythe Seller Representative if there has been a material misrepresentation or amaterial default or breach by the Buyer with respect to its representations inthis Agreement or in any ancillary document or the due and timely performanceof any of the Buyer’s covenants and agreements contained in this Agreement orin any ancillary document, and such misrepresentation, default or breach shallnot have been cured within five (5) days after receipt by the Buyerof notice specifying particularly such misrepresentation, default or breach;

####  

#### (ii)                                  bythe Seller Representative, if there has been an amendment, supplement orrevision to the Buyer Disclosure Schedule;

 

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#### (iii)                               bythe Buyer if there has been a material misrepresentation or a material defaultor breach by the Company or any Seller with respect to any of their respectiverepresentations in this Agreement or in any ancillary document or the due andtimely performance by the Company or any Seller of any of their respectivecovenants and agreements contained in this Agreement or in any ancillarydocument, and such misrepresentation, default or breach shall not have beencured within five (5) days after receipt by the Company or any Sellerof notice specifying particularly such misrepresentation, default or breach;

####  

#### (iv)                              bythe Buyer if there has been an amendment, supplement or revision to the SellerDisclosure Schedule;

####  

#### (v)                                 bymutual agreement of the Company and the Buyer;

####  

#### (vi)                              byeither the Company or the Buyer if the Closing shall not have occurred on orbefore the ninety (90) days after the date hereof; providedthatthe Party seeking to terminate this Agreement shall not because of its (and inthe case of the Company, any Seller’s) breach or violation of anyrepresentation, warranty or covenant contained herein have caused the Closingnot to have occurred;

####  

#### (vii)                           by the Buyerif Wachovia Bank, National Association, or other applicable lenders under theAmended and Restated Credit Agreement, refuse to provide the Credit AgreementConsent; provided, however, the Buyer’s rights under this Section 11.1(a)(vii) shallexpire on the fifteenth (15th) day after the date hereof; or

####  

#### (viii)                        by theSeller Representative, on the one hand, or by the Buyer, on the other hand, ifthere shall be a final nonappealable order of a federal or state court ineffect preventing the consummation of the transactions contemplated by thisAgreement; or there shall be any action taken, or any statute, rule, regulationor order enacted, promulgated or issued or deemed applicable to thetransactions by any Government Authority which would make the consummation ofthe transactions illegal.

####  

### (b)                                 Inthe event of the termination of this Agreement pursuant to Section 11.1(a),(i) the Stock Purchase shall be abandoned; (ii) the provisions of Article IX,this Article XI and Article XII shall remain in full force and effectand survive any termination of this Agreement; and (iii) each Party shallremain liable for any breach of this Agreement prior to its termination.

###  

# **ARTICLE XIIMISCELLANEOUS**

#  

## 12.1                           Successorsand Assigns. This Agreement shall inure to the benefit of and be bindingupon the Parties and their respective successors and assigns; provided, however,that neither the Company nor any of the Sellers may make any assignment ofthis Agreement or any interest herein without the prior written consent of theBuyer and, except in connection with the Credit Agreement Consent or otherwiseto Wachovia Bank, National Association (or any assignor, successor or otherPerson who assumes the Buyer’s Senior Debt or replaces Wachovia Bank, NationalAssociation or provides indebtedness for borrowed money to the Buyer), Buyer 

 

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## may not make anyassignment of this Agreement or any interest herein without the prior writtenconsent of the Seller Representative. Any such purported assignment withoutsuch prior written consent shall be void and of no force or effect.

##  

## 12.2                           GoverningLaw. This Agreement shall in all respects be interpreted, construed andgoverned by and in accordance with the laws of the Commonwealth of Virginia,without regard to its conflicts or choice of laws principles.

##  

## 12.3                           SpecificPerformance. Each Party acknowledges that the other Parties shall beirreparably harmed and that there shall be no adequate remedy at law for anyviolation by any of them of any of the covenants or agreements contained inthis Agreement. It is accordingly agreed that, in addition to, but not in lieuof, any other remedies which may be available upon the breach of any suchcovenants or agreements, each Party shall have the right to obtain injunctiverelief to restrain a breach or threatened breach of, or otherwise to obtainspecific performance of, the other Parties’ covenants and agreements containedin this Agreement. All rights and remedies of the Parties under this Agreementshall be cumulative, and the exercise of one or more rights or remedies willnot preclude the exercise of any other right or remedy available under thisAgreement or applicable Law.

##  

## 12.4                           Severability.Each section, subsection and lesser section of this Agreementconstitutes a separate and distinct undertaking, covenant and/or provisionhereof. In the event that any provision of this Agreement shall finally bedetermined to be unlawful, such provision shall be deemed severed from thisAgreement, but every other provision of this Agreement shall remain in fullforce and effect; provided, however, if such unlawful clause isso material to the Party for whose benefit the clause was originally includedso that such Party would not have entered into this Agreement without suchunlawful clause, the severability of such clause shall be arbitrated pursuantto Section 12.9 hereof. The preceding sentence is in addition to and notin place of the severability provisions in Article X.

##  

## 12.5                           Amendment.This Agreement may be amended, supplemented or modified only by executionof an instrument in writing signed by the Buyer, the Company and the SellerRepresentative.

##  

## 12.6                           Waiver.Any Party hereto may to the extent permitted by applicable Law (i) extendthe time for the performance of any of the obligations or other acts of the otherParties hereto, (ii) waive any inaccuracies in the representations andwarranties of the other Parties hereto contained herein or in any documentdelivered pursuant hereto or (iii) waive compliance with any of theagreements of the other Parties hereto contained herein. No such extension orwaiver shall be effective unless set forth in a written instrument dulyexecuted by or on behalf of the Party extending the time of performance orwaiving any such inaccuracy or non-compliance. No waiver by any Party of anyterm of this Agreement, in any one or more instances, shall be deemed to be orconstrued as a waiver of the same or any other term of this Agreement on anyfuture occasion.

##  

## 12.7                           Notices.All notices, requests, consents, waivers, and other communications required orpermitted to be given hereunder shall be in writing and shall be deemed to havebeen duly given (a) if personally delivered, upon delivery or refusal ofdelivery; (b) if mailed by 

 

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## registered or certified UnitedStates mail, return receipt requested, postage prepaid, upon delivery orrefusal of delivery; or (c) if sent by a nationally recognized overnightdelivery service, upon delivery or refusal of delivery. All notices, consents,waivers, or other communications required or permitted to be given hereundershall be addressed as follows:

##  

### (a)                                  Ifto the Buyer:

###  

SI International, Inc.12012 Sunset Hills Road, Suite 800Reston, Virginia  20190Attention: Thomas E. Dunn

James E. Daniel

Telephone: (703) 234-7000Facsimile:   (703) 234-7501

 

with a copy to:

 

Morrison & Foerster LLP1650 Tysons Boulevard, Suite 300McLean, Virginia 22102Attention:  Lawrence T. YanowitchTelephone:  (703) 760-7318Facsimile:  (703) 760-7777

 

### (b)                                 Ifto any Seller or the Seller Representative:

###  

Donald E. Reed830 Randolph RoadSilver Spring, Maryland 20904

 

with a copy to:

 

Jenner & Block LLP601 Thirteenth Street, NW

Suite 1200 South

Washington, DC 20005-3823Attention:  Leslie H. LepowTelephone:  (202) 639-6090Facsimile:   (202) 639-6066

 

and a copy to:

 

Leslie W. Butler6060 Tower Court, No. 1404Alexandria, Virginia 22304

 

or at suchother address or addresses as the Party addressed may from time to timedesignate in writing pursuant to notice given in accordance with this section.

 

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## 12.8                           Expenses.Except as otherwise provided in Article IX, all costs and expenses of theCompany and any Seller (including, without limitation, financial advisory fees,legal fees and expenses, broker and finder fees, fees and expenses ofaccountants) incurred by the Company or any Seller in connection with thetransactions contemplated hereby shall be borne by the Sellers and all costsand expenses of the Buyer (including, without limitation, financial advisoryfees, legal fees and expenses, broker and finder fees, fees and expenses ofaccountants) incurred by the Buyer in connection with the transactionscontemplated hereby shall be borne by the Buyer. The Seller Representative may directthe Buyer to satisfy any of the Seller’s obligations under this Section 12.8at the Closing, in which case the First Post-Closing Payment shall be reducedby a corresponding amount.

##  

## 12.9                           Arbitration.

##  

### (a)                                  Exceptas set forth in Article X, Section 12.3 and Section 12.9(c) hereof,any dispute, difference, controversy or claim arising in connection with orrelated or incidental to, or question occurring under, this Agreement or thesubject matter hereof shall be finally settled under the Commercial ArbitrationRules (the “Rules”) of the AmericanArbitration Association (“AAA”), unlessotherwise agreed, by an arbitral tribunal composed of three (3) arbitrators,at least one (1) of whom shall be an attorney experienced incorporate transactions, appointed by agreement of the Buyer and the SellerRepresentative in accordance with said Rules. In the event Buyer and the SellerRepresentative fail to agree upon a panel of arbitrators from the first list ofpotential arbitrators proposed by the AAA, the AAA will submit a second list inaccordance with such Rules. In the event Buyer and the Seller Representativeshall have failed to agree upon a full panel of arbitrators from such secondlist, any remaining arbitrators to be selected shall be appointed by the AAA inaccordance with such Rules. If at the time of the arbitration Buyer and theSeller Representative agree in writing to submit the dispute to a singlearbitrator, such single arbitrator shall be appointed by agreement of Buyer andthe Seller Representative in connection with the foregoing procedure or failingsuch agreement by the AAA in accordance with such Rules. All arbitrators shallbe neutral arbitrators and subject to Rule 19 of the Rules.

###  

### (b)                                 Thearbitrators shall not have the authority to add to, detract from, or modify anyprovision hereof nor to award punitive damages to any injured Party. A decisionby a majority of the arbitrators shall be final, conclusive and binding. Thearbitrators shall deliver a written and reasoned award with respect to thedispute to each of the parties, who shall promptly act in accordance therewith.Any arbitration proceeding shall be held in Alexandria, Virginia.

###  

### (c)                                  TheParties hereby exclude any right of appeal to any court on the merits of thedispute. The provisions of this Section 12.9 may be enforced in anycourt having jurisdiction over the award or any of the Parties or any of theirrespective assets, and judgment on the award (including without limitationequitable remedies) granted in any arbitration hereunder may be entered inany such court. Nothing contained in this Section 12.9 shall prevent anyParty from seeking injunctive or other equitable relief from any court ofcompetent jurisdiction, without the need to resort to arbitration.

###  

### (d)                                 Inany arbitration hereunder, the holders of Company Common Stock and theirrespective successors shall be bound by any and all actions taken by the Seller

 

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### Representative on their behalfpursuant to Section 2.3. All communications or writings sent to the SellerRepresentative shall be deemed notice to all of the holders of Company CommonStock hereunder.

###  

## 12.10                     CompleteAgreement. This Agreement, those documents expressly referred to herein,including all exhibits and schedules hereto, and the other documents of evendate herewith, together with the Confidentiality and Non-Disclosure Agreement,dated August 29, 2005, between the Company and Buyer (which shallautomatically terminate at Closing and be of no further force or effect),embody the complete agreement and understanding among the Parties and supersedeand preempt any prior understandings, agreements or representation by or amongthe Parties, written or oral, which may have related to the subject matterherein.

##  

## 12.11                     Absence ofThird Party Beneficiary Rights. No provision of this Agreement is intended,nor will be interpreted, to provide or create any third party beneficiaryrights or any other rights of any kind in any client, customer, Affiliate,stockholder, employee or partner of any Party hereto or any other Person.

##  

## 12.12                     MutualDrafting. This Agreement is the mutual product of the Parties, and eachprovision hereof has been subject to the mutual consultation, negotiation andagreement of each of the Parties, and shall not be construed for or against anyParty hereto.

##  

## 12.13                     FurtherRepresentations. Each Party to this Agreement acknowledges and representsthat it has been represented by its own legal counsel in connection with thetransaction contemplated by this Agreement, with the opportunity to seek adviceas to its legal rights from such counsel. Each Party further represents that itis being independently advised as to the Tax or securities consequences of thetransactions contemplated by this Agreement and is not relying on anyrepresentation or statements made by any other Party as to such Tax andsecurities consequences.

##  

## 12.14                     Gender.Unless the context clearly indicates otherwise, where appropriate the singularshall include the plural and the masculine shall include the feminine orneuter, and viceversa, to the extent necessary to give the termsdefined herein and/or the terms otherwise used in this Agreement the propermeanings.

##  

## 12.15                     Headings.The headings in this Agreement are intended solely for convenience of referenceand shall be given no effect in the construction or interpretation of thisAgreement.

##  

## 12.16                     Counterparts.This Agreement may be executed in two or more counterparts, each of whichwhen executed and delivered shall be deemed an original and all of which, takentogether, shall constitute the same agreement. This Agreement and any documentor schedule required hereby may be executed by facsimile signaturewhich shall be considered legally binding for all purposes.

 

[Signatures appear on followingpage(s).]

 

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**IN WITNESSWHEREOF**, each Party hereto has caused this Agreementto be signed as of the date first above written.

 
|   | SI INTERNATIONAL, INC.    |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            | /s/ Thomas E. Dunn |
|   | Name: Thomas E. Dunn           |
|   | Title:                         | Executive Vice President, Chief |
|   |                           | Financial Officer and Treasurer |
|   |                           |
|   |                           |
|   | ZEN TECHNOLOGY, INC.      |
|   |                           |
|   |                           |
|   | By:                            | /s/ Donald E. Reed |
|   | Name: Donald E. Reed           |
|   | Title: Chief Executive Officer |
|   |                           |
|   |                           |
|   | /s/ Donald E. Reed             |
|   | DONALD E. REED            |
|   |                           |
|   |                           |
|   | /s/ Leslie W. Butler           |
|   | LESLIE W. BUTLER          |
|   |                           |
|   |                           |
|   | /s/ Barbara M. Reed            |
|   | BARBARA M. REED           |
|   |                           |
|   |                           |
|   | /s/ Cindy Andre                |
|   | CINDY ANDRE                    |
|        |                                |  |  |

 

 

*[Signature page ofStock Purchase Agreement]*

 

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**APPENDICES**

 

Appendix A                               DefinedTerms

 

Appendix B                                 ModifiedGAAP

 

Appendix C                                 CertainMatters

 

**EXHIBITS**

 

Exhibit A                                               Form ofSubordination Agreement

 

Exhibit B                                                 Form ofRestricted Stock Repurchase Agreement

 

Exhibit C-1                                       Form ofConsulting Agreement – Donald E. Reed

 

Exhibit C-2                                       Form ofConsulting Agreement – Leslie W. Butler

 

Exhibit C-3                                       Form ofConsulting Agreement – Cindy A. Andre

 

Exhibit D                                                Form ofOpinion of Counsel

 

[Appendices and Exhibits IntentionallyOmitted]

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