**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**

 

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**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                                        |   |

 

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|   | 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

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|   | 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                            |   |

 

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|   | 10.16 | Waiver of Jury Trial     |   |
|--------|-------|--------------------------|--------|
|   | 10.17 | Waiver of Certain Rights |   |

 

iv

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| **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

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| Schedule 6.2.12 — Company  Obligations             |   |
|---------------------------------------------------------|--------|
| Schedule 6.2.19 —  Consents, Permits and Approvals |   |

 

vi

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**STOCK PURCHASE AGREEMENT**

 

ThisStock Purchase Agreement (this “Agreement”), is made as of April 1,2004, by and among **RGII TECHNOLOGIES, INC.,**aMaryland corporation (the “Buyer”), **AUTOMATEDINFORMATION 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 asthe “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 andoutstanding 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 “CompanyShares”).

 

**WHEREAS,**the Buyer desires to acquire and the Seller desires to sell, the CompanyShares 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 hereincontained, the Parties agree as follows.

 

**1.****            ****DEFINITIONS**.**“ActualWorking Capital”**hasthe meaning set forth in Section 2.5.1 below.

** **

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

** **

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

** **

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

 

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

** **

**“Buyer Party(ies)”**means the Buyer, its Affiliates and theofficers, directors and representatives of such Persons; provided that(i) the Company shall be a Buyer Party after the Closing and (ii) neither theSeller 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 2.2below.

 

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

 

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

 

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

 

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

 

**“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 andCode §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 Recitalsabove. 

** **

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

 

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

** **

**“Confidential Information”**means any information concerning the businessand affairs of the Company that is not already generally available to thepublic.

** **

**“Contract Disputes Act”**has the meaning set forth in Section4.24.5 below.

** **

**“Cost Accounting Standards”**means the United States Government CostAccounting 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 4.30below.

** **

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

** **

**“Direct Contract Costs”**means, with respect to any period, theaggregate amounts of labor and other direct expenses, including, withoutlimitation, expenses for materials, subcontracts, consultants and travel.

** **

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

** **

**“Employee Benefit Plan”**means each “employee benefit plan” (as suchterm is defined in ERISA §3(3)) and each other employee benefit plan, programor arrangement of any kind that the Company maintains, to which the Companycontributes or has any obligation to contribute, or with respect to which theCompany 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 oftrust, right-of-way, restriction, purchase rights, preemptive rights,encumbrance, right of setoff or adverse interest of any kind or character.

 

2

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

 

**“Environmental, Health, and Safety Requirements”**shall mean all federal, state, local andforeign statutes, regulations, ordinances and other provisions having the forceor effect of law, all judicial and administrative orders and determinations,all contractual obligations and all common law concerning public health andsafety, worker health and safety, and pollution or protection of theenvironment, 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, substancesor 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 orhereafter in effect.

** **

**“ERISA Affiliate”**means each entity which is treated as asingle 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 7.4below.

** **

**“Escrow Account”**shall have the meaning set forth in Section2.6 below.

** **

**“Escrow Agent”**shall have the meaning set forth in Section2.6 below.

** **

**“Escrow Amount”**shall have the meaning set forth in Section2.6 below.

** **

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

 

“**FAR**” has the meaning set forth in Section4.24.3 below.

** **

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

** **

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

** **

**“GAAP”**means United States generally accepted accounting principles as ineffect from time to time.

** **

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

** **

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

** **

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

 

3

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**“Government-Furnished Items”**has the meaning set forth in Section4.24.19 below.

** **

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

** **

**“Indebtedness”**means without duplication, all indebtednessor other obligation of the Company for borrowed money. For the avoidance ofdoubt, all deferred rent or other lease obligations set forth on Schedule4.12 (other than capitalized lease obligations) shall be specificallyexcluded from this definition of “Indebtedness.”

** **

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

** **

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

** **

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

** **

**“Intellectual Property”**means: (a) all inventions, all improvementsthereto, and all patents, patent applications, and patent disclosures, togetherwith all reissuances, continuations, continuations-in-part, revisions,divisions, extensions, and reexaminations thereof, (b) all trademarks, servicemarks, trade dress, logos, slogans, trade names, corporate names, Internetdomain names, and all goodwill associated with any of the foregoing, and allapplications, registrations, and renewals in connection therewith, (c) allcopyrightable works, all copyrights, and all applications, registrations, andrenewals in connection therewith, (d) all mask works and all applications,registrations, and renewals in connection therewith, (e) all trade secrets andconfidential business information (including ideas, research and development,know-how, formulas, compositions, manufacturing and production processes andtechniques, technical data, designs, drawings, specifications, customer andsupplier lists, pricing and cost information, and business and marketing plansand proposals), (f) all computer software (including source code, executablecode, data, databases and related documentation), and (g) all other proprietaryrights.

** **

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

 

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

** **

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

** **

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

** **

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

 

4

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**“Leased Real Property”**means all leasehold or subleasehold estatesand 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, guarantiesand other agreements with respect thereto, pursuant to which the Company holdsany Leased Real Property, including the right to all security deposits andother amounts and instruments deposited by or on behalf of the Company.

** **

**“Liability”**means any liability (whether known or unknown, whether asserted orunasserted, 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 ofany foreign, federal, provincial, state and local governments, governmentalagencies, 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 stateof facts, event(s), change(s) or effect(s) that had, has or would reasonably beexpected to have a material adverse effect on the assets, business, financialcondition, results of operations, customer, supplier or employee relations ofsuch Person taken as a whole.

** **

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

** **

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

** **

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

 

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

 

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

 

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

 

**“Non-Compete Agreements”**has the meaning set forth in Section6.2.11 below.

** **

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

 

5

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**“Ordinary Course of Business”**means the ordinary course of businessconsistent with past custom and practice (including with respect to quantityand frequency).

** **

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

 

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

** **

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

** **

**“Person”**means an individual, a partnership, a corporation, a limited liabilityentity, an association, a joint stock company, a trust, a joint venture, anunincorporated organization, or a Governmental Authority.

** **

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

** **

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

** **

**“Prohibited Transaction”**has the meaning set forth in ERISA §406 andCode §4975.

** **

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

** **

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

** **

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

** **

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

** **

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

 

“**Securities Act**” means theSecurities Act of 1933, as amended.

 

“**Seller**” has the meaning set forthin the preface above.

** **

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

** **

**“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), customsduties, capital stock, franchise, profits, withholding, social security (orsimilar), 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, oraddition thereto, whether disputed or not.

 

6

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**“Tax****Asset**” means anynet operating loss, net capital loss, investment tax credit, foreign taxcredit, charitable deduction or any other credit or tax attribute that could becarried forward or back to reduce income or franchise Taxes (including, withoutlimitation, deductions and credits related to alternative minimum Taxes) andlosses 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 informationreturn or statement relating to Taxes filed or required to be filed with aGovernmental Authority, including any schedule or attachment thereto, andincluding any amendment thereof.

** **

**“Taxing Authority”**means any Governmental Authority (whetherfederal, state, local, municipal, foreign or otherwise) responsible for theimposition, collection or administration of any Tax.

** **

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

 

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

** **

**“Transaction Documents”**means, collectively, this Agreement, theEmployment Agreements, the Release of Claims, the Non-Compete Agreement and theother documents and instruments to be executed and or delivered in connectionwith the transactions contemplated by this Agreement.

 

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

 

**“Working Capital”**means the difference (whether positive ornegative) 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 caseas determined in accordance with GAAP immediately prior to the consummation ofthe 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 (withoutlimitation) all liabilities for accrued or deferred Taxes allocable to taxableperiods or a portion thereof ending on or before the Closing Date, balancesheet reserves for billings in excess of revenues, 401(k) plan withholdings,bonus plan accruals and the amount of transaction expenses, if any, payableafter the Closing and not otherwise paid out of the Cash Closing Amount andbonuses, if any, that may become payable to Company employees after Closing asset forth on Schedule 1 hereto.

 

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

 

**2.****            ****PURCHASE AND SALE OF THECOMPANY SHARES**.

 

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

 

7

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

 

**2.2**         **Cash Closing Amount**.****In consideration for the sale by the Sellerof the Company Shares to the Buyer, at the Closing, the Buyer shall pay to theSeller $12,725,000 plus the amount by which Working Capital is estimatedto exceed the Working Capital Threshold, if applicable, or minus theamount by which the Working Capital Threshold is estimated to exceed WorkingCapital, if applicable, such estimate as determined in accordance with Section2.4.1 (together, the “Cash Closing Amount”), by wire transfer ofimmediately available funds to Seller’s account; and in addition the Buyershall deposit $1,000,000 into escrow pursuant to Section 2.6 hereof.

 

**2.3****         ****TheClosing**. The closing of the transactionscontemplated by this Agreement (the “Closing”) shall take place at the officesof Reed Smith LLP, 1301 K Street, N.W., Suite 1100 - East Tower, Washington, DC20005, commencing at 10:00 a.m. local time on the date of this Agreement orsuch other date as the Buyer and the Seller may agree (the “Closing Date”) andthe Closing shall be deemed to have occurred as of 12:01 a.m. on the ClosingDate. At the Closing, (i) the Seller will deliver to the Buyer the variouscertificates, instruments, and documents referred to in Section 6.2 below, (ii)the Buyer will deliver to the Seller the various certificates, instruments, anddocuments referred to in Section 6.3 below, (iii) Seller will deliver to theBuyer stock certificates representing all of Seller’s Company Shares, endorsedin blank or accompanied by duly executed assignment documents, (iv) the Buyerwill deliver to the Seller the Cash Closing Amount specified in Section 2.2above and (v) Buyer will deliver the Escrow Amount to the Escrow Agent.

** **

**2.4****         ****Determination of Working Capital Adjustment**.

** **

**2.4.1****      ****Determination of EstimatedWorking Capital**.****Not later than three, nor more than fivebusiness days prior to the Closing Date, the Seller shall prepare and deliverto the Buyer a certificate certifying the Seller’s good faith estimate of theWorking Capital of the Company as of the Closing Date, and including anestimated unaudited balance sheet of the Company as of the Closing Date andalso certifying that as of Closing, Company shall have no long termIndebtedness. Such determination of Working Capital shall be in accordance withGAAP and consistent with the Company’s historical financial statements. Aspromptly as practicable but not later than one business day prior to theClosing, the Buyer shall identify any adjustments that it believes are requiredto the certificate delivered by the Seller. If the Seller disputes any suchadjustments, the Buyer and the Seller shall use reasonable best efforts to resolvesuch dispute, after which the Seller shall re-deliver to the Buyer thecertificate with such adjustments as the Parties have agreed are appropriate.(The form of certificate finally delivered pursuant to this Section 2.4.1and acceptable to the Buyer and the Seller is referred to herein as the “ClosingPayment Certificate” and shall be used to determine the Cash Closing Amountunder Section 2.2.)

 

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

 

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being greater or less thanthe amounts set forth on the Closing Payment Certificate. If the Seller doesnot object to Buyer’s certificate within 30 days after receipt, or accepts suchcertificate during such 30 day period, the Purchase Price shall be adjusted asset forth in Buyer’s certificate, and payment made in accordance with Section2.5. If the Seller objects to the Buyer’s certificate, the Seller shallnotify the Buyer in writing of such objection within 30 days after the Seller’sreceipt thereof (such notice setting forth in reasonable detail the basis forsuch objection). During such 30 day period, the Buyer shall permit the Selleraccess to such work papers relating to the preparation of the Buyer’scertificate, as may be reasonably necessary to permit the Seller to review indetail the manner in which the Buyer’s certificate was prepared. The Buyer andthe Seller shall thereafter negotiate in good faith to resolve any suchobjections. If the Buyer and the Seller are unable to resolve all of suchdifferences within twenty (20) calendar days of the Buyer’s receipt of Seller’sobjections, the items in dispute will be referred for determination as promptlyas practicable to the Independent Accounting Firm, which shall be jointlyengaged 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 andthe Seller shall execute. If PriceWaterhouseCoopers LLP is unable to serve asthe Independent Accounting Firm and the Buyer and the Seller have failed toreach agreement on an Independent Accounting Firm within ten (10) calendar daysfollowing the termination of the twenty (20) calendar-day period referred to inthe immediately preceding sentence, then the Independent Accounting Firm shallbe selected by the American Arbitration Association. The Independent AccountingFirm shall prescribe procedures for resolving the disputed items and in allevents shall make a written determination, with respect to such disputed itemsonly, whether and to what extent, if any, the Closing Payment Certificate andthe accompanying calculations of the Working Capital and/or Indebtedness of theCompany at Closing require adjustment based on the terms and conditions of thisAgreement (the “Determination”). The Determination shall be based solelyon presentations with respect to such disputed items by the Buyer and theSeller to the Independent Accounting Firm and not on the Independent AccountingFirm’s independent review; provided, that such presentations shall bedeemed to include, without limitation, any work papers, records, accounts orsimilar materials delivered to the Independent Accounting Firm by the Buyer orthe Seller in connection with such presentations and any materials delivered tothe Independent Accounting Firm in response to requests by the IndependentAccounting Firm. Each of the Buyer and the Seller shall use its reasonable bestefforts to make its presentation as promptly as practicable followingsubmission to the Independent Accounting Firm of the disputed items, and each suchparty shall be entitled, as part of its presentation, to respond to thepresentation of the other party and any question and requests of theIndependent Accounting Firm. The Buyer and the Seller shall instruct theIndependent Accounting Firm to deliver the Determination to the Buyer and theSeller no later than thirty (30) calendar days following the date on which thedisputed items are referred to the Independent Accounting Firm. In deciding anymatter, the Independent Accounting Firm (i) shall be bound by the provisions ofthis Section 2.4.2, (ii) may not assign a value to any item greater than thegreatest value for such item claimed by either the Buyer or the Seller or lessthan 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 thisAgreement, including the definition of Working Capital contained herein. In theabsence of fraud or manifest error, the Determination shall be conclusive andbinding upon the Buyer and the Seller. The Independent Accounting Firm shallconsider only those items and amounts in the Buyer’s certificate which theBuyer and the Seller were unable to resolve. The determination of the

 

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

 

**2.5**          **Adjustment to Cash Closing Amount**.

 

**2.5.1****                    **The Working Capital amount determined inaccordance with Section 2.4.2 (the “Actual Working Capital”) shall beused to calculate post closing adjustments to the Cash Closing Amount bycalculating the difference between $12,725,000, plus the amount by whichActual Working Capital exceeds the Working Capital Threshold, if applicable, orminus the amount by which the Working Capital Threshold exceeds theActual Working Capital, if applicable (the “Cash Purchase Price”). If the CashPurchase Price is less than the Cash Closing Amount, then the Seller shall payto the Buyer an amount equal to such deficiency (plus interest thereon at anannual rate of 4% from the Closing Date to the date of payment).

 

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

 

**2.5.3****                    **All payments to be made to either the Buyeror the Seller pursuant to this Section 2.5 shall be made by wiretransfer 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 WorkingCapital 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 insteaddeliver the Escrow Amount to an escrow agent selected by Buyer and reasonablyacceptable to Seller (the “Escrow Agent”) for deposit into escrow (the “EscrowAccount”). The Escrow Amount shall be held pursuant to the provisions of anescrow agreement in the form of Exhibit A hereto (the “Escrow Agreement”).The Escrow Amount will be available to compensate Buyer for Losses as providedin Sections 7.1 and 7.3. To the extent that there is an Escrow Amount remainingin the Escrow Account which has not been reserved for claims under the EscrowAgreement, 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 anauditor designated by CHC or (ii) March 31, 2005.

 

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

 

**3.****          ****REPRESENTATIONS AND WARRANTIES CONCERNING THETRANSACTION**.

 

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

 

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**3.1****         ****Representations and Warranties of the Seller**.            Except as set forth in the attached disclosure schedules delivered bythe Seller to the Buyer on the date hereof  (the “Disclosure Schedules”), Sellerrepresents and warrants to the Buyer that the statements contained in this Section3.1 are correct and complete. The Disclosure Schedules shall be arrangedaccording to the numbered and lettered paragraphs in this Section 3.1,and any disclosure shall qualify (x) the corresponding paragraph in this Section3.1 and (y) any other paragraph(s) in this Section 3.1 only to theextent that such disclosure clearly states that it also qualifies or applies tosuch other paragraph(s).

** **

**3.1.1****      ****Authorization of Transaction**.**         **Seller has full power and authority to executeand deliver this Agreement and to perform Seller’s obligations hereunder.  This Agreement constitutes the valid andlegally binding obligation of Seller, enforceable in accordance with its termsand conditions, except as enforceability may be limited by applicable equitableprinciples or by bankruptcy, insolvency, reorganization, moratorium, or similarlaws from time to time in effect affecting the enforcement of creditors’ rightsgenerally. Seller is not required to give any notice to, make any filing with,or obtain any authorization, consent, or approval of any Governmental Authorityin order to consummate the transactions contemplated by this Agreement.

 

**3.1.2****      ****Noncontravention**.               Neither the execution and the delivery of this Agreement, nor theconsummation 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 theCompany is subject, (B) violate, conflict with, result in a breach of,constitute a default under, result in the acceleration of, create in any partythe right to accelerate, terminate, modify, or cancel, or require any noticeunder any agreement, contract, lease, license, instrument, or other arrangementto which Seller or the Company is a party or by which Seller or the Company isbound 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 tothe Company Shares.

 

**3.1.3****      ****Brokers’ Fees**.     Except for Aronson Capital Advisors LLC, the Seller has no Liability orobligation to pay any fees or commissions to any broker, finder, or agent with respectto the transactions contemplated by this Agreement for which the Buyer couldbecome 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 andEncumbrances. At the Closing, Seller represents the Company Shares will betransferred to Buyer or its designated Affiliate, whereupon the transferee willacquire good, valid and marketable title to the Company Shares free and clearof all Encumbrances. Seller is not a party to any option, warrant, purchaseright, or other contract or commitment (other than this Agreement) that couldrequire Seller to sell, transfer, or otherwise dispose of any capital stock of theCompany. Seller is not a party to any voting trust, proxy, or other agreementor understanding with respect to the voting of any capital stock of theCompany, and there are no issued or outstanding options, warrants, purchaserights, shares, subscription rights, conversion rights, preemptive rights,exchange rights, or other contracts or commitments that could require theCompany to issue, sell, or otherwise cause to become outstanding any of itscapital stock.

 

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**3.2****         ****Representations and Warranties of the Buyer**.****Except as set forth in the attached Disclosure Schedules, the Buyerrepresents and warrants to the Seller that the statements contained in this Section3.2 are correct and complete. The Disclosure Schedules shall be arrangedaccording to the numbered and lettered paragraphs in this Section 3.2,and any disclosure shall qualify (x) the corresponding paragraph in this Section3.2 and (y) any other paragraph(s) in this Section 3.2 only to theextent that such disclosure clearly states that it also qualifies or applies tosuch other paragraph(s).

 

**3.2.1****      ****Organization of the Buyer**.****The Buyer is a corporation duly organized, validly existing, and ingood 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 powerand authority) to execute and deliver this Agreement and to perform itsobligations hereunder. This Agreement constitutes the valid and legally bindingobligation of the Buyer, enforceable in accordance with its terms andconditions, except as enforceability may be limited by applicable equitableprinciples or by bankruptcy, insolvency, reorganization, moratorium, or similarlaws from time to time in effect affecting the enforcement of creditors’ rightsgenerally. The Buyer need not give any notice to, make any filing with, or obtainany authorization, consent, or approval of any Governmental Authority in orderto consummate the transactions contemplated by this Agreement.

 

**3.2.3****      ****Noncontravention**. Neither the execution and the delivery ofthis 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 anyGovernmental Authority to which the Buyer is subject or any provision of its certificateof incorporation or bylaws or (B) conflict with, result in a breach of,constitute a default under, result in the acceleration of, create in any partythe right to accelerate, terminate, modify, or cancel, or require any noticeunder any agreement, contract, lease, license, instrument, or other arrangementto which the Buyer is a party or by which it is bound or to which any of its assetsis subject.

 

**3.2.4****      ****Brokers’ Fees**. The Buyer has no Liability or obligation topay any fees or commissions to any broker, finder, or agent with respect to thetransactions contemplated by this Agreement for which Seller could becomeliable or obligated.

 

**4.****          ****REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY**

 

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

 

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shall not be deemed adequateto disclose an exception to a representation or warranty made herein (unlessthe representation or warranty has to do with the existence of the document orother item itself). Except for those representations and warranties expresslyset forth in Article 3 and this Article 4, Seller makes no otherrepresentations or warranties, express or implied, at law or in equity, of anykind 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 ofits incorporation. The Company has all requisite corporate power and authorityto own, lease and operate the assets owned, leased and operated by it and tocarry on its business as currently being conducted and contemplated top beconducted by it. The Company is duly authorized to conduct business and is ingood standing under the laws of each jurisdiction where such qualification isrequired except where the failure would not have a Material Adverse Effect. Schedule4.1 identifies the directors and officers of the Company. The Seller andthe Company have delivered to the Buyer correct and complete copies of thecertificate of incorporation and bylaws of the Company (as amended to date). Theminute books (containing the records of meetings of the stockholders, the boardof directors, and any committees of the board of directors), the stockcertificate books, and the stock record books of the Company are correct, accurateand except as provided on Schedule 4.1, complete in all materialrespects.

 

**4.2****         ****Capitalization**.****The entire authorized capital stock of theCompany consists of 10,000 shares of common stock, $.10 par value per share, ofwhich 1,000 shares are issued and outstanding and 9,000 shares are authorizedbut unissued. All of the issued and outstanding Company Shares have been dulyauthorized, are validly issued, fully paid, and nonassessable, free ofpreemptive rights, and are held of record, and beneficially owned, by theSeller. There are no outstanding or authorized options, warrants, purchaserights, subscription rights, conversion rights, preemptive rights, exchangerights, or other contracts or commitments that could require the Company toissue, 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 hasthe Company committed to issue any of the foregoing. There are no votingtrusts, proxies, or other agreements or understandings with respect to thevoting 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 consummationof the transactions contemplated hereby, will (i) violate any constitution,statute, regulation, rule, injunction, judgment, Order, charge, or otherrestriction of any Governmental Authority to which the Company is subject or anyprovision of the certificate of incorporation or bylaws of the Company, (ii)conflict with, result in a breach of, constitute a default under, result in theacceleration of, create in any party the right to accelerate, terminate,modify, or cancel, or require any notice, report or other filing (whether witha Governmental Authority or other third party) or give rise to any payments or compensationunder any agreement, contract, lease, license, instrument, or other arrangementto which the Company is a party or by which it is bound or to which any of itsassets is subject (iii) or result in the imposition of any Encumbrance upon anyof the Company Shares or the Company’s assets. Except as set forth in Schedule4.3, neither the Company nor the Seller needs to give any notice to, makeany filing with, or obtain any authorization, consent, or approval of

 

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any Governmental Authorityin order for the Parties to consummate the transactions contemplated by thisAgreement.

 

**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 toany broker, finder, or agent with respect to the transactions contemplated bythis Agreement.

 

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

 

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

 

**4.7**          **Financial Statements**.****Attached hereto as Exhibit B are thefollowing Company financial statements (collectively, the “FinancialStatements”): (i) audited balance sheets, statements of income, statementsof cash flows and changes in stockholders’ equity, as of and for the fiscalyears ended December 31, 2001 and December 31, 2002 and December 31, 2003, alongwith the related notes thereto (the “Most Recent Fiscal Year End”) forthe Company; and (ii) unaudited balance sheet and statements of income, changesin stockholders’ equity, and cash flows (the “Most Recent FinancialStatements”) as of and for the two months ended February 29, 2004 (the “MostRecent Fiscal Month End”) for the Company. The Financial Statements (includingthe notes thereto) have been prepared in accordance with GAAP applied on a consistentbasis throughout the periods covered thereby (except that the unaudited interimfinancial statements will not contain any footnotes, may not contain alladjustments 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 andcomplete; 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 RecentFiscal Year End, there has not been any change in the business, financialcondition, operations, results of operations, assets, customer, supplier or employeerelations (other than changes in general economic conditions) which has had, oris reasonably likely to have, a Material Adverse Effect on the Company or itsbusiness as presently conducted. Without limiting the generality of theforegoing, 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 theaggregate, 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) eitherinvolving more than $25,000 or outside the Ordinary Course of Business;

 

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**4.8.3**       no party (including the Company) has accelerated, terminated, made materialmodifications to, or cancelled any agreement, contract, lease, or license (orseries of related agreements, contracts, leases, and licenses) involving morethan $25,000 to which the Company is a party or by which it is bound nor, tothe Knowledge of the Seller and the Company, threatened any of the foregoingactions;

 

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

** **

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

** **

**4.8.6**       the Company has not made any capital investment in, any loan to, or anyacquisition of the securities or assets of, any other Person (or series ofrelated 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 orcapitalized 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 otherdebt of the Company;

 

**4.8.8**       the Company has not incurred, created or otherwise become liable forany Indebtedness and has not delayed or postponed the payment of accountspayable and other Liabilities outside the Ordinary Course of Business;

 

**4.8.9**       the Company has not amended, cancelled, compromised, waived, or releasedany right or claim (or series of related rights and claims) either involvingmore than $10,000 or outside the Ordinary Course of Business and has notaccelerated collection of accounts receivable, delayed payment of accountspayable;

 

**4.8.10**     the Company has not granted any license or sublicense of any rightsunder or with respect to any Intellectual Property that is material, eitherindividually or in the aggregate, to the Company’s business;

 

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

 

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

 

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

 

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

 

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

 

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

** **

**4.8.17**     other than in the Ordinary Course of business, the Company has not grantedany increase in the compensation of any of its directors, officers oremployees;

** **

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

 

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

 

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

** **

**4.8.21**     the Company has not changed any method or principle of accounting exceptto the extent required by GAAP or as advised by the Company’s independentaccountant;

** **

**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**          **UndisclosedLiabilities**. Except as disclosed on Schedule 4.9, theCompany 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 thatwould reasonably be expected to give rise to any Liability), except for (i)Liabilities set forth on the Most Recent Balance Sheet, and (ii) Liabilitieswhich have arisen after the Most Recent Fiscal Month End in the Ordinary Courseof Business or as a result of the transactions contemplated hereby (none ofwhich results from, arises out of, relates to, is in the nature of, or wascaused by any breach of contract, breach of warranty, tort, infringement, or violationof law).

 

**4.10**        **LegalCompliance**. Each of the Company and its predecessorsand Affiliates has complied with all applicable Laws and Orders, and no action,suit, proceeding, hearing,

 

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

 

**4.11****       ****Tax Matters**.

** **

**4.11.1  **The Company has duly and timely filed all TaxReturns 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 DisclosureSchedules, all Taxes required to have been paid by the Company (whether or notshown on any Tax Return) have been paid. The Company is not currently the beneficiaryof any extension of time within which to file any Tax Return. No claim has everbeen made by a Taxing Authority in writing (or, to the Knowledge of the Selleror the Company, made in any other manner), for a jurisdiction where the Companydoes not file Tax Returns that it is or may be subject to taxation by thatjurisdiction. There are no Encumbrances on any of the assets of the Companythat arose in connection with any failure (or alleged failure) to pay any Tax.

 

**4.11.2  **The Company has complied with all applicablelaws regarding payment and withholding of Taxes and has withheld and paid allTaxes required to have been withheld and paid in connection with amounts paidor owing to any employee, independent contractor, creditor, stockholder, orother Person.

** **

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

** **

**4.11.4  **The Company has not executed any agreementwaiving any statute of limitations in respect of assessment or collection ofTaxes or agreed to any extension of time with respect to a Tax assessment ordeficiency that has continuing effect, or granted any power of attorney inrespect to the Company with respect to any matter related to Taxes which is currentlyin force. There are no agreements currently in effect between the Company andany Tax Authority with respect to the payment in installments of any taxliability after the Closing Date.

** **

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

 

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excess parachute paymentswithin the meaning of Code § 280G. The Company has not been a United Statesreal property holding corporation within the meaning of Code §897(c)(2) duringthe applicable period specified in Code §897(c)(l)(A)(ii). Except as providedon the Disclosure Schedules, the Company has disclosed on its federal incomeTax Returns all positions taken therein that could give rise to a substantial understatementof federal income Tax within the meaning of Code §6662. The Company is not aparty to any Tax allocation or sharing agreement. The Company (A) has neverbeen a member of an Affiliated Group filing a consolidated federal income TaxReturn (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 theCompany) under Treasury Regulation §1.1502-6 (or any similar provision ofstate, local, or foreign law), as a transferee or successor, by contract, orotherwise. The Company does not have a “net required payments balance” asdefined 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 timingdifferences between book and Tax income) set forth on the Most Recent BalanceSheet (rather than in any notes thereto) and (B) do not exceed that reserve asadjusted for the passage of time through the Closing Date in accordance withthe past custom and practice of the Company in filing its Tax Returns.

** **

**4.11.7  **The Company will not be required to includeany 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 theClosing Date as a result of any change in method of accounting for a taxableperiod ending on or prior to the Closing Date under Code §481(c) (or any correspondingor similar provision of state, local or foreign income Tax law). The Company isnot a party to any “closing agreement” as described in Code §7121 (or anycorresponding or similar provision of state, local or foreign income Tax law)executed on or prior to the Closing Date that would have continuing effectafter the Closing Date. The Company has no (A) gain from intercompanytransaction which has been deferred pursuant to Treasury Regulations Section1.1502-13 or any excess loss account described in Treasury Regulations Section1.1502-13 (or any corresponding or similar provision of state, local or foreignincome Tax law) arising in any taxable period or portion thereof ending beforethe Closing Date; (B) installment sale or open transaction disposition made onor prior to the Closing Date, income from which would be required to bereported by the Company after the Closing Date; or (C) prepaid income amount receivedon or prior to the Closing Date not required to have been reported in computingtaxable income for periods ending on or before the Closing Date, except, ineach case, to the extent adequately reserved for in the Most Recent FinancialStatement or arising in the Ordinary Course of Business since the MostRecent Fiscal Month End.

** **

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

 

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**4.12**        **Real Property**.

 

**4.12.1    **The Company does not own any real property.

 

**4.12.2**     Schedule 4.12 setsforth the address of each parcel of Leased Real Property, and a true andcomplete list of all Leases for each such Leased Real Property (including thedate and name of the parties to such Lease document). The Company has deliveredto the Buyer a true and complete copy of each such Lease document, and in thecase 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.****         **suchLease is legal, valid, binding, enforceable and in full force and effect;

 

**4.12.2.2.****         **the transaction contemplated by thisAgreement does not require the consent of any other party to such Lease, willnot result in a breach of or default under such Lease, and will not otherwisecause such Lease to cease to be legal, valid, binding, enforceable and in fullforce and effect on identical terms following the Closing;

 

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

 

**4.12.2.4.****         **neither the Company nor any other party tothe Lease is in breach or default under such Lease, and, to the Knowledge ofthe 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 sucha breach or default, or permit the termination, modification or acceleration ofrent under such Lease;

 

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

 

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

 

**4.12.2.7.**          the other party to such Lease is not anaffiliate of, and otherwise does not have any economic interest in, theCompany;

 

**4.12.2.8.**          the Company has not subleased, licensed orotherwise granted any Person the right to use or occupy such Leased RealProperty or any portion thereof;

 

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

 

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**4.12.2.10.****       **thereare 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 forregistration of Intellectual Property owned by the Company, (ii) lists alltrade names, domain names and material unregistered trademarks owned by the Company,(iii) describes all material inventions and material unregistered copyrights ownedby 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, freefrom any Encumbrance, or has a valid, enforceable and fully paid up license orother right to use, all material Intellectual Property used in the business ofthe Company or necessary to operate the business of the Company as currentlyconducted. All Intellectual Property owned or used by the Company in theoperation of its business as of the date hereof will be owned or available foruse by the Company on identical terms and conditions immediately following theClosing. The Company has taken all necessary action, performed all customaryacts, and has paid all fees and taxes (to the extent applicable), required toprotect and maintain in full force and effect all Intellectual Property ownedby 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 bythe Company, and Seller and Company have no Knowledge of any basis for suchclaim. Neither the Company nor the Seller has received any notices (includingany cease-and -desist letters or offers to license) alleging infringement ormisappropriation of any third party Intellectual Property. To the Knowledge ofthe Company and the Seller, no third party is infringing, misappropriating or otherwiseengaging 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 theCompany requiring such employee, consultant or officer to maintain theconfidentiality of the Company’s proprietary information and assign all IntellectualProperty developed by such employee, consultant or officer to the Company orits designee. The Company has not interfered with, infringed upon,misappropriated or otherwise come into conflict with any Intellectual Propertyrights of third parties.

 

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

 

**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 setforth 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 Personproviding for lease payments in excess of $20,000 per annum;

 

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**4.15.2**     for the purchase or sale of raw materials, commodities, supplies,products, or other personal property, or for the furnishing or receipt ofservices, the performance of which will extend over a period of more than oneyear, which reasonably would be expected to result in a material loss to theCompany, 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 anyindebtedness for borrowed money, or any capitalized lease obligation, in excessof $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 anybusiness 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, stockappreciation, deferred compensation, severance, or other plan or arrangementfor 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 $20,000or providing material severance benefits;

** **

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

** **

**4.15.10**** **under which the consequences of a default or termination couldreasonably 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 Companyin excess of $20,000 per annum;

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

** **

**4.15.13**  which is a stock purchase agreement, asset purchase agreement, or otheracquisition or divestiture agreement entered into by the Company since itsinception.

 

TheCompany has delivered to Buyer a true and complete copy of such writtencontract required to be listed in Schedule 4.15. Neither the Companynor, to the Seller’s Knowledge, any other party to such contract is in breachor default thereunder, and no event has occurred which, with notice or lapse oftime or both would constitute a breach or default thereof, or permittermination, modification or acceleration thereunder.

 

**4.16**        **Powersof Attorney**. There are no outstanding powers of attorney executed on behalf of theCompany.

 

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**4.17****       ****Insurance**.** **Schedule 4.17contains a description (including the name of the insurer, the policy number,and the period, amount and scope of coverage) of each insurance policymaintained 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 andeffect on identical terms following the consummation of the transactionscontemplated hereby. The Company is not in default with respect to its obligationsunder any Insurance Policy, nor has the Company been denied insurance coverage.Except as set forth on Schedule 4.17, the Company does not have anyself-insurance or co-insurance programs. Except as set forth on Schedule4.17, the reserves set forth on the Most Recent Balance Sheet are adequateto cover all liabilities with respect to any such self-insurance orco-insurance programs including, without limitation, all terminal liabilities. Inthe three (3) year period ending on the date hereof, the Company has notreceived any notice from, or on behalf of, any insurance carrier relating to orinvolving any change in the conditions of insurance, any refusal to issue aninsurance policy or non-renewal of a policy, or requiring or suggestingmaterial alteration of any of the Company’s assets, purchase of additionalequipment or material modification of any of the Company’s methods of doingbusiness. The Company has not made any claim against an insurance policy as towhich 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 Knowledgeof the Seller and the Company, investigation pending against, or to theKnowledge of the Seller and the Company, threatened against or affecting, theSeller or the Company with respect to the Company or the Company’s business as itis presently conducted before any Governmental Authority. The actions, suitsand proceedings listed on Schedule 4.18 will not, either individually orin the aggregate, have a Material Adverse Effect on the Company. Except as setforth on Schedule 4.18, neither the Seller nor the Company is inviolation of and, to the Knowledge of the Seller and the Company, is not under investigationwith respect to and, to the Knowledge of the Seller and the Company, has notbeen threatened to be charged with or given notice of any violation of, anyapplicable 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 theCompany, along with the position, date of hire, annual rate of compensation (orwith respect to employees compensated on an hourly or per diem basis, thehourly or per diem rate of compensation), most recent increase (or decrease) incompensation and amount thereof, and estimated or target annual incentivecompensation of each such person. None of such employees is a party to awritten employment agreement or contract with the Company and each is employed “atwill.” Each employee has entered into the Company’s standard form of employeenon-disclosure and invention assignment agreement with the Company, a copy ofwhich has been previously delivered to the Buyer. To the Knowledge of theSeller and the Company, no executive, key employee, or group of employees hasany plans to terminate employment with the Company. The Company is not a partyto or bound by any collective bargaining agreement, nor has it experienced anystrikes, grievances, claims of unfair labor practices, or other collectivebargaining disputes. The Company has not committed any material unfair laborpractice. Neither the Seller nor the Company has any Knowledge of anyorganizational effort presently

 

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

 

**4.19.2**     Schedule 4.19.2contains a list of all independent contractors (excluding governmentsubcontractors) currently engaged by the Company, along with the position, dateof retention and rate of remuneration, most recent increase (or decrease) inremuneration and amount thereof, for each such Person. Each such independentcontractor has entered with the Company into a written independent contractoragreement, a copy of which has been previously delivered to the Buyer. For thepurposes of applicable Law, including without limitation the Code, allindependent contractors who are, or within the last six years have been,engaged by the Company are bona fide independent contractors and not employeesof the Company.

 

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

 

**4*.*****19*.*4****    **The Company is not delinquent in payments to any of its employees forwages, salaries, commissions, bonuses or other direct compensation for servicesperformed by such employees or for reimbursement of expenses.

 

**4.20****       ****EmployeeBenefits**.

 

**4.20.1**     Schedule 4.20 setsforth 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 theterms of such Employee Benefit Plan and the terms of any applicable collectivebargaining agreement and complies in form and in operation in all materialrespects with the applicable requirements of ERISA, the Code, and otherapplicable laws.

 

**4.20.3**     All required reports and descriptions (including annual reports (IRSForm 5500), summary annual reports, and summary plan descriptions) have beentimely filed and/or distributed in accordance with the applicable requirementsof ERISA and the Code with respect to each such Employee Benefit Plan. Therequirements of COBRA have been met in all material respects with respect toeach Employee Benefit Plan which is an Employee Welfare Benefit Plan subject toCOBRA.

 

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

 

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**4.20.5**     Each Employee Benefit Plan which is intended to meet the requirements ofa “qualified plan” under Code §401 (a) has received a determination from theIRS that such Employee Benefit Plan is so qualified, and nothing has occurredsince the date of such determination that could adversely affect the qualifiedstatus of any such Employee Benefit Plan. Each such Employee Benefit Plan hasbeen timely amended to comply with the provisions of recent legislationcommonly referred to as “GUST” and timely submitted to the IRS for a determinationletter that takes such amendments into account.

 

**4.20.6**     The Seller and the Company have delivered to the Buyer correct and completecopies of the plan documents and summary plan descriptions, the most recent determinationletter received from the IRS, the most recent annual report (IRS Form 5500,with all applicable attachments), and all related trust agreements, insurancecontracts, and other funding arrangements which implement each such EmployeeBenefit Plan. Except as set forth in Schedule 4.20, each EmployeeBenefit Plan may be amended, terminated or otherwise discontinued at the willby the Company without liability for such amendment, termination or discontinuance(other than costs of administration and accelerated vesting, as required bylaw).

 

**4.20.7**     Neither the Company nor any ERISA Affiliate maintains, sponsors, contributesto, 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 otherwisehas any Liability under Title IV of ERISA. No asset of the Company is subjectto any lien under ERISA or the Code.

 

**4.20.8**       There have been no Prohibited Transactions with respect to any EmployeeBenefit Plan which would result in liability to the Company. No Fiduciary hasany Liability for breach of fiduciary duty or any other failure to act orcomply in connection with the administration or investment of the assets of anyEmployee Benefit Plan which would result in any liability to the Company. Noaction, suit, proceeding, hearing, or investigation with respect to theadministration 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 contributeto, or any Liability with respect to, any Employee Welfare Benefit Planproviding medical, health, or life insurance or other welfare-type benefits forcurrent or future retired or terminated directors, officers or employees of theCompany (or any spouse or other dependent thereof) other than in accordancewith COBRA.

 

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

 

**4.22**        **Environmental, Health, and Safety Matters**.

 

**4.22.1 **Each of the Company and its Affiliates hascomplied 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

 

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operation of its business; alist of all such permits, Licenses and other authorizations is set forth on Schedule4.22.

** **

**4.22.2****    **The Company has not received any written ororal notice, report or other information regarding any actual or allegedmaterial violation of Environmental, Health, and Safety Requirements, or anymaterial 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 facilitiesarising under Environmental, Health, and Safety Requirements.

 

**4.22.3**     The Company has not treated, stored, disposed of, arranged for or permittedthe disposal of, transported, handled, or released any substance, includingwithout limitation any hazardous substance, or owned or operated any propertyor facility (and no such property or facility is contaminated by any suchsubstance) in a manner that has given or that would reasonably be anticipatedto give rise to liabilities, including any liability for response costs,corrective action costs, personal injury, property damage, natural resourcesdamages or attorney fees, or any investigatory, remedial or corrective obligations,pursuant to the Comprehensive Environmental Response, Compensation andLiability Act of 1980, as amended, the Solid Waste Disposal Act, as amended orany other Environmental, Health, and Safety Requirements.

** **

**4.22.4**     Neither this Agreement nor the consummation of the transaction that isthe subject of this Agreement will result in any material obligations for siteinvestigation or cleanup, or notification to or consent of government agenciesor third parties, pursuant to any of the so-called “transaction-triggered” or “responsibleproperty transfer” Environmental, Health, and Safety Requirements.

** **

**4.22.5**     The Seller and the Company have furnished to the Buyer all environmentalaudits, reports and other material environmental documents relating to the Company’s,or its affiliates’, past or current properties, facilities or operations, whichare 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 thebusiness in which it is engaged and to own and use the properties owned andused by it. The Company is in compliance with the material terms and conditionsof such Licenses. After the Closing, it is expected that the Company shall nolonger be eligible for Small business status, small disadvantage businessstatus or protégé status. Other than as provided in the preceding sentence, noloss or expiration of any License is pending or, to the Knowledge of the Sellerand the Company, threatened or reasonably foreseeable (including, withoutlimitation, as a result of the transactions contemplated hereby) other thanexpiration in accordance with the terms thereof, which terms do not expire as aresult of the consummation of the transactions contemplated hereby.

 

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**4.24****       ****Government Contracts**.

 

**4.24.1**     Part I of Schedule 4.24.1 lists all current Government Contractsactive for calendar years 2003 or 2004, and with respect to each such listedGovernment Contract, Part I of Schedule 4.24.1 accurately lists: (A) thecontract name; (B) the award date; (C) the customer; (D) the contract end date;and (E) as applicable, whether the Current Government Contract is premised onthe Company’s 8(a) status, small business status, small disadvantaged business status,protégé status, or other preferential status. Attached to Part I of Schedule4.24.1 is the “contract data sheet” maintained by the Company for eachcurrent Government Contract listed on Part I of Schedule 4.24.1 forwhich the Company is the prime contractor. Part II of Schedule 4.24.1 liststhe Company’s current project charge codes, and with respect to each suchcharge code, Part II of Schedule 4.24.1 accurately lists: (A) thecustomer; (B) the customer’s contract number corresponding to the charge code;(C) the customer’s order number; (D) the Company’s internal project charge codenumber; (E) the corresponding project name; (F) the end date; (G) inception toFebruary 29, 2004 funding; (H) inception to February 29, 2004 revenue and (I)the ceiling values of the contract (excluding task orders and blanket purchaseagreements). The Company has no Government Contracts that have fixed price taskorders or that are billed on a fixed price basis. Part III of Schedule4.24.1 lists all Government Contract Bids, including task order bids underCurrent Government Contracts submitted by the Company and for which no awardhas been made thirty (30) days or more prior to the date of this Agreement, andwith respect to each such Government Contract Bid, Part III to Schedule4.24.1 accurately lists: (1) the customer agency and title; (2) the requestfor proposal (RFP) number or, if such Government Contract Bid is for a taskorder under a prime contract, the applicable prime contract number, (3) thedate of proposal submission; (4) the expected award date, if known; (5) theestimated period of performance; (6) the estimated value based on the proposal,if any; and (7) except for Government Contract Bids for task orders, whethersuch Government Contract Bid is premised on the Company’s 8(a) status, smallbusiness status, small disadvantaged business status, protégé status, or otherpreferential status. The Company and the Seller have delivered or madeavailable to Buyer true and complete copies of all Government Contracts (exceptfor task orders pursuant to such Government Contracts) and of all GovernmentContract Bids and all material documentation related thereto requested byBuyer. The Company has not exceeded the authorized funding (spending level) ofany task or task order. Neither the Seller nor the Company has made anyrepresentation with regard to the amount or likelihood of any awards under suchGovernment Contract Bids.

 

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

 

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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 tocurrent Government Contracts active for calendar years 2003 or 2004, (A) theCompany has fully complied with all material terms and conditions of eachGovernment Contract and Government Contract Bid to which it is a party; (B) theCompany has complied, in all material respects, with all statutory and regulatoryrequirements, including but not limited to the Service Contract Act, theProcurement Integrity Act, the Federal Procurement and Administrative ServicesAct, the Federal Acquisition Regulation (“FAR”) and related cost principles andthe Cost Accounting Standards, where and as applicable to each of theGovernment Contracts and Government Contract Bids, (C) the representations,certifications, and warranties made by the Company with respect to theGovernment Contracts or Government Contract Bids were accurate in all material respectsas of their effective date, and the Company has fully complied with all such certificationsin all material respects; (D) no termination for default, cure notice or showcause notice has been issued and remains unresolved with respect to anyGovernment Contract or Government Contract Bid, and, to the Knowledge of theCompany and the Seller, no event, condition or omission has occurred or existsthat would constitute grounds for such action; (E) no past performance evaluationreceived by the Company with respect to any such Government Contract has setforth a default or other material failure to perform thereunder or terminationor default thereof; and (F) to the Knowledge of the Company and the Seller, nomoney currently due to the Company pertaining to any Government Contract orGovernment Contract Bid has been withheld or set-off.

 

**4.24.4**     Except as set forth in Schedule 4.24.4, with respect to theGovernment Contracts, no Governmental Authority, prime contractor or higher-tiersubcontractor under a Government Contract or any other Person has notified theCompany of any actual or alleged violation or breach of any statute,regulation, representation, certification, disclosure obligation, contractterm, condition, clause, provision or specification that could reasonably beexpected to materially affect payments under Government Contracts or adverselyaffect 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 anylitigation that could reasonably be expected to give rise to (A) liabilityunder the False Claims Act, (B) a claim for price adjustment under the Truth inNegotiations Act, or (C) any other request for a reduction in the price of anyGovernment Contract, including but not limited to claims based on actual oralleged defective pricing. There exists no basis for a claim of any materialliability of the Company by any Governmental Authority as a result of defectivecost and pricing data submitted to any Governmental Authority. The Company isnot participating in any pending claim and, to the Knowledge of the Company andthe Seller, has no interest in any potential claim under the Contract DisputesAct against the United States Government or any prime contractor, subcontractoror vendor arising under or relating to any Government Contract or GovernmentContract Bid.

 

**4.24.6**     Except as set forth on Schedule 4.24.6, (A) the Company has notreceived, during the past five (5) years, any written or, to the Knowledge ofthe Company and the Seller, any oral, show cause, cure, default or similarnotice relating to the Government Contracts; (B) no

 

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Government Contract has beenterminated for default in the past three (3) years; and (C) the Company has notreceived, during the past five (5) years, any written or, to the Knowledge ofthe Company and the Seller, any oral, notice terminating any GovernmentContract for convenience or indicating an intent to terminate any of theGovernment 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 ofthe Company and the Seller, oral, notice of any outstanding claims or contractdisputes to which the Company is a party (A) relating to the GovernmentContracts or Government Contract Bids and involving either a GovernmentalAuthority, any prime contractor, any higher-tier subcontractor, vendor or anythird party; and (B) relating to the Government Contracts under the ContractDisputes 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 GovernmentContract. No suspension or debarment actions with respect to GovernmentContracts have been commenced, or to the Knowledge of the Company and theSellers, threatened against the Company or any of its officers or employees. Tothe Knowledge of the Company and the Seller, there is no valid basis for theCompany’s or the Seller’s suspension or debarment from bidding on contracts orsubcontracts for or with any Governmental Authority.

** **

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

** **

**4.24.10**  Except as set forth on Schedule 4.24.10, (A) the Company has notundergone and is not undergoing any audit, inspection, survey or examination ofrecords by any Governmental Authority relating to any Government Contract, (B)the Company has not received written notice of, and to the Knowledge of theCompany and the Seller, the Company has not undergone any investigationrelating to any Government Contract, and (C) to the Knowledge of the Companyand the Seller, no such audit, inspection, investigation, survey or examinationof records is threatened. Except as set forth in Schedule 4.24.10, theCompany has not, during the past five (5) years, received any official noticethat it is or was being specifically audited (other than routine DCAA orsimilar audits) or investigated by the General Accounting Office, any state orfederal agency Inspector General, the contracting officer with respect to any GovernmentContract 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 Schedule4.24.10 has revealed any fact, occurrence or practice which couldreasonably 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 disclosurein writing to any Governmental Authority with respect to any material alleged irregularity,misstatement or omission arising under or relating to a Government Contract or GovernmentContract Bid.

 

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**4.24.12**** **The Company has not received any writtennotice that any, and to the Knowledge of the Company and the Seller, none ofthe Company’s employees, consultants or agents is (or during the last five (5)years has been) under administrative, civil or criminal investigation orindictment by any Governmental Authority with respect to the conduct of the businessof the Company. The Company has not received written notice of any, and to the Knowledgeof 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) yearshas there been any audit or investigation of the Company or any officer,employee or representative of the Company relating to the business of theCompany resulting in a material adverse finding with respect to any materialalleged irregularity, misstatement or omission arising under or relating to anyGovernment Contract or Government Contract Bid.

 

**4.24.13**** **To the Knowledge of the Company and theSeller, the Company is in compliance in all material respects with allapplicable national security obligations, including those specified in theNational Industrial Security Program Operating Manual, DOD 5220.22-M (January1995), 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 oromissions that would reasonably be expected to result in (A) a material claimagainst the Company by a Governmental Authority or any prime contractor, subcontractor,vendor, or other third party arising under or relating to any GovernmentContract or Government Contract Bid, or (B) a material dispute between the Companyand a Governmental Authority or any prime contractor, subcontractor, vendor, orother third party arising under or relating to any Government Contract orGovernment 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 ofany events or omissions that, at the time of the audit, the Company or theSeller reasonably expected to have a Material Adverse Effect on performance ofa Government Contract or Government Contract Bid or a Material Adverse Effecton the Company as a whole. Except as set forth on Schedule 4.24.15, tothe Knowledge of the Sellers and the Company, (A) all Government Contract Bidslisted on Schedule 4.24.15 were submitted in the Ordinary Course ofBusiness of the Company, (ii) all Government Contract Bids listed on Schedule4.24.15 were based on assumptions believed by the management of the Companyto be reasonable, and (iii) the Company and the Sellers reasonably believe all GovernmentContract Bids listed on Schedule 4.24.15 are capable of performance bythe Company in accordance with the terms and conditions of such GovernmentContract Bid without a total program loss over the life of such GovernmentContract (calculated in accordance with the Company’s accounting principlesconsistently applied).

** **

**4.24.16**** **To the Knowledge of the Company and theSeller, no Government Contract, during the past five (5) years, has incurred orcurrently projects costs overruns in an amount exceeding $25,000. No paymenthas been made by the Company or, to the Knowledge of the Company and theSeller, by a Person acting on the Company’s behalf, to any Person (other thanto any bona fide employee or agent of the Company, as defined in subpart 3.4 ofthe FAR) which is or was improperly contingent upon the award of any GovernmentContract or which would otherwise be in violation of any applicable procurementlaw 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 toassign, to any Person, any Government Contracts, or any account receivablerelating 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 representativesapproving and “closing” all rates, rate schedules and indirect costs charged toGovernment 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 orotherwise furnished to the Company by or on behalf of the United StatesGovernment (the “Government-Furnished Items”). To the Knowledge of theCompany and the Seller, the Company has complied in all material respects withall of its obligations relating to the Government-Furnished Items and, upon thereturn thereof to the United States Government in the condition thereof on thedate hereof, would have no liability to the United States Government withrespect thereto.

 

**4.24.20**       Except as set forth on Schedule 4.24.20,(A) no written claims, or claims threatened in writing, exist against theCompany with respect to express warranties and guarantees contained inGovernment Contracts on products or services provided by the Company; (B) nosuch claims of a material nature have been made against the Company in the past5 years; (C) to the Knowledge of the Company and the Seller, no amendment hasbeen made to any written warranty or guarantee contained in any GovernmentContract that would reasonably be expected to result in a Material AdverseEffect 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 giveany Person a right to make a claim under any written warranty or guaranteecontained in any Government Contract.

 

**4.24.21**       Except to the extent prohibited by applicableLaw, Schedule 4.24.21 sets forth all material facility securityclearances held by the Company, all employees of the Company who have securityclearances and all employees of the Company who have pending requests forsecurity clearances.

 

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

 

**4.26****                   ****Notesand Accounts Receivable**. All notes and accounts receivable of the Company shown on all balancesheets included in the Financial Statements arose from sales actually made orservices actually performed in the Ordinary Course of Business of the Company andare subject to no setoffs or counterclaims. To the Knowledge of the Company andthe Seller, the billed accounts receivable have been collected or are fullycollectible according to their terms in amounts not less than the aggregateamounts 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, theCompany has not had access to non-public information nor provided systems engineering,technical direction, consultation, technical evaluation, source selectionservices or services of any type, nor prepared specifications or statements ofwork, nor engaged in any other conduct that would create in any current GovernmentalAuthority procurement for which the Company has submitted a Government Bid anOrganizational Conflict of Interest, as defined in Federal Acquisition Regulation9.501, with the Company.

 

**4.28****                   ****Customers and Suppliers**.

 

**4.28.1**              Schedule 4.28 identifies the 10 largest customers (byrevenue) of the Company (on a consolidated basis) for each of the two mostrecent fiscal years and sets forth opposite the name of each such customer thepercentage of consolidated net revenues attributable to such customer. Schedule 4.28also identifies any additional customers which the Company reasonablyanticipates shall be among the 20 largest customers for the current fiscalyear. For purposes of this Section 4.28, “customer” shallmean any contracting entity (without regard to the end user of the goods orservices in question).

 

**4.28.2**              Since the date of the Most Recent BalanceSheet, no material supplier of the Company has indicated that it shall stop, ormaterially decrease the rate of, supplying materials, products or services tothe Company, and to the Company’s and the Seller’s Knowledge no customer listedon Schedule 4.28 has indicated that it shall stop, or materially decreasethe rate of, buying materials, products or services from the Company.

 

**4.29****                   ****Affiliated Transactions**.****Exceptas set forth on Schedule 4.29, neither (i) Seller, (ii) any memberof Seller’s immediate family (limited to Seller’s spouse and any child by bloodor 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 votingstock of the Company or any other Affiliate of Seller (each, a “Related Party”)(x) is a party to any material agreement, contract, commitment, arrangement, ortransaction with the Company or that pertains to the business of the Company, excludingemployment or other compensation, non-competition, confidentiality or othersimilar 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 financialobligations of any kind (including, without limitation, inter-company accounts,notes, guarantees, loans, or advances) between the Company on the one hand anda Related Party on the other hand (each a “Related Party Obligation”),except to the extent arising out of the post-Closing performance of a RelatedParty 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). Thesatisfaction, release, termination, or other disposition of a Related PartyObligation shall not have caused, and shall not reasonably be expected tocause, the Company to suffer an Adverse Consequence, except to the extent that suchAdverse Consequence is reflected in the Most Recent Financial Statements anddoes not and will not impose any obligation or other Liability on the Companyfrom and after the Closing.

 

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**4.30****                   ****Defense Articles, Defense Services and Technical Data**.****During the period from inception to thepresent, the Company has not manufactured or brokered “defense articles,” exported“defense articles” or furnished “defense services” or “technical data” toforeign nationals in the United States or abroad, as those terms are defined in22 Code of Federal Regulations Sections 120.6, 120.9 and 120.10, respectively.

 

**4.31****                   ****Disclosure**.****To the Seller’s knowledge, no representationor warranty by the Seller or the Company contained in this Agreement and nostatement of fact contained (i) in the Disclosure Schedules delivered to theBuyer or its representatives pursuant to this Agreement, or (ii) incertificates or other documents, delivered pursuant to this Agreement, by theCompany and the Seller to the Buyer or any of its representatives contains anyuntrue statement of material fact or omits or will knowingly omit to state anymaterial 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 banksand other financial institutions with which the Company maintains an account(or at which an account is maintained to which the Company has access as towhich deposits are made on behalf of the Company), in each case listing thetype of account, the account number therefor, and the names of all Personsauthorized to draw thereupon or have access thereto and lists the locations ofall safe deposit boxes used by the Company.

 

**5.****                                     ****ADDITIONAL AGREEMENTS OF THEPARTIES.**

 

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

 

**5.1**                           **General**.****In case at any time after the Closing anyfurther action is necessary to carry out the purposes of this Agreement, eachof the Parties will take such further action (including the execution anddelivery of such further instruments and documents) as any other Partyreasonably may request, all at the sole cost and expense of the requestingParty (unless the requesting Party is entitled to indemnification thereforunder Section 7 below). The Seller acknowledges and agrees thatfrom and after the Closing the Buyer will be entitled to possession of andSeller will provide to Buyer all documents, books, records (including Taxrecords), agreements, corporate minute books and financial data of any sortrelating to the Company; provided that Buyer will provide Seller withreasonable access to all such data, records and information following theClosing.

 

**5.2**                           **Litigation Support**.****In the event and forso long as any Party actively is contesting or defending against any action,suit, proceeding, hearing, investigation, charge, complaint, claim, or demandin 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 thatexisted on or prior to the Closing Date involving the Company, each of the otherParties will cooperate with such Party and such Party’s counsel in the contestor defense, make available their personnel, and provide such testimony andaccess to their books and records as shall be reasonably necessary in connectionwith the contest or defense, all at the sole cost and expense of the contestingor defending Party (unless the contesting or defending Party is entitled toindemnification therefor under Section 7 below).

 

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

 

**5.4****                                 ****Confidentiality**.****The Seller will treatand hold as confidential all of the Confidential Information, refrain fromusing any of the Confidential Information except in connection with thisAgreement, and deliver promptly to the Buyer or destroy, at the request and optionof the Buyer, all tangible embodiments (and all copies) of the ConfidentialInformation which are in Seller’s possession. In the event that Seller isrequested or required (by oral question or request for information or documentsin any legal proceeding, interrogatory, subpoena, civil investigative demand, orsimilar process) to disclose any Confidential Information, Seller will notifythe Buyer promptly of the request or requirement so that the Buyer may seek anappropriate 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 ConfidentialInformation to any tribunal or else stand liable for contempt, Seller may disclosethe Confidential Information to the tribunal; provided, however,that Seller shall use Seller’s reasonable best efforts to obtain, at therequest of the Buyer, an order or other assurance that confidential treatmentwill be accorded to such portion of the Confidential Information required to bedisclosed as the Buyer shall designate. The foregoing provisions shall notapply to any Confidential Information which is generally available to thepublic immediately prior to the time of disclosure.

 

**5.5****                          ****Company’s Accountants**.****TheSeller will cooperate with the Buyer, upon the request of the Buyer, inobtaining the consent of the Company’s Accountants to the use by the Buyer ofthe historical financial statements of the Company in connection with anyfiling 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 toconsummate the transactions to be performed by each of them in connection with theClosing if, on the Closing Date, (i) any action, suit, or proceeding shall bepending or threatened before any Governmental Authority wherein an Order orcharge would (A) prevent consummation of any of the transactions contemplatedby this Agreement or (B) cause any of the transactions contemplated by thisAgreement to be rescinded following consummation, or (ii) any Law or Orderwhich would have any of the foregoing effects shall have been enacted or promulgatedby any Governmental Authority. Each Party may waive any condition to its obligationsspecified in this Section 6.1 by execution of a writing so statingat or prior to the Closing.

 

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

 

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

 

**6.2.2****                    **the Seller and the Company shall haveperformed and complied with all of their covenants hereunder in all materialrespects through the Closing, except to the extent that such covenants arequalified by terms such as “material” and “Material Adverse Effect,” in whichcase with respect to such covenants the Seller and the Company shall haveperformed and complied with such covenants hereunder in all respects throughthe Closing;

 

**6.2.3****                    **no action, suit, or proceeding shall bepending or threatened before any Governmental Authority wherein an Order orcharge would (A) affect adversely the right of the Buyer to own the CompanyShares and to control the Company, (B) affect adversely the right of theCompany to own its assets and to operate its business, (C) prevent consummationof any of the transactions contemplated by this Agreement, or (D) cause any ofthe transactions contemplated by this Agreement to be rescinded followingconsummation (and no such Order or charge shall be in effect), nor shall anyLaw or Order which would have any of the foregoing effects have been enacted orpromulgated by any Governmental Authority;

 

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

 

**6.2.5****                    **the Seller and Company shall have procured allof the necessary Governmental Authority authorizations, consents, orders andapprovals;

 

**6.2.6****                    **the Seller and the Company shall havedelivered to the Buyer a certificate to the effect that each of the conditionsspecified above in Section 6.2.1 through Section 6.2.5is satisfied in all respects;

 

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

 

**6.2.8****                    **each of Deon Buffaloe and Bette Burgess shallhave entered into an Employment Agreement substantially in the form of ExhibitC attached hereto (the “Employment Agreement”);

 

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

 

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

 

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**6.2.11****             **the Seller and Michael Hardy shall have eachexecuted and delivered to Buyer a five-year Confidentiality and Non-CompetitionAgreement in the form of Exhibit F;

 

**6.2.12****             **the Seller shall deliver to Buyer such documentationthat properly evidences the Company is not a lessee and/or guarantor and has noobligations with respect to the vehicle owned by the Seller, as furtherdescribed on Schedule 6.2.12.

 

**6.2.13****             **the Seller shall have caused the Company to haveno long term Indebtedness as of Closing and shall have provided Buyer acertificate to such effect;

 

**6.2.14****             **the Seller shall have executed and deliveredthe Escrow Agreement;

 

**6.2.15****             **the Seller shall have delivered to Buyeroriginal stock certificates representing the Company Shares and irrevocablestock powers executed by Seller transferring the Company Shares to Buyer;

 

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

 

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

 

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

 

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

 

**6.2.20**              the approval of the Board of Directors of theCompany (if required by applicable law) shall have been obtained, and the Buyershall have been furnished with evidence reasonably satisfactory to it that suchapproval and any other approvals necessary for the consummation of thetransactions contemplated by this Agreement and the other Transaction Documentshave been obtained;

 

**6.2.21****             **with respect to each Real Property Lease setforth on Schedule 4.12, the Buyer shall have received any consentof the landlord required under such Real Property Lease in connection with theconsummation of the transactions contemplated herein;

 

**6.2.22**              at the Closing, the Buyer shall received anaffidavit from Seller, setting forth such Seller’s name, address and federaltax 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 withholdfrom the Initial Payment at Closing to the Sellers pursuant hereto such sums asare required to be withheld therefrom under Section 1445 of the Code;

 

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**6.2.23** allactions to be taken by the Seller and the Company in connection withconsummation of the transactions contemplated hereby and all certificates,opinions, instruments, and other documents required to effect the transactionscontemplated hereby will be reasonably satisfactory in form and substance tothe Buyer.

 

TheBuyer may waive any condition to its obligations specified in this Section 6.2by 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 consummatethe transactions to be performed by the Seller in connection with the Closing issubject to satisfaction of the following conditions:

 

**6.3.1**                     the representations and warranties set forthin Section 3.2 above that are qualified as to materiality shall betrue and correct, and those that are not so qualified shall be true and correctin all material respects, at and as of the date of this Agreement and theClosing Date (except (x) to the extent such representations and warranties arespecifically made as of a particular date, in which case such representationsand warranties shall be true and correct as of such date, and (y) for changespermitted by this Agreement);

 

**6.3.2**                     the Buyer shall have performed and compliedwith all of its covenants hereunder in all material respects through theClosing, except to the extent that such covenants are qualified by terms suchas “material” and “Material Adverse Effect,” in which case the Buyer shall haveperformed and complied with all of its covenants hereunder in all respectsthrough 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 Sellera certificate to the effect that each of the conditions specified above in Section 6.3.1through Section 6.3.3 is satisfied in all respects;

 

**6.3.5**                     all actions to be taken by the Buyer inconnection with consummation of the transactions contemplated hereby and allcertificates, opinions, instruments, and other documents required to effect thetransactions contemplated hereby will be reasonably satisfactory in form andsubstance to the Seller.

 

**6.3.6**                     Buyer shall have delivered the Cash ClosingAmount in accordance with Section 2.2

 

**6.3.7**                     Buyer shall have executed and delivered theConfidentiality and Non-Competition Agreements, by and between the Buyer andeach of Seller and Michael Hardy, substantially in the form attached hereto as ExhibitF.

 

**6.3.8**                     Company shall have entered into that certainRelease of Claims identified in Section 6.2.9 above.

 

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**6.3.9**                     The Buyer shall have entered into thosecertain Employment Agreements identified in Section 6.2.8 above.

 

**6.3.10****             **The Board of Directors of the Buyer shallhave authorized and approved this Agreement and the transactions contemplatedhereby.

 

**6.3.11****             **Seller shall have caused the Company todeliver 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 EscrowAmount to the Escrow Agent and shall have entered into the Escrow Agreement.

 

**6.3.13**              Seller shall have caused the Company toobtain and deliver to Buyer a certificate of good standing of the Company fromthe Maryland Department of Assessments and Taxation a certificate from theSecretaries of State of each jurisdiction in which the Company owns or leasesreal property or otherwise does business evidencing the Company’s authorizationto conduct business as a foreign corporation in such state, dated not earlierthan ten (10) days prior to the Closing Date.

 

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

 

**7.****                                     ****INDEMNIFICATION.**

 

**7.1**                           **Indemnification by the Seller**.****TheSeller agrees to indemnify, defend and hold harmless the Buyer Parties (andtheir respective directors, officers, employees, Affiliates, successors andassigns) 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 orproceedings between the Buyer Parties and the Seller or between the BuyerParties and any third party or otherwise) based upon, arising out of, orotherwise 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 theSeller or the Company, or (ii) the non-fulfillment by the Company or the Sellerprior to the Closing and by the Seller from and after the Closing, of anyunwaived covenant or agreement, in the case of (i) and (ii) above, as containedin this Agreement or in any of the other Transaction Documents or in any documentor 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 7.1to the extent that indemnity is specifically provided for Losses pursuant toany supplemental indemnity pursuant to Section 7.3 of this Agreement.

 

**7.2**                           **Indemnification by the Buyer**.****TheBuyer agrees to indemnify the Seller against and hold Seller harmless from andin 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, ineach case as made by or on behalf of the Buyer in this Agreement or in any ofthe other Transaction Documents or in any document or instrument delivered atthe Closing pursuant hereto or thereto or (b) enforcing the Seller’sindemnification rights provided for hereunder.

 

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**7.3****                              ****Supplemental Indemnification by Seller**.

 

**7.3.1****                    ****Supplemental ERISAIndemnification**.****Seller agrees to indemnify and hold harmlessthe Buyer Parties with respect to any Losses incurred by any of the BuyerParties based upon, arising out of or otherwise in respect of, the Company’sbeing affiliated prior to the date hereof, directly or indirectly, under Code Section 414or ERISA Section 4001 or any similar foreign law, with the Seller or anyof their Affiliates. In addition, Seller agrees to indemnify and hold harmlessthe Buyer Parties and Employee Benefit Plans with respect to any and all Lossesarising out of or otherwise in respect of (i) any Employee Benefit Plan that isnot disclosed on Schedule 4.20 or any violation of any reportingand disclosure rules or regulations, including, without limitation, the failureto timely file any report, schedule, application for determination, or anyother information required to be reported, under ERISA or the Code in respectof 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 bereported, under ERISA or the Code in respect of any Employee Benefit Plan thatis disclosed on Schedule 4.20 and (iii) any failure to amend,within the time period required under the Code, any Employee Benefit Plan thatis a tax-qualified retirement plan to qualify under Section 401(a) of theCode.  Notwithstanding anything to thecontrary in Section 7.4, the indemnification obligations set forth inclauses (i) (ii) and (iii) of the second sentence of this Section 7.3.1shall be treated as ERISA Claims (as defined in Section 7.4) for purposesof the survival provisions of Section 7.4 and shall be subject to thedollar limitations in Section 7.5(i) and (ii).

 

**7.3.2**                     **Supplemental ContractIndemnification**.****Seller agrees to indemnify and hold harmlessthe Buyer Parties with respect to any Losses incurred by any of the Buyer Partiesbased upon, arising out of or otherwise in respect of, any governmentdisallowance of incurred Direct Contract Costs and/or Indirect Costs,including, without limitation, any Losses arising out of Defense Contract AuditAgency for any time period prior to the Closing Date. Notwithstanding anythingto the contrary in Sections 7.3.2 and 7.5, all indemnification obligations inthis Section 7.3.2 shall survive the execution and delivery of thisAgreement and the consummation of the transactions contemplated hereby, shallterminate on March 31, 2006 and shall be subject to the dollar limitationsin Sections 7.5(i) and (ii).

 

**7.3.3**                     **Supplemental TaxIndemnification**.****Seller agrees to indemnify the Buyer Partiesfor any liability for any Taxes imposed on the Company (including without limitation,any underpayment penalties, and any Taxes required to have been withheld from paymentsto the employees of the Company) pursuant to federal, state, local or foreignlaw attributable to any periods or portions thereof ending on or before theClosing Date (“Pre-Closing Taxes”) in excess of Taxes which are included ascurrent liabilities for purposes of computing Working Capital. Allindemnification obligations set forth in this Section 7.3.3 shall betreated as Tax Claims (as defined in clause (b) of Section 7.4) forpurposes of the survival provisions of Section 7.4 and shall not besubject to any dollar limitation, including, without limitation, those setforth in Section 7.5.

 

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

 

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

 

**7.4**                               **Survival of Representations and Warranties of theSeller**.****Notwithstanding any right of the Buyer fullyto investigate the affairs of the Company and the Seller and notwithstandingany knowledge of facts determined or determinable by the Buyer pursuant to suchinvestigation or right of investigation, the Buyer has the right to rely fullyupon the representations and warranties of each of the Seller and the Companycontained in this Agreement. All representations and warranties of the partieshereto contained in this Agreement shall survive the execution and deliveryhereof and the Closing hereunder, and, except for the representations andwarranties made in Sections 3.1, 3.2, 4.1, 4.2, 4.3 and 4.11 which shall survivewithout limit, (a) with respect to any General Claim (as defined below), orERISA Claim, shall terminate on March 31, 2006, (b) with respect to anyTax Claim, shall terminate on the later of (i) sixty (60) days following thedate upon which the liability to which any such Tax Claim may relate is barredby all applicable statutes of limitation (including any extension or waiver ofsuch periods) and (ii) sixty (60) days following the date upon which any claimfor refund or credit related to such Tax Claim is barred by all applicablestatutes of limitations (including any extension or waiver of such periods),(c) unless, in the case of clauses (a), (b) and (c) above, the party assertingsuch claim shall have given notice on or prior to such date, to the partyagainst which such claim is asserted.

 

As used in this Agreement, the followingterms have the following meanings: (a) “General Claim” means any claim (otherthan 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, anyinaccuracy in or any breach of any representation or warranty of any Seller orthe Company contained in this Agreement related to Taxes, including, withoutlimitation, 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 inrespect of, any inaccuracy in or any breach of any representation or warrantyof any Seller or the Company contained in this Agreement related to any Plan,including, without limitation, Section 4.20 and any claim for Lossespursuant to Section 7.3.1, and (d) “Environmental Claim” means any claimbased upon, arising out of or otherwise in respect of, any inaccuracy in or anybreach of any representation or warranty of any Seller contained in Section 4.22.Except as otherwise expressly provided herein, the covenants and agreementscontained in this Agreement shall survive the execution and delivery hereof andthe consummation of the transactions contemplated hereby.

 

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

 

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

 

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indemnity payments for all such Losses in excess of the DeductibleAmount; provided, however, that solely for purposes of determining whether theamount of the Seller’s indemnification obligations exceeds the DeductibleAmount, a breach of the Seller’s and the Company’s representations orwarranties that gives rise to losses in excess of $25,000 shall be determinedwithout regard to any limitation or qualification as to materiality or CompanyMaterial Adverse Effect (or similar concept) set forth in such representationor warranty.

 

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

 

**7.6****                          ****Defenseof Claims**.****In the case ofany claim for indemnification under Section 7.1, 7.2 or 7.3 arising from aclaim of a third party (including the IRS or any Governmental Agency), anindemnified party shall give prompt written notice and, subject to thefollowing sentence, in no case later than twenty (20) days after theindemnified party’s receipt of notice of such claim, to the indemnifying partyof any claim, suit or demand of which such indemnified party has Knowledge andas to which it may request indemnification hereunder. The failure to give suchnotice shall not, however, relieve the indemnifying party of itsindemnification obligations except to the extent that the indemnifying party isactually harmed thereby. The indemnifying party shall have the right to defendand to direct the defense against any such claim, suit or demand (including,without limitation, ERISA Claims, Tax Claims and claims relating to Sections7.3.2), at its expense, and with counsel selected by the indemnifying partyunless such claim, suit or demand seeks an injunction or other equitable reliefagainst the indemnified party; provided, however, the indemnifying party shallnot have the right to defend or direct the defense of any such claim, suit ordemand if it refuses to acknowledge fully its obligations to the indemnifiedparty or contests, in whole or in part, its indemnification obligationstherefor. If the indemnifying party elects, and is entitled, to compromise ordefend such claim, it shall within 30 days (or sooner, if the nature of theclaim so requires) notify the indemnified party of its intent to do so, and theindemnified party shall, at the request and expense of the indemnifying party,cooperate in the defense of such claim, suit or demand. If the indemnifyingparty elects not to compromise or defend such claim, fails to notify theindemnified party of its election as herein provided or refuses (other than ingood faith) to acknowledge or contests its obligation to indemnify under thisAgreement, the indemnified party may pay, compromise or defend such claim.Except as set forth in the immediately preceding sentence, the indemnifyingparty shall have no indemnification obligations with respect to any such claim,suit or demand which shall be settled by the indemnified party without theprior written consent of the indemnifying party (which consent shall not beunreasonably withheld or delayed); provided, however, that notwithstanding theforegoing, the indemnified party shall not be required to refrain from payingany claim which has matured by a court judgment or decree, unless an appeal isduly taken therefrom and exercise thereof has been stayed, nor shall it berequired to refrain from paying any claim where the delay in paying such claimwould result in the foreclosure of a lien upon any of the property or assetsthen held by the indemnified party or where any delay in payment would causethe indemnified party material economic loss. The indemnifying party’s right todirect the defense shall include the right to compromise or enter

 

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intoan agreement settling any claim by a third party; provided that no suchcompromise or settlement shall obligate the indemnified party to agree to anysettlement which requires the taking of any action by the indemnified partyother than the delivery of a release, except with the consent of theindemnified party (such consent to be withheld or delayed only for a good faithreason). Notwithstanding the indemnifying party’s right to compromise or settlein accordance with the immediately preceding sentence, the indemnifying partymay not settle or compromise any claim over the objection of the indemnifiedparty; provided, however, that consent by the indemnified party to settlementor compromise shall not be unreasonably withheld or delayed. The indemnifiedparty shall have the right to participate in the defense of any claim, suit ordemand with counsel selected by it subject to the indemnifying party’s right todirect the defense. The fees and disbursements of such counsel shall be at theexpense of the indemnified party; provided, however, that, in the case of anyclaim, suit or demand which seeks injunctive or other equitable relief againstthe indemnified party, the fees and disbursements of such counsel shall be atthe expense of the indemnifying party.

 

**7.7****                          ****Non-Third Party Claims**.****Any claim which does not result in a thirdparty claim shall be asserted by a written notice to the other Party orParties. 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 therecipient does not respond within such forty-five (45) days, the recipientshall be deemed to have accepted responsibility for the Losses set forth insuch notice and shall have no further right to contest the validity of suchnotice. If the recipient responds within such forty-five (45) days after thereceipt of the notice and rejects such claim in whole or in part, the party deliveringshall be free to pursue such remedies as may be available to it under contractor applicable law.

 

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

 

**7.9****                          ****Tax Treatment**.****All indemnification payments shall constituteadjustments to the Purchase Price for all Tax purposes, and no party shall takeany position inconsistent with such characterization, unless a finaldetermination by any Governmental Authority causes any such amount not to constitutean adjustment to the Purchase Price for Tax purposes.

 

**7.10****                   ****Exclusive Remedy**.****The foregoing indemnification provisions inthis Section 7 shall be the exclusive remedy from and after the Closing ofthe Buyer against the Seller and of the Seller against the Buyer for Lossesunder Sections 7.1, 7.2 and 7.3 or with respect to any other claims relating tothis Agreement or the transactions contemplated hereby, provided that nothingcontained in this Agreement (i) is intended to waive any claims for fraud orwillful misconduct to which a party may be entitled, or shall relieve or limitthe liability of any party or any officer or director of such Party from anyliability arising out of or resulting from fraud or willful misconduct inconnection with the transactions contemplated by this Agreement or in

 

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connectionwith the delivery of any of the documents referred to herein and (ii) isintended 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 orthe Buyer with respect to all or any part of any of the Seller’s indemnificationobligations under this Section 7.

 

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

 

**7.13**                    **Set-Off**. Any amounts to which Buyer may be entitledpursuant to the provisions of Sections 7.1 or 7.3 may be set-off by Buyeragainst the Escrow Amount. Prior to any such set-off, Buyer shall provide inwriting notice at least thirty (30) days to Seller describing the amount of andbasis for such set-off. The Escrow Amount represented by the proposed set-off shallbe suspended until the claim or dispute that is the basis for the proposedset-off is either (i) resolved by the parties in writing or (ii) determined byan 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 shallbe made within ten (10) days following the resolution or determination of suchclaim or dispute. If such claim that is the basis for the setoff results in an awardor settlement of damages less than the amount of the set-off, then Buyer shallpay Seller the difference between the amount setoff and the award or settlementof damages, plus interest at the rate of four percent (4%) per annum. Interestpaid pursuant to this sub-section shall be accrued from the date thescheduled payment was due.

 

**8.****                                     ****TAX MATTERS**.

 

The following provisions shall govern theallocation of responsibility as between the Buyer and the Seller for certainTax matters following the Closing Date:

 

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

 

**8.2****                          ****Post-Closing Tax Returns**.

 

**8.2.1****                          ****Preparation of CompanyIncome Tax Returns by Seller**.****Seller shall direct the Company’s Accountantsto prepare all income Tax Returns required to be initially filed by the Companyafter the Closing Date which relate to taxable periods ending on or before theClosing Date (“Pre-Closing Income Tax Returns”), and shall be responsible forexpenses of preparing such Tax Returns. Each such Tax Return shall be preparedin a manner consistent with the prior practice of the Company unless otherwiserequired by applicable Tax laws. A draft of each such Tax Return shall beprovided to Buyer for review and approval at least 30 days prior to the duedate for filing such Tax Return. Buyer shall have the right to review andapprove such Tax Return prior to the filing of such Tax Return (which approvalshall not be unreasonably withheld or delayed). For this purpose, Buyer’swithholding of timely approval of a Tax Return

 

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

 

**8.2.2****                          ****Preparation of Other CompanyTax Returns**.****Except as provided with respect toPre-Closing Income Tax Returns in Section 8.2.1, Buyer shall properly andaccurately prepare (or cause to be prepared) each Tax Return required to befiled by the Company after the Closing Date for a taxable period beginning onor before the Closing Date, and shall be responsible for expenses of preparingsuch Tax Returns. If any Tax shown as due on any such Tax Return is to be borneby the Seller (taking into account indemnification obligations hereunder andadjustments to the Purchase Price), (A) such Tax Return shall be prepared in a mannerconsistent with the prior practice of the Company unless otherwise required by applicableTax laws; (B) a draft of each such Tax Return shall be provided to Seller forreview and approval at least 30 days prior to the due date for filing suchreturn (or, if required to be filed within 90 days of the Closing, as soon aspossible following the Closing); and (C) Seller shall have the right to reviewand approve such Tax Return prior to the filing of such Tax Return (whichapproval shall not be unreasonably withheld or delayed). For this purpose,Seller’s withholding of timely approval of a Tax Return based upon Buyer’sfailure to adopt in such Tax Return an alternative reporting position suggestedby Seller shall be deemed reasonable if the reporting position proposed by theSeller on such Tax Return has a “reasonable basis,” as defined in Code §6662.

 

**8.2.3**                           **Filing of Tax Company TaxReturns and Payment of Taxes**.****Buyer shall file (or cause to be filed) eachTax Return required to be filed by the Company after the Closing Date for ataxable period beginning on or before the Closing Date, and shall cause to be timelypaid all Taxes shown on such Tax Returns; provided that such payment obligationshall not prevent recovery by Buyer of any indemnification to which Buyer maybe entitled under Section 7. To the extent that there are insufficientfunds then available in the Escrow Account to fully pay such claim forindemnity, the Seller shall reimburse the Buyer for any Taxes of the Companypayable with respect to a taxable period ending on or before the Closing Dateor 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 ofSeller’s obligation to indemnify against such Taxes pursuant to Section 7.3.3of this Agreement (that is, to the extent of the excess of such Tax over theamount taken into account as a liability in the computation of Closing WorkingCapital).

 

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

 

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deduction,or loss recognized on or after the Closing Date shall be included by theCompany and CHC in CHC’s consolidated federal income tax return (and to theextent applicable, in CHC’s tax return for state and local tax purposes aswell). For purposes of this Agreement, Taxes incurred by the Company withrespect 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 beallocated to the portion of the taxable period ending on the Closing Date (the “Pre-ClosingPeriod”) (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 ortransaction giving rise to the Tax, and (B) except as provided in (C) below,with respect to periodically assessed ad valorem Taxes and Taxes not otherwisereasonably allocable to specific identifiable transactions or events or dates,in proportion to the number of days in such taxable period that occur on orbefore 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, inan amount equal to the Tax which would be payable if the relevant taxableperiod ended on the Closing Date. All determinations necessary to give effectto the foregoing allocations shall be made in a manner consistent with priorpractices of the Company. Notwithstanding the foregoing, the Parties agree thatincome Taxes attributable to the Pre-Closing Period shall include any Taxliability of the Company arising in connection with the Closing (including,without limitation, any Tax relating to distributions of property by theCompany to the Seller occurring on the Closing Date) other than in the OrdinaryCourse 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 andinterest thereon, “Transfer Taxes”) incurred by the Company in connection withthis Agreement, shall be borne one-half by the Buyer and one-half by theSeller. Each Party shall prepare at their own expense any Tax Returns relatingto Transfer Taxes required to be filed by such Party, and, if required byapplicable law, each Party will, and will cause its affiliates to, join in theexecution of any such Tax Returns and other documentation required to be filedby the other Parties. The Party paying any such Transfer Tax in excess of its ratableshare shall be reimbursed by the other Party for the appropriate portion ofsuch Tax within fifteen (15) days after notice and evidence of payment is givento the other Party of such payment; provided that reimbursement by the Sellershall be required only to the extent the portion of such Transfer Tax allocableto Seller exceeds the amount taken into account as a liability therefore in theNet Working Capital computation, and further provided that any payment fromSeller otherwise required hereunder shall be paid first out of the EscrowAccount 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 respectto the Company, which may give rise to liability of another Party hereto, shallpromptly notify Buyer and Seller within ten (10) business days of the receiptof such notice. The Parties each agree to consult with and to keep the otherParties hereto informed on a regular basis regarding the status of any Taxaudit or proceeding to the extent that such audit or proceeding could affect aliability of such other Parties (including indemnity obligations hereunder).Seller shall have the right to represent the Company’s interests in any Taxaudit or administrative or judicial proceeding and to employ counsel of Seller’schoice and at Seller’s expense, but reasonably satisfactory to Buyer, but onlyto the extent such audit or other proceeding pertains to

 

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taxableperiods ending on or before the Closing Date. Buyer shall have the right toparticipate in such proceeding at its own expense, and shall be entitled tocontrol the disposition of any issue involved in such proceeding which does notaffect a potential liability of Seller. Both Buyer and Seller shall be entitledto represent their own interests in light of their responsibilities (includingindemnity obligations) for the related Taxes, at their own expense, in anyaudit or administrative or judicial proceedings involving a taxable period thatincludes but does not end on the Closing Date, provided that neither Partyshall communicate with representatives of an auditing Taxing Authority on anysubstantive matter without advising the other Party of the communication in advance,and if oral, providing the other Party an adequate opportunity to andparticipate in such communication. Notwithstanding the foregoing, Seller shallnot agree to any settlement for any taxable period that would effect TaxLiabilities of Buyer or the Company for any taxable period beginning on orafter the Closing Date without prior written consent of Buyer. Except asprovided in this Section 8.5, the provisions of Article 7 includingthe provisions therein addressing settlement authority, shall govern the mannerin 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 shallcooperate fully, as and to the extent reasonably requested by the other Party,in connection with the filing of Tax Returns pursuant to this Section 8and any audit, litigation or other proceeding with respect to Taxes. Suchcooperation shall include the retention and (upon the other Party’s request)the provision of records and information which are reasonably relevant to anysuch audit, litigation or other proceeding and making employees available on amutually convenient basis to provide additional information and explanation ofany material provided hereunder. The Company and the Seller shall (A) retainall books and records with respect to Tax matters pertinent to the Company relatingto any taxable period beginning before the Closing Date until the expiration ofthe statute of limitations (and, to the extent notified by the Buyer or theSeller, any extensions thereof) of the respective taxable periods, and abide byall 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 totake possession of such books and records.

 

**8.5.2**                     The Buyer and the Seller further agree, uponrequest, to use their best efforts to obtain any certificate or other documentfrom any Governmental Authority or any other Person as may be necessary tomitigate, reduce or eliminate any Tax that could be imposed (including, withoutlimitation, 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 beconsidered as having been paid for the Seller’s non-competition covenant ofSeller.

 

**8.7**                           **Buyer Actions Prohibited**.****The Buyer covenants that it will not and will not cause or permit theCompany or any Affiliate of the Buyer to (1) take any action on the Closing Dateother than in the Ordinary Course of Business, including, without limitation, thedistribution of any dividend or the effectuation of any redemption, that couldgive rise to any Tax

 

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

 

**8.8****                          ****Amended Tax Returns**.****Except in connection with an audit resolvedpursuant to Section 8.5 and Section 7.6 (including consistentcorrelative adjustments to Tax Returns for non-audited taxable periods), noparty may amend a Tax Return filed by any Party with respect to the Company orfile or amend any Tax election of the Company, in each case, for a taxableperiod beginning prior to the Closing Date, without the consent of the otherParties hereto, not to be unreasonably withheld or delayed. Buyer shall, uponrequest by Seller and at the sole expense of the Seller, cooperate in thepreparation of and submission to the proper Taxing Authority of any amended TaxReturn which is required to cause such Tax Return to be consistent withadjustments to the Tax Returns of the Company for any other taxable periodproposed by any Taxing Authority, or to give effect to an allowable losscarryback or carryover from a taxable period of the Company ending on or beforethe Closing Date.

 

**9.****                                     ****FEES****RELATING TO TRANSACTION**.

 

**9.1****                          ****Brokerage****Fees**. Except as otherwise set forth herein, the Seller and the Companyrepresent and warrant to the Buyer that no broker, finder, agent or similarintermediary has acted on behalf of the Company or Seller in connection withthis Agreement or the transactions contemplated hereby, and that there are nobrokerage commissions, finders’ fees or similar fees or commissions payable inconnection therewith based on any agreement, arrangement or understanding withthe Company or the Seller, or any action taken by the Company or any of theSeller. The Buyer represents and warrants to the Seller that no broker, finder,agent or similar intermediary has acted on behalf of the Buyer in connectionwith this Agreement or the transactions contemplated hereby, and that there areno brokerage commissions, finders’ fees or similar fees or commissions payablein connection therewith based on any agreement, arrangement or understandingwith the Buyer or any action taken by the Buyer. Each such party agrees toindemnify and save the other harmless from any claim or demand for commission orother compensation by any broker, finder, agent or similar intermediaryclaiming to have been employed by or on behalf of such party, and to bear thecost of legal expenses incurred in defending against any such claim.

 

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

 

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**10.****                              ****MISCELLANEOUS**.

 

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

 

**10.2****                   ****No Third-Party Beneficiaries**.****ThisAgreement shall not confer any rights or remedies upon any Person other thanthe Parties and their respective successors and permitted assigns.

 

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

 

**10.4****                   ****Succession and Assignment**.****ThisAgreement shall be binding upon and inure to the benefit of the Parties namedherein and their respective successors and permitted assigns. No Party mayassign either this Agreement or any of such Party’s rights, interests, orobligations hereunder without the prior written approval of the Buyer and theSeller; provided, however, that the Buyer may (i) assign any orall of its rights and interests hereunder to one or more of its Affiliates,(ii) designate one or more of its Affiliates to perform its obligationshereunder (in any or all of which cases the Buyer nonetheless shall remainresponsible 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 lenderto the Buyer or the Company for the purpose of providing collateral security.

 

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

 

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

 

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

 

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| 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                    |

 

AnyParty may send any notice, request, demand, claim, or other communicationhereunder to the intended recipient at the address set forth above using anyother 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

 

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beenduly 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 otherParties notice in the manner herein set forth.

 

**10.8****                   ****Governing Law**.** **This Agreement shall be governed by andconstrued in accordance with the domestic laws of the State of Maryland withoutgiving effect to any choice or conflict of law provision or rule (whether ofthe State of Maryland or any other jurisdiction) that would cause theapplication of the laws of any jurisdiction other than the State of New York.

 

**10.9****                   ****Amendments and Waivers**.****Noamendment of any provision of this Agreement shall be valid unless the sameshall be in writing and signed by the Parties. No waiver by any Party of anydefault, misrepresentation, or breach of warranty or covenant hereunder,whether intentional or not, shall be deemed to extend to any prior or subsequentdefault, misrepresentation, or breach of warranty or covenant hereunder oraffect in any way any rights arising by virtue of any prior or subsequent suchoccurrence.

 

**10.10****            ****Severability**.****Any term or provisionof this Agreement that is invalid or unenforceable in any situation in anyjurisdiction shall not affect the validity or enforceability of the remainingterms and provisions hereof or the validity or enforceability of the offendingterm or provision in any other situation or in any other jurisdiction.

 

**10.11****            ****Expenses**.****Each of the Buyer, the Seller and the Companywill 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 contemplatedhereby; provided, however, that in the event that thetransactions contemplated by this Agreement are consummated, if the Companyremains liable on the Closing Date for any unpaid expenses incurred by or onbehalf of the Company or the Seller in connection with the transactionscontemplated hereby, which expenses have not been fully accounted for in thedetermination of Working Capital, such expenses shall be deducted from theCompany’s working capital in the determination of Working Capital pursuant to Section 2.4.2.

 

**10.12****            ****Construction**.****The Parties haveparticipated jointly in the negotiation and drafting of this Agreement. In theevent an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the Parties and nopresumption or burden of proof shall arise favoring or disfavoring any Party byvirtue of the authorship of any of the provisions of this Agreement. Anyreference to any federal, state, local, or foreign statute or law shall bedeemed also to refer to all rules and regulations promulgated thereunder,unless the context requires otherwise. The word “including” shall meanincluding without limitation. The Parties intend that each representation,warranty, and covenant contained herein shall have independent significance. Ifany Party has breached any representation, warranty, or covenant containedherein in any respect, the fact that there exists another representation,warranty, or covenant relating to the same subject matter (regardless of therelative levels of specificity) which the Party has not breached shall notdetract from or mitigate the fact that the Party is in breach of the firstrepresentation, warranty, or covenant.

 

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

 

**10.14****            ****Specific Performance**.****Eachof the Parties acknowledges and agrees that the other Parties would be damagedirreparably in the event any of the provisions of this Agreement are not performedin accordance with their specific terms or otherwise are breached. Accordingly,each of the Parties agrees that the other Parties shall be entitled to aninjunction or injunctions to prevent breaches of the provisions of thisAgreement and to enforce specifically this Agreement and the TransactionDocuments and the terms and provisions hereof in any action instituted in anycourt of the United States or any state thereof having jurisdiction over the Partiesand the matter (subject to the provisions set forth in Section 10.16below), in addition to any other remedy to which they may be entitled, at lawor in equity.

 

**10.15****            ****Submission to Jurisdiction**.****Eachof the Parties submits to the jurisdiction of any state or federal courtsitting in the State of Maryland, in any action or proceeding arising out of orrelating to this Agreement and agrees that all claims in respect of the actionor proceeding may be heard and determined in any such court. Each of theParties waives any defense of inconvenient forum to the maintenance of anyaction or proceeding so brought and waives any bond, surety, or other securitythat might be required of any other Party with respect thereto. Any Party maymake service on any other Party by sending or delivering a copy of the processto the Party to be served at the address and in the manner provided for thegiving 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 anyother manner permitted by law or at equity. Each Party agrees that a finaljudgment in any action or proceeding so brought shall be conclusive and may beenforced by suit on the judgment or in any other manner provided by law or atequity.

 

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

 

**10.17****            ****Waiver of Certain Rights**.****Byher execution of this Agreement, Seller hereby irrevocably waives, relinquishesand terminates effective as of the Closing Date any and all of Seller’s rightsunder the Company’s certificate of incorporation or bylaws, or under any agreementwith the Company to which Seller is a party or in respect of which Seller mayhave any rights, including any purchase right, approval right, right of firstrefusal, or other similar right, with respect to the transactions contemplatedby this Agreement, notwithstanding any defects in notice or procedure containedtherein; provided that upon termination of this Agreement pursuant to Section 9of this Agreement prior to Closing, this Section 10.17 shall thereuponbecome void and of no further force and effect.

 

**[END OFPAGE]**

**[SIGNATUREPAGE FOLLOWS]**

 

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IN WITNESS WHEREOF, the Parties hereto have executedthis 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* |

 

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