Exhibit 10(z)


 


EXECUTION COPY


 


 


STOCK PURCHASE AGREEMENT


 


BY AND AMONG


 


RGII TECHNOLOGIES, INC., BUYER


 


AUTOMATED INFORMATION MANAGEMENT, INC.


 


AND


 


CYNTHIA F. HARDY, SELLER


 


 


April 1, 2004


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS

  	
   

  
	
  2.

  	
  PURCHASE
  AND SALE OF THE COMPANY SHARES

  	
   

  
	
   

  	
  2.1

  	
  Basic
  Transaction

  	
   

  
	
   

  	
  2.2

  	
  Cash
  Closing Amount

  	
   

  
	
   

  	
  2.3

  	
  The Closing

  	
   

  
	
   

  	
  2.4

  	
  Determination
  of Working Capital Adjustment

  	
   

  
	
   

  	
  2.5

  	
  Adjustment to Cash
  Closing Amount

  	
   

  
	
   

  	
  2.6

  	
  Escrow

  	
   

  
	
   

  	
  2.7

  	
  Purchase
  Price

  	
   

  
	
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES CONCERNING THE TRANSACTION

  	
   

  
	
   

  	
  3.1

  	
  Representations
  and Warranties of the Seller

  	
   

  
	
   

  	
  3.2

  	
  Representations
  and Warranties of the Buyer

  	
   

  
	
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES CONCERNING THE COMPANY

  	
   

  
	
   

  	
  4.1

  	
  Organization,
  Qualification, and Corporate Power

  	
   

  
	
   

  	
  4.2

  	
  Capitalization

  	
   

  
	
   

  	
  4.3

  	
  Noncontravention

  	
   

  
	
   

  	
  4.4

  	
  Brokers’ Fees

  	
   

  
	
   

  	
  4.5

  	
  Title to
  Assets

  	
   

  
	
   

  	
  4.6

  	
  Subsidiaries

  	
   

  
	
   

  	
  4.7

  	
  Financial
  Statements

  	
   

  
	
   

  	
  4.8

  	
  Events
  Subsequent to Most Recent Fiscal Year End

  	
   

  
	
   

  	
  4.9

  	
  Undisclosed Liabilities

  	
   

  
	
   

  	
  4.10

  	
  Legal
  Compliance

  	
   

  
	
   

  	
  4.11

  	
  Tax Matters

  	
   

  
	
   

  	
  4.12

  	
  Real Property

  	
   

  
	
   

  	
  4.13

  	
  Intellectual Property

  	
   

  
	
   

  	
  4.14

  	
  Sufficiency
  of Assets

  	
   

  
	
   

  	
  4.15

  	
  Contracts

  	
   

  
	
   

  	
  4.16

  	
  Powers
  of Attorney

  	
   

  
	
   

  	
  4.17

  	
  Insurance

  	
   

  
	
   

  	
  4.18

  	
  Litigation

  	
   

  



 





















 


	
   

  	
  4.19

  	
  Employees and Contractors

  	
   

  
	
   

  	
  4.20

  	
  Employee
  Benefits

  	
   

  
	
   

  	
  4.21

  	
  Guaranties

  	
   

  
	
   

  	
  4.22

  	
  Environmental,
  Health, and Safety Matters

  	
   

  
	
   

  	
  4.23

  	
  Governmental Licenses
  and Permits

  	
   

  
	
   

  	
  4.24

  	
  Government Contracts

  	
   

  
	
   

  	
  4.25

  	
  Liability for Cost
  and Pricing Data

  	
   

  
	
   

  	
  4.26

  	
  Notes and Accounts
  Receivable

  	
   

  
	
   

  	
  4.27

  	
  Organizational
  Conflicts of Interest

  	
   

  
	
   

  	
  4.28

  	
  Customers and Suppliers

  	
   

  
	
   

  	
  4.29

  	
  Affiliated Transactions

  	
   

  
	
   

  	
  4.30

  	
  Defense
  Articles, Defense Services and Technical Data

  	
   

  
	
   

  	
  4.31

  	
  Disclosure

  	
   

  
	
   

  	
  4.32

  	
  Bank Accounts

  	
   

  
	
  5.

  	
  ADDITIONAL
  AGREEMENTS OF THE PARTIES

  	
   

  
	
   

  	
  5.1

  	
  General

  	
   

  
	
   

  	
  5.2

  	
  Litigation Support

  	
   

  
	
   

  	
  5.3

  	
  Transition

  	
   

  
	
   

  	
  5.4

  	
  Confidentiality

  	
   

  
	
   

  	
  5.5

  	
  Company’s Accountants

  	
   

  
	
  6.

  	
  CONDITIONS TO
  OBLIGATION TO CLOSE

  	
   

  
	
   

  	
  6.1

  	
  Conditions
  to Obligation of the Parties Generally

  	
   

  
	
   

  	
  6.2

  	
  Conditions to
  Obligation of the Buyer

  	
   

  
	
   

  	
  6.3

  	
  Conditions to
  Obligation of the Seller

  	
   

  
	
  7.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
  7.1

  	
  Indemnification by the
  Seller

  	
   

  
	
   

  	
  7.2

  	
  Indemnification by the
  Buyer

  	
   

  
	
   

  	
  7.3

  	
  Supplemental
  Indemnification by Seller

  	
   

  
	
   

  	
  7.4

  	
  Survival
  of Representations and Warranties of the Seller

  	
   

  
	
   

  	
  7.5

  	
  Certain
  Limitations on Indemnification Obligations

  	
   

  
	
   

  	
  7.6

  	
  Defense of Claims

  	
   

  
	
   

  	
  7.7

  	
  Non-Third Party Claims

  	
   

  
	
   

  	
  7.8

  	
  Liability of the Company

  	
   

  



 


ii





















 


	
   

  	
  7.9

  	
  Tax Treatment

  	
   

  
	
   

  	
  7.10

  	
  Exclusive Remedy

  	
   

  
	
   

  	
  7.11

  	
  No Right of Contribution

  	
   

  
	
   

  	
  7.12

  	
  Set-Off

  	
   

  
	
  8.

  	
  TAX
  MATTERS

  	
   

  
	
   

  	
  8.1

  	
  Company Status

  	
   

  
	
   

  	
  8.2

  	
  Post-Closing Tax Returns

  	
   

  
	
   

  	
  8.3

  	
  Transfer Taxes

  	
   

  
	
   

  	
  8.4

  	
  Audits and Contests
  Regarding Taxes

  	
   

  
	
   

  	
  8.5

  	
  Cooperation on Tax Matters

  	
   

  
	
   

  	
  8.6

  	
  Certain Taxes

  	
   

  
	
   

  	
  8.7

  	
  Purchase Price Allocation
  to Covenant Not to Compete

  	
   

  
	
   

  	
  8.8

  	
  Buyer Actions Prohibited

  	
   

  
	
   

  	
  8.9

  	
  Amended Tax Returns

  	
   

  
	
  9.

  	
  FEES RELATING TO
  TRANSACTION

  	
   

  
	
   

  	
  9.1

  	
  Brokerage Fees

  	
   

  
	
   

  	
  9.2

  	
  Other Fees and Expenses

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  10.1

  	
  Press Releases
  and Public Announcements

  	
   

  
	
   

  	
  10.2

  	
  No Third-Party Beneficiaries

  	
   

  
	
   

  	
  10.3

  	
  Entire Agreement

  	
   

  
	
   

  	
  10.4

  	
  Succession and Assignment

  	
   

  
	
   

  	
  10.5

  	
  Counterparts

  	
   

  
	
   

  	
  10.6

  	
  Headings

  	
   

  
	
   

  	
  10.7

  	
  Notices

  	
   

  
	
   

  	
  10.8

  	
  Governing Law

  	
   

  
	
   

  	
  10.9

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  10.10

  	
  Severability

  	
   

  
	
   

  	
  10.11

  	
  Expenses

  	
   

  
	
   

  	
  10.12

  	
  Construction

  	
   

  
	
   

  	
  10.13

  	
  Incorporation
  of Exhibits and Disclosure Schedules

  	
   

  
	
   

  	
  10.14

  	
  Specific Performance

  	
   

  
	
   

  	
  10.15

  	
  Submission to Jurisdiction

  	
   

  



 


iii





















 


	
   

  	
  10.16

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
  10.17

  	
  Waiver of Certain Rights

  	
   

  



 


iv





















 


	
  EXHIBIT
  LIST

  	
   

  
	
   

  	
   

  
	
  Exhibit A — 

  	
  Form of Escrow Agreement

  	
   

  
	
  Exhibit B —

  	
  Financial Statements

  	
   

  
	
  Exhibit C —

  	
  Form of Employment
  Agreement

  	
   

  
	
  Exhibit D —

  	
  Form of Release of Claims

  	
   

  
	
  Exhibit E —

  	
  Form of Opinion of Counsel
  to the Seller

  	
   

  
	
  Exhibit F —

  	
  Form of Confidentiality
  and Non-Competition Agreement

  	
   

  
	
  Exhibit G —

  	
  Form of Consulting
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  DISCLOSURE
  SCHEDULES LIST

  	
   

  
	
   

  	
   

  
	
  Schedule 1 — Employee
  Bonuses

  	
   

  
	
  Schedule 4.1 — Officers
  and Directors

  	
   

  
	
  Schedule 4.3 —
  Non-Contravention

  	
   

  
	
  Schedule 4.4 — Brokers’
  Fees

  	
   

  
	
  Schedule 4.6 —
  Subsidiaries

  	
   

  
	
  Schedule 4.8 — Events
  Subsequent to Most Recent Fiscal Year End

  	
   

  
	
  Schedule 4.9 — Liabilities

  	
   

  
	
  Schedule 4.11 — Tax
  Matters

  	
   

  
	
  Schedule 4.12 — Real
  Property

  	
   

  
	
  Schedule 4.13 —
  Intellectual Property

  	
   

  
	
  Schedule 4.15 — Contracts

  	
   

  
	
  Schedule 4.17 — Insurance

  	
   

  
	
  Schedule 4.18 — Litigation

  	
   

  
	
  Schedule 4.19.1 — Employees

  	
   

  
	
  Schedule 4.19.2 —
  Contractors

  	
   

  
	
  Schedule 4.19.3 — Company
  Policies, Rules and Procedures

  	
   

  
	
  Schedule 4.20 — Employee
  Benefits Plans

  	
   

  
	
  Schedule 4.22 —
  Environmental, Health and Safety Matters

  	
   

  
	
  Schedule 4.24.1 —
  Government Contracts

  	
   

  
	
  Schedule 4.24.2 — Claims
  and Protests

  	
   

  
	
  Schedule 4.24.3 —
  Compliance

  	
   

  
	
  Schedule 4.24.4 —
  Violations; Breaches

  	
   

  
	
  Schedule 4.24.6 — Default
  Notices; Terminations

  	
   

  
	
  Schedule 4.24.7 — Claims
  and Disputes

  	
   

  
	
  Schedule 4.24.10 —
  Government Audits

  	
   

  
	
  Schedule 4.24.14 — Events
  or Omissions

  	
   

  
	
  Schedule 4.24.15 —
  Internal Audits

  	
   

  
	
  Schedule 4.24.17 —
  Assignments of Government Contract

  	
   

  
	
  Schedule 4.24.18 —
  Indirect Costs

  	
   

  
	
  Schedule 4.24.19 —
  Government-Furnished Items

  	
   

  
	
  Schedule 4.24.20 —
  Warranties and Guaranties

  	
   

  
	
  Schedule 4.24.21 —
  Facility Security Clearances

  	
   

  
	
  Schedule 4.27 —
  Organizational Conflicts of Interest

  	
   

  
	
  Schedule 4.28 — Customers
  and Suppliers

  	
   

  
	
  Schedule 4.29 — Affiliated
  Transactions

  	
   

  
	
  Schedule 4.32 — Bank
  Accounts

  	
   

  
				



 


v





















 


	
  Schedule 6.2.12 — Company
  Obligations

  	
   

  
	
  Schedule 6.2.19 —
  Consents, Permits and Approvals

  	
   

  



 


vi





















 


STOCK PURCHASE AGREEMENT


 


This
Stock Purchase Agreement (this “Agreement”), is made as of April 1,
2004, by and among RGII TECHNOLOGIES, INC., a
Maryland corporation (the “Buyer”), AUTOMATED
INFORMATION MANAGEMENT, INC., a Maryland closely held corporation
(the “Company”), and CYNTHIA F. HARDY (“Seller”).
The Buyer, the Company and the Seller are referred to collectively herein as
the “Parties.”


 


RECITALS


 


WHEREAS, the Buyer desires to acquire all of the capital stock of the Company.


 


WHEREAS, the Seller is the record and beneficial owner of 100% of the issued and
outstanding capital stock of the Company, which, as of the date hereof,
consists of 1,000 shares of common stock, par value $.10 per share (the “Company
Shares”).


 


WHEREAS, the Buyer desires to acquire and the Seller desires to sell, the Company
Shares under the terms and conditions of this Agreement.


 


NOW, THEREFORE, in consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows.


 


1.             DEFINITIONS. “Actual
Working Capital” has
the meaning set forth in Section 2.5.1 below.


 


“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Exchange Act.


 


“Affiliated Group” means any affiliated group within the meaning
of Code §1504(a) or any similar group defined under a similar provision of
state, local or foreign law.


 


“Agreement” has the meaning set forth in the preface above.


 


“Basket Amount” has the meaning set forth in Section 7.5
below.


 


“Buyer Party(ies)” means the Buyer, its Affiliates and the
officers, directors and representatives of such Persons; provided that
(i) the Company shall be a Buyer Party after the Closing and (ii) neither the
Seller nor any of the Seller’s Affiliates shall be a Buyer Party at any time.


 


“Buyer” has the meaning set forth in the preface above.


 


“Cash Closing Amount” has the meaning set forth in Section 2.2
below.


 


“Cash Purchase Price” has the meaning set forth in Section 2.5.1
below.


 


“CHC”
means Computer Horizons Corp., the parent of the Buyer.


 





















 


“Closing
Date” has the meaning set forth in Section 2.3
below.


 


“Closing Payment Certificate” has the meaning set forth in Section 2.4.1
below.


 


“Closing” has the meaning set forth in Section 2.3 below.


 


“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code §4980B and of any similar state law.


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


 


“Company Shares” has the meaning set forth in the Recitals
above. 


 


“Company’s Accountants” means Deloitte & Touche LLP.


 


“Company” has the meaning set forth in the preface above.


 


“Confidential Information” means any information concerning the business
and affairs of the Company that is not already generally available to the
public.


 


“Contract Disputes Act” has the meaning set forth in Section
4.24.5 below.


 


“Cost Accounting Standards” means the United States Government Cost
Accounting Standards as set forth in 48 C.F.R. 9904.


“Defense Articles” has the meaning set forth in Section 4.30 below.


 


“Defense Services” has the meaning set forth in Section 4.30
below.


 


“Determination” has the meaning set forth in Section 2.4.2
below.


 


“Direct Contract Costs” means, with respect to any period, the
aggregate amounts of labor and other direct expenses, including, without
limitation, expenses for materials, subcontracts, consultants and travel.


 


“Disclosure Schedules” has the meaning set forth in Section 3.1
below.


 


“Employee Benefit Plan” means each “employee benefit plan” (as such
term is defined in ERISA §3(3)) and each other employee benefit plan, program
or arrangement of any kind that the Company maintains, to which the Company
contributes or has any obligation to contribute, or with respect to which the
Company has any Liability.


 


“Employee Pension Benefit Plan” has the meaning set forth in ERISA §3(2).


 


“Employee Welfare Benefit Plan” has the meaning set forth in ERISA §3(1).


 


“Encumbrance” means any equity, claim, lien, pledge,
option, warrant, charge, demand, easement, security interest, mortgage, deed of
trust, right-of-way, restriction, purchase rights, preemptive rights,
encumbrance, right of setoff or adverse interest of any kind or character.


 


2





















 


“Environmental Claim” has the meaning set forth in Section 7.4
below.


 


“Environmental, Health, and Safety Requirements” shall mean all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations,
all contractual obligations and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.


 


“ERISA Affiliate” means each entity which is treated as a
single employer with the Company for purposes of Code §414(b), (c), (m) and
(o).


 


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


 


“ERISA Claim” has the meaning set forth in Section 7.4
below.


 


“Escrow Account” shall have the meaning set forth in Section
2.6 below.


 


“Escrow Agent” shall have the meaning set forth in Section
2.6 below.


 


“Escrow Amount” shall have the meaning set forth in Section
2.6 below.


 


“Exchange Act” means the Exchange Act of 1934, as amended.


 


“FAR” has the meaning set forth in Section
4.24.3 below.


 


“Fiduciary” has the meaning set forth in ERISA §3(21).


 


“Financial Statements” has the meaning set forth in Section 4.7
below.


 


“GAAP” means United States generally accepted accounting principles as in
effect from time to time.


 


“General Claim” has the meaning set forth in Section 7.4
below.


 


“Government Contract Bid” means any offer, proposal or quote for goods
or services to be delivered to or in support of a Governmental Authority under
a proposed prime contract or a proposed subcontract (at any tier) under a
proposed prime contract.


 


“Government Contract” means any contract of the Company with a
Governmental Authority, including without limitation any blanket purchasing
agreement or task order pursuant to such a contract; the term “Government
Contract” also includes any subcontract (at any tier) of the Company with
another entity that holds either a prime contract with such a Governmental
Authority or a subcontract (at any tier) under such a prime contract.


 


3





















 


“Government-Furnished Items” has the meaning set forth in Section
4.24.19 below.


 


“Governmental Authority” means any government or political
subdivision, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any
federal, state, local or foreign court or arbitrator.


 


“Indebtedness” means without duplication, all indebtedness
or other obligation of the Company for borrowed money. For the avoidance of
doubt, all deferred rent or other lease obligations set forth on Schedule
4.12 (other than capitalized lease obligations) shall be specifically
excluded from this definition of “Indebtedness.”


 


“Independent Accounting Firm” shall mean PriceWaterhouseCoopers LLP or such
other nationally recognized accounting firm having no relationship with the
Seller, the Company Buyer and CHC and mutually agreed upon by the Buyer and the
Seller.


 


“Indirect Costs” means any fringe benefits, general and administrative
expenses and overhead expenses.


 


“Insurance Policies” has the meaning set forth in Section 4.17
below.


 


“Intellectual Property” means: (a) all inventions, all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
divisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, trade dress, logos, slogans, trade names, corporate names, Internet
domain names, and all goodwill associated with any of the foregoing, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including source code, executable
code, data, databases and related documentation), and (g) all other proprietary
rights.


 


“IRS” is the Internal Revenue Service of the United States Department of
Treasury.


 


“Employment Agreement” has the meaning set forth in Section 6.2.8
below.


 


“Knowledge” means actual knowledge and the knowledge which a director, officer and
Knowledgeable Employee should have in the reasonable performance of their
duties. When used with respect to the Company, “Knowledge” means both (a) the
Knowledge of the directors and officers of the Company and (b) the Knowledge of
the Knowledgeable Employees.


 


“Knowledgeable Employees” means each of Seller, Michael Hardy, Bette
Burgess, Deon Buffaloe, Gloria Butters and Beverly Jackson.


 


“Law” means any law, statute, code, ordinance, regulation or rule of any
Governmental Authority.


 


4





















 


“Leased Real Property” means all leasehold or subleasehold estates
and other rights to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property held by the Company.


 


“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties
and other agreements with respect thereto, pursuant to which the Company holds
any Leased Real Property, including the right to all security deposits and
other amounts and instruments deposited by or on behalf of the Company.


 


“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.


 


“License” means any security clearance, permit, license, variance, franchise,
order, approval, consent, certificate, registration or other authorization of
any foreign, federal, provincial, state and local governments, governmental
agencies, judicial authority or regulatory body, and other similar rights.


 


“Losses” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, Encumbrances, losses, expenses, and fees,
including court costs and reasonable attorneys’ fees and expenses.


 


“Material Adverse Effect” means, with respect to any Person, such state
of facts, event(s), change(s) or effect(s) that had, has or would reasonably be
expected to have a material adverse effect on the assets, business, financial
condition, results of operations, customer, supplier or employee relations of
such Person taken as a whole.


 


“Material Lease” means any Lease that is material to the
business of the Company as presently conducted.


 


“Most Recent Balance Sheet” means the balance sheet contained within the
Most Recent Financial Statements.


 


“Most Recent Financial Statements” has the meaning set forth in Section 4.7
below.


 


“Most Recent Fiscal Month End” has the meaning set forth in Section 4.7
below.


 


“Most Recent Fiscal Year End” has the meaning set forth in Section 4.7
below.


 


“Multiemployer Plan” has the meaning set forth in ERISA §3(37).


 


“Non-Compete Agreements” has the meaning set forth in Section
6.2.11 below.


 


“Order” means any order, judgment, ruling, injunction, assessment, award,
decree or writ of any Governmental Authority.


 


5





















 


“Ordinary Course of Business” means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).


 


“Organizational Conflict of Interest” has the meaning set forth in Section 4.27
below.


 


“Party” has the meaning set forth in the preface above.


 


“Permitted Encumbrances” means (a) Encumbrances for Taxes or
governmental charges or claims not yet due and payable, (b) statutory
Encumbrances of landlords, carriers, warehousemen, mechanics and materialmen
and other similar Encumbrances imposed by Law in the Ordinary Course of Business
for sums not yet due and payable, and (c) easements, rights-of-way,
restrictions and other similar charges or Encumbrances on real property, in
each case which do not materially interfere with the ordinary conduct of the
business of the Company.


 


“Person” means an individual, a partnership, a corporation, a limited liability
entity, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a Governmental Authority.


 


“Pre-Closing Period” has the meaning set forth in Section 8.2
below.


 


“Pre-Closing Taxes” has the meaning set forth in Section 7.3.3
below.


 


“Prohibited Transaction” has the meaning set forth in ERISA §406 and
Code §4975.


 


“Purchase Price” has the meaning set forth in Section 2.7
below.


 


“Related Party” has the meaning set forth in Section 4.29
below.


 


“Related Party Agreement” has the meaning set forth in Section 4.29
below.


 


“Related Party Obligation” has the meaning set forth in Section 4.29
below.


 


“Release of Claims” has the meaning set forth in Section 6.2.9
below.


 


“Securities Act” means the
Securities Act of 1933, as amended.


 


“Seller” has the meaning set forth
in the preface above.


 


“Subsidiary” means any corporation with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.


 


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


 


6





















 


“Tax Asset” means any
net operating loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction or any other credit or tax attribute that could be
carried forward or back to reduce income or franchise Taxes (including, without
limitation, deductions and credits related to alternative minimum Taxes) and
losses or deductions deferred by the Code or other applicable Law.


 


“Tax Claims” has the meaning set forth in Section 7.4 below.


 


“Tax Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes filed or required to be filed with a
Governmental Authority, including any schedule or attachment thereto, and
including any amendment thereof.


 


“Taxing Authority” means any Governmental Authority (whether
federal, state, local, municipal, foreign or otherwise) responsible for the
imposition, collection or administration of any Tax.


 


“Technical Data” has the meaning set forth in Section 4.30
below.


 


“Transfer Taxes” has the meaning set forth in Section 8.4
below.


 


“Transaction Documents” means, collectively, this Agreement, the
Employment Agreements, the Release of Claims, the Non-Compete Agreement and the
other documents and instruments to be executed and or delivered in connection
with the transactions contemplated by this Agreement.


 


“United States Government” means the government of the United States of
America, its agencies and instrumentalities.


 


“Working Capital” means the difference (whether positive or
negative) of (a) the current assets of the Company as of the Closing Date, minus
(b) the current liabilities of the Company as of the Closing Date, in each case
as determined in accordance with GAAP immediately prior to the consummation of
the purchase and sale of the Company Shares contemplated hereby.
Notwithstanding the foregoing, the Parties intend that “current liabilities”
taken into account in computing Working Capital shall include (without
limitation) all liabilities for accrued or deferred Taxes allocable to taxable
periods or a portion thereof ending on or before the Closing Date, balance
sheet reserves for billings in excess of revenues, 401(k) plan withholdings,
bonus plan accruals and the amount of transaction expenses, if any, payable
after the Closing and not otherwise paid out of the Cash Closing Amount and
bonuses, if any, that may become payable to Company employees after Closing as
set forth on Schedule 1 hereto.


 


“Working Capital Threshold” means $1,100,000.


 


2.             PURCHASE AND SALE OF THE
COMPANY SHARES.


 


2.1         Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, 100% of the issued and outstanding Company Shares
for the consideration specified below in this Section 2. The purchase
price for the Company Shares is $13,725,000 increased by


 


7





















 


the amount Actual Working
Capital exceeds the Working Capital Threshold and decrease the amount Actual
Working Capital is less than the Working Capital Threshold.


 


2.2         Cash Closing Amount. In consideration for the sale by the Seller
of the Company Shares to the Buyer, at the Closing, the Buyer shall pay to the
Seller $12,725,000 plus the amount by which Working Capital is estimated
to exceed the Working Capital Threshold, if applicable, or minus the
amount by which the Working Capital Threshold is estimated to exceed Working
Capital, if applicable, such estimate as determined in accordance with Section
2.4.1 (together, the “Cash Closing Amount”), by wire transfer of
immediately available funds to Seller’s account; and in addition the Buyer
shall deposit $1,000,000 into escrow pursuant to Section 2.6 hereof.


 


2.3          The
Closing. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices
of Reed Smith LLP, 1301 K Street, N.W., Suite 1100 - East Tower, Washington, DC
20005, commencing at 10:00 a.m. local time on the date of this Agreement or
such other date as the Buyer and the Seller may agree (the “Closing Date”) and
the Closing shall be deemed to have occurred as of 12:01 a.m. on the Closing
Date. At the Closing, (i) the Seller will deliver to the Buyer the various
certificates, instruments, and documents referred to in Section 6.2 below, (ii)
the Buyer will deliver to the Seller the various certificates, instruments, and
documents referred to in Section 6.3 below, (iii) Seller will deliver to the
Buyer stock certificates representing all of Seller’s Company Shares, endorsed
in blank or accompanied by duly executed assignment documents, (iv) the Buyer
will deliver to the Seller the Cash Closing Amount specified in Section 2.2
above and (v) Buyer will deliver the Escrow Amount to the Escrow Agent.


 


2.4          Determination of Working Capital Adjustment.


 


2.4.1       Determination of Estimated
Working Capital. Not later than three, nor more than five
business days prior to the Closing Date, the Seller shall prepare and deliver
to the Buyer a certificate certifying the Seller’s good faith estimate of the
Working Capital of the Company as of the Closing Date, and including an
estimated unaudited balance sheet of the Company as of the Closing Date and
also certifying that as of Closing, Company shall have no long term
Indebtedness. Such determination of Working Capital shall be in accordance with
GAAP and consistent with the Company’s historical financial statements. As
promptly as practicable but not later than one business day prior to the
Closing, the Buyer shall identify any adjustments that it believes are required
to the certificate delivered by the Seller. If the Seller disputes any such
adjustments, the Buyer and the Seller shall use reasonable best efforts to resolve
such dispute, after which the Seller shall re-deliver to the Buyer the
certificate with such adjustments as the Parties have agreed are appropriate.
(The form of certificate finally delivered pursuant to this Section 2.4.1
and acceptable to the Buyer and the Seller is referred to herein as the “Closing
Payment Certificate” and shall be used to determine the Cash Closing Amount
under Section 2.2.)


 


2.4.2       Determination of Actual
Working Capital. Within 45 days after the Closing Date, the
Buyer will prepare and deliver to the Seller a certificate, signed by Buyer, certifying
the Buyer’s determination of the actual Working Capital of the Company as of
the Closing Date, and identifying any adjustments to the Purchase Price as a
result of such amounts


 


8





















 


being greater or less than
the amounts set forth on the Closing Payment Certificate. If the Seller does
not object to Buyer’s certificate within 30 days after receipt, or accepts such
certificate during such 30 day period, the Purchase Price shall be adjusted as
set forth in Buyer’s certificate, and payment made in accordance with Section
2.5. If the Seller objects to the Buyer’s certificate, the Seller shall
notify the Buyer in writing of such objection within 30 days after the Seller’s
receipt thereof (such notice setting forth in reasonable detail the basis for
such objection). During such 30 day period, the Buyer shall permit the Seller
access to such work papers relating to the preparation of the Buyer’s
certificate, as may be reasonably necessary to permit the Seller to review in
detail the manner in which the Buyer’s certificate was prepared. The Buyer and
the Seller shall thereafter negotiate in good faith to resolve any such
objections. If the Buyer and the Seller are unable to resolve all of such
differences within twenty (20) calendar days of the Buyer’s receipt of Seller’s
objections, the items in dispute will be referred for determination as promptly
as practicable to the Independent Accounting Firm, which shall be jointly
engaged by the Buyer, on the one hand, and the Seller, on the other hand,
pursuant to an engagement letter in customary form which each of the Buyer and
the Seller shall execute. If PriceWaterhouseCoopers LLP is unable to serve as
the Independent Accounting Firm and the Buyer and the Seller have failed to
reach agreement on an Independent Accounting Firm within ten (10) calendar days
following the termination of the twenty (20) calendar-day period referred to in
the immediately preceding sentence, then the Independent Accounting Firm shall
be selected by the American Arbitration Association. The Independent Accounting
Firm shall prescribe procedures for resolving the disputed items and in all
events shall make a written determination, with respect to such disputed items
only, whether and to what extent, if any, the Closing Payment Certificate and
the accompanying calculations of the Working Capital and/or Indebtedness of the
Company at Closing require adjustment based on the terms and conditions of this
Agreement (the “Determination”). The Determination shall be based solely
on presentations with respect to such disputed items by the Buyer and the
Seller to the Independent Accounting Firm and not on the Independent Accounting
Firm’s independent review; provided, that such presentations shall be
deemed to include, without limitation, any work papers, records, accounts or
similar materials delivered to the Independent Accounting Firm by the Buyer or
the Seller in connection with such presentations and any materials delivered to
the Independent Accounting Firm in response to requests by the Independent
Accounting Firm. Each of the Buyer and the Seller shall use its reasonable best
efforts to make its presentation as promptly as practicable following
submission to the Independent Accounting Firm of the disputed items, and each such
party shall be entitled, as part of its presentation, to respond to the
presentation of the other party and any question and requests of the
Independent Accounting Firm. The Buyer and the Seller shall instruct the
Independent Accounting Firm to deliver the Determination to the Buyer and the
Seller no later than thirty (30) calendar days following the date on which the
disputed items are referred to the Independent Accounting Firm. In deciding any
matter, the Independent Accounting Firm (i) shall be bound by the provisions of
this Section 2.4.2, (ii) may not assign a value to any item greater than the
greatest value for such item claimed by either the Buyer or the Seller or less
than the smallest value for such item claimed by the Buyer or the Seller, and (iii)
shall be bound by the express terms, conditions and covenants set forth in this
Agreement, including the definition of Working Capital contained herein. In the
absence of fraud or manifest error, the Determination shall be conclusive and
binding upon the Buyer and the Seller. The Independent Accounting Firm shall
consider only those items and amounts in the Buyer’s certificate which the
Buyer and the Seller were unable to resolve. The determination of the


 


9





















 


Independent
Accounting Firm shall be final, conclusive, non-appealable and binding upon the
Buyer and the Seller for all purposes hereunder. All fees and expenses
(including reasonable attorney’s fees and expenses and fees and expenses of the
Independent Accounting Firm) incurred in connection with any dispute over the
Buyer’s certificate shall be borne by the Parties based on the percentage which
the portion of the contested amount not awarded to each Party bears to the
amount actually contested by such Party.


 


2.5          Adjustment to Cash Closing Amount.


 


2.5.1                     The Working Capital amount determined in
accordance with Section 2.4.2 (the “Actual Working Capital”) shall be
used to calculate post closing adjustments to the Cash Closing Amount by
calculating the difference between $12,725,000, plus the amount by which
Actual Working Capital exceeds the Working Capital Threshold, if applicable, or
minus the amount by which the Working Capital Threshold exceeds the
Actual Working Capital, if applicable (the “Cash Purchase Price”). If the Cash
Purchase Price is less than the Cash Closing Amount, then the Seller shall pay
to the Buyer an amount equal to such deficiency (plus interest thereon at an
annual rate of 4% from the Closing Date to the date of payment).


 


2.5.2                     If the Cash Purchase Price is greater than
the Cash Closing Amount, then the Buyer shall pay to the Seller an aggregate
amount equal to the amount of such excess (plus interest thereon at an annual
rate of 4% from the Closing Date to the date of payment).


 


2.5.3                     All payments to be made to either the Buyer
or the Seller pursuant to this Section 2.5 shall be made by wire
transfer of immediately available funds to Seller’s account or Buyer’s account,
as applicable, within three (3) business days after the date on which Actual Working
Capital is finally determined pursuant to Section 2.4 above.


 


2.6          Escrow.
 At the Closing, Buyer shall withhold
$1,000,000 (the “Escrow Amount”), from the Seller and shall instead
deliver the Escrow Amount to an escrow agent selected by Buyer and reasonably
acceptable to Seller (the “Escrow Agent”) for deposit into escrow (the “Escrow
Account”). The Escrow Amount shall be held pursuant to the provisions of an
escrow agreement in the form of Exhibit A hereto (the “Escrow Agreement”).
The Escrow Amount will be available to compensate Buyer for Losses as provided
in Sections 7.1 and 7.3. To the extent that there is an Escrow Amount remaining
in the Escrow Account which has not been reserved for claims under the Escrow
Agreement, such Escrow Amount will be released to the Seller on the earlier of:
(i) the date the financial statements of the Company have been audited by an
auditor designated by CHC or (ii) March 31, 2005.


 


2.7          Purchase Price. The purchase price for the Company Shares shall
be the sum of the Cash Purchase Price plus the Escrow Amount.


 


3.           REPRESENTATIONS AND WARRANTIES CONCERNING THE
TRANSACTION.


 


Except
for those representations and warranties expressly set forth in this Article 3,
Seller makes no other representations or warranties, express or implied, at law
or in equity, of any kind or nature whatsoever concerning the organization,
business, assets, liabilities and operations of the Company or any other
matters.


 


10





















 


3.1          Representations and Warranties of the Seller.            Except as set forth in the attached disclosure schedules delivered by
the Seller to the Buyer on the date hereof  (the “Disclosure Schedules”), Seller
represents and warrants to the Buyer that the statements contained in this Section
3.1 are correct and complete. The Disclosure Schedules shall be arranged
according to the numbered and lettered paragraphs in this Section 3.1,
and any disclosure shall qualify (x) the corresponding paragraph in this Section
3.1 and (y) any other paragraph(s) in this Section 3.1 only to the
extent that such disclosure clearly states that it also qualifies or applies to
such other paragraph(s).


 


3.1.1       Authorization of Transaction.          Seller has full power and authority to execute
and deliver this Agreement and to perform Seller’s obligations hereunder.  This Agreement constitutes the valid and
legally binding obligation of Seller, enforceable in accordance with its terms
and conditions, except as enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws from time to time in effect affecting the enforcement of creditors’ rights
generally. Seller is not required to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Authority
in order to consummate the transactions contemplated by this Agreement.


 


3.1.2       Noncontravention.               Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any Governmental Authority to which Seller or the
Company is subject, (B) violate, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Seller or the Company is a party or by which Seller or the Company is
bound or to which any of Seller’s or the Company assets is subject, or (C)
result in the imposition or creation of an Encumbrance upon or with respect to
the Company Shares.


 


3.1.3       Brokers’ Fees.     Except for Aronson Capital Advisors LLC, the Seller has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.


 


3.1.4       Ownership of Shares.         Seller holds of record and owns beneficially all one thousand (1,000)
of the issued and outstanding Company Shares, free and clear of all Taxes and
Encumbrances. At the Closing, Seller represents the Company Shares will be
transferred to Buyer or its designated Affiliate, whereupon the transferee will
acquire good, valid and marketable title to the Company Shares free and clear
of all Encumbrances. Seller is not a party to any option, warrant, purchase
right, or other contract or commitment (other than this Agreement) that could
require Seller to sell, transfer, or otherwise dispose of any capital stock of the
Company. Seller is not a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the
Company, and there are no issued or outstanding options, warrants, purchase
rights, shares, subscription rights, conversion rights, preemptive rights,
exchange rights, or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock.


 


11





















 


3.2          Representations and Warranties of the Buyer. Except as set forth in the attached Disclosure Schedules, the Buyer
represents and warrants to the Seller that the statements contained in this Section
3.2 are correct and complete. The Disclosure Schedules shall be arranged
according to the numbered and lettered paragraphs in this Section 3.2,
and any disclosure shall qualify (x) the corresponding paragraph in this Section
3.2 and (y) any other paragraph(s) in this Section 3.2 only to the
extent that such disclosure clearly states that it also qualifies or applies to
such other paragraph(s).


 


3.2.1       Organization of the Buyer. The Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation.


 


3.2.2       Authorization of Transaction. The Buyer has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions, except as enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws from time to time in effect affecting the enforcement of creditors’ rights
generally. The Buyer need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Governmental Authority in order
to consummate the transactions contemplated by this Agreement.


 


3.2.3       Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which the Buyer is subject or any provision of its certificate
of incorporation or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its assets
is subject.


 


3.2.4       Brokers’ Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become
liable or obligated.


 


4.           REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY


 


Except
as set forth in the attached Disclosure Schedules, the Seller hereby represents
and warrants to the Buyer that the statements contained in this Section 4
are correct and complete. The Disclosure Schedules shall be arranged according
to the numbered and lettered paragraphs in this Section 4, and any
disclosure shall qualify (x) the corresponding paragraph in this Section 4
and (y) any other paragraph(s) in this Section 4 only to the extent that
such disclosure clearly states that it also qualifies or applies to such other
paragraph(s). The Seller and the Company hereby acknowledge that nothing in the
Disclosure Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein, unless the applicable Disclosure
Schedule(s) identifies such exception with particularity. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item


 


12





















 


shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty has to do with the existence of the document or
other item itself). Except for those representations and warranties expressly
set forth in Article 3 and this Article 4, Seller makes no other
representations or warranties, express or implied, at law or in equity, of any
kind or nature whatsoever concerning the organization, business, assets,
liabilities and operations of the Company or any other matters.


 


4.1          Organization, Qualification, and Corporate Power.  The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation. The Company has all requisite corporate power and authority
to own, lease and operate the assets owned, leased and operated by it and to
carry on its business as currently being conducted and contemplated top be
conducted by it. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required except where the failure would not have a Material Adverse Effect. Schedule
4.1 identifies the directors and officers of the Company. The Seller and
the Company have delivered to the Buyer correct and complete copies of the
certificate of incorporation and bylaws of the Company (as amended to date). The
minute books (containing the records of meetings of the stockholders, the board
of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of the Company are correct, accurate
and except as provided on Schedule 4.1, complete in all material
respects.


 


4.2          Capitalization. The entire authorized capital stock of the
Company consists of 10,000 shares of common stock, $.10 par value per share, of
which 1,000 shares are issued and outstanding and 9,000 shares are authorized
but unissued. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, free of
preemptive rights, and are held of record, and beneficially owned, by the
Seller. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, preemptive rights, exchange
rights, or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Company, nor has
the Company committed to issue any of the foregoing. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Company.


 


4.3          Noncontravention.  Except as set forth on Schedule 4.3,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, Order, charge, or other
restriction of any Governmental Authority to which the Company is subject or any
provision of the certificate of incorporation or bylaws of the Company, (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice, report or other filing (whether with
a Governmental Authority or other third party) or give rise to any payments or compensation
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company is a party or by which it is bound or to which any of its
assets is subject (iii) or result in the imposition of any Encumbrance upon any
of the Company Shares or the Company’s assets. Except as set forth in Schedule
4.3, neither the Company nor the Seller needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of


 


13





















 


any Governmental Authority
in order for the Parties to consummate the transactions contemplated by this
Agreement.


 


4.4          Brokers’ Fees. Except as set forth on Schedule 4.4,
the Company has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.


 


4.5          Title to Assets. The Company has good and marketable title to, or a valid leasehold
interest in, the properties and assets used by it, located on its premises, or
shown on the Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Encumbrances, excluding Permitted Encumbrances and except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.


 


4.6          Subsidiaries. The Corporation has no Subsidiaries. Except
as set forth on Schedule 4.6, the Company
(i) has never had a Subsidiary and (ii) does not own or hold the right to
acquire any shares of stock or any other security or interest in any other
Person.


 


4.7          Financial Statements. Attached hereto as Exhibit B are the
following Company financial statements (collectively, the “Financial
Statements”): (i) audited balance sheets, statements of income, statements
of cash flows and changes in stockholders’ equity, as of and for the fiscal
years ended December 31, 2001 and December 31, 2002 and December 31, 2003, along
with the related notes thereto (the “Most Recent Fiscal Year End”) for
the Company; and (ii) unaudited balance sheet and statements of income, changes
in stockholders’ equity, and cash flows (the “Most Recent Financial
Statements”) as of and for the two months ended February 29, 2004 (the “Most
Recent Fiscal Month End”) for the Company. The Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except that the unaudited interim
financial statements will not contain any footnotes, may not contain all
adjustments required by GAAP and will be subject to year-end adjustment);
present fairly the financial condition, the results of operations, shareholders’
equity and cash flow of the Company in all material respects; are correct and
complete; and are consistent with the books and records of the Company.


 


4.8          Events Subsequent to Most Recent Fiscal Year End. Except as set forth on Schedule 4.8, since the Most Recent
Fiscal Year End, there has not been any change in the business, financial
condition, operations, results of operations, assets, customer, supplier or employee
relations (other than changes in general economic conditions) which has had, or
is reasonably likely to have, a Material Adverse Effect on the Company or its
business as presently conducted. Without limiting the generality of the
foregoing, since that date:


4.8.1       the Company has not sold, leased, transferred, or assigned any of its assets,
tangible or intangible, that are material, either individually or in the
aggregate, to the Company’s business, outside the Ordinary Course of Business;


 


4.8.2       the Company has not entered into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) either
involving more than $25,000 or outside the Ordinary Course of Business;


 


14





















 


4.8.3       no party (including the Company) has accelerated, terminated, made material
modifications to, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving more
than $25,000 to which the Company is a party or by which it is bound nor, to
the Knowledge of the Seller and the Company, threatened any of the foregoing
actions;


 


4.8.4       except for Permitted Encumbrance, the Company has not caused or permitted
any Encumbrance to be imposed upon any of its assets, tangible or intangible,
that are material, either individually or in the aggregate, to the Company’s
business;


 


4.8.5       the Company has not made any capital expenditure (or series of related capital
expenditures) either involving more than $10,000 or outside the Ordinary Course
of Business;


 


4.8.6       the Company has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);


 


4.8.7       the Company has not issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than $5,000 singly or
$20,000 in the aggregate and has not repaid or returned any note, bond or other
debt of the Company;


 


4.8.8       the Company has not incurred, created or otherwise become liable for
any Indebtedness and has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;


 


4.8.9       the Company has not amended, cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either involving
more than $10,000 or outside the Ordinary Course of Business and has not
accelerated collection of accounts receivable, delayed payment of accounts
payable;


 


4.8.10     the Company has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property that is material, either
individually or in the aggregate, to the Company’s business;


 


4.8.11     there has been no change made or authorized in the certificate of incorporation
or bylaws of the Company;


 


4.8.12     the Company has not issued, sold, exchanged, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;


 


4.8.13     the Company has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased, or otherwise acquired any of its capital stock, or
granted any Person any option or other right to acquire any shares of capital
stock or other securities of the Company;


 


15





















 


4.8.14     the Company has not experienced any damage, destruction, or loss (whether
or not covered by insurance) to property that is material, either individually
or in the aggregate, to the Company’s business;


 


4.8.15     the Company has not made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees;


 


4.8.16     the Company has not entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;


 


4.8.17     other than in the Ordinary Course of business, the Company has not granted
any increase in the compensation of any of its directors, officers or
employees;


 


4.8.18     the Company has not adopted, amended, modified, or terminated, in any material
respect, any bonus, profit sharing, incentive, severance, employee benefit or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);


 


4.8.19     except as set forth on Schedule 4.8, the Company has not entered into
or modified any retention, severance or incentive agreement related to the transactions
contemplated by this Agreement;


 


4.8.20     the Company has not made any other change in employment terms, compensation
or benefits for any of its directors, officers, and employees;


 


4.8.21     the Company has not changed any method or principle of accounting except
to the extent required by GAAP or as advised by the Company’s independent
accountant;


 


4.8.22     the Company has not made any material Tax election, or settled any Tax liability;
and


 


4.8.23     the Company has not committed to or agreed to undertake any of the foregoing.


 


4.9          Undisclosed
Liabilities. Except as disclosed on Schedule 4.9, the
Company has no Liability (and, to the Knowledge of the Company and the Seller,
there is no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand pending or threatened against the Company that
would reasonably be expected to give rise to any Liability), except for (i)
Liabilities set forth on the Most Recent Balance Sheet, and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business or as a result of the transactions contemplated hereby (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or violation
of law).


 


4.10        Legal
Compliance. Each of the Company and its predecessors
and Affiliates has complied with all applicable Laws and Orders, and no action,
suit, proceeding, hearing,


 


16





















 


investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.


 


4.11        Tax Matters.


 


4.11.1  The Company has duly and timely filed all Tax
Returns required to have been filed by it. All such Tax Returns are true,
correct and complete in all respects. Except as set forth in the Disclosure
Schedules, all Taxes required to have been paid by the Company (whether or not
shown on any Tax Return) have been paid. The Company is not currently the beneficiary
of any extension of time within which to file any Tax Return. No claim has ever
been made by a Taxing Authority in writing (or, to the Knowledge of the Seller
or the Company, made in any other manner), for a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Encumbrances on any of the assets of the Company
that arose in connection with any failure (or alleged failure) to pay any Tax.


 


4.11.2  The Company has complied with all applicable
laws regarding payment and withholding of Taxes and has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other Person.


 


4.11.3  Neither the Seller nor any director or
officer (or employee responsible for Tax matters) of the Company expects any
Taxing Authority to assess against the Company any additional Taxes with respect
to any taxable period for which Tax Returns have been filed by or on behalf of
the Company. There is no dispute or claim concerning any Tax Liability of the Company
either (A) claimed or raised by any Taxing Authority in writing or (B) as to
which the Seller or the Company has Knowledge based upon personal contact with
any agent of such Taxing Authority. Schedule 4.11 lists all federal,
state, local, and foreign income Tax Returns filed with respect to the Company
for taxable periods commencing July 1, 1995 and ended on or before December 31,
2003, indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. The Seller and the Company
have delivered to the Buyer correct and complete copies of all such federal
income Tax Returns, examination reports with respect to such income Tax
Returns, and statements of income Taxes assessed against or agreed to by the
Company since July 1, 1995 which were not shown on the face of such income Tax
Return.


 


4.11.4  The Company has not executed any agreement
waiving any statute of limitations in respect of assessment or collection of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency that has continuing effect, or granted any power of attorney in
respect to the Company with respect to any matter related to Taxes which is currently
in force. There are no agreements currently in effect between the Company and
any Tax Authority with respect to the payment in installments of any tax
liability after the Closing Date.


 


4.11.5  The Company has not filed a consent under
Code §341(f) concerning collapsible corporations. The Company has not made any
payments, is not obligated to make any payments in connection with the
transactions contemplated by this Agreement that would be


 


17





















 


excess parachute payments
within the meaning of Code § 280G. The Company has not been a United States
real property holding corporation within the meaning of Code §897(c)(2) during
the applicable period specified in Code §897(c)(l)(A)(ii). Except as provided
on the Disclosure Schedules, the Company has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Code §6662. The Company is not a
party to any Tax allocation or sharing agreement. The Company (A) has never
been a member of an Affiliated Group filing a consolidated federal income Tax
Return (other than a group the common parent of which was the Company) and (B)
does not have any Liability for the Taxes of any Person (other than the
Company) under Treasury Regulation §1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise. The Company does not have a “net required payments balance” as
defined in Section 7519 of the Code.


 


4.11.6  The unpaid Taxes of the Company (A) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Most Recent Balance
Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Company in filing its Tax Returns.


 


4.11.7  The Company will not be required to include
any item of income in, nor will the Company exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) beginning after the
Closing Date as a result of any change in method of accounting for a taxable
period ending on or prior to the Closing Date under Code §481(c) (or any corresponding
or similar provision of state, local or foreign income Tax law). The Company is
not a party to any “closing agreement” as described in Code §7121 (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date that would have continuing effect
after the Closing Date. The Company has no (A) gain from intercompany
transaction which has been deferred pursuant to Treasury Regulations Section
1.1502-13 or any excess loss account described in Treasury Regulations Section
1.1502-13 (or any corresponding or similar provision of state, local or foreign
income Tax law) arising in any taxable period or portion thereof ending before
the Closing Date; (B) installment sale or open transaction disposition made on
or prior to the Closing Date, income from which would be required to be
reported by the Company after the Closing Date; or (C) prepaid income amount received
on or prior to the Closing Date not required to have been reported in computing
taxable income for periods ending on or before the Closing Date, except, in
each case, to the extent adequately reserved for in the Most Recent Financial
Statement or arising in the Ordinary Course of Business since the Most
Recent Fiscal Month End.


 


4.11.8  The Company has had in effect at all times
since July 1, 1999 a valid election under Section 1362(a) of the Code to be
treated as an S corporation, and since that date has validly been treated in a
similar manner for purposes of the income tax laws of all states in which it
has been subject to taxation where analogous treatment is legally available.
Neither the Seller nor the Company has taken or omitted to take any action
which action or inaction would cause the Company to cease to be treated as an S
Corporation for federal and applicable state and local Tax purposes for any
period since July 1, 1999.


 


18





















 


4.12        Real Property.


 


4.12.1     The Company does not own any real property.


 


4.12.2     Schedule 4.12 sets
forth the address of each parcel of Leased Real Property, and a true and
complete list of all Leases for each such Leased Real Property (including the
date and name of the parties to such Lease document). The Company has delivered
to the Buyer a true and complete copy of each such Lease document, and in the
case of any oral Lease, a written summary of the material terms of such Lease.
With respect to each of the Leases which is a Material Lease:


 


4.12.2.1.          such
Lease is legal, valid, binding, enforceable and in full force and effect;


 


4.12.2.2.          the transaction contemplated by this
Agreement does not require the consent of any other party to such Lease, will
not result in a breach of or default under such Lease, and will not otherwise
cause such Lease to cease to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing;


 


4.12.2.3.          the Company’s possession and quiet enjoyment
of the Leased Real Property under such Lease has not been disturbed and, to the
Knowledge of the Seller and the Company, there are no disputes with respect to such
Lease;


 


4.12.2.4.          neither the Company nor any other party to
the Lease is in breach or default under such Lease, and, to the Knowledge of
the Seller and the Company, no event has occurred or circumstance exists which,
with the delivery of notice, the passage of time or both, would constitute such
a breach or default, or permit the termination, modification or acceleration of
rent under such Lease;


 


4.12.2.5.          no security deposit or portion thereof
deposited with respect to such Lease has been applied in respect of a breach or
default under such Lease which has not been redeposited in full;


 


4.12.2.6.          the Company does not owe, nor will it owe in
the future, any brokerage commissions or finder’s fees with respect to such
Lease;


 


4.12.2.7.          the other party to such Lease is not an
affiliate of, and otherwise does not have any economic interest in, the
Company;


 


4.12.2.8.          the Company has not subleased, licensed or
otherwise granted any Person the right to use or occupy such Leased Real
Property or any portion thereof;


 


4.12.2.9.          the Company has not collaterally assigned or
granted any other security interest in such Lease or any interest therein; and


 


19





















 


4.12.2.10.        there
are no liens or encumbrances on the estate or interest created by such Lease.


 


4.13        Intellectual Property. Schedule 4.13 (i) lists all patents, registrations and applications for
registration of Intellectual Property owned by the Company, (ii) lists all
trade names, domain names and material unregistered trademarks owned by the Company,
(iii) describes all material inventions and material unregistered copyrights owned
by the Company, (iv) lists all software developed and/or owned by the Company,
and (v) lists all material trade secrets of the Company. The Company owns, free
from any Encumbrance, or has a valid, enforceable and fully paid up license or
other right to use, all material Intellectual Property used in the business of
the Company or necessary to operate the business of the Company as currently
conducted. All Intellectual Property owned or used by the Company in the
operation of its business as of the date hereof will be owned or available for
use by the Company on identical terms and conditions immediately following the
Closing. The Company has taken all necessary action, performed all customary
acts, and has paid all fees and taxes (to the extent applicable), required to
protect and maintain in full force and effect all Intellectual Property owned
by the Company. No claim by any third party has been made contesting the validity,
enforceability, use or ownership of the Intellectual Property owned or used by
the Company, and Seller and Company have no Knowledge of any basis for such
claim. Neither the Company nor the Seller has received any notices (including
any cease-and -desist letters or offers to license) alleging infringement or
misappropriation of any third party Intellectual Property. To the Knowledge of
the Company and the Seller, no third party is infringing, misappropriating or otherwise
engaging in unauthorized use of the Intellectual Property of the Company.
Except as set forth on Schedule 4.13, each current and former employee,
consultant and officer of the Company has executed an agreement with the
Company requiring such employee, consultant or officer to maintain the
confidentiality of the Company’s proprietary information and assign all Intellectual
Property developed by such employee, consultant or officer to the Company or
its designee. The Company has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of third parties.


 


4.14        Sufficiency of Assets. The Company owns and has good and
marketable title, free and clear of Encumbrances, to all of its assets. The
Company owns or has a valid leasehold interest in all of the tangible and
intangible assets (including, without limitation, all buildings, machinery,
equipment, and other tangible assets) necessary for the conduct of its business
as presently conducted. Each such tangible asset is free from material defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in satisfactory operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is
used.


 


4.15        Contracts.  Schedule 4.15 identifies each of the executory contracts, commitments,
arrangements, undertakings and other agreements to which the Company is a party
(other than Government Contracts and Related Party Agreements, which are set
forth separately on Schedule 4.24.1 and Schedule 4.29,
respectively):


 


4.15.1     for the lease of personal or real property to or from any Person
providing for lease payments in excess of $20,000 per annum;


 


20





















 


4.15.2     for the purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more than one
year, which reasonably would be expected to result in a material loss to the
Company, or involve consideration in excess of $20,000;


 


4.15.3     concerning a partnership or joint venture;


 


4.15.4     under which the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in excess
of $20,000 or under which it has imposed an Encumbrance on any of its assets,
tangible or intangible;


 


4.15.5     concerning confidentiality, noncompetition or which restricts any
business by the Company, or the ability to solicit or hire any Person;


 


4.15.6     with respect to any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement
for the benefit of its current or former directors, officers, and employees;


 


4.15.7     any collective bargaining agreement;


 


4.15.8     for the employment of any individual on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of $20,000
or providing material severance benefits;


 


4.15.9     under which it has advanced or loaned any amount to any of its
directors, officers, and employees outside the Ordinary Course of Business;


 


4.15.10  under which the consequences of a default or termination could
reasonably be expected to have a Material Adverse Effect on the Company;


 


4.15.11  the performance of which involves the payment of consideration by the Company
in excess of $20,000 per annum;


4.15.12  relating to Intellectual Property (other than those related to retail shrinkwrap
software licensed by the Company for a total cost of less than $2,000 each
instance) including licenses, permits, sublicenses or the development of
Intellectual Property; or


 


4.15.13  which is a stock purchase agreement, asset purchase agreement, or other
acquisition or divestiture agreement entered into by the Company since its
inception.


 


The
Company has delivered to Buyer a true and complete copy of such written
contract required to be listed in Schedule 4.15. Neither the Company
nor, to the Seller’s Knowledge, any other party to such contract is in breach
or default thereunder, and no event has occurred which, with notice or lapse of
time or both would constitute a breach or default thereof, or permit
termination, modification or acceleration thereunder.


 


4.16        Powers
of Attorney. 
There are no outstanding powers of attorney executed on behalf of the
Company.


 


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4.17        Insurance.  Schedule 4.17
contains a description (including the name of the insurer, the policy number,
and the period, amount and scope of coverage) of each insurance policy
maintained by the Company with respect to its properties, assets and business (collectively,
the “Insurance Policies”). Each Insurance Policy (i) is legal, valid,
binding, enforceable and in full force and effect as of the Closing and (ii)
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby. The Company is not in default with respect to its obligations
under any Insurance Policy, nor has the Company been denied insurance coverage.
Except as set forth on Schedule 4.17, the Company does not have any
self-insurance or co-insurance programs. Except as set forth on Schedule
4.17, the reserves set forth on the Most Recent Balance Sheet are adequate
to cover all liabilities with respect to any such self-insurance or
co-insurance programs including, without limitation, all terminal liabilities. In
the three (3) year period ending on the date hereof, the Company has not
received any notice from, or on behalf of, any insurance carrier relating to or
involving any change in the conditions of insurance, any refusal to issue an
insurance policy or non-renewal of a policy, or requiring or suggesting
material alteration of any of the Company’s assets, purchase of additional
equipment or material modification of any of the Company’s methods of doing
business. The Company has not made any claim against an insurance policy as to
which the insurer is denying coverage.


 


4.18        Litigation.  Except as set forth on Schedule 4.18,
there is no action, indictment, arbitration, suit, proceeding or, to the Knowledge
of the Seller and the Company, investigation pending against, or to the
Knowledge of the Seller and the Company, threatened against or affecting, the
Seller or the Company with respect to the Company or the Company’s business as it
is presently conducted before any Governmental Authority. The actions, suits
and proceedings listed on Schedule 4.18 will not, either individually or
in the aggregate, have a Material Adverse Effect on the Company. Except as set
forth on Schedule 4.18, neither the Seller nor the Company is in
violation of and, to the Knowledge of the Seller and the Company, is not under investigation
with respect to and, to the Knowledge of the Seller and the Company, has not
been threatened to be charged with or given notice of any violation of, any
applicable law, rule, regulation, judgment or Order.


 


4.19        Employees and Contractors.


 


4.19.1   Schedule 4.19.1  contains a list of all employees of the
Company, along with the position, date of hire, annual rate of compensation (or
with respect to employees compensated on an hourly or per diem basis, the
hourly or per diem rate of compensation), most recent increase (or decrease) in
compensation and amount thereof, and estimated or target annual incentive
compensation of each such person. None of such employees is a party to a
written employment agreement or contract with the Company and each is employed “at
will.” Each employee has entered into the Company’s standard form of employee
non-disclosure and invention assignment agreement with the Company, a copy of
which has been previously delivered to the Buyer. To the Knowledge of the
Seller and the Company, no executive, key employee, or group of employees has
any plans to terminate employment with the Company. The Company is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. The Company has not committed any material unfair labor
practice. Neither the Seller nor the Company has any Knowledge of any
organizational effort presently


 


22





















 


being made or threatened by
or on behalf of any labor union with respect to employees of the Company.


 


4.19.2     Schedule 4.19.2
contains a list of all independent contractors (excluding government
subcontractors) currently engaged by the Company, along with the position, date
of retention and rate of remuneration, most recent increase (or decrease) in
remuneration and amount thereof, for each such Person. Each such independent
contractor has entered with the Company into a written independent contractor
agreement, a copy of which has been previously delivered to the Buyer. For the
purposes of applicable Law, including without limitation the Code, all
independent contractors who are, or within the last six years have been,
engaged by the Company are bona fide independent contractors and not employees
of the Company.


 


4.19.3     There are no written policies, rules or procedures applicable to employees
of the Company other than those set forth in Schedule 4.19.3. True and
complete copies of such policies have been delivered to Buyer.


 


4.19.4     The Company is not delinquent in payments to any of its employees for
wages, salaries, commissions, bonuses or other direct compensation for services
performed by such employees or for reimbursement of expenses.


 


4.20        Employee
Benefits.


 


4.20.1     Schedule 4.20 sets
forth a complete and correct list of each Employee Benefit Plan.


 


4.20.2     Each Employee Benefit Plan (and each related trust, insurance contract,
or fund) has been maintained, funded and administered in accordance with the
terms of such Employee Benefit Plan and the terms of any applicable collective
bargaining agreement and complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable laws.


 


4.20.3     All required reports and descriptions (including annual reports (IRS
Form 5500), summary annual reports, and summary plan descriptions) have been
timely filed and/or distributed in accordance with the applicable requirements
of ERISA and the Code with respect to each such Employee Benefit Plan. The
requirements of COBRA have been met in all material respects with respect to
each Employee Benefit Plan which is an Employee Welfare Benefit Plan subject to
COBRA.


 


4.20.4     All contributions (including all employer contributions and employee salary
reduction contributions) which are due have been made within the time periods
prescribed by ERISA and the Code to each Employee Benefit Plan which is an
Employee Pension Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been made to each such
Employee Pension Benefit Plan or accrued in accordance with the past custom and
practice of the Company. All premiums or other payments for all periods ending
on or before the Closing Date have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.


 


23





















 


4.20.5     Each Employee Benefit Plan which is intended to meet the requirements of
a “qualified plan” under Code §401 (a) has received a determination from the
IRS that such Employee Benefit Plan is so qualified, and nothing has occurred
since the date of such determination that could adversely affect the qualified
status of any such Employee Benefit Plan. Each such Employee Benefit Plan has
been timely amended to comply with the provisions of recent legislation
commonly referred to as “GUST” and timely submitted to the IRS for a determination
letter that takes such amendments into account.


 


4.20.6     The Seller and the Company have delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most recent determination
letter received from the IRS, the most recent annual report (IRS Form 5500,
with all applicable attachments), and all related trust agreements, insurance
contracts, and other funding arrangements which implement each such Employee
Benefit Plan. Except as set forth in Schedule 4.20, each Employee
Benefit Plan may be amended, terminated or otherwise discontinued at the will
by the Company without liability for such amendment, termination or discontinuance
(other than costs of administration and accelerated vesting, as required by
law).


 


4.20.7     Neither the Company nor any ERISA Affiliate maintains, sponsors, contributes
to, or has any Liability under (or with respect to) any “defined benefit plan”
(as defined in Section 3(35) of ERISA), or any Multiemployer Plan, or otherwise
has any Liability under Title IV of ERISA. No asset of the Company is subject
to any lien under ERISA or the Code.


 


4.20.8       There have been no Prohibited Transactions with respect to any Employee
Benefit Plan which would result in liability to the Company. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
Employee Benefit Plan which would result in any liability to the Company. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any Employee Benefit Plan
(other than routine claims for benefits) is pending or threatened.


 


4.20.9     The Company does not maintain, contribute to or have an obligation to contribute
to, or any Liability with respect to, any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type benefits for
current or future retired or terminated directors, officers or employees of the
Company (or any spouse or other dependent thereof) other than in accordance
with COBRA.


 


4.21        Guaranties. The Company is not a guarantor nor is it otherwise liable for any Liability
or obligation (including indebtedness) of any other Person.


 


4.22        Environmental, Health, and Safety Matters.


 


4.22.1  Each of the Company and its Affiliates has
complied and is in compliance in all material respects with all Environmental,
Health, and Safety Requirements, including, without limitation, all permits,
Licenses and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of its facilities and the


 


24





















 


operation of its business; a
list of all such permits, Licenses and other authorizations is set forth on Schedule
4.22.


 


4.22.2     The Company has not received any written or
oral notice, report or other information regarding any actual or alleged
material violation of Environmental, Health, and Safety Requirements, or any
material liabilities or potential material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any material investigatory,
remedial or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.


 


4.22.3     The Company has not treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance, including
without limitation any hazardous substance, or owned or operated any property
or facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or that would reasonably be anticipated
to give rise to liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages or attorney fees, or any investigatory, remedial or corrective obligations,
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Solid Waste Disposal Act, as amended or
any other Environmental, Health, and Safety Requirements.


 


4.22.4     Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any material obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called “transaction-triggered” or “responsible
property transfer” Environmental, Health, and Safety Requirements.


 


4.22.5     The Seller and the Company have furnished to the Buyer all environmental
audits, reports and other material environmental documents relating to the Company’s,
or its affiliates’, past or current properties, facilities or operations, which
are in their possession or under their reasonable control.


 


4.23        Governmental Licenses and Permits.  The Company owns or possesses all right,
title and interest in and to all Licenses which are necessary to carry on the
business in which it is engaged and to own and use the properties owned and
used by it. The Company is in compliance with the material terms and conditions
of such Licenses. After the Closing, it is expected that the Company shall no
longer be eligible for Small business status, small disadvantage business
status or protégé status. Other than as provided in the preceding sentence, no
loss or expiration of any License is pending or, to the Knowledge of the Seller
and the Company, threatened or reasonably foreseeable (including, without
limitation, as a result of the transactions contemplated hereby) other than
expiration in accordance with the terms thereof, which terms do not expire as a
result of the consummation of the transactions contemplated hereby.


 


25





















 


4.24        Government Contracts.


 


4.24.1     Part I of Schedule 4.24.1 lists all current Government Contracts
active for calendar years 2003 or 2004, and with respect to each such listed
Government Contract, Part I of Schedule 4.24.1 accurately lists: (A) the
contract name; (B) the award date; (C) the customer; (D) the contract end date;
and (E) as applicable, whether the Current Government Contract is premised on
the Company’s 8(a) status, small business status, small disadvantaged business status,
protégé status, or other preferential status. Attached to Part I of Schedule
4.24.1 is the “contract data sheet” maintained by the Company for each
current Government Contract listed on Part I of Schedule 4.24.1 for
which the Company is the prime contractor. Part II of Schedule 4.24.1 lists
the Company’s current project charge codes, and with respect to each such
charge code, Part II of Schedule 4.24.1 accurately lists: (A) the
customer; (B) the customer’s contract number corresponding to the charge code;
(C) the customer’s order number; (D) the Company’s internal project charge code
number; (E) the corresponding project name; (F) the end date; (G) inception to
February 29, 2004 funding; (H) inception to February 29, 2004 revenue and (I)
the ceiling values of the contract (excluding task orders and blanket purchase
agreements). The Company has no Government Contracts that have fixed price task
orders or that are billed on a fixed price basis. Part III of Schedule
4.24.1 lists all Government Contract Bids, including task order bids under
Current Government Contracts submitted by the Company and for which no award
has been made thirty (30) days or more prior to the date of this Agreement, and
with respect to each such Government Contract Bid, Part III to Schedule
4.24.1 accurately lists: (1) the customer agency and title; (2) the request
for proposal (RFP) number or, if such Government Contract Bid is for a task
order under a prime contract, the applicable prime contract number, (3) the
date of proposal submission; (4) the expected award date, if known; (5) the
estimated period of performance; (6) the estimated value based on the proposal,
if any; and (7) except for Government Contract Bids for task orders, whether
such Government Contract Bid is premised on the Company’s 8(a) status, small
business status, small disadvantaged business status, protégé status, or other
preferential status. The Company and the Seller have delivered or made
available to Buyer true and complete copies of all Government Contracts (except
for task orders pursuant to such Government Contracts) and of all Government
Contract Bids and all material documentation related thereto requested by
Buyer. The Company has not exceeded the authorized funding (spending level) of
any task or task order. Neither the Seller nor the Company has made any
representation with regard to the amount or likelihood of any awards under such
Government Contract Bids.


 


4.24.2     Except as set forth on Schedule 4.24.2, (A) the Company has not
received written notification of cost, schedule, technical or quality problems
that could reasonably result in claims against the Company (or successors in
interest) by a Governmental Authority, a prime contractor or a higher-tier
subcontractor; (B) there are no Government Contracts pursuant to which the
Company is, to the Knowledge of the Company and the Seller, reasonably likely
in the near future to experience cost, schedule, technical or quality problems
that could reasonably result in claims against the Company (or successors in
interest) by a Governmental Authority, a prime contractor or a higher-tier
subcontractor; (C) to the Knowledge of the Company and the Seller, all of the
Government Contracts were legally awarded, are binding on the parties thereto, and
are in full force and effect; (D) the Government Contracts are not currently
the subject of bid or award protest proceedings, and, to the Knowledge of the
Company and the Seller, no such Government Contracts are reasonably likely to
become the subject of bid or award protest proceedings; and (E) no Person has
notified the Company that any Governmental Authority intends to seek the
Company’s agreement to lower rates under any of the Government Contracts


 


26





















 


or Government Contract Bids,
including but not limited to any task order under any Government Contract Bids.


 


4.24.3     Except as set forth on Schedule 4.24.3 and with respect to
current Government Contracts active for calendar years 2003 or 2004, (A) the
Company has fully complied with all material terms and conditions of each
Government Contract and Government Contract Bid to which it is a party; (B) the
Company has complied, in all material respects, with all statutory and regulatory
requirements, including but not limited to the Service Contract Act, the
Procurement Integrity Act, the Federal Procurement and Administrative Services
Act, the Federal Acquisition Regulation (“FAR”) and related cost principles and
the Cost Accounting Standards, where and as applicable to each of the
Government Contracts and Government Contract Bids, (C) the representations,
certifications, and warranties made by the Company with respect to the
Government Contracts or Government Contract Bids were accurate in all material respects
as of their effective date, and the Company has fully complied with all such certifications
in all material respects; (D) no termination for default, cure notice or show
cause notice has been issued and remains unresolved with respect to any
Government Contract or Government Contract Bid, and, to the Knowledge of the
Company and the Seller, no event, condition or omission has occurred or exists
that would constitute grounds for such action; (E) no past performance evaluation
received by the Company with respect to any such Government Contract has set
forth a default or other material failure to perform thereunder or termination
or default thereof; and (F) to the Knowledge of the Company and the Seller, no
money currently due to the Company pertaining to any Government Contract or
Government Contract Bid has been withheld or set-off.


 


4.24.4     Except as set forth in Schedule 4.24.4, with respect to the
Government Contracts, no Governmental Authority, prime contractor or higher-tier
subcontractor under a Government Contract or any other Person has notified the
Company of any actual or alleged violation or breach of any statute,
regulation, representation, certification, disclosure obligation, contract
term, condition, clause, provision or specification that could reasonably be
expected to materially affect payments under Government Contracts or adversely
affect the award of Government Contracts to the Company in the future.


 


4.24.5     The Company has not taken any action and is not a party to any
litigation that could reasonably be expected to give rise to (A) liability
under the False Claims Act, (B) a claim for price adjustment under the Truth in
Negotiations Act, or (C) any other request for a reduction in the price of any
Government Contract, including but not limited to claims based on actual or
alleged defective pricing. There exists no basis for a claim of any material
liability of the Company by any Governmental Authority as a result of defective
cost and pricing data submitted to any Governmental Authority. The Company is
not participating in any pending claim and, to the Knowledge of the Company and
the Seller, has no interest in any potential claim under the Contract Disputes
Act against the United States Government or any prime contractor, subcontractor
or vendor arising under or relating to any Government Contract or Government
Contract Bid.


 


4.24.6     Except as set forth on Schedule 4.24.6, (A) the Company has not
received, during the past five (5) years, any written or, to the Knowledge of
the Company and the Seller, any oral, show cause, cure, default or similar
notice relating to the Government Contracts; (B) no


 


27





















 


Government Contract has been
terminated for default in the past three (3) years; and (C) the Company has not
received, during the past five (5) years, any written or, to the Knowledge of
the Company and the Seller, any oral, notice terminating any Government
Contract for convenience or indicating an intent to terminate any of the
Government Contracts for convenience.


 


4.24.7     Except as set forth on Schedule 4.24.7, the Company has not,
during the past five (5) years, received any written, or to the Knowledge of
the Company and the Seller, oral, notice of any outstanding claims or contract
disputes to which the Company is a party (A) relating to the Government
Contracts or Government Contract Bids and involving either a Governmental
Authority, any prime contractor, any higher-tier subcontractor, vendor or any
third party; and (B) relating to the Government Contracts under the Contract
Disputes Act or any other federal statute.


 


4.24.8     Neither the Company nor the Seller has ever been and is not now, suspended,
debarred or proposed for suspension or debarment from bidding on any Government
Contract. No suspension or debarment actions with respect to Government
Contracts have been commenced, or to the Knowledge of the Company and the
Sellers, threatened against the Company or any of its officers or employees. To
the Knowledge of the Company and the Seller, there is no valid basis for the
Company’s or the Seller’s suspension or debarment from bidding on contracts or
subcontracts for or with any Governmental Authority.


 


4.24.9     No negative determination of responsibility has been issued against the
Company during the past three (3) years with respect to any quotation, bid or
proposal for a Government Contract.


 


4.24.10  Except as set forth on Schedule 4.24.10, (A) the Company has not
undergone and is not undergoing any audit, inspection, survey or examination of
records by any Governmental Authority relating to any Government Contract, (B)
the Company has not received written notice of, and to the Knowledge of the
Company and the Seller, the Company has not undergone any investigation
relating to any Government Contract, and (C) to the Knowledge of the Company
and the Seller, no such audit, inspection, investigation, survey or examination
of records is threatened. Except as set forth in Schedule 4.24.10, the
Company has not, during the past five (5) years, received any official notice
that it is or was being specifically audited (other than routine DCAA or
similar audits) or investigated by the General Accounting Office, any state or
federal agency Inspector General, the contracting officer with respect to any Government
Contract or the Department of Justice (including any United States Attorney).
The Company has not received any written notice that any audit, review,
inspection, investigation, survey or examination of records described in Schedule
4.24.10 has revealed any fact, occurrence or practice which could
reasonably be expected to have a Material Adverse Effect on the Company.


 


4.24.11  During the last five (5) years, the Company has not made any voluntary disclosure
in writing to any Governmental Authority with respect to any material alleged irregularity,
misstatement or omission arising under or relating to a Government Contract or Government
Contract Bid.


 


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4.24.12  The Company has not received any written
notice that any, and to the Knowledge of the Company and the Seller, none of
the Company’s employees, consultants or agents is (or during the last five (5)
years has been) under administrative, civil or criminal investigation or
indictment by any Governmental Authority with respect to the conduct of the business
of the Company. The Company has not received written notice of any, and to the Knowledge
of the Company and the Seller, there is no, pending investigation of any officer,
employee or representative of the Company, nor within the last five (5) years
has there been any audit or investigation of the Company or any officer,
employee or representative of the Company relating to the business of the
Company resulting in a material adverse finding with respect to any material
alleged irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Contract Bid.


 


4.24.13  To the Knowledge of the Company and the
Seller, the Company is in compliance in all material respects with all
applicable national security obligations, including those specified in the
National Industrial Security Program Operating Manual, DOD 5220.22-M (January
1995), and any supplements, amendments or revised editions thereof.


 


4.24.14  Except as set forth on Section 4.24.14,
to the Knowledge of the Company and the Seller, there are no events or
omissions that would reasonably be expected to result in (A) a material claim
against the Company by a Governmental Authority or any prime contractor, subcontractor,
vendor, or other third party arising under or relating to any Government
Contract or Government Contract Bid, or (B) a material dispute between the Company
and a Governmental Authority or any prime contractor, subcontractor, vendor, or
other third party arising under or relating to any Government Contract or
Government Contract Bid.


 


4.24.15  Except as set forth on Schedule 4.24.15,
during the past five (5) years, the Company has undertaken no internal audit of
any events or omissions that, at the time of the audit, the Company or the
Seller reasonably expected to have a Material Adverse Effect on performance of
a Government Contract or Government Contract Bid or a Material Adverse Effect
on the Company as a whole. Except as set forth on Schedule 4.24.15, to
the Knowledge of the Sellers and the Company, (A) all Government Contract Bids
listed on Schedule 4.24.15 were submitted in the Ordinary Course of
Business of the Company, (ii) all Government Contract Bids listed on Schedule
4.24.15 were based on assumptions believed by the management of the Company
to be reasonable, and (iii) the Company and the Sellers reasonably believe all Government
Contract Bids listed on Schedule 4.24.15 are capable of performance by
the Company in accordance with the terms and conditions of such Government
Contract Bid without a total program loss over the life of such Government
Contract (calculated in accordance with the Company’s accounting principles
consistently applied).


 


4.24.16  To the Knowledge of the Company and the
Seller, no Government Contract, during the past five (5) years, has incurred or
currently projects costs overruns in an amount exceeding $25,000. No payment
has been made by the Company or, to the Knowledge of the Company and the
Seller, by a Person acting on the Company’s behalf, to any Person (other than
to any bona fide employee or agent of the Company, as defined in subpart 3.4 of
the FAR) which is or was improperly contingent upon the award of any Government
Contract or which would otherwise be in violation of any applicable procurement
law or regulation or any other Laws.


 


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4.24.17       Except as set forth on Schedule 4.24.17,
the Company has not assigned or otherwise conveyed or transferred, or agreed to
assign, to any Person, any Government Contracts, or any account receivable
relating thereto, whether a security interest or otherwise.


 


4.24.18       Except as set forth on Schedule 4.24.18,
the Company has reached agreement with the cognizant government representatives
approving and “closing” all rates, rate schedules and indirect costs charged to
Government Contracts for the years 1983 through 2003.


 


4.24.19       Schedule 4.24.19 identifies, as of December 31, 2003,
all material personal property, equipment and fixtures loaned, bailed or
otherwise furnished to the Company by or on behalf of the United States
Government (the “Government-Furnished Items”). To the Knowledge of the
Company and the Seller, the Company has complied in all material respects with
all of its obligations relating to the Government-Furnished Items and, upon the
return thereof to the United States Government in the condition thereof on the
date hereof, would have no liability to the United States Government with
respect thereto.


 


4.24.20       Except as set forth on Schedule 4.24.20,
(A) no written claims, or claims threatened in writing, exist against the
Company with respect to express warranties and guarantees contained in
Government Contracts on products or services provided by the Company; (B) no
such claims of a material nature have been made against the Company in the past
5 years; (C) to the Knowledge of the Company and the Seller, no amendment has
been made to any written warranty or guarantee contained in any Government
Contract that would reasonably be expected to result in a Material Adverse
Effect on the Company; and (D) to the Knowledge of the Company and the Seller,
the Company has not taken any action which would reasonably be expected to give
any Person a right to make a claim under any written warranty or guarantee
contained in any Government Contract.


 


4.24.21       Except to the extent prohibited by applicable
Law, Schedule 4.24.21 sets forth all material facility security
clearances held by the Company, all employees of the Company who have security
clearances and all employees of the Company who have pending requests for
security clearances.


 


4.25                    Liability for Cost and Pricing Data. To the Knowledge of the Company and the Seller, there exists no basis
for a claim of any liability against the Company by any Governmental Authority
as a result of defective cost and pricing data submitted to any Governmental
Authority, including, without limitation, any such data relating to liabilities
accrued on the Company’s books or in their respective financial accounts for
deferred compensation to any employees of the Company.


 


4.26                    Notes
and Accounts Receivable. All notes and accounts receivable of the Company shown on all balance
sheets included in the Financial Statements arose from sales actually made or
services actually performed in the Ordinary Course of Business of the Company and
are subject to no setoffs or counterclaims. To the Knowledge of the Company and
the Seller, the billed accounts receivable have been collected or are fully
collectible according to their terms in amounts not less than the aggregate
amounts thereof carried on the books of the Company.


 


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4.27                    Organizational Conflicts of Interest. Except as set forth on Schedule 4.27,
to the knowledge of the Company and the Seller in the past six years, the
Company has not had access to non-public information nor provided systems engineering,
technical direction, consultation, technical evaluation, source selection
services or services of any type, nor prepared specifications or statements of
work, nor engaged in any other conduct that would create in any current Governmental
Authority procurement for which the Company has submitted a Government Bid an
Organizational Conflict of Interest, as defined in Federal Acquisition Regulation
9.501, with the Company.


 


4.28                    Customers and Suppliers.


 


4.28.1              Schedule 4.28 identifies the 10 largest customers (by
revenue) of the Company (on a consolidated basis) for each of the two most
recent fiscal years and sets forth opposite the name of each such customer the
percentage of consolidated net revenues attributable to such customer. Schedule 4.28
also identifies any additional customers which the Company reasonably
anticipates shall be among the 20 largest customers for the current fiscal
year. For purposes of this Section 4.28, “customer” shall
mean any contracting entity (without regard to the end user of the goods or
services in question).


 


4.28.2              Since the date of the Most Recent Balance
Sheet, no material supplier of the Company has indicated that it shall stop, or
materially decrease the rate of, supplying materials, products or services to
the Company, and to the Company’s and the Seller’s Knowledge no customer listed
on Schedule 4.28 has indicated that it shall stop, or materially decrease
the rate of, buying materials, products or services from the Company.


 


4.29                    Affiliated Transactions. Except
as set forth on Schedule 4.29, neither (i) Seller, (ii) any member
of Seller’s immediate family (limited to Seller’s spouse and any child by blood
or adoption, brother, sister, or parent of Seller or Seller’s spouse), (iii)
any of the Seller’s Affiliates (excluding the Company), nor (iv) any officer,
director, or person owning beneficially or of record at least 10% of the voting
stock of the Company or any other Affiliate of Seller (each, a “Related Party”)
(x) is a party to any material agreement, contract, commitment, arrangement, or
transaction with the Company or that pertains to the business of the Company, excluding
employment or other compensation, non-competition, confidentiality or other
similar agreements between the Company and any Person who is an officer,
director, or employee of the Company (each an “Related Party Agreement”);
or (y) owns, leases, or has any economic or other interest in any asset,
tangible or intangible, that is used by the Company in carrying out its business.
As of the Closing, there shall be no outstanding or unsatisfied financial
obligations of any kind (including, without limitation, inter-company accounts,
notes, guarantees, loans, or advances) between the Company on the one hand and
a Related Party on the other hand (each a “Related Party Obligation”),
except to the extent arising out of the post-Closing performance of a Related
Party Agreement that is in writing and is set forth on Schedule 4.29
(and a true and complete copy of which has been provided to the Buyer). The
satisfaction, release, termination, or other disposition of a Related Party
Obligation shall not have caused, and shall not reasonably be expected to
cause, the Company to suffer an Adverse Consequence, except to the extent that such
Adverse Consequence is reflected in the Most Recent Financial Statements and
does not and will not impose any obligation or other Liability on the Company
from and after the Closing.


 


31





















 


4.30                    Defense Articles, Defense Services and Technical Data. During the period from inception to the
present, the Company has not manufactured or brokered “defense articles,” exported
“defense articles” or furnished “defense services” or “technical data” to
foreign nationals in the United States or abroad, as those terms are defined in
22 Code of Federal Regulations Sections 120.6, 120.9 and 120.10, respectively.


 


4.31                    Disclosure. To the Seller’s knowledge, no representation
or warranty by the Seller or the Company contained in this Agreement and no
statement of fact contained (i) in the Disclosure Schedules delivered to the
Buyer or its representatives pursuant to this Agreement, or (ii) in
certificates or other documents, delivered pursuant to this Agreement, by the
Company and the Seller to the Buyer or any of its representatives contains any
untrue statement of material fact or omits or will knowingly omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading.


 


4.32                    Bank Accounts. Schedule 4.32 lists the names and locations of all banks
and other financial institutions with which the Company maintains an account
(or at which an account is maintained to which the Company has access as to
which deposits are made on behalf of the Company), in each case listing the
type of account, the account number therefor, and the names of all Persons
authorized to draw thereupon or have access thereto and lists the locations of
all safe deposit boxes used by the Company.


 


5.                                      ADDITIONAL AGREEMENTS OF THE
PARTIES.


 


The Parties agree as follows with respect to
the period following the Closing.


 


5.1                           General. In case at any time after the Closing any
further action is necessary to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor
under Section 7 below). The Seller acknowledges and agrees that
from and after the Closing the Buyer will be entitled to possession of and
Seller will provide to Buyer all documents, books, records (including Tax
records), agreements, corporate minute books and financial data of any sort
relating to the Company; provided that Buyer will provide Seller with
reasonable access to all such data, records and information following the
Closing.


 


5.2                           Litigation Support. In the event and for
so long as any Party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
in connection with (i) any transaction contemplated under this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction that
existed on or prior to the Closing Date involving the Company, each of the other
Parties will cooperate with such Party and such Party’s counsel in the contest
or defense, make available their personnel, and provide such testimony and
access to their books and records as shall be reasonably necessary in connection
with the contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 7 below).


 


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5.3                                  Transition. Neither the Seller nor the Company will take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the
Company from maintaining the same business relationships with the Company after
the Closing as it maintained with the Company prior to the Closing. The Seller
will refer all customer inquiries relating to the business of the Company to
the Company from and after the Closing.


 


5.4                                  Confidentiality. The Seller will treat
and hold as confidential all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyer or destroy, at the request and option
of the Buyer, all tangible embodiments (and all copies) of the Confidential
Information which are in Seller’s possession. In the event that Seller is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Seller will notify
the Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this Section 5.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
Seller is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, Seller may disclose
the Confidential Information to the tribunal; provided, however,
that Seller shall use Seller’s reasonable best efforts to obtain, at the
request of the Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall not
apply to any Confidential Information which is generally available to the
public immediately prior to the time of disclosure.


 


5.5                           Company’s Accountants. The
Seller will cooperate with the Buyer, upon the request of the Buyer, in
obtaining the consent of the Company’s Accountants to the use by the Buyer of
the historical financial statements of the Company in connection with any
filing by CHC under the Securities Act or the Exchange Act.


 


6.                                      CONDITIONS TO OBLIGATION TO CLOSE.


 


6.1                           Conditions to Obligation of the Parties Generally. The Parties shall not be obligated to
consummate the transactions to be performed by each of them in connection with the
Closing if, on the Closing Date, (i) any action, suit, or proceeding shall be
pending or threatened before any Governmental Authority wherein an Order or
charge would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (ii) any Law or Order
which would have any of the foregoing effects shall have been enacted or promulgated
by any Governmental Authority. Each Party may waive any condition to its obligations
specified in this Section 6.1 by execution of a writing so stating
at or prior to the Closing.


 


6.2                           Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:


 


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6.2.1                     the representations and warranties set forth
in Section 3.1 and Section 4 above that are qualified
as to materiality shall be true and correct, and those that are not so qualified
shall be true and correct in all material respects, at and as of the date of
this Agreement and the Closing Date (except (x) to the extent such
representations and warranties are specifically made as of a particular date,
in which case such representations and warranties shall be true and correct as
of such date, and (y) for changes permitted by this Agreement);


 


6.2.2                     the Seller and the Company shall have
performed and complied with all of their covenants hereunder in all material
respects through the Closing, except to the extent that such covenants are
qualified by terms such as “material” and “Material Adverse Effect,” in which
case with respect to such covenants the Seller and the Company shall have
performed and complied with such covenants hereunder in all respects through
the Closing;


 


6.2.3                     no action, suit, or proceeding shall be
pending or threatened before any Governmental Authority wherein an Order or
charge would (A) affect adversely the right of the Buyer to own the Company
Shares and to control the Company, (B) affect adversely the right of the
Company to own its assets and to operate its business, (C) prevent consummation
of any of the transactions contemplated by this Agreement, or (D) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation (and no such Order or charge shall be in effect), nor shall any
Law or Order which would have any of the foregoing effects have been enacted or
promulgated by any Governmental Authority;


 


6.2.4                     no event, change or development shall exist
or shall have occurred since the date of this Agreement that has had or is
reasonably likely to have a Material Adverse Effect on the Company;


 


6.2.5                     the Seller and Company shall have procured all
of the necessary Governmental Authority authorizations, consents, orders and
approvals;


 


6.2.6                     the Seller and the Company shall have
delivered to the Buyer a certificate to the effect that each of the conditions
specified above in Section 6.2.1 through Section 6.2.5
is satisfied in all respects;


 


6.2.7                     the Buyer shall have received letters of
resignation from each of the directors of the Company;


 


6.2.8                     each of Deon Buffaloe and Bette Burgess shall
have entered into an Employment Agreement substantially in the form of Exhibit
C attached hereto (the “Employment Agreement”);


 


6.2.9                     the Seller and Michael Hardy, on the one
hand, and the Company, on the other hand, shall have entered into a limited
mutual release substantially in the form of Exhibit D attached hereto
(the “Release of Claims”);


 


6.2.10              the Buyer shall have received from counsel to
the Seller an opinion in form and substance as set forth in Exhibit E
attached hereto, addressed to the Buyer, and dated as of the Closing Date;


 


34





















 


6.2.11              the Seller and Michael Hardy shall have each
executed and delivered to Buyer a five-year Confidentiality and Non-Competition
Agreement in the form of Exhibit F;


 


6.2.12              the Seller shall deliver to Buyer such documentation
that properly evidences the Company is not a lessee and/or guarantor and has no
obligations with respect to the vehicle owned by the Seller, as further
described on Schedule 6.2.12.


 


6.2.13              the Seller shall have caused the Company to have
no long term Indebtedness as of Closing and shall have provided Buyer a
certificate to such effect;


 


6.2.14              the Seller shall have executed and delivered
the Escrow Agreement;


 


6.2.15              the Seller shall have delivered to Buyer
original stock certificates representing the Company Shares and irrevocable
stock powers executed by Seller transferring the Company Shares to Buyer;


 


6.2.16              the Seller shall have delivered to Buyer the
original corporate record book (minute book) of the Company;


 


6.2.17              the Seller and Company shall have paid the
attorneys and accountants to the Seller and Company in full through Closing and
shall have delivered to Buyer a certificate to such effect;


 


6.2.18              the Seller and Company shall have terminated all
Related Party Agreements and provided Buyer with evidence of such terminations;


 


6.2.19              all consents, permits and approvals from
parties to contracts with the Company or with the Seller that are set forth on Schedule 6.2.19
shall have been obtained and be in full force and effect, and the Buyer shall
have been furnished with evidence reasonably satisfactory to it that such
consents, permits and approvals have been obtained and are in full force and
effect;


 


6.2.20              the approval of the Board of Directors of the
Company (if required by applicable law) shall have been obtained, and the Buyer
shall have been furnished with evidence reasonably satisfactory to it that such
approval and any other approvals necessary for the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
have been obtained;


 


6.2.21              with respect to each Real Property Lease set
forth on Schedule 4.12, the Buyer shall have received any consent
of the landlord required under such Real Property Lease in connection with the
consummation of the transactions contemplated herein;


 


6.2.22              at the Closing, the Buyer shall received an
affidavit from Seller, setting forth such Seller’s name, address and federal
tax identification number and stating that Seller is not a “foreign person”
within the meaning of Section 1445 of the Code. If, on or before the Closing,
the Buyer shall not have received such affidavit, the Purchaser may withhold
from the Initial Payment at Closing to the Sellers pursuant hereto such sums as
are required to be withheld therefrom under Section 1445 of the Code;


 


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6.2.23 all
actions to be taken by the Seller and the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
the Buyer.


 


The
Buyer may waive any condition to its obligations specified in this Section 6.2
by execution of a writing so stating at or prior to the Closing.


 


6.3                             Conditions to Obligation of the Seller. The obligations of the Seller to consummate
the transactions to be performed by the Seller in connection with the Closing is
subject to satisfaction of the following conditions:


 


6.3.1                     the representations and warranties set forth
in Section 3.2 above that are qualified as to materiality shall be
true and correct, and those that are not so qualified shall be true and correct
in all material respects, at and as of the date of this Agreement and the
Closing Date (except (x) to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date, and (y) for changes
permitted by this Agreement);


 


6.3.2                     the Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing, except to the extent that such covenants are qualified by terms such
as “material” and “Material Adverse Effect,” in which case the Buyer shall have
performed and complied with all of its covenants hereunder in all respects
through the Closing;


 


6.3.3                     the Parties shall have received all authorizations,
consents, and approvals of Governmental Authorities referred to in Section 3.1.2,
Section 3.2.2 and Section 4.3 above;


 


6.3.4                     the Buyer shall have delivered to the Seller
a certificate to the effect that each of the conditions specified above in Section 6.3.1
through Section 6.3.3 is satisfied in all respects;


 


6.3.5                     all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Seller.


 


6.3.6                     Buyer shall have delivered the Cash Closing
Amount in accordance with Section 2.2


 


6.3.7                     Buyer shall have executed and delivered the
Confidentiality and Non-Competition Agreements, by and between the Buyer and
each of Seller and Michael Hardy, substantially in the form attached hereto as Exhibit
F.


 


6.3.8                     Company shall have entered into that certain
Release of Claims identified in Section 6.2.9 above.


 


36





















 


6.3.9                     The Buyer shall have entered into those
certain Employment Agreements identified in Section 6.2.8 above.


 


6.3.10              The Board of Directors of the Buyer shall
have authorized and approved this Agreement and the transactions contemplated
hereby.


 


6.3.11              Seller shall have caused the Company to
deliver to Buyer a certified copy of the Company’s articles of incorporation,
and all amendments thereto.


 


6.3.12              The Buyer shall have delivered the Escrow
Amount to the Escrow Agent and shall have entered into the Escrow Agreement.


 


6.3.13              Seller shall have caused the Company to
obtain and deliver to Buyer a certificate of good standing of the Company from
the Maryland Department of Assessments and Taxation a certificate from the
Secretaries of State of each jurisdiction in which the Company owns or leases
real property or otherwise does business evidencing the Company’s authorization
to conduct business as a foreign corporation in such state, dated not earlier
than ten (10) days prior to the Closing Date.


 


The
Seller may waive any condition to its obligations specified in this Section 6.3
by execution of a writing so stating at or prior to the Closing.


 


7.                                      INDEMNIFICATION.


 


7.1                           Indemnification by the Seller. The
Seller agrees to indemnify, defend and hold harmless the Buyer Parties (and
their respective directors, officers, employees, Affiliates, successors and
assigns) against, and hold the Buyer Parties harmless from and in respect of,
any and all Losses incurred by the Buyer Parties in any and all actions or
proceedings between the Buyer Parties and the Seller or between the Buyer
Parties and any third party or otherwise) based upon, arising out of, or
otherwise in respect of or which are incurred by virtue of or result from (a)
(i) the inaccuracy in or breach of any representation or warranty made by the
Seller or the Company, or (ii) the non-fulfillment by the Company or the Seller
prior to the Closing and by the Seller from and after the Closing, of any
unwaived covenant or agreement, in the case of (i) and (ii) above, as contained
in this Agreement or in any of the other Transaction Documents or in any document
or instrument delivered at the Closing pursuant hereto or thereto or (b)
enforcing the Buyer Parties’ indemnification rights provided for hereunder;
provided, however, that no indemnification shall be payable under this Section 7.1
to the extent that indemnity is specifically provided for Losses pursuant to
any supplemental indemnity pursuant to Section 7.3 of this Agreement.


 


7.2                           Indemnification by the Buyer. The
Buyer agrees to indemnify the Seller against and hold Seller harmless from and
in respect of any and all Losses which are incurred by virtue of or result from
(a) (i) the inaccuracy in or breach of any representation or warranty made by Buyer,
or (ii) the non-fulfillment or breach of any unwaived covenant or agreement, in
each case as made by or on behalf of the Buyer in this Agreement or in any of
the other Transaction Documents or in any document or instrument delivered at
the Closing pursuant hereto or thereto or (b) enforcing the Seller’s
indemnification rights provided for hereunder.


 


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7.3                               Supplemental Indemnification by Seller.


 


7.3.1                     Supplemental ERISA
Indemnification. Seller agrees to indemnify and hold harmless
the Buyer Parties with respect to any Losses incurred by any of the Buyer
Parties based upon, arising out of or otherwise in respect of, the Company’s
being affiliated prior to the date hereof, directly or indirectly, under Code Section 414
or ERISA Section 4001 or any similar foreign law, with the Seller or any
of their Affiliates. In addition, Seller agrees to indemnify and hold harmless
the Buyer Parties and Employee Benefit Plans with respect to any and all Losses
arising out of or otherwise in respect of (i) any Employee Benefit Plan that is
not disclosed on Schedule 4.20 or any violation of any reporting
and disclosure rules or regulations, including, without limitation, the failure
to timely file any report, schedule, application for determination, or any
other information required to be reported, under ERISA or the Code in respect
of any Employee Benefit Plan that is not disclosed on Schedule 4.20,
(ii) any violation of any reporting and disclosure rules or regulations,
including, without limitation, the failure to timely file any report, schedule,
application for determination, or any other information required to be
reported, under ERISA or the Code in respect of any Employee Benefit Plan that
is disclosed on Schedule 4.20 and (iii) any failure to amend,
within the time period required under the Code, any Employee Benefit Plan that
is a tax-qualified retirement plan to qualify under Section 401(a) of the
Code.  Notwithstanding anything to the
contrary in Section 7.4, the indemnification obligations set forth in
clauses (i) (ii) and (iii) of the second sentence of this Section 7.3.1
shall be treated as ERISA Claims (as defined in Section 7.4) for purposes
of the survival provisions of Section 7.4 and shall be subject to the
dollar limitations in Section 7.5(i) and (ii).


 


7.3.2                     Supplemental Contract
Indemnification. Seller agrees to indemnify and hold harmless
the Buyer Parties with respect to any Losses incurred by any of the Buyer Parties
based upon, arising out of or otherwise in respect of, any government
disallowance of incurred Direct Contract Costs and/or Indirect Costs,
including, without limitation, any Losses arising out of Defense Contract Audit
Agency for any time period prior to the Closing Date. Notwithstanding anything
to the contrary in Sections 7.3.2 and 7.5, all indemnification obligations in
this Section 7.3.2 shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, shall
terminate on March 31, 2006 and shall be subject to the dollar limitations
in Sections 7.5(i) and (ii).


 


7.3.3                     Supplemental Tax
Indemnification. Seller agrees to indemnify the Buyer Parties
for any liability for any Taxes imposed on the Company (including without limitation,
any underpayment penalties, and any Taxes required to have been withheld from payments
to the employees of the Company) pursuant to federal, state, local or foreign
law attributable to any periods or portions thereof ending on or before the
Closing Date (“Pre-Closing Taxes”) in excess of Taxes which are included as
current liabilities for purposes of computing Working Capital. All
indemnification obligations set forth in this Section 7.3.3 shall be
treated as Tax Claims (as defined in clause (b) of Section 7.4) for
purposes of the survival provisions of Section 7.4 and shall not be
subject to any dollar limitation, including, without limitation, those set
forth in Section 7.5.


 


7.3.4                     Supplemental Rate Overruns Indemnification. Seller agrees to indemnify and hold harmless the Buyer Parties with
respect to any Losses incurred by any of the Buyer Parties based upon, arising
out of or in connection with the Company’s rate overruns for


 


38





















 


any
time period prior to December 31, 2003. Notwithstanding anything to the
contrary in Section 7.4 and 7.5, all indemnification obligations in this Section 7.3.6
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, shall terminate on March 31, 2006
and shall be subject to the dollar limitations described in Section 7.5(i)
and (ii).


 


7.4                               Survival of Representations and Warranties of the
Seller. Notwithstanding any right of the Buyer fully
to investigate the affairs of the Company and the Seller and notwithstanding
any knowledge of facts determined or determinable by the Buyer pursuant to such
investigation or right of investigation, the Buyer has the right to rely fully
upon the representations and warranties of each of the Seller and the Company
contained in this Agreement. All representations and warranties of the parties
hereto contained in this Agreement shall survive the execution and delivery
hereof and the Closing hereunder, and, except for the representations and
warranties made in Sections 3.1, 3.2, 4.1, 4.2, 4.3 and 4.11 which shall survive
without limit, (a) with respect to any General Claim (as defined below), or
ERISA Claim, shall terminate on March 31, 2006, (b) with respect to any
Tax Claim, shall terminate on the later of (i) sixty (60) days following the
date upon which the liability to which any such Tax Claim may relate is barred
by all applicable statutes of limitation (including any extension or waiver of
such periods) and (ii) sixty (60) days following the date upon which any claim
for refund or credit related to such Tax Claim is barred by all applicable
statutes of limitations (including any extension or waiver of such periods),
(c) unless, in the case of clauses (a), (b) and (c) above, the party asserting
such claim shall have given notice on or prior to such date, to the party
against which such claim is asserted.


 


As used in this Agreement, the following
terms have the following meanings: (a) “General Claim” means any claim (other
than a Tax Claim, an ERISA Claim, an Environmental Claim), (b) “Tax Claim”
means any claim based upon, arising out of or otherwise in respect of, any
inaccuracy in or any breach of any representation or warranty of any Seller or
the Company contained in this Agreement related to Taxes, including, without
limitation, Section 4.11 and any claim for Losses pursuant to Section 7.3.3,
(c) “ERISA Claim” means any claim based upon, arising out of or otherwise in
respect of, any inaccuracy in or any breach of any representation or warranty
of any Seller or the Company contained in this Agreement related to any Plan,
including, without limitation, Section 4.20 and any claim for Losses
pursuant to Section 7.3.1, and (d) “Environmental Claim” means any claim
based upon, arising out of or otherwise in respect of, any inaccuracy in or any
breach of any representation or warranty of any Seller contained in Section 4.22.
Except as otherwise expressly provided herein, the covenants and agreements
contained in this Agreement shall survive the execution and delivery hereof and
the consummation of the transactions contemplated hereby.


 


7.5                           Certain Limitations on Indemnification Obligations. The Buyer Parties shall not be entitled to
receive any indemnification payments under Sections 7.1 and 7.3:


 


(i)                                     in connection with the inaccuracy in or
breach of any representation or warranty or any other claim, until the
aggregate amount of Losses incurred by the Buyer Parties equal $145,000 (the “Deductible
Amount”), whereupon the Buyer shall be entitled to receive in full


 


39





















 


indemnity payments for all such Losses in excess of the Deductible
Amount; provided, however, that solely for purposes of determining whether the
amount of the Seller’s indemnification obligations exceeds the Deductible
Amount, a breach of the Seller’s and the Company’s representations or
warranties that gives rise to losses in excess of $25,000 shall be determined
without regard to any limitation or qualification as to materiality or Company
Material Adverse Effect (or similar concept) set forth in such representation
or warranty.


 


(ii)                                  Other than Tax Claims or as a result of a
breach of Section 3.1, the maximum aggregate amount of indemnification to
which the Buyer Parties shall be entitled to receive for General Claims, ERISA
Claims and Environmental Claims or otherwise shall not exceed $2.8 million.


 


7.6                           Defense
of Claims. In the case of
any claim for indemnification under Section 7.1, 7.2 or 7.3 arising from a
claim of a third party (including the IRS or any Governmental Agency), an
indemnified party shall give prompt written notice and, subject to the
following sentence, in no case later than twenty (20) days after the
indemnified party’s receipt of notice of such claim, to the indemnifying party
of any claim, suit or demand of which such indemnified party has Knowledge and
as to which it may request indemnification hereunder. The failure to give such
notice shall not, however, relieve the indemnifying party of its
indemnification obligations except to the extent that the indemnifying party is
actually harmed thereby. The indemnifying party shall have the right to defend
and to direct the defense against any such claim, suit or demand (including,
without limitation, ERISA Claims, Tax Claims and claims relating to Sections
7.3.2), at its expense, and with counsel selected by the indemnifying party
unless such claim, suit or demand seeks an injunction or other equitable relief
against the indemnified party; provided, however, the indemnifying party shall
not have the right to defend or direct the defense of any such claim, suit or
demand if it refuses to acknowledge fully its obligations to the indemnified
party or contests, in whole or in part, its indemnification obligations
therefor. If the indemnifying party elects, and is entitled, to compromise or
defend such claim, it shall within 30 days (or sooner, if the nature of the
claim so requires) notify the indemnified party of its intent to do so, and the
indemnified party shall, at the request and expense of the indemnifying party,
cooperate in the defense of such claim, suit or demand. If the indemnifying
party elects not to compromise or defend such claim, fails to notify the
indemnified party of its election as herein provided or refuses (other than in
good faith) to acknowledge or contests its obligation to indemnify under this
Agreement, the indemnified party may pay, compromise or defend such claim.
Except as set forth in the immediately preceding sentence, the indemnifying
party shall have no indemnification obligations with respect to any such claim,
suit or demand which shall be settled by the indemnified party without the
prior written consent of the indemnifying party (which consent shall not be
unreasonably withheld or delayed); provided, however, that notwithstanding the
foregoing, the indemnified party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and exercise thereof has been stayed, nor shall it be
required to refrain from paying any claim where the delay in paying such claim
would result in the foreclosure of a lien upon any of the property or assets
then held by the indemnified party or where any delay in payment would cause
the indemnified party material economic loss. The indemnifying party’s right to
direct the defense shall include the right to compromise or enter


 


40





















 


into
an agreement settling any claim by a third party; provided that no such
compromise or settlement shall obligate the indemnified party to agree to any
settlement which requires the taking of any action by the indemnified party
other than the delivery of a release, except with the consent of the
indemnified party (such consent to be withheld or delayed only for a good faith
reason). Notwithstanding the indemnifying party’s right to compromise or settle
in accordance with the immediately preceding sentence, the indemnifying party
may not settle or compromise any claim over the objection of the indemnified
party; provided, however, that consent by the indemnified party to settlement
or compromise shall not be unreasonably withheld or delayed. The indemnified
party shall have the right to participate in the defense of any claim, suit or
demand with counsel selected by it subject to the indemnifying party’s right to
direct the defense. The fees and disbursements of such counsel shall be at the
expense of the indemnified party; provided, however, that, in the case of any
claim, suit or demand which seeks injunctive or other equitable relief against
the indemnified party, the fees and disbursements of such counsel shall be at
the expense of the indemnifying party.


 


7.7                           Non-Third Party Claims. Any claim which does not result in a third
party claim shall be asserted by a written notice to the other Party or
Parties. The recipient of such notice shall have a period of forty-five (45)
days after receipt of such notice within which to respond thereto. If the
recipient does not respond within such forty-five (45) days, the recipient
shall be deemed to have accepted responsibility for the Losses set forth in
such notice and shall have no further right to contest the validity of such
notice. If the recipient responds within such forty-five (45) days after the
receipt of the notice and rejects such claim in whole or in part, the party delivering
shall be free to pursue such remedies as may be available to it under contract
or applicable law.


 


7.8                           Liability of the Company. The Buyer shall not after the Closing make any claim against the
Company in respect of any representation, warranty, covenant or any other
obligation of the Company to the Buyer hereunder or under any other Transaction
Document to which the Company is a party. The Buyer shall not make any claim
against Seller in respect of any non-fulfillment after the Closing by the
Company of any covenant hereunder or under any other Transaction Document to
which the Company is a party. Notwithstanding anything herein to the contrary,
the Buyer retains, and nothing contained in this Section 7.8 shall in any
way waive or limit, its rights to bring claims against the Seller pursuant to
this Article 7.


 


7.9                           Tax Treatment. All indemnification payments shall constitute
adjustments to the Purchase Price for all Tax purposes, and no party shall take
any position inconsistent with such characterization, unless a final
determination by any Governmental Authority causes any such amount not to constitute
an adjustment to the Purchase Price for Tax purposes.


 


7.10                    Exclusive Remedy. The foregoing indemnification provisions in
this Section 7 shall be the exclusive remedy from and after the Closing of
the Buyer against the Seller and of the Seller against the Buyer for Losses
under Sections 7.1, 7.2 and 7.3 or with respect to any other claims relating to
this Agreement or the transactions contemplated hereby, provided that nothing
contained in this Agreement (i) is intended to waive any claims for fraud or
willful misconduct to which a party may be entitled, or shall relieve or limit
the liability of any party or any officer or director of such Party from any
liability arising out of or resulting from fraud or willful misconduct in
connection with the transactions contemplated by this Agreement or in


 


41





















 


connection
with the delivery of any of the documents referred to herein and (ii) is
intended to waive any equitable remedies to which a party may be entitled.


 


7.11                    No
Right of Contribution. The Seller shall have no right to seek contribution from the Company or
the Buyer with respect to all or any part of any of the Seller’s indemnification
obligations under this Section 7.


 


7.12                    Insurance. The Buyer shall first proceed against any
insurance that is available with respect to any Losses prior to seeking payment
with respect to any indemnification claim for Seller.


 


7.13                    Set-Off. Any amounts to which Buyer may be entitled
pursuant to the provisions of Sections 7.1 or 7.3 may be set-off by Buyer
against the Escrow Amount. Prior to any such set-off, Buyer shall provide in
writing notice at least thirty (30) days to Seller describing the amount of and
basis for such set-off. The Escrow Amount represented by the proposed set-off shall
be suspended until the claim or dispute that is the basis for the proposed
set-off is either (i) resolved by the parties in writing or (ii) determined by
an arbitration award after which time the proposed set-off shall become effective.
Any payment or set-off determined upon resolution of any proposed set-off shall
be made within ten (10) days following the resolution or determination of such
claim or dispute. If such claim that is the basis for the setoff results in an award
or settlement of damages less than the amount of the set-off, then Buyer shall
pay Seller the difference between the amount setoff and the award or settlement
of damages, plus interest at the rate of four percent (4%) per annum. Interest
paid pursuant to this sub-section shall be accrued from the date the
scheduled payment was due.


 


8.                                      TAX MATTERS.


 


The following provisions shall govern the
allocation of responsibility as between the Buyer and the Seller for certain
Tax matters following the Closing Date:


 


8.1                           Company Status. The Company and the Seller will not, prior to
the Closing, revoke the Company’s election to be taxed as an S corporation
within the meaning of Code §§1361 and 1362. Prior to the Closing, the Company
and the Seller will not take or allow any action that would result in the
termination of the Company’s status as a validly electing S corporation within
the meaning of Code §§1361 and 1362.


 


8.2                           Post-Closing Tax Returns.


 


8.2.1                           Preparation of Company
Income Tax Returns by Seller. Seller shall direct the Company’s Accountants
to prepare all income Tax Returns required to be initially filed by the Company
after the Closing Date which relate to taxable periods ending on or before the
Closing Date (“Pre-Closing Income Tax Returns”), and shall be responsible for
expenses of preparing such Tax Returns. Each such Tax Return shall be prepared
in a manner consistent with the prior practice of the Company unless otherwise
required by applicable Tax laws. A draft of each such Tax Return shall be
provided to Buyer for review and approval at least 30 days prior to the due
date for filing such Tax Return. Buyer shall have the right to review and
approve such Tax Return prior to the filing of such Tax Return (which approval
shall not be unreasonably withheld or delayed). For this purpose, Buyer’s
withholding of timely approval of a Tax Return


 


42





















 


reflecting
a reporting position as caused to be prepared by Seller shall be deemed
reasonable only if the reporting position proposed by the Seller on such Tax
Return does not have a “reasonable basis,” as defined in Code §6662. To the
extent permitted by applicable law, Seller shall include any income, gain,
loss, deduction or other Tax items for such periods on their Tax Returns in a
manner consistent with the Schedule K-1s furnished by the Company to the
Seller for such periods.


 


8.2.2                           Preparation of Other Company
Tax Returns. Except as provided with respect to
Pre-Closing Income Tax Returns in Section 8.2.1, Buyer shall properly and
accurately prepare (or cause to be prepared) each Tax Return required to be
filed by the Company after the Closing Date for a taxable period beginning on
or before the Closing Date, and shall be responsible for expenses of preparing
such Tax Returns. If any Tax shown as due on any such Tax Return is to be borne
by the Seller (taking into account indemnification obligations hereunder and
adjustments to the Purchase Price), (A) such Tax Return shall be prepared in a manner
consistent with the prior practice of the Company unless otherwise required by applicable
Tax laws; (B) a draft of each such Tax Return shall be provided to Seller for
review and approval at least 30 days prior to the due date for filing such
return (or, if required to be filed within 90 days of the Closing, as soon as
possible following the Closing); and (C) Seller shall have the right to review
and approve such Tax Return prior to the filing of such Tax Return (which
approval shall not be unreasonably withheld or delayed). For this purpose,
Seller’s withholding of timely approval of a Tax Return based upon Buyer’s
failure to adopt in such Tax Return an alternative reporting position suggested
by Seller shall be deemed reasonable if the reporting position proposed by the
Seller on such Tax Return has a “reasonable basis,” as defined in Code §6662.


 


8.2.3                           Filing of Tax Company Tax
Returns and Payment of Taxes. Buyer shall file (or cause to be filed) each
Tax Return required to be filed by the Company after the Closing Date for a
taxable period beginning on or before the Closing Date, and shall cause to be timely
paid all Taxes shown on such Tax Returns; provided that such payment obligation
shall not prevent recovery by Buyer of any indemnification to which Buyer may
be entitled under Section 7. To the extent that there are insufficient
funds then available in the Escrow Account to fully pay such claim for
indemnity, the Seller shall reimburse the Buyer for any Taxes of the Company
payable with respect to a taxable period ending on or before the Closing Date
or allocable to the Pre-Closing Period (as defined below), within fifteen (15)
days after payment by Buyer or the Company of such Taxes to the extent of
Seller’s obligation to indemnify against such Taxes pursuant to Section 7.3.3
of this Agreement (that is, to the extent of the excess of such Tax over the
amount taken into account as a liability in the computation of Closing Working
Capital).


 


8.2.4                           Closing of Taxable Periods;
Allocation of Tax to the Pre-Closing Period. The Parties shall, unless prohibited by applicable law, cause the
taxable period of the Company to end as of the close of the Closing Date. Buyer
shall not permit the Company to take any actions after Closing on the Closing
Date that are out of the Ordinary Course of Business, except as contemplated by
this Agreement. For the avoidance of doubt, the Parties hereto agree that the
taxable year of the Company, as a subchapter S corporation, shall terminate and
end at the end of the day before the Closing Date for federal income Tax
purposes (and to the extent applicable, for state and local income Tax purposes
as well), and that all items of income, gain,


 


43





















 


deduction,
or loss recognized on or after the Closing Date shall be included by the
Company and CHC in CHC’s consolidated federal income tax return (and to the
extent applicable, in CHC’s tax return for state and local tax purposes as
well). For purposes of this Agreement, Taxes incurred by the Company with
respect to a taxable period that includes but does not end on the Closing Date
(other than a Taxable period that begins on the Closing Date), shall be
allocated to the portion of the taxable period ending on the Closing Date (the “Pre-Closing
Period”) (A) except as provided in (B) and (C) below, to the extent feasible,
on a specific identification basis, according to the date of the event or
transaction giving rise to the Tax, and (B) except as provided in (C) below,
with respect to periodically assessed ad valorem Taxes and Taxes not otherwise
reasonably allocable to specific identifiable transactions or events or dates,
in proportion to the number of days in such taxable period that occur on or
before the Closing Date compared to the total number of days in such taxable period,
and (C) in the case of any Tax based upon or related to income or receipts, in
an amount equal to the Tax which would be payable if the relevant taxable
period ended on the Closing Date. All determinations necessary to give effect
to the foregoing allocations shall be made in a manner consistent with prior
practices of the Company. Notwithstanding the foregoing, the Parties agree that
income Taxes attributable to the Pre-Closing Period shall include any Tax
liability of the Company arising in connection with the Closing (including,
without limitation, any Tax relating to distributions of property by the
Company to the Seller occurring on the Closing Date) other than in the Ordinary
Course of Business.


 


8.3                           Transfer Taxes. Notwithstanding Section 8.2 and Section 7.3.3,
the Parties agree that all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest thereon, “Transfer Taxes”) incurred by the Company in connection with
this Agreement, shall be borne one-half by the Buyer and one-half by the
Seller. Each Party shall prepare at their own expense any Tax Returns relating
to Transfer Taxes required to be filed by such Party, and, if required by
applicable law, each Party will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation required to be filed
by the other Parties. The Party paying any such Transfer Tax in excess of its ratable
share shall be reimbursed by the other Party for the appropriate portion of
such Tax within fifteen (15) days after notice and evidence of payment is given
to the other Party of such payment; provided that reimbursement by the Seller
shall be required only to the extent the portion of such Transfer Tax allocable
to Seller exceeds the amount taken into account as a liability therefore in the
Net Working Capital computation, and further provided that any payment from
Seller otherwise required hereunder shall be paid first out of the Escrow
Account to the extent thereof.


 


8.4                           Audits and Contests Regarding Taxes. Any Party who receives any notice of a pending or threatened Tax audit,
assessment, or adjustment relating to the Company, or the Seller with respect
to the Company, which may give rise to liability of another Party hereto, shall
promptly notify Buyer and Seller within ten (10) business days of the receipt
of such notice. The Parties each agree to consult with and to keep the other
Parties hereto informed on a regular basis regarding the status of any Tax
audit or proceeding to the extent that such audit or proceeding could affect a
liability of such other Parties (including indemnity obligations hereunder).
Seller shall have the right to represent the Company’s interests in any Tax
audit or administrative or judicial proceeding and to employ counsel of Seller’s
choice and at Seller’s expense, but reasonably satisfactory to Buyer, but only
to the extent such audit or other proceeding pertains to


 


44





















 


taxable
periods ending on or before the Closing Date. Buyer shall have the right to
participate in such proceeding at its own expense, and shall be entitled to
control the disposition of any issue involved in such proceeding which does not
affect a potential liability of Seller. Both Buyer and Seller shall be entitled
to represent their own interests in light of their responsibilities (including
indemnity obligations) for the related Taxes, at their own expense, in any
audit or administrative or judicial proceedings involving a taxable period that
includes but does not end on the Closing Date, provided that neither Party
shall communicate with representatives of an auditing Taxing Authority on any
substantive matter without advising the other Party of the communication in advance,
and if oral, providing the other Party an adequate opportunity to and
participate in such communication. Notwithstanding the foregoing, Seller shall
not agree to any settlement for any taxable period that would effect Tax
Liabilities of Buyer or the Company for any taxable period beginning on or
after the Closing Date without prior written consent of Buyer. Except as
provided in this Section 8.5, the provisions of Article 7 including
the provisions therein addressing settlement authority, shall govern the manner
in which Tax audit or administrative or judicial proceedings are resolved.


 


8.5                           Cooperation on Tax Matters.


 


8.5.1                     The Buyer, the Company and the Seller shall
cooperate fully, as and to the extent reasonably requested by the other Party,
in connection with the filing of Tax Returns pursuant to this Section 8
and any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other Party’s request)
the provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company and the Seller shall (A) retain
all books and records with respect to Tax matters pertinent to the Company relating
to any taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by the Buyer or the
Seller, any extensions thereof) of the respective taxable periods, and abide by
all record retention agreements entered into with any Taxing Authority, and (B)
give the other Party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other Party so requests,
the Company or the Seller, as the case may be, shall allow the other Party to
take possession of such books and records.


 


8.5.2                     The Buyer and the Seller further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, without
limitation, with respect to the transactions contemplated hereby).


 


8.6                           Purchase Price Allocation to Covenant Not to Compete. The Parties hereby agree that $100,000 of the Purchase Price shall be
considered as having been paid for the Seller’s non-competition covenant of
Seller.


 


8.7                           Buyer Actions Prohibited. The Buyer covenants that it will not and will not cause or permit the
Company or any Affiliate of the Buyer to (1) take any action on the Closing Date
other than in the Ordinary Course of Business, including, without limitation, the
distribution of any dividend or the effectuation of any redemption, that could
give rise to any Tax


 


45





















 


liability
or reduce any Tax Asset of either the Company (for a taxable period or portion
thereof ending on or before the Closing Date) or the Seller, or give rise to
any loss of the Seller, or (2) make any election or deemed election under Section 338
of the Code, or (3) make or change any Tax election, amend any Tax Return or
take any Tax position on any Tax Return, take any action, omit to take any
action or enter into any transaction, merger or restructuring that ipso facto
results in any increase in any Tax liability or any reduction of any Tax Asset
of either the Company (for a taxable period or portion thereof ending on or
before the Closing Date) or the Seller.


 


8.8                           Amended Tax Returns. Except in connection with an audit resolved
pursuant to Section 8.5 and Section 7.6 (including consistent
correlative adjustments to Tax Returns for non-audited taxable periods), no
party may amend a Tax Return filed by any Party with respect to the Company or
file or amend any Tax election of the Company, in each case, for a taxable
period beginning prior to the Closing Date, without the consent of the other
Parties hereto, not to be unreasonably withheld or delayed. Buyer shall, upon
request by Seller and at the sole expense of the Seller, cooperate in the
preparation of and submission to the proper Taxing Authority of any amended Tax
Return which is required to cause such Tax Return to be consistent with
adjustments to the Tax Returns of the Company for any other taxable period
proposed by any Taxing Authority, or to give effect to an allowable loss
carryback or carryover from a taxable period of the Company ending on or before
the Closing Date.


 


9.                                      FEES
RELATING TO TRANSACTION.


 


9.1                           Brokerage Fees. Except as otherwise set forth herein, the Seller and the Company
represent and warrant to the Buyer that no broker, finder, agent or similar
intermediary has acted on behalf of the Company or Seller in connection with
this Agreement or the transactions contemplated hereby, and that there are no
brokerage commissions, finders’ fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
the Company or the Seller, or any action taken by the Company or any of the
Seller. The Buyer represents and warrants to the Seller that no broker, finder,
agent or similar intermediary has acted on behalf of the Buyer in connection
with this Agreement or the transactions contemplated hereby, and that there are
no brokerage commissions, finders’ fees or similar fees or commissions payable
in connection therewith based on any agreement, arrangement or understanding
with the Buyer or any action taken by the Buyer. Each such party agrees to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of such party, and to bear the
cost of legal expenses incurred in defending against any such claim.


 


9.2                           Other Fees and Expenses. The parties to this Agreement shall bear
their respective fees and expenses incurred in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including, without limitation, all fees and expenses of attorneys,
consultants, investment bankers, auditors and other third party advisors
incurred in connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby. For purposes of clarifying
the foregoing, unpaid expenses of the Seller and the Company shall be paid by
the Seller out of the proceeds of the sale and not otherwise charged or
expensed to, or paid by, the Company.


 


46





















 


10.                               MISCELLANEOUS.


 


10.1                    Press Releases and Public Announcements. No Party shall issue or cause to be issued
any press release or make or cause to be made any public announcement relating
to the subject matter of this Agreement without the prior written approval of
the Buyer and the Seller; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law (in which case the disclosing Party will advise the other Parties prior to
making the disclosure).


 


10.2                    No Third-Party Beneficiaries. This
Agreement shall not confer any rights or remedies upon any Person other than
the Parties and their respective successors and permitted assigns.


 


10.3                    Entire Agreement. With the exception of
that certain confidentiality agreement between the Company and CHC dated November 7,
2003, which shall continue to survive this Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. Without limiting the generality of the foregoing, the
Parties agree that the letter agreement dated February 19, 2004, by and
between the Company and the Buyer is null and void and of no further effect.


 


10.4                    Succession and Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of such Party’s rights, interests, or
obligations hereunder without the prior written approval of the Buyer and the
Seller; provided, however, that the Buyer may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates,
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases the Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder) and (iii)
assign any and all of its rights hereunder to and for the benefit of any lender
to the Buyer or the Company for the purpose of providing collateral security.


 


10.5                    Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.


 


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


 


10.7                    Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be deemed duly
given if personally delivered, sent by registered or certified mail, return
receipt requested, postage prepaid, or delivered by express courier service or
telecopied (with hard copy to follow). Notices, demands, claims and other communications
to the Parties shall, unless another address is specified in writing, be sent
to the address or telecopy number set forth below:


 


47





















 


	
  If
  to the Buyer:

  	
   

  	
  RGII
  Technologies, Inc.

  
	
   

  	
   

  	
  1997
  Annapolis Exchange Parkway

  
	
   

  	
   

  	
  Suite
  210

  
	
   

  	
   

  	
  Annapolis,
  MD 21401

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
  Fax:
  (410) 224-3767

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Reed
  Smith LLP

  
	
   

  	
   

  	
  One
  Riverfront Plaza

  
	
   

  	
   

  	
  Newark,
  NJ 07102

  
	
   

  	
   

  	
  Attention:
  Gerard S. DiFiore

  
	
   

  	
   

  	
  Fax:
  (973) 621-3199

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Computer
  Horizons Corporation

  
	
   

  	
   

  	
  49
  Old Bloomfield Avenue

  
	
   

  	
   

  	
  Mountain
  Lakes, New Jersey 07046-1495

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
  Fax:
  (973) 402-7986

  
	
   

  	
   

  	
   

  
	
  If
  to the Seller:

  	
   

  	
  Cynthia
  F. Hardy

  
	
   

  	
   

  	
  463
  NE 38th Street

  
	
   

  	
   

  	
  Boca
  Raton, FL 33431

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Shaw
  Pittman

  
	
   

  	
   

  	
  1650
  Tysons Boulevard

  
	
   

  	
   

  	
  McLean,
  VA 22102-4859

  
	
   

  	
   

  	
  Attention:
  Craig E. Chason, Esq.

  
	
   

  	
   

  	
  Phone:
  (703) 770-7947

  
	
   

  	
   

  	
  Fax:
  (703) 770-7901

  
	
   

  	
   

  	
   

  
	
  If
  to the Company:

  	
   

  	
  AUTOMATED
  INFORMATION MANAGEMENT, INC.

  
	
   

  	
   

  	
  4403
  Forbes Boulevard

  
	
   

  	
   

  	
  Lanham,
  Maryland 20706

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  RGII
  Technologies, Inc.

  
	
   

  	
   

  	
  1997
  Annapolis Exchange Parkway

  
	
   

  	
   

  	
  Suite
  210

  
	
   

  	
   

  	
  Annapolis,
  MD 21401

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
  Fax:
  (410) 224-3767

  



 


Any
Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have


 


48





















 


been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.


 


10.8                    Governing Law.  This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Maryland without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Maryland or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.


 


10.9                    Amendments and Waivers. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.


 


10.10             Severability. Any term or provision
of this Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.


 


10.11             Expenses. Each of the Buyer, the Seller and the Company
will bear such Person’s own costs and expenses (including, without limitation, attorneys’,
accountants’, investment bankers and valuation experts’ fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby; provided, however, that in the event that the
transactions contemplated by this Agreement are consummated, if the Company
remains liable on the Closing Date for any unpaid expenses incurred by or on
behalf of the Company or the Seller in connection with the transactions
contemplated hereby, which expenses have not been fully accounted for in the
determination of Working Capital, such expenses shall be deducted from the
Company’s working capital in the determination of Working Capital pursuant to Section 2.4.2.


 


10.12             Construction. The Parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word “including” shall mean
including without limitation. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.


 


49





















 


10.13             Incorporation of Exhibits and Disclosure Schedules.  The Exhibits and Disclosure Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.


 


10.14             Specific Performance. Each
of the Parties acknowledges and agrees that the other Parties would be damaged
irreparably in the event any of the provisions of this Agreement are not performed
in accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the Transaction
Documents and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the Parties
and the matter (subject to the provisions set forth in Section 10.16
below), in addition to any other remedy to which they may be entitled, at law
or in equity.


 


10.15             Submission to Jurisdiction. Each
of the Parties submits to the jurisdiction of any state or federal court
sitting in the State of Maryland, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on any other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10.7 above. Nothing in this Section 10.15,
however, shall affect the right of any Party to serve legal process in any
other manner permitted by law or at equity. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.


 


10.16             Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


10.17             Waiver of Certain Rights. By
her execution of this Agreement, Seller hereby irrevocably waives, relinquishes
and terminates effective as of the Closing Date any and all of Seller’s rights
under the Company’s certificate of incorporation or bylaws, or under any agreement
with the Company to which Seller is a party or in respect of which Seller may
have any rights, including any purchase right, approval right, right of first
refusal, or other similar right, with respect to the transactions contemplated
by this Agreement, notwithstanding any defects in notice or procedure contained
therein; provided that upon termination of this Agreement pursuant to Section 9
of this Agreement prior to Closing, this Section 10.17 shall thereupon
become void and of no further force and effect.


 


[END OF
PAGE]


[SIGNATURE
PAGE FOLLOWS]


 


50





















 


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


 


 


	
   

  	
  RGII TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathryn B. Freeland

  	
   

  
	
   

  	
   

  	
  Kathryn B. Freeland, CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTOMATED INFORMATION

  MANAGEMENT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cynthia F. Hardy

  	
   

  
	
   

  	
   

  	
  Cynthia
  F. Hardy, President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cynthia F. Hardy

  	
   

  
	
   

  	
   

  	
  Cynthia
  F. Hardy, Individually

  



 


51