##### 



Exhibit 2

EXECUTION COPY

STOCK PURCHASE AGREEMENT

by and among

UIL HOLDINGS CORPORATION
UNITED RESOURCES, INC.

and

CHECKFREE CORPORATION

for all of the outstanding stock of American Payment Systems, Inc.

December 16, 2003





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Table of Contents

|   |  |     |  |        |  |                                                                             |  |                                                                |    |  |    | 
|-- |  | --- |  | ------ |  | --------------------------------------------------------------------------- |  | -------------------------------------------------------------- | -- |  | -- | 
|1. |  |     |  |        |  | Definitions                                                                 |  |                                                                | 1  | 
|2. |  |     |  |        |  | Purchase And Sale Of The Company Shares                                     |  |                                                                | 7  | 
|   |  | (a) |  |        |  | Basic Transaction                                                           |  |                                                                | 7  | 
|   |  | (b) |  |        |  | Purchase Price                                                              |  |                                                                | 7  | 
|   |  |     |  | (i)    |  |                                                                             |  | Amount Paid at Closing                                         |    |  | 7  | 
|   |  |     |  | (ii)   |  |                                                                             |  | Post Closing Adjustments                                       |    |  | 8  | 
|   |  |     |  | (iii)  |  |                                                                             |  | Dispute Resolution Procedures                                  |    |  | 8  | 
|   |  |     |  | (iv)   |  |                                                                             |  | Closing Distributions; Repayment of Inter-company Debt         |    |  | 9  | 
|   |  | (c) |  |        |  | The Closing                                                                 |  |                                                                | 9  | 
|   |  | (d) |  |        |  | Deliveries at the Closing                                                   |  |                                                                | 10 | 
|3. |  |     |  |        |  | Representations And Warranties Concerning The Seller Entities And The Buyer |  |                                                                | 10 | 
|   |  | (a) |  |        |  | Representations and Warranties of the Seller Entities                       |  |                                                                | 10 | 
|   |  |     |  | (i)    |  |                                                                             |  | Organization                                                   |    |  | 10 | 
|   |  |     |  | (ii)   |  |                                                                             |  | Authorization of Transaction                                   |    |  | 10 | 
|   |  |     |  | (iii)  |  |                                                                             |  | Noncontravention                                               |    |  | 10 | 
|   |  |     |  | (iv)   |  |                                                                             |  | Brokers Fees                                                  |    |  | 11 | 
|   |  |     |  | (v)    |  |                                                                             |  | Company Shares                                                 |    |  | 11 | 
|   |  |     |  | (vi)   |  |                                                                             |  | Litigation                                                     |    |  | 11 | 
|   |  |     |  | (vii)  |  |                                                                             |  | Legal Compliance                                               |    |  | 11 | 
|   |  | (b) |  |        |  | Representations and Warranties of the Buyer                                 |  |                                                                | 11 | 
|   |  |     |  | (i)    |  |                                                                             |  | Organization of the Buyer                                      |    |  | 11 | 
|   |  |     |  | (ii)   |  |                                                                             |  | Authorization of Transaction                                   |    |  | 11 | 
|   |  |     |  | (iii)  |  |                                                                             |  | Noncontravention                                               |    |  | 12 | 
|   |  |     |  | (iv)   |  |                                                                             |  | Brokers Fees                                                  |    |  | 12 | 
|   |  |     |  | (v)    |  |                                                                             |  | Investment                                                     |    |  | 12 | 
|   |  |     |  | (vi)   |  |                                                                             |  | Accredited Investor                                            |    |  | 12 | 
|   |  |     |  | (vii)  |  |                                                                             |  | Litigation; Compliance with Laws                               |    |  | 12 | 
|   |  |     |  | (viii) |  |                                                                             |  | Disclaimer; Investigation by the Buyer; the Sellers Liability |    |  | 13 | 
|   |  |     |  | (ix)   |  |                                                                             |  | Legal Compliance                                               |    |  | 13 | 
|   |  |     |  | (x)    |  |                                                                             |  | Adequate Funds                                                 |    |  | 14 | 
|4. |  |     |  |        |  | Representations And Warranties Concerning Company                           |  |                                                                | 14 | 
|   |  | (a) |  |        |  | Organization of the Company                                                 |  |                                                                | 14 | 
|   |  | (b) |  |        |  | Capitalization                                                              |  |                                                                | 14 | 
|   |  |     |  | (i)    |  |                                                                             |  | Company                                                        |    |  | 14 | 
|   |  |     |  | (ii)   |  |                                                                             |  | Subsidiaries                                                   |    |  | 15 | 
|   |  | (c) |  |        |  | Noncontravention                                                            |  |                                                                | 15 | 

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|   |  |     |  |  |  |                                                     |  |  |    |  |  | 
|-- |  | --- |  |  |  | --------------------------------------------------- |  |  | -- |  |  | 
|   |  | (d) |  |  |  | Brokers Fees                                       |  |  | 16 | 
|   |  | (e) |  |  |  | Title to Assets; Sufficiency of Assets              |  |  | 16 | 
|   |  | (f) |  |  |  | Financial Statements                                |  |  | 16 | 
|   |  | (g) |  |  |  | Undisclosed Liabilities                             |  |  | 16 | 
|   |  | (h) |  |  |  | Events Subsequent to Most Recent Fiscal Quarter End |  |  | 17 | 
|   |  | (i) |  |  |  | Legal Compliance                                    |  |  | 17 | 
|   |  | (j) |  |  |  | Tax Matters                                         |  |  | 17 | 
|   |  | (k) |  |  |  | Real Property                                       |  |  | 19 | 
|   |  | (l) |  |  |  | Intellectual Property                               |  |  | 20 | 
|   |  | (m) |  |  |  | Contracts                                           |  |  | 22 | 
|   |  | (n) |  |  |  | Guaranties                                          |  |  | 24 | 
|   |  | (o) |  |  |  | Tangible Assets                                     |  |  | 24 | 
|   |  | (p) |  |  |  | Litigation                                          |  |  | 24 | 
|   |  | (q) |  |  |  | Employees                                           |  |  | 24 | 
|   |  | (r) |  |  |  | Employee Benefits                                   |  |  | 25 | 
|   |  | (s) |  |  |  | Environmental, Health, and Safety Matters           |  |  | 27 | 
|   |  | (t) |  |  |  | Notes and Accounts Receivable                       |  |  | 28 | 
|   |  | (u) |  |  |  | Powers of Attorney                                  |  |  | 28 | 
|   |  | (v) |  |  |  | Insurance                                           |  |  | 28 | 
|   |  | (w) |  |  |  | Disclosure                                          |  |  | 28 | 
|   |  | (x) |  |  |  | Disclaimer of Other Representations and Warranties  |  |  | 28 | 
|5. |  |     |  |  |  | Pre-Closing Covenants                               |  |  | 29 | 
|   |  | (a) |  |  |  | General                                             |  |  | 29 | 
|   |  | (b) |  |  |  | Regulatory Matters                                  |  |  | 29 | 
|   |  | (c) |  |  |  | Operation of Business                               |  |  | 30 | 
|   |  | (d) |  |  |  | Preservation of Business                            |  |  | 31 | 
|   |  | (e) |  |  |  | Full Access                                         |  |  | 31 | 

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|   |  |     |  |  |  |                                                                                  |  |  |    |  |  | 
|-- |  | --- |  |  |  | -------------------------------------------------------------------------------- |  |  | -- |  |  | 
|   |  | (f) |  |  |  | Notice of Developments                                                           |  |  | 31 | 
|   |  | (g) |  |  |  | Exclusivity                                                                      |  |  | 32 | 
|   |  | (h) |  |  |  | Termination of Agreements                                                        |  |  | 32 | 
|   |  | (i) |  |  |  | Financials                                                                       |  |  | 32 | 
|   |  | (j) |  |  |  | Transfer of Divested Items                                                       |  |  | 33 | 
|   |  | (k) |  |  |  | Amendment or Cancellation of Certain Agreements                                  |  |  | 33 | 
|6. |  |     |  |  |  | Post-Closing Covenants                                                           |  |  | 33 | 
|   |  | (a) |  |  |  | General                                                                          |  |  | 33 | 
|   |  | (b) |  |  |  | Litigation Support                                                               |  |  | 33 | 
|   |  | (c) |  |  |  | Transition                                                                       |  |  | 34 | 
|   |  | (d) |  |  |  | Employees                                                                        |  |  | 34 | 
|   |  | (e) |  |  |  | Employee Benefit Plans                                                           |  |  | 34 | 
|   |  | (f) |  |  |  | Confidentiality                                                                  |  |  | 36 | 
|   |  | (g) |  |  |  | Covenant Not to Compete                                                          |  |  | 36 | 
|   |  | (h) |  |  |  | Insurance                                                                        |  |  | 36 | 
|   |  | (i) |  |  |  | Access to Information                                                            |  |  | 37 | 
|   |  | (j) |  |  |  | Nonassignable Contracts and Permits                                              |  |  | 37 | 
|   |  | (k) |  |  |  | Guarantee                                                                        |  |  | 37 | 
|7. |  |     |  |  |  | Conditions To Obligation To Close                                                |  |  | 37 | 
|   |  | (a) |  |  |  | Conditions to Obligation of the Buyer                                            |  |  | 37 | 
|   |  | (b) |  |  |  | Conditions to Obligation of the Seller                                           |  |  | 39 | 
|8. |  |     |  |  |  | Remedies For Breaches Of This Agreement                                          |  |  | 40 | 
|   |  | (a) |  |  |  | Survival                                                                         |  |  | 40 | 
|   |  | (b) |  |  |  | Indemnification Provisions for Benefit of the Buyer                              |  |  | 40 | 
|   |  | (c) |  |  |  | Indemnification Provisions for Benefit of the Seller Entities and its Affiliates |  |  | 41 | 
|   |  | (d) |  |  |  | Limitations                                                                      |  |  | 41 | 

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|    |  |     |  |  |  |                                                                |  |  |    |  |  | 
|--- |  | --- |  |  |  | -------------------------------------------------------------- |  |  | -- |  |  | 
|    |  | (e) |  |  |  | Other Limitations                                              |  |  | 42 | 
|    |  | (f) |  |  |  | Losses Net of Insurance, Etc                                   |  |  | 42 | 
|    |  | (g) |  |  |  | Termination of Indemnification                                 |  |  | 43 | 
|    |  | (h) |  |  |  | Procedures Relating to Indemnification                         |  |  | 43 | 
|    |  | (i) |  |  |  | Exclusive Remedy                                               |  |  | 44 | 
|    |  | (j) |  |  |  | Mitigation                                                     |  |  | 44 | 
|9.  |  |     |  |  |  | Tax Matters                                                    |  |  | 44 | 
|    |  | (a) |  |  |  | Consolidated Return                                            |  |  | 44 | 
|    |  | (b) |  |  |  | Tax Periods Ending on or Before the Closing Date               |  |  | 45 | 
|    |  | (c) |  |  |  | Tax Periods Beginning Before and Ending After the Closing Date |  |  | 45 | 
|    |  | (d) |  |  |  | Refunds and Tax Benefits                                       |  |  | 46 | 
|    |  | (e) |  |  |  | Cooperation on Tax Matters                                     |  |  | 46 | 
|    |  | (f) |  |  |  | Tax Sharing Agreements                                         |  |  | 47 | 
|    |  | (g) |  |  |  | Certain Taxes                                                  |  |  | 47 | 
|    |  | (h) |  |  |  | Representation                                                 |  |  | 47 | 
|    |  | (i) |  |  |  | Confidentiality                                                |  |  | 48 | 
|    |  | (j) |  |  |  | Section 1445                                                   |  |  | 48 | 
|    |  | (k) |  |  |  | Section 338 Election                                           |  |  | 47 | 
|    |  | (l) |  |  |  | Phantom Stock Option Plan                                      |  |  | 48 | 
|    |  | (m) |  |  |  | Purchase Price Adjustment                                      |  |  | 49 | 
|10. |  |     |  |  |  | Termination                                                    |  |  | 50 | 
|    |  | (a) |  |  |  | Termination of Agreement                                       |  |  | 50 | 
|    |  | (b) |  |  |  | Effect of Termination                                          |  |  | 51 | 
|11. |  |     |  |  |  | Miscellaneous                                                  |  |  | 51 | 
|    |  | (a) |  |  |  | Press Releases and Public Announcements                        |  |  | 51 | 
|    |  | (b) |  |  |  | No Third-Party Beneficiaries                                   |  |  | 51 | 

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| |  |     |  |  |  |                                         |  |  |    |  |  | 
| |  | --- |  |  |  | --------------------------------------- |  |  | -- |  |  | 
| |  | (c) |  |  |  | Entire Agreement                        |  |  | 51 | 
| |  | (d) |  |  |  | Succession and Assignment               |  |  | 52 | 
| |  | (e) |  |  |  | Counterparts                            |  |  | 52 | 
| |  | (f) |  |  |  | Headings                                |  |  | 52 | 
| |  | (g) |  |  |  | Notices                                 |  |  | 52 | 
| |  | (h) |  |  |  | Governing Law                           |  |  | 53 | 
| |  | (i) |  |  |  | Venue                                   |  |  | 53 | 
| |  | (j) |  |  |  | Waiver of Jury Trial                    |  |  | 53 | 
| |  | (k) |  |  |  | Amendments and Waivers                  |  |  | 53 | 
| |  | (l) |  |  |  | Severability                            |  |  | 53 | 
| |  | (m) |  |  |  | Expenses                                |  |  | 53 | 
| |  | (n) |  |  |  | Construction                            |  |  | 53 | 
| |  | (o) |  |  |  | Incorporation of Exhibits and Schedules |  |  | 54 | 

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STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, entered as of December 16, 2003, by and among
CheckFree Corporation, a Delaware corporation or its permitted assignee (the
Buyer), UIL Holdings Corporation, a Connecticut corporation (the Parent)
and United Resources, Inc., a Connecticut corporation (the Seller and
together with the Parent, the Seller Entities). The Buyer and the Seller
Entities are referred to collectively herein as the Parties and individually
as a Party.

WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of American Payment Systems, Inc., a Connecticut
corporation (the Company) in return for the consideration set forth herein.

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

1.     DEFINITIONS.

Adjustment Statement has the meaning set forth in Section 2(b)(iii)
below.

Adverse Consequences means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys fees and
expenses.

Agreement means this Stock Purchase Agreement.

Affiliate has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

Affiliate Plan has the meaning set forth in Section 4(r)(ii) below.

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

APS-Cal has the meaning set forth in Section 4(b)(ii) below.

Basket Amount has the meaning set forth in Section 8(d)(i) below.

BellSouth has the meaning set forth in Section 6(k) below.

Buyer has the meaning set forth in the preface above.

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Buyer Excluded Provisions has the meaning set forth in Section 8(d)(i)
below.

CCI has the meaning set forth in Section 4(b)(ii) below.

Closing has the meaning set forth in Section 2(c) below.

Closing Date has the meaning set forth in Section 2(c) below.

Closing Date Balance Sheet has the meaning set forth in Section 2(b)(ii)
below.

Closing Date Net Working Capital has the meaning set forth in Section
2(b)(ii) below.

Closing Payment has the meaning set forth in Section 2(b)(i) below.

Code means the Internal Revenue Code of 1986, as amended.

Collateral Source has the meaning set forth in Section 8(f) below.

Company has the meaning set forth in the preface above.

Company Balance Sheet means a periodic balance sheet produced by the
Company in accordance with past procedures and practices.

Company Confidential Information means any Confidential Information
relating to or concerning the business of the Company.

Company Share means any share of the common stock, par value $100 per
share, of the Company.

Confidential Information means any written, oral or visual information
in any medium concerning the businesses and affairs of the Company or any Party
that is not already generally available to the public or, under the
circumstances, should reasonably be considered confidential or proprietary.

Contested Adjustments has the meaning set forth in Section 2(b)(iii)
below.

Contested Adjustment Notice has the meaning set forth in Section
2(b)(iii) below.

Contested Adjustment Dispute has the meaning set forth in Section
2(b)(iii) below.

December Balance Sheet the meaning set forth in Section 5(i)(ii) below.

December Fixed Asset Amount the meaning set forth in Section 5(i)(ii)
below.

Disclosure Schedule means the disclosure schedules attached hereto.

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Divested Items means (i) all ownership interests in CCI owned by the
Company and all ownership interests in BillMatrix Corporation owned by the
Company, including without limitation any beneficial ownership interest of the
Company in shares of BillMatrix Corporation held by an Affiliate of the
Company, (ii) the assets related to the prepaid telephony business acquired
from Paysmart America, Inc. and any liabilities related thereto, which assets
and liabilities are described in Section 5(j) of the Disclosure Schedule and
(iii) all assets and liabilities relating to CCI, BillMatrix Corporation and
Paysmart America, Inc. and owned by the Company, which assets and liabilities
are described in Section 5(j) of the Disclosure Schedule.

Employee has the meaning set forth in Section 4(r)(i) below.

Employee Benefit Plan has the meaning set forth in Section 4(r)(i)
below.

Environmental, Health, and Safety Requirements shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law and all judicial and
administrative orders and determinations concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any Hazardous Substances.

ERISA means the Employee Retirement Income Security Act of 1974, as
amended.

ERISA Affiliate has the meaning set forth in Section 4(r)(ii) below.

Financial Statements has the meaning set forth in Section 4(f) below.

GAAP means United States generally accepted accounting principles as in
effect from time to time.

Guarantee has the meaning set forth in Section 6(k) below.

Hazardous Substances shall have the meaning set forth in Section 101(14)
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act
(CERCLA), 42 U.S.C. Section 9601(14).

HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.

Income Tax means any federal, state, local, or foreign income or
franchise tax, including any interest, penalty, or addition thereto, whether
disputed or not.

Income Tax Return means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

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Indemnified Party has the meaning set forth in Section 8(h) below.

Indemnifying Party has the meaning set forth in Section 8(h) below.

Independent Accountant means a senior-level certified public accountant
of Ernst & Young LLP, resident in the office of such firm located in Stamford,
Connecticut.

Intellectual Property means, in respect of the Company, (a) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all Internet domain names and universal
resource locators (URLs), (e) all mask works and all applications,
registrations, and renewals in connection therewith, (f) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (g) all computer software (including data and related
documentation), and (h) all copies and tangible embodiments thereof (in
whatever form or medium) owned or held by the Company.

Knowledge, or phrases of similar import, with respect to an individual,
means an individual shall be deemed to have knowledge of a particular fact or
other matter if (a) that individual is actually aware of that fact or matter;
or (b) a prudent individual should be aware of such fact or matter in the
ordinary course of performing his or her duties, without conducting any special
inquiry. With respect to a Person, other than an individual, Knowledge, or
phrases of similar import, means a Person shall be deemed to have knowledge of
a particular fact or other matter if any individual who is serving as a
director or executive officer of that Person (or in any similar capacity) has
knowledge of that fact or other matter (as set forth in (a) and (b) above),
except that the Parent shall be deemed to have knowledge of a fact or other
matter if the chief executive officer or chief financial officer of the Parent
has knowledge of such fact or other matter (as set forth in (a) and (b) above)
or if any of Paul Rocheleau, John Frank, Richard Bucchi, Paul Lavoie, Corey
Stone, Carol Boedicker and Donna Estelle has knowledge of a fact or other
matter (as set forth in (a) and (b) above).

Loss has the meaning set forth in Section 8(b)(i) below.

MADSP has the meaning set forth in Section 9(k)(i) below.

Material Adverse Effect means, with respect to any of the Buyer, a
Seller Entity, the Company or APS-Cal, any change, occurrence or effect (direct
or indirect) which might reasonably be expected to have a material adverse
effect on (a) the business, operations,

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properties (including tangible properties), condition (financial or otherwise),
assets, obligations or liabilities (whether absolute, contingent or otherwise
and whether due or to become due) of such Party or (b) the ability of such
Party to timely perform its obligations under the Agreement or otherwise to
consummate the transactions contemplated by this Agreement, other than any
fact, circumstance, event or thing (i) generally affecting the financial
services industry, or resulting from general economic or market conditions
(including changes in interest rates) or changes in accounting principles or
changes in law, regulations, or regulatory policies of general applicability
(or interpretations thereof), (ii) resulting from actions or omissions of a
Party taken with the prior written consent of the other Parties in
contemplation of the transactions contemplated hereby, or (iii) resulting from
the announcement or execution of this Agreement or the transactions
contemplated herein.

Most Recent Financial Statements has the meaning set forth in Section
4(f) below.

Most Recent Fiscal Quarter End has the meaning set forth in Section 4(f)
below.

Multiemployer Plan has the meaning set forth in ERISA §3(37).

Net Working Capital Shortfall has the meaning set forth in Section
2(b)(ii) below.

Net Working Capital Surplus has the meaning set forth in Section
2(b)(ii) below.

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

Overlap Period has the meaning set forth in Section 9(c) below.

Parent has the meaning set forth in the preface above.

Parent Consolidated Group has the meaning set forth in Section 4(j)(i)
below.

Party or Parties has the meaning set forth in the preface above.

Person means an individual, a governmental entity (or any department,
agency, or political subdivision thereof), or a partnership, limited liability
company, limited liability partnership, corporation, association, joint stock
company, trust, joint venture, unincorporated organization or similar entity.

Purchase Price has the meaning set forth in Section 2(b)(i) below.

Real Property has the meaning set forth in Section 4(k)(i) below.

Representatives has the meaning set forth in Section 3(b)(viii) below.

Requisite Consents has the meaning set forth in Section 7(a)(v) below.

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Restricted Items means all funds that are the property of any client of
the Company (including, without limitation, any restricted cash, settlement
assets or settlement obligations) and all inter-company liabilities related
thereto.

Securities Act means the Securities Act of 1933, as amended.

Securities Exchange Act means the Securities Exchange Act of 1934, as
amended.

Security Interest means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanics, materialmens, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money, all of which are
set forth in Section 4(e) of the Disclosure Schedule.

Seller has the meaning set forth in the preface above.

Seller Entities has the meaning set forth in the preface above.

Seller Excluded Provisions has the meaning set forth in Section 8(d)(i)
below.

Seller 401(k) Plan means the United Illuminating Company 401(k) Employee
Stock Ownership Plan.

September Balance Sheet means the unaudited balance sheet of the
Company, as of September 30, 2003, attached hereto as Section 2(b)(ii) of the
Disclosure Schedule which depicts: in column (A), the unaudited, consolidated
balance sheet of the Company as of September 30, 2003; in columns (B) through
(E), the Divested Items and all assets and liabilities related thereto; and in
column (F), the adjusted, unaudited balance sheet of the Company as of
September 30, 2003, excluding the Divested Items and all assets and liabilities
related thereto.

September Net Working Capital means Total Current Assets less Total
Current Liabilities, as such items are described in column (F) of the
September Balance Sheet attached hereto as Section 2(b)(ii) of the Disclosure
Schedule, which reflects such amount as $1,855,537.32.

Subsidiary means any corporation (or other entity) with respect to which
a specified Person or a Subsidiary thereof owns a majority of the common stock
(or analogous equity interest, as applicable) or has the power to vote or
direct the voting of sufficient securities to elect a majority of members of
the board of directors (or analogous governing body, as applicable).

Successor 401(k) Plan has the meaning set forth in Section 6(e)(ii)
below.

6



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##### 



Tax Returns means federal, state, foreign and local Tax reports,
returns, declarations, claims for refund, information returns and other
documents, including any schedules or attachments thereto and including any
amendments thereto.

Taxes or Tax shall mean all taxes, assessments, charges, duties,
fees, levies or other governmental charges, including, without limitation, all
federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or Affiliated Group or of a contractual obligation to
indemnify any Person.

Taxing Authorities means the Internal Revenue Service and any other
federal, state or local authority which has the right to impose Taxes on the
Company, the Parent Consolidated Group or a Seller Entity.

Third Party Claim has the meaning set forth in Section 8(h) below.

Transferred Employee has the meaning set forth in Section 6(d) below.

Wallingford Condition means the conditions described in Section 6.20.5,
Section 6.20.8, and the first two paragraphs under the heading Significant
Interior Observations and Issues in Section 10.00 of the Phase I Environmental
Site Assessment Report regarding 15 Sterling Drive, Wallingford, CT, File
42859, dated October 2002, which report has been furnished to the Buyer.

338 Indemnity Amount has the meaning set forth in Section 9(k)(iii)
below.

338(h)(10) Election has the meaning set forth in Section 9(k)(i) below.

2.     PURCHASE AND SALE OF THE COMPANY SHARES.

(a) Basic Transaction.On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, all of its Company Shares for the consideration specified
below in this Section 2.

(b) Purchase Price.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Amount Paid at Closing.The Buyer agrees to pay to the Seller
at Closing One Hundred Ten Million and 00/100 Dollars ($110,000,000.00),
subject to adjustment pursuant to Section 2(b) (ii) below (the Purchase
Price). At the Closing, the Buyer shall deliver to the Seller in
immediately available funds One Hundred Ten Million Dollars
($110,000,000.00) by certified check or wire transfer to the Sellers
designated account(s) (the Closing Payment).

7



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Post Closing Adjustments.As soon as practicable, but no later
than thirty (30) days after the Closing Date, the Independent Accountant,
on behalf of the Parties and pursuant to an engagement agreement
reasonably acceptable to the Buyer and the Seller, shall prepare and
deliver to the Buyer and the Seller an unaudited balance sheet of the
Company as of the close of business on the Closing Date (the Closing
Date Balance Sheet) in substantially the form of the September Balance
Sheet attached hereto as Section 2(b)(ii) of the Disclosure Schedule.
The Closing Date Balance Sheet shall include a calculation of the net
working capital of the Company as of the close of business on the Closing
Date (the Closing Date Net Working Capital) which shall be made, and
presented on the Closing Date Balance Sheet, in the same manner as the
calculation of the September Net Working Capital is made and presented on
the September Balance Sheet attached hereto as Section 2(b)(ii) of the
Disclosure Schedule. The Closing Date Balance Sheet shall be prepared by
the Independent Accountant in accordance with GAAP, as modified by the
accounting principles used in preparing the September Balance Sheet (as
reflected in Section 2(b)(ii) of the Disclosure Schedule). For the
avoidance of doubt, the calculation of the September Net Working Capital
does not, and the calculation of the Closing Date Net Working Capital
shall not, include any of the assets or liabilities identified in columns
(B) through (E) of the September Balance Sheet attached hereto as Section
2(b)(ii) of the Disclosure Schedule. The Independent Accountant shall
also make available to the Buyer and the Seller copies of all work papers
and other documents and data as were used to prepare the Closing Date
Balance Sheet (and any items therein) and the Closing Date Net Working
Capital calculation. The Buyer and the Seller shall have the right to
dispute the Closing Date Balance Sheet (and any items therein) and the
Closing Date Net Working Capital calculation and make any proposed
adjustments thereto as provided in Section 2(b) (iii) hereto.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) If it is determined by the Independent Accountant that the
Closing Date Net Working Capital is more than the September Net
Working Capital (such surplus being a Net Working Capital
Surplus), then the Buyer shall, subject to Section 2(b) (iii),
deliver to the Seller cash in an amount equal to such Net Working
Capital Surplus, if any, within ten (10) days of receipt of the
Independent Accountants determination; or



| |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) If it is determined by the Independent Accountant that the
Closing Date Net Working Capital is less than the September Net
Working Capital (such shortfall being a Net Working Capital
Shortfall), then the Seller shall, subject to Section 2(b) (iii),
deliver to the Buyer cash in an amount equal to such Net Working
Capital Shortfall, if any, within ten (10) days of receipt of the
Independent Accountants determination.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) Dispute Resolution Procedures.The Buyer and the Seller shall
have until ten (10) days after the delivery of the Closing Date Net
Working Capital calculation prepared by the Independent Accountant to
review the calculation set forth therein and propose any adjustments
thereto. All adjustments proposed by the Buyer or the Seller shall be
set out in detail in a written statement delivered to the other Party and

8



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the Independent Accountant (an Adjustment Statement) and shall be
incorporated into the Closing Date Balance Sheet, unless the other Party
shall object in writing to such proposed adjustments to the proposing
Party within ten (10) days of delivery of the Adjustment Statement (the
proposed adjustment or adjustments to which either Party objects are
referred to herein as the Contested Adjustments and the objection
notice is referred to herein as the Contested Adjustment Notice). If
either Party delivers a Contested Adjustment Notice, the Seller and the
Buyer shall attempt in good faith to resolve their dispute (a Contested
Adjustment Dispute) regarding the Contested Adjustments, but if a final
resolution thereof is not obtained within ten (10) days after delivery of
said Contested Adjustment Notice, the Independent Accountant shall
resolve any remaining disputes concerning the Contested Adjustments. If
the Independent Accountant is requested to resolve a Contested Adjustment
Dispute, then (A) the Buyer and the Seller shall each submit to the
Independent Accountant in writing, not later than ten (10) days after the
Independent Accountant is retained for such purpose, their respective
positions with respect to the Contested Adjustments, together with such
supporting documentation as they deem necessary or as the Independent
Accountant reasonably requests, and (B) the Independent Accountant shall,
within ten (10) days after receiving the positions of both the Buyer and
the Seller and all supplementary supporting documentation requested by
the Independent Accountant, render its decision as to the Contested
Adjustments, which decision shall be final and binding on, and
non-appealable by, the Parties. Each of the Seller and the Buyer shall
pay fifty percent (50%) of the fees and expenses of the Independent
Accountant related to the preparation and delivery of a Closing Date
Balance Sheet and the calculation of the Closing Date Net Working
Capital. The fees and expenses of the Independent Accountant related to
the resolution of Contested Adjustments shall be paid by the Party whose
estimate of the Closing Date Net Working Capital is farthest from the
Independent Accountants final calculation of the Closing Date Net
Working Capital. The decision of the Independent Accountant shall also
include a certificate of the Independent Accountant setting forth the
final Closing Date Net Working Capital calculation. The Closing Date
Balance Sheet shall be deemed to include all proposed adjustments not
disputed by either Party and those adjustments accepted or made by the
decision of the Independent Accountant in resolving the Contested
Adjustments.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Closing Distributions; Repayment of Inter-company Debt. The
Buyer acknowledges and agrees that prior to the Closing Date the Company
shall have the right, in its sole discretion, to (i) distribute all or
some of its cash on hand to the Seller and/or (ii) repay all or some
principal and interest on any inter-company debt. The Buyer agrees that
if there is any inter-company debt outstanding with respect to any
Restricted Items as of the Closing, then the Buyer shall cause the
Company to repay the amount of such debt to the Parent promptly after the
receipt of payment to the Company in respect
of such Restricted Item, but in any event not later than five (5)
days after the Closing Date.

(c) The Closing.The closing of the transactions contemplated by this
Agreement (the Closing) shall take place at the offices of Wiggin & Dana LLP
in Stamford, CT, commencing at 9:00 a. m. local time, on the fifth (5th)
business day immediately following

9



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##### 



the date on which the last condition set
forth in Section 7 hereof is fulfilled or waived in writing. or such other date
as the Buyer and the Seller may mutually determine in writing (the Closing
Date).

(d) Deliveries at the Closing.At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Buyer will deliver to the Seller
the various certificates, instruments, and documents referred to in Section
7(b) below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of the Company Shares, endorsed in blank or accompanied by
duly executed assignment documents, and (iv) the Buyer will deliver to the
Seller the Closing Payment.

3.     REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER ENTITIES AND THE
BUYER.

(a) Representations and Warranties of the Seller Entities.Each of the
Seller Entities jointly and severally represents and warrants to the Buyer that
except as set forth in the Disclosure Schedule, the statements contained in
this Section 3(a) are correct and complete as of the date hereof.



| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Organization.Each of the Seller Entities is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Authorization of Transaction.Each of the Seller Entities has
full power and authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and
all other agreements and transactions contemplated hereby have been duly
authorized by all required corporate proceedings of each of the Seller
Entities and no other corporate proceedings are necessary to authorize
this Agreement and such agreements contemplated hereby and transactions
contemplated hereby and thereby. This Agreement constitutes the valid
and legally binding obligation of each of the Seller Entities,
enforceable in accordance with its terms and conditions, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization and other laws affecting the enforcement of
creditors rights generally and by general principles of equity. Except
as required by the HSR Act and as set forth in Section 3(a) (ii) of the
Disclosure Schedule, neither Seller Entity is required to give any notice
to,
make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in connection with the
transactions contemplated by this Agreement.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) Non-contravention.Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which a Seller Entity
is subject or any provision of the charter or bylaws of a Seller Entity
or (B) conflict with, result in a breach of, constitute a default under,
result in the

10



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| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which a Seller Entity may be a party or by which it is bound or to which
its assets are subject.



| |                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Brokers Fees.Neither Seller Entity has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement, other
than certain fees to Morgan Stanley & Co. Incorporated for which the
Seller Entities shall be wholly responsible.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) Company Shares.The Seller holds of record and owns
beneficially the number of Company Shares set forth in Section 4(b)
below, free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), taxes,
Security Interests, options, warrants, purchase rights, contracts, or
commitments. Neither Seller Entity is a party to any option, warrant,
purchase right, or other contract or commitment that could require the
Seller to sell, transfer, or otherwise dispose of any capital stock of
the Company (other than this Agreement). Neither Seller Entity is a
party to any voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of the Company.



| |                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vi) Litigation.There is no action, suit, investigation or
proceeding pending, or to the Knowledge of the Seller Entities,
threatened against or affecting the Seller Entities before any court or
arbitrator or any governmental body, agency or official which in any
manner challenges or seeks to prevent, enjoin, alter or delay the
consummation of the transactions contemplated by this Agreement.



| |                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vii) Legal Compliance.The Seller Entities do not reasonably
anticipate any material impediments to their obtaining all required
permits, license, approval or authorizations of governmental authorities
listed in Section 3(a)(ii) of the Disclosure Schedule required to
consummate the transactions contemplated hereunder.

(b) Representations and Warranties of the Buyer.The Buyer represents and
warrants to the Seller Entities that except as set forth in the Disclosure
Schedule, the statements contained in this Section 3(b) are correct and
complete as of the date hereof.



| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Organization of the Buyer.The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Authorization of Transaction.The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement and all other
agreements and transactions contemplated hereby, have been duly
authorized by all required corporate proceedings of the Buyer, and no
other corporate proceedings are necessary to authorize this Agreement and
such

11



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | agreements contemplated hereby and the transactions contemplated
hereby and thereby. This Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in accordance with its terms
and conditions, except to the extent that enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization and other laws
affecting the enforcement of creditors rights generally and by general
principles of equity. Except as required by the HSR Act and as set forth
in Section 3(b) (ii) of the Disclosure Schedule, the Buyer need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
connection with the transactions contemplated by this Agreement.



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



| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Brokers Fees.The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) Investment.The Buyer is purchasing the Company Shares for its
own account and is not acquiring the Company Shares with a view to or for
sale in connection with any distribution thereof within the meaning of
the Securities Act. The Buyer has no present intention of selling,
granting any participation in, or otherwise distributing the Company
Shares. None of the Buyer or
its Affiliates has entered into any contract, undertaking, agreement or
arrangement with any Person for resale of the Company Shares. The Buyer
acknowledges that the offering of the Company Shares pursuant to this
Agreement has not been and will not be registered under the Securities
Act or any state securities or blue sky laws on the grounds that the
offering and sale of the Company Shares contemplated by this Agreement is
exempt from registration pursuant to exemptions available under such
laws, and that the Sellers reliance upon such exemptions is predicated
in part upon the Buyers representations set forth in this Agreement.



| |                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vi) Accredited Investor.The Buyer is an accredited investor
within the meaning of Regulation D promulgated under the Securities Act,
and has the knowledge and experience necessary to evaluate the merits and
risks of an investment in the Company Shares and the consummation of the
transactions contemplated hereby.



| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | (vii) Litigation; Compliance with Laws.There is no action, suit,
investigation or proceeding pending against, or to the Knowledge of the
Buyer,

12



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| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | threatened against or affecting the Buyer before any court or
arbitrator or any governmental body, agency or official which in any
manner challenges or seeks to prevent, enjoin, alter or delay the
consummation of the transactions contemplated by this Agreement.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (viii) Disclaimer; Investigation by the Buyer; the Sellers
Liability.The Buyer acknowledges that none of the Parent, the Seller,
the Company or any of their Affiliates has made any representation,
warranty or agreement except as expressly set forth in this Agreement.
The Buyer is not relying on any statement, document, record, report,
material or information made or provided by the Parent, the Seller, the
Company or any of their Affiliates, representatives or agents, except as
expressly set forth in this Agreement, the Disclosure Schedule and any
certificates delivered at Closing. The Buyer has conducted its own
independent investigation, review and analysis of the business,
operations, assets, liabilities, results of operations, financial
condition, software, technology and prospects of the Company, which
investigation, review and analysis was done by the Buyer and its

Affiliates and, to the extent the Buyer deemed appropriate, by the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives (collectively,
Representatives) of Buyer. The Buyer acknowledges that it and its
Representatives have been provided adequate access to the personnel,
properties, premises and records of the Company for such purpose. In
entering into this Agreement, the Buyer acknowledges that it has relied
solely upon the aforementioned investigation, review and analysis and not
on any factual representations of the Parent, the Seller, the Company or
the Representatives thereof (except the specific representations and
warranties set forth in this Agreement). The Buyer agrees, to the
fullest extent permitted by law, that none of the Parent, the Seller, the
Company, or any of their respective directors, officers, employees,
shareholders, Affiliates, controlling Persons, agents, advisors or
Representatives shall have any liability or responsibility whatsoever to
the Buyer or its
directors, officers, employees, affiliates, controlling Persons,
agents or Representatives on any basis (including in contract or tort,
under federal or state securities laws or otherwise) other than for fraud
or intentional misconduct, based upon any information provided or made
available, or statements made (including in materials furnished in any
data room, in presentations by management of the Parent, the Seller or
the Company, on site visits or otherwise) to the Buyer or its directors,
officers, employees, affiliates, controlling Persons, advisors, agents or
Representatives (or any omissions therefrom); provided, however, that the
foregoing limitations (A) shall not apply to the Seller Entities insofar
as the Seller Entities make the specific representations and warranties
set forth in this Agreement, but always subject to the limitations and
restrictions contained in Section 8 and (B) shall not otherwise limit
Buyers rights under Section 8 hereof.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) Legal Compliance.To the Knowledge of the Buyer, the Buyer has
taken all necessary actions to be in compliance with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, and
local governments (and all agencies thereof), except where the failure to
comply would not have a Material Adverse Effect upon the Buyer. To the
Knowledge of the Buyer, except as set forth in Section 3(b)(ix) of the

13



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Disclosure Schedule, the Buyer holds and is in compliance with all
permits, licenses, approvals, and authorizations of governmental
authorities, required for the conduct of its business as currently
conducted, except to the extent that any failure to hold or comply would
not reasonably be expected to have a Material Adverse Effect on the Buyer
or the Company following the Closing. The Buyer does not reasonably
anticipate any material impediments to its obtaining all required
permits, licenses, approvals or authorizations of governmental
authorities listed in Section 3(b) (ii) of the Disclosure Schedule
required to consummate the transactions contemplated hereunder.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | (x) Adequate Funds.The Buyer has available funds to pay the entire
Purchase Price at the Closing.

4.     REPRESENTATIONS AND WARRANTIES CONCERNING COMPANY.The Parent and the
Seller jointly and severally represent and warrant to the Buyer that except as
set forth in the Disclosure Schedule, each of the statements contained in this
Section 4 is correct and complete in all material respects as of the date of
this Agreement. The exceptions, modifications and disclosures made in any
Section of the Disclosure Schedule are made for all purposes of this Agreement
or in any agreement or instrument delivered pursuant to or in connection with
this Agreement notwithstanding the fact that no express cross-reference is
made; provided, however, that the applicability of any particular exception,
modification or disclosure to a particular section of the Disclosure Schedule
must be reasonably clear from the description thereof.

(a) Organization of the Company.The Company is a corporation duly
organized, validly existing, and in good standing under the laws of
Connecticut. Complete and accurate copies of the certificate of incorporation
and bylaws of the Company have been made available to the Buyer. The
Company is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required,
except where the lack of such qualification would not have a Material Adverse
Effect on the Company. The Company has full corporate power and authority to
carry on the businesses in which it is engaged in the manner in which they are
currently conducted and to own and use the properties owned and used by it in
the manner in which they are currently used.

(b) Capitalization.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Company.The entire authorized capital stock of the Company
consists of 5,000 Company Shares, of which 10 Company Shares are issued
and outstanding. All of the issued and outstanding Company Shares have
been duly authorized, are validly issued, fully paid, and nonassessable,
and are held beneficially and of record by the Seller free and clear of
all Security Interests. There are no outstanding or authorized options,
warrants, purchase rights, pre-emptive rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require the Company to issue, sell, repurchase or otherwise
cause to become outstanding any of its capital stock or other securities
convertible or exchangeable for stock of the Company, or grant to any
Person a right to subscribe for capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to the capital stock of the Company.

14



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Subsidiaries.Other than as set forth in Section 4(b)(ii) of
the Disclosure Schedule and other than CellCards of Illinois, LLC, an
Illinois limited liability company (CCI) and American Payment Systems
of California, Inc. (APS-Cal), the Company has no Subsidiaries and does
not otherwise own or control, directly or indirectly, any equity or
similar interest or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in any Person. For the
last five (5) years, the Company has owned no Subsidiaries other than as
set forth in Section 4(b)(ii) of the Disclosure Schedule and other than
CCI and APS-Cal. APS- Cal is a corporation duly organized, validly
existing, and in good standing under the laws of California. Complete
and accurate copies of the articles of incorporation and bylaws of
APS-Cal have been made available to the Buyer. APS-Cal is duly
authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required, except where the
lack of such qualification would not have a Material Adverse Effect on
APS-Cal. APS-Cal has full corporate power and authority to carry on the
business in which it is engaged in the manner in which it is currently
conducted and to own and use the properties owned and used by it. The
authorized capital of CCI consists of 100,000 units of ownership
interests of which 100,000 units are issued and outstanding and owned as
set forth in Section 4(b) (ii) of the Disclosure Schedule. The
authorized capital stock of APS-Cal consists of 10,000 shares of common
stock of which 1,000 are issued and outstanding and owned by the Company.
Except as set forth in Section 4(b)(ii) of the Disclosure Schedule: (A)
there are no options, warrants, convertible securities or other contracts
of any kind, nature or description obligating the Company, CCI or APS-Cal
to issue or sell any units of ownership of or any other interest in CCI
or APS-Cal, as the case may be; (B) none of the
issued and outstanding units of ownership of CCI or APS-Cal was issued in
violation of any preemptive rights; (C) there are no outstanding
obligations to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company, CCI or APS-Cal, or to provide funds to or
make any investment in any other Person; (D) there are no voting trusts,
shareholder agreements, proxies, or other contracts in effect with
respect to the voting or transfer of any shares of capital stock of or
any other interests in CCI or APS-Cal.

(c) Non-contravention.Except as set forth in Section 4(c) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which the Company or APS-Cal is subject or any provision of
the charter or bylaws of the Company or APS-Cal or (ii) conflict with, result
in a breach of, constitute a default under, or result in the acceleration of
any agreement, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any contract, lease, license, instrument
or other arrangement to which the Company or APS-Cal is a party or by which it
is bound or to which any of its assets is subject, except where the violation,
conflict, breach, default, or acceleration would not have a Material Adverse
Effect on the Company or APS-Cal or on the ability of the Parties to consummate
the transactions contemplated by this Agreement. To the Knowledge of the
Seller Entities and except as set forth in Section 4(c) of the Disclosure
Schedule, neither the Company nor APS-Cal is required to give any notice to,
make

15



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##### 



any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in connection with the transactions
contemplated by this Agreement.

(d) Brokers Fees.Neither the Company nor APS-Cal has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.

(e) Title to Assets; Sufficiency of Assets.The Company and APS-Cal have
good and marketable title to, or a valid leasehold interest in, the properties
and assets used by them, located on their premises, or shown on the Most Recent
Financial Statements, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Financial Statements. Such assets consist of all of
the assets reasonably necessary to conduct the businesses in which the Company
and APS-Cal are engaged as currently conducted. The assets of the Company
described as POSA Technology on Section 5(j) of the Disclosure Schedule, are
utilized by the Company exclusively in connection with its pre-paid telephony
business. None of the software licenses, source code or hardware, including
servers and routers, described on Section 5(j) of the Disclosure Schedule are
used by the Company other than in connection with the pre-paid telephony
business of the Company.

(f) Financial Statements.Copies of the following financial statements
(collectively the Financial Statements) have been
made available to the Buyer: (i) the audited, consolidated balance sheets and
statements of income, shareholder equity, and cash flows as of and for the
fiscal years ended December 31, 2000, 2001, and 2002 for the Company and its
Subsidiaries; and (ii) an unaudited, consolidated balance sheet and statements
of income, shareholder equity and cash flows (the Most Recent Financial
Statements), as of and for the nine (9) months ended September 30, 2003 (the
Most Recent Fiscal Quarter End) for the Company and its Subsidiaries and
(iii) the September Balance Sheet. The Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP, except as set forth
therein or in Section 4(f) of the Disclosure Schedule. The Financial
Statements present fairly, in all material respects, the financial condition of
the Company and its Subsidiaries as of such dates and the results of operations
and cash flows of the Company and its Subsidiaries for such periods in
accordance with GAAP except as set forth therein or in Section 4(f) of the
Disclosure Schedule; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.

(g) Undisclosed Liabilities.Neither the Company nor APS-Cal has any
material liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), except for (i)
liabilities set forth in the Most Recent Financial Statements (rather than in
any notes, if any, thereto) and (ii) liabilities which have arisen after the
date of the Most Recent Financial Statements in the Ordinary Course of Business
in accordance with past practices, which individually or in the aggregate are
not material to the Company or APS-Cal, as

16



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##### 



the case may be, or the operation of
the business of the Company or APS-Cal, as the case may be.

(h) Events Subsequent to Most Recent Fiscal Quarter End.Since the date
of the Most Recent Financial Statements, (i) there has not been any change in
the business or results of operations or the financial condition of the Company
or APS-Cal that would have a Material Adverse Effect on the Company and APS-Cal
taken as a whole and (ii) the Company and APS-Cal have conducted their
businesses in the Ordinary Course of Business. Without limiting the generality
of the foregoing and except as otherwise contemplated by this Agreement, since
the date of the Most Recent Financial Statements, neither the Company nor
APS-Cal has (A) sold, assigned or otherwise transferred any of its material
assets or properties, other than in the Ordinary Course of Business and other
than in connection with the Divested Items, (B) made any acquisition of all of
the capital stock (whether by merger or otherwise) or all or substantially all
of the assets of any Person, (C) subjected any of its material assets to a
Security Interest, (D) amended or authorized any amendment to its certificate
of incorporation or by-laws, (E) borrowed or refinanced any amount from any
non-affiliated Person or incurred any liabilities (contingent or otherwise) in
excess of $50,000, other than trade payables incurred in the Ordinary Course of
Business in accordance with past practices, (F) declared or made any payment or
distribution to stockholders, (G) made any changes to its accounting policies,
principles or practices, (H) made any loans to any Persons, (I) entered into,
adopted, amended or terminated any bonus, profit sharing, compensation or stock
option/ownership plan, severance or other Employee Benefit Plan or other
arrangement for the benefit of any director, officer or employee, or increased
in any manner the compensation or fringe benefits of any director or
officer, (J) waived any right in any contract listed in Section 4(m) of the
Disclosure Schedule, the waiver of which would reasonably be expected to
materially detract from the value of such contract to the Company or APS-Cal,
as the cause may be, or (K) become obligated to take any of the actions
specified in subparagraphs (A) through (J) above.

(i) Legal Compliance.To the Knowledge of the Seller Entities, each of
the Company and APS-Cal is currently conducting business in compliance in all
material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, and local governments (and all agencies
thereof). To the Knowledge of the Seller Entities, except as set forth in
Section 4(i) of the Disclosure Schedule, each of the Company and APS-Cal holds
and is in compliance in all material respects with all permits, licenses,
approvals, and authorizations of governmental authorities, required for the
conduct of its business as currently conducted.

(j) Tax Matters..



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Company has at all times since its incorporation been a
member of an Affiliated Group filing a consolidated federal Income Tax
Return in which the Parent was the common parent (the Parent
Consolidated Group). Except as set forth in Section 4(j) (i) of the
Disclosure Schedule, all Tax Returns required to be filed in respect of
the Company, APS-Cal and the Parent Consolidated Group have been filed
and all Taxes have been paid (whether or not shown on such Tax Returns),
except where the failure to file Tax Returns or to pay Taxes would not
have a Material Adverse Effect on

17



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the Company or APS-Cal. All such Tax
Returns were correct and complete in all material respects. All Taxes
owed by a Seller Entity, the Company or APS-Cal (whether or not shown on
any Tax Return) have been paid, except where the failure to pay such Tax
would not have a Material Adverse Effect on such Seller Entity, the
Company or APS-Cal, as applicable. Except as described above in this
subparagraph (i), neither the Parent, the Seller, the Company nor APS-Cal
is currently the beneficiary of any extension of time within which to
file any Tax Return. No written claim has ever been made by an authority
in a jurisdiction where the Company or APS-Cal does not file Tax Returns
that such entity is or may be subject to taxation by that jurisdiction
and neither the Company nor APS-Cal has been informed in writing that it
is subject to Tax in any jurisdiction where it has not filed a Tax
Return. To the Knowledge of the Seller Entities, neither the Company nor
APS-Cal is subject to Tax in any jurisdiction where it has not filed a
Tax Return. There are no Security Interests on any of the assets of the
Company or APS-Cal that arose in connection with any failure (or alleged
failure) to pay any Tax.



| |                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Each of the Company and APS-Cal has filed all state and local
Income Tax Returns that it was required to file prior to the date hereof,
and has paid or has reserved adequate funds for the payment of all Income
Taxes shown thereon as owing.
|
| | (iii) Neither the Company nor APS-Cal has waived any statute of
limitations in respect of Income Taxes or agreed to any extension of time
with respect to an Income Tax assessment or deficiency.                                                   



| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Each of the Company and APS-Cal has withheld and paid all Taxes
required to have been withheld and paid by the Company or APS-Cal, as
applicable, except payroll taxes which are not due as of the Closing Date
and which have been appropriately reflected as liabilities on the Most
Recent Financial Statements.



| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) There is no dispute or claim concerning any material liability
in respect of any Tax of a Seller Entity, the Company or APS-Cal either
(A) claimed or raised by any authority in writing or (B) as to which the
Seller Entities have Knowledge.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vi) Neither the Parent, the Seller, the Company nor APS-Cal has
filed a consent under Code § 341(f) concerning collapsible corporations
or any corresponding provision of state, local or foreign Income Tax law.
Neither the Parent, the Seller, the Company nor APS-Cal has been a
United States real property holding corporation within the meaning of
Code § 897(c)(2) during the applicable period specified in Code
§897(c)(1)(A)(ii) and the Buyer is not required to withhold tax on the
purchase of the stock of the Company by reason of Section 1445 of the
Code. Each of the Seller Entities, APS-Cal and the Company has disclosed
on their respective federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Code § 6662. Neither the Parent, the
Seller, the Company nor APS-Cal is a party to any Tax allocation or
sharing agreement which will not be terminated on or before the Closing
Date. Neither the Company nor APS-Cal is a party to any safe harbor
lease within the meaning of Section

18



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 168(f)(8) of the Code. Except as set
forth in Section 4(j)(vi) of the Disclosure Schedule, neither the Company
nor APS-Cal has entered into any compensatory agreements with respect to
the performance of services which payment thereunder would result in a
nondeductible expense to the Parent Consolidated Group pursuant to
Sections 162(m) or 280G of the Code. Neither the Company nor APS-Cal has
been the distributing corporation within the meaning of Section
355(c)(2) of the Code with respect to a transaction described in Section
355 of the Code within the three (3) year period ending as of the date of
this Agreement. Neither the Company nor APS-Cal has participated in an
international boycott as defined in Section 999 of the Code. Neither the
Company nor APS-Cal has agreed, nor is either such entity required to
make, any adjustment under Section 263A or 481(a) of the Code by reason
of a change in accounting method or otherwise. Neither the Company nor
APS-Cal has a permanent establishment in any foreign country, as defined
in any applicable Tax treaty or convention between the United States of
America and such foreign country.



| |                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vii) The unpaid Taxes of the Company and APS-Cal did not, as of the
Most Recent Fiscal Quarter End, materially exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
face of the Most Recent Financial Statements (rather than in any notes
thereto).
|
| | (viii) Neither the Company nor APS-Cal has any liability for Taxes
of any Person other than the Company or APS-Cal under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign
law)                                                                                                                                                  



| |                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) To the Knowledge of the Seller Entities, the basis of the
assets of the Company for federal Tax purposes as of September 30, 2003
is as set forth in Section 4(j)(ix) of the Disclosure Schedules, and the
basis of the Company Shares for federal Tax purposes as of September 30,
2003 is as set forth in Section 4(j)(ix) of the Disclosure Schedules.



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (x) To the Knowledge of the Seller Entities, the Seller Entities
are eligible to make a joint 338(h)(10) Election with the Buyer with
respect to the Company.

(k) Real Property.



| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | (i) Neither the Company nor APS-Cal currently owns or has ever owned
any real property (the Real Property).



| |                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Section 4(k) (ii) of the Disclosure Schedule lists and
describes briefly all parcels of Real Property leased or subleased to the
Company or APS-Cal by any other Person. The Seller Entities have made
available to the Buyer correct and complete copies of the leases and
subleases listed in Section 4(k)(ii) of the Disclosure Schedule and:

19



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) each such lease or sublease is legal, valid, binding, in
good standing, enforceable, and in full force and effect with
respect to the Company or APS-Cal, as the case may be, and to the
Knowledge of the Seller Entities, each such lease or sublease is
legal, valid, binding, in good standing, enforceable, and in full
force and effect with regard to each other party thereto, except in
each case where the illegality, invalidity, non-binding nature,
unenforceability, or ineffectiveness would not reasonably be deemed
to have a Material Adverse Effect on the Company or APS-Cal, as the
case may be;



| |                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------
| | (B) the consummation of the transactions contemplated hereby
is not an event of default under any such lease or sublease;



| |                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (C) neither the Company nor APS-Cal is in breach or default of
any such lease or sublease and no event has occurred which, with
notice or lapse of time, would constitute a breach or default by
the Company or APS-Cal or permit termination, modification, or
acceleration thereunder;



| |                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (D) To the Knowledge of the Seller Entities, no counterparty
to any lease or sublease is in breach or default of any such lease
or sublease, and no event has occurred which, with notice or lapse
of time, would constitute a breach or
default by the counterparty or permit termination, modification, or
acceleration thereunder;



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | (E) the Company has received no actual notice that any party
to any such lease or sublease has repudiated any provision thereof;



| |                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (F) there are no oral agreements or forbearance programs in
effect as to any such lease or sublease and neither the Company nor
APS-Cal has assigned, subleased, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or
subleasehold.

(l) Intellectual Property.



| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Company and APS-Cal either own, hold valid licenses for, or
otherwise possess the valid and enforceable right to use all Intellectual
Property that is used or reasonably necessary for the conduct of the
business of the Company or APS-Cal as currently conducted.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) To the Knowledge of the Seller Entities, neither the Company
nor APS-Cal has interfered with, infringed upon, misappropriated, or
violated any material Intellectual Property rights of third parties in
any material respect. To the Knowledge of the Seller Entities, neither
Seller Entity has received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company or APS-Cal must license
or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Seller Entities, no

20



---



##### 





| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | third party has
interfered with, infringed upon, misappropriated, or violated any
material Intellectual Property rights of the Company or APS-Cal in any
material respect.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) Section 4(l)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to the Company or APS-Cal
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which the Company or
APS-Cal has made with respect to any of its Intellectual Property, and
identifies each material license, agreement, or other permission (as
amended to date) to which the Company or APS-Cal is the licensee or by
which the Company or APS-Cal has granted to any third party a license
with respect to any of its Intellectual Property (together with any
exceptions). Section 4(l) (iii) of the Disclosure Schedule also
identifies each material trade name or unregistered trademark owned
and/or used by the Company or APS-Cal in connection with any of its
businesses. With respect to each item of Intellectual Property required
to be identified in Section 4(l) (iii) of the Disclosure Schedule:



| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) the Company and APS-Cal possess all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;



| |                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;                                                                                                                                                        
|
| | (C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of the Seller Entities, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
and



| |                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (D) neither the Company nor APS-Cal has ever agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item other
than in the Ordinary Course of Business.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Section 4(l) (iv) of the Disclosure Schedule lists and briefly
describes all licenses, sublicenses, agreements, and permissions (as
amended to date), with respect to each material item of Intellectual
Property that any third party owns and that the Company or APS-Cal
presently use pursuant to license, sublicense, agreement, or permission
except for Shrink-wraps and similar widely available binary code and
commercial end-user licenses, including public or open technology. With
respect to each item of Intellectual Property required to be identified
in Section 4(l) (iv) of the Disclosure Schedule:



| |                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect, except where the illegality, invalidity, non-binding
nature, unenforceability, or ineffectiveness would not reasonably
be deemed to have a Material Adverse Effect on the Company;

21



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) neither the Company nor APS-Cal is, and to the Knowledge
of the Seller Entities, no other party to the license, sublicense,
agreement, or permission is in material breach or default, and no
event has occurred which with notice or lapse of time would
constitute a material breach or default or permit termination,
modification, or acceleration thereunder;



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (C) neither APS-Cal nor the Company has, and to the Knowledge
of the Seller Entities, no other party to the license, sublicense,
agreement, or permission has repudiated any material provision
thereof; and



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (D) neither the Company nor APS-Cal has granted any sublicense
or similar right with respect to such license, sublicense,
agreement, or permission other than in the Ordinary Course of
Business.



| |                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) All Intellectual Property created at the Company, APS-Cal or any
predecessor in interest, or by any employee or consultant working for the
Company or APS-Cal, has been assigned to the Company and such assignor is
contractually obligated to assist the Company in registering any such
Intellectual Property rights.

(m) Contracts.With respect to each of the contracts listed in Section
4(m) of the Disclosure Schedule: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material respects as to the
Company
and APS-Cal, as the case may be; (B) none of the Company, APS-Cal or to the
Knowledge of the Seller Entities, any other party is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification,
or acceleration, under the agreement; and (C) neither APS-Cal nor the Company
has, and to the Knowledge of the Seller Entities, no other party has repudiated
any material provision of the agreement and (D) correct and complete copies of
the agreement have been provided or made available to the Buyer. Section 4(m)
of the Disclosure Schedule lists all of the contracts to which the Company or
APS-Cal is a party of the type described below:



| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) any agreement (or group of related agreements) for the lease of
real or personal property to or from any Person providing for lease
payments in excess of $50,000 per annum;



| |                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one (1) year
or involve consideration in excess of $50,000;



| |                                                               
| | --------------------------------------------------------------
| | (iii) any agreement concerning a partnership or joint venture;



| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) any agreement (or group of related agreements) under which the
Company has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$50,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;

22



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) any agreement concerning confidentiality not entered into in the
Ordinary Course of Business or any agreement which involves any
prohibition on the Company conducting business in a geographical area or
performing any service or restricts the Companys ability to operate in
the Ordinary Course of Business or grants to any party thereto other than
the Company or APS-Cal the exclusive right to perform any service;



| |                                                                             
| | ----------------------------------------------------------------------------
| | (vi) any agreement with a Seller Entity or another Affiliate of the
Company;



| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (viii) any collective bargaining agreement or agreement with a labor
union or other association representing or purporting to represent a
group of employees;



| |                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing material severance
benefits;                                                     
|
| | (x) any agreement with any officer or director of the Company or
APS-Cal, including without limitation, any agreement under which it has
advanced or loaned any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | (xi) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on the Company;



| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | (xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000 in the
aggregate;
|
| | (xiii) Any agreement requiring capital expenditures or the disposal
or acquisition of assets in excess of $50,000;                               



| |                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xiv) any agreement pursuant to which the Company or APS-Cal grants
the right to act as its agent to a Person that is among the Companys
largest forty (40) agents having (5) five or more locations (calculated
by the volume of transactions conducted in the twelve (12) months ended
September 30, 2003);



| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xv) Any agreement regarding payments to any governmental entities,
other than filing, registration, or similar fees made in the Ordinary
Course of Business; or



| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (xvi) Any agreement not entered into in the Ordinary Course of
Business or which is material to the conduct of the business of the
Company or APS-Cal or to the

23



---



##### 





| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | financial condition or results of operation
of the Company or APS-Cal and not otherwise listed in subparagraphs (i)
through (xv) above.

(n) Guaranties.Neither the Company nor APS-Cal is a guarantor and is not
otherwise liable for any Liability or obligation (including indebtedness) of
any other Person.

(o) Tangible Assets.The Company and APS-Cal own or lease all buildings,
machinery, equipment, and other tangible assets reasonably necessary for the
conduct of its business as presently conducted.

(p) Litigation.Section 4(p) of the Disclosure Schedule sets forth each
instance in which the Company or APS-Cal (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, or
local jurisdiction. To the Knowledge of the Seller Entities, there is no
action, suit, proceeding, hearing, or investigation (other than an
investigation conducted in the Ordinary Course of Business by any federal or
state licensing or similar authorities) threatened against the Company or
APS-Cal. Section 4(p) of the Disclosure Schedule sets forth all injunctions,
judgments, orders, decrees, rulings or charges against the Company or APS-Cal
within the last two (2) years. Section 4(p) also sets forth all workers
compensation and OSHA complaints made against the Company or APS-Cal within the
last two (2) years.

(q) Employees.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Except as provided in Section 4(q)(i) of the Disclosure
Schedule, there is no charge, action, or proceeding pending against the
Company or APS-Cal, and there is no written complaint, or to the
Knowledge of the Seller Entities oral complaint, pending against the
Company or APS-Cal, relating to the alleged material violation of any
applicable state or federal labor or employment law or regulation,
including any charge or complaint filed by any employee or labor
organization with the National Labor Relations Board, the Equal
Employment Opportunities Commission, or any other administrative
governmental agency, nor is there pending against the Company any
material grievance by any employee or labor organization under any
collective bargaining agreement or other agreement with an association
representing a group of employees with respect to employees of the
Company or APS-Cal.



| |                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) There is no pending strike, slow-down, picketing, or work
stoppage by employees of the Company or APS-Cal, nor is there any pending
lockout by the Company or APS-Cal of any its employees and no such
lockout is contemplated by the Company or APS-Cal.



| |                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) There is no pending organizing activity or petition for
certification by or on behalf of any labor organization with respect to
employees of the Company or APS-Cal, and there is no agreement with any
labor organization or any other association representing or purporting to
represent any group of employees with respect to employees of the Company
or APS-Cal.

24



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##### 





| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) All employees currently employed by the Company are listed in
Section 4(q) (iv) of the Disclosure Schedule, which includes the salary
level of each such employee.

(r) Employee Benefits.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Attached hereto in Section 4(r) of the Disclosure Schedule is a
true and complete list of each employee benefit plan, (as defined in
Section 3(3) of ERISA) as well as every other bonus, incentive, profit
sharing, deferred compensation, pension, retirement, excess benefit,
supplemental retirement, change-in-control, employment contract, stock
purchase, stock ownership, stock option, stock appreciation, supplemental
unemployment, medical, dental, vision, disability, life insurance, death
benefit, disability, cafeteria, vacation, sick-day, severance and other
material employee benefit or fringe benefit plan, program or arrangement,
whether or not covered by ERISA, that provides benefits or compensation
in respect of any employee or former employee of the Company or the
beneficiaries or the dependents of any such employee or former employee
(hereinafter individually, an Employee and collectively, the
Employees) or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Company, or to which the Company contributes or is or
has been obligated or required to contribute (collectively, the Employee
Benefit Plans).



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | (ii) In addition, for purposes of this Agreement, the following
terms shall have the following meanings:



| |  |  | ERISA Affiliate means any other person, trade or business, or
entity that is or was treated as a single employer with the Company
under Section 414(b), (c), (m) or (o) of the Code or Section
4001(a)(14) or (b)(1) of ERISA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Affiliate Plan shall mean each employee benefit plan, (as
defined in Section 3(3) of ERISA) as well as every other bonus,
incentive, profit sharing, deferred compensation, pension,
retirement, excess benefit, supplemental retirement,
change-in-control, employment contract, stock purchase, stock
ownership, stock option, stock appreciation, supplemental
unemployment, medical, dental, vision, disability, life insurance,
death benefit, disability, cafeteria, vacation, sick-day, severance
and other material employee benefit or fringe benefit plan, program
or arrangement, whether or not covered by ERISA, that is or has
been at any time within the last six (6) years sponsored,
administered, maintained or established by any ERISA Affiliate, or
to which any ERISA Affiliate contributes or is or has been within
the last six (6) years obligated or required to contribute and that
provides benefits or compensation in respect of any Employee or any
employee or former employee of any ERISA Affiliate or the
beneficiaries or the dependents thereof or under which any of the
foregoing is or may become eligible to participate or derive a
benefit.

25



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) A copy of each Employee Benefit Plan listed in Section 4(r) of
the Disclosure Schedule, the summary plan descriptions and in the case of
an unwritten Employee Benefit Plan, a written description thereof,
determination letters received from the Internal Revenue Service, the
most recent annual report (IRS Form 5500), and all related trust
agreements, insurance contracts, and other funding arrangements which
implement each such Employee Benefit Plan has been furnished or made
available to the Buyer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (iv) Each Employee Benefit Plan that is intended to be a
tax-qualified deferred compensation plan under Section 401(a) of the Code
has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of said Code section, and that
its related trust is exempt from taxation under Section 501(a) of the
Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (v) Each of the Employee Benefit Plans listed in Section 4(r) of the
Disclosure Schedule (A) complies in all material respects with the
requirements of all applicable laws, including, without limitation, ERISA
and the Code, and (B) has at all times been maintained and operated in
compliance with its terms and the requirements of all applicable laws,
including without limitation ERISA and the Code, except to the extent as
would reasonably be expected not to have a Material Adverse Effect on the
Company. The Company has no commitment, intention or understanding to
create, modify or terminate any Employee Benefit Plan listed in Section
4(r) of the Disclosure Schedule, and no condition or circumstance exists
that would prevent the amendment or termination of any Employee Benefit
Plan listed in Section 4(r) of the Disclosure Schedule. Except as set
forth in Section 4(r)(v) of the Disclosure Schedule, and except as may
arise in connection with the consummation of the transactions
contemplated by this Agreement, there is no pending or threatened
litigation, arbitration, or disputed claim with respect to any
Transferred Employee involving any Employee Benefit Plan or Affiliate
Plan or any fiduciary or administrator thereof in their capacities as
such.
|
| | (vi) Full payment has been made of all amounts which the Company and
any ERISA Affiliate are required to have paid as contributions to or
benefits under any Employee Benefit Plan and any Affiliate Plan as of the
end of the most recent plan year thereof, except to the extent as would
reasonably be expected not to have a Material Adverse Effect on the
Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (vii) The Company and all ERISA Affiliates have complied with all
reporting and disclosure obligations to all governmental entities and all
participants and beneficiaries with respect to each Employee Benefit Plan
required by the terms of such Employee Benefit Plan, any statutes,
orders, rules or regulations, including but not limited to ERISA, the
Code and the Sarbanes-Oxley Act of 2002, to the extent that the failure
to do so would have a Material Adverse Effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (viii) Except as required by Section 4908B of the Code and Title I,
Part 6 of ERISA, the Company has no liability for any obligation to
provide post-retirement health or medical benefits for retired or former
Employees of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

26



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) With respect to the Employee Benefit Plans which are group
health plans under Section 4980B of the Code or Section 607(1) of ERISA,
the Company has timely complied in all material respects with all
requirements imposed under Section 4980B of the Code and Part 6 of Title
I of ERISA. Neither the Company nor any ERISA Affiliate has any
liability, loss, assessment, tax penalty, or other sanction with respect
to any failure to comply with such requirements.
|
| | (x) Other than as disclosed in Section 4(r)(x) of the Disclosure
Schedule, the Company has no liability related to any obligations under
any stock option plans of the Company, the Seller Entities or any ERISA
Affiliate.                                                                                                                                                                                                                                                    

(s) Environmental, Health, and Safety Matters.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Except as disclosed in Section 4(s) of the Disclosure Schedule,
the Company has complied in all material respects with all Environmental,
Health, and Safety Requirements.                                                                                                                                                                                                                                                                                                                                                  
|
| | (ii) To the Knowledge of the Seller Entities, none of the following
exists at any property or facility owned, leased or operated by the
Company or APS-Cal: (1) underground storage tanks, (2) friable asbestos
or friable-asbestos-containing material, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.                                                                                                                                            
|
| | (iii) To the Knowledge of the Seller Entities, neither the Company
nor APS-Cal has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance the
treatment, storage, disposal, arrangement for or permission of disposal,
transport, handling or release of which is governed or otherwise
regulated by any Environmental, Safety or Health Requirement, including
without limitation any Hazardous Substance.                                                   
|
| | (iv) To the Knowledge of the Seller Entities, neither the Company
nor APS-Cal owns, leases or operates, nor have they owned, leased or
operated any property or facility contaminated by any substance referred
to in Section 4(s) (iii) above, such as to give rise to Adverse
Consequences, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages
or attorney fees, pursuant to CERCLA or any other Environmental, Health,
and Safety Requirements.
|
| | (v) No employee or other Person has ever made a written, or to the
Knowledge of the Seller Entities, oral claim or demand against the
Company or APS-Cal based on alleged damage to health caused by any
Hazardous Substance, and to the Knowledge of the Seller Entities, no such
claim is threatened.                                                                                                                                                                                                                         
|
| | (vi) The Seller Entities have provided or made available to the
Buyer all environmental reports, notes, documents or findings in their
possession that relate to any property or facility owned, leased or
operated by the Company or APS-Cal.                                                                                                                                                                                                                                                                                  

27



---



##### 



(t) Notes and Accounts Receivable.All notes and accounts receivable of
the Company are reflected properly on their books and records, arose from bona
fide transactions in the Ordinary Course of Business in accordance with past
practices and are subject to reserves which are reasonable in light of the
Companys historical collection experience. To the Knowledge of the Seller
Entities, the methodology used in the calculation of such reserves is
reasonable in light of the nature of the Companys outstanding accounts
receivable.

(u) Powers of Attorney.There are no outstanding powers of attorney
executed on behalf of the Company or APS-Cal.

(v) Insurance.Section 4(v) of the Disclosure Schedule lists each
insurance policy of the Company and APS-Cal (including policies providing
property, casualty, liability, and workers compensation coverage and bond and
surety arrangements) and the following information with respect to each
insurance policy to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years:



| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the name, address, and telephone number of the agent;                                                                                                                                                                         
|
| | (ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;                                                                                                                                 
|
| | (iii) the policy number and the period of coverage;                                                                                                                                                                               
|
| | (iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate)
of coverage; and
|
| | (v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.                                                                                                                                      

Copies of each insurance policy listed on Section 4(v) of the Disclosure
Schedule have been made available to the Buyer. The Company has been covered
during the past five (5) years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section 4(v) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company.

(w) Disclosure.The representations and warranties contained in this
Section 4 do not intentionally contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
and information contained in this Section 4 not misleading.

(x) Disclaimer of Other Representations and Warranties.Except as
expressly set forth in this Agreement, neither the Seller Entities nor any of
their respective Affiliates make any representation or warranty, express or
implied, at law or in equity, with

28



---



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respect to any of its or their respective assets, liabilities or operations,
including, without limitation, representations and warranties of
merchantability or fitness for any particular purpose, title, or
non-infringement, and any such other representations or warranties are hereby
expressly disclaimed.

5.     PRE-CLOSING COVENANTS.The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.

(a) General.Each of the Parties will use its commercially reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
Closing conditions set forth in Section 7 below).

(b) Regulatory Matters.The Seller Entities and the Buyer shall
cooperate and use all commercially reasonable efforts to promptly prepare and
file all necessary documentation, effect all necessary applications, notices,
petitions and filings and obtain all necessary permits, consents, approvals and
authorizations of all governmental authorities necessary or advisable to obtain
all required statutory approvals, including, without limitation, those
described in Section 3(b)(ii) of the Disclosure Schedule and pursuant to the
HSR Act. In furtherance of the foregoing, the Seller Entities and the Buyer
shall cooperate and use all commercially reasonable efforts to prepare and file
any such applications, notices, petitions, filings and other documents no later
than ten (10) business days from the date hereof or as soon thereafter as
practicable and shall thereafter cooperate to diligently prosecute all such
applications, notices, petitions, filings and other documents. Each Party
shall, consistent with applicable law, before making any applications, notices,
petitions or filings, provide a copy thereof to the other Parties for their
review and shall consider incorporating the comments of any other Party in good
faith. Without limiting the generality of the foregoing, the Buyer shall not
take any action, directly or indirectly, that could reasonably be expected to
cause any governmental authority to withhold or deny any permit, consent,
approval or authorization set forth in Section 3(b)(ii) of the Disclosure
Schedule. The Seller Entities and the Buyer shall (i) respond as promptly as
practicable to any inquiries received from a governmental authority for
additional information or documentation, and (ii) not extend any waiting period
under the HSR Act or enter into any agreement with a governmental authority not
to consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other Parties hereto. The Buyer shall defend
through litigation on the merits (including appeals) any claim asserted in any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent or
materially delay consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation. Each Party shall (i) promptly notify the
other Party of any written communication to that Party from any governmental
authority and, subject to applicable law, permit the other Party to review in
advance any proposed written communication to any of the foregoing; (ii) not
agree to participate in any substantive meeting or discussion with any
governmental authority in respect of any filings, investigation or inquiry
concerning this Agreement or the transactions contemplated hereby, unless it
consults with the other Party in advance and, to the extent permitted by such
governmental authority, gives the

29



---



##### 



other Party the opportunity to attend and participate thereat; and (iii)
furnish the other Party with copies of all correspondence, filings, and
communications (and memoranda setting forth the substance thereof) between it
and its Affiliates and their respective representatives on the one hand, and
any government or regulatory authority or members or their respective staffs on
the other hand, with respect to this Agreement.

(c) Operation of Business.The Seller Entities will not cause or permit
the Company to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business in accordance with past
practices; provided, however, that the Seller may cause the Company to dividend
or otherwise distribute all or some of the cash of the Company prior to the
Closing and/or cancel or pay all or some of any inter-company indebtedness; and
provided, further, that the Seller may cause the Company to establish a credit
facility with a nationally recognized financial institution pursuant to
documentation reasonably acceptable to the Buyer and borrow funds thereunder
for working capital purposes or to repay all or some of any inter-company
indebtedness. Without limiting the generality of the foregoing, except as
contemplated by the foregoing sentence or as otherwise contemplated by this
Agreement, the Seller Entities will cause the Company and APS-Cal not to:



| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) become legally obligated to sell, assign or otherwise transfer
any of their material assets or properties, other than in the Ordinary
Course of Business and other than in connection with the transfer of the
Divested Items;                                       
|
| | (ii) make any acquisition of all of the capital stock (whether by
merger or otherwise) or all or substantially all of the assets of any
Person;                                                                                                                          
|
| | (iii) subject any material asset to a Security Interest;                                                                                                                                                                                                                 
|
| | (iv) amend or authorize any amendment to its certificate of
incorporation or bylaws;                                                                                                                                                                                     
|
| | (v) borrow or refinance any amount from a non-affiliated Person or
incur any liability (contingent or otherwise) in excess of $50,000, other
than trade payables incurred in the Ordinary Course of Business in
accordance with past practices;                          
|
| | (vi) declare or make any payment or distribution to shareholders
other than as contemplated by Section 2 (b)(iv) or in connection with the
distribution of proceeds from the transfer of the Divested Items;                                                             
|
| | (vii) issue, sell, pledge, dispose of, or encumber any shares of, or
securities convertible into or exchangeable or exercisable for, or
options, warrants, calls, commitments or rights of any kind to acquire
any shares of the capital stock of the Company or APS-Cal;
|
| | (viii) make any change to its accounting policies, principles or
practices other than as required by law or changes in GAAP;                                                                                                                                             

30



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ix) make any loans to any Persons;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (x) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation or stock option/ownership plan, severance or other Employee
Benefit Plan or other arrangement for the benefit of any director,
officer or employee, or increase in any manner the compensation or fringe
benefits of any director or officer other than (A) amendments to the
employment agreements listed in Section 4(m)(ix) of the Disclosure
Schedule solely to extend the term thereof to a date not more than three
(3) months after the Closing Date and (B) amendments contemplated in
Section 5(k); or
|
| | (xi) waive any right in any contract listed in Section 4(m) of the
Disclosure Schedule, the waiver of which would reasonably be expected to
materially detract from the value of such contract to the Company or
APS-Cal, as the case may be; or                                                                                                                                                                                                                                                                                                                                                 
|
| | (xii) become obligated to take any of the actions specified in
subparagraphs (i) through (xi) above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

(d) Preservation of Business.The Seller Entities will cause the Company
to use its commercially reasonable efforts to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.

(e) Full Access.The Seller Entities will permit, and the Seller Entities
will cause the Company to permit, representatives of the Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Company. The Buyer and its representatives will treat and
hold as such any Company Confidential Information it receives from the Seller
Entities and the Company in the course of the reviews contemplated by this
Section 5(e), will not use or disclose any of the Company Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, promptly will return to the Seller
Entities and the Company all tangible embodiments (and all copies, notes or
summaries) of the Company Confidential Information which are in its possession;
provided, however, that in granting such access the Seller Entities and the
Company shall not be required to take any action that would constitute a waiver
of any legal privilege, including the attorney-client privilege.

(f) Notice of Developments.The Seller Entities will give prompt written
notice to the Buyer upon becoming aware of any material adverse development
causing a breach of any of the representations and warranties in Section 4
above. Each Party will give prompt written notice to the others upon becoming
aware of any material adverse development causing a breach of any of its own
representations and warranties in Section 3 above. No disclosure by any Party
pursuant to this Section 5(f), however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.

31



---



##### 



(g) Exclusivity.Until this Agreement has been terminated in accordance
with its terms, neither the Parent, the Seller nor any of their Affiliates will
(and the Seller Entities will not cause or permit the Company to) (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities, or
any substantial portion of the assets, of the Company (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Until this Agreement has been terminated in accordance with its
terms, the Seller will not vote its Company Shares in favor of any such
acquisition.

(h) Termination of Agreements.Except as set forth in Section 5(h) of the
Disclosure Schedule, the Seller and the Parent shall, prior to the Closing,
terminate or cause to be terminated all Contracts between the Company, on the
one hand, and the Seller or any Affiliate of the Seller, on the other hand, and
the Company shall retain no obligations under such Contract.

(i) Financials.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Seller Entities shall cause the Company to audit its
financial statements for fiscal year 2003 in the Ordinary Course of
Business and deliver such audited financial statements to the Buyer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (ii) At such time, the Seller Entities shall also deliver to the
Buyer an unaudited balance sheet of the Company as of the close of
business on December 31, 2003 (the December Balance Sheet) in
substantially the form of the September Balance Sheet attached hereto as
Section 2(b)(ii) of the Disclosure Schedule. The Seller Entities shall
prepare the December Balance Sheet in the same manner used to prepare the
September Balance Sheet. The Parties hereby acknowledge and agree that
the September Balance Sheet sets forth the total fixed assets of the
Company, adjusted to exclude the Divested Items (in column F and the row
labeled Total Fixed Assets, Net) as $9,086,445.81 as of September 30,
2003. If the total fixed assets of the Company, adjusted to exclude the
Divested Items, as set forth on the December Balance Sheet (the December
Fixed Asset Amount) is less than $9,086,445.81, then the Seller Entities
shall deliver to the Buyer cash in an amount equal to the amount of any
such shortfall immediately after the Closing.
|
| | (iii) The Buyer shall have the right to dispute the calculation
of the December Fixed Asset Amount, by delivering a written notice of
objection to the Seller within twenty (20) days of delivery of the
December Balance Sheet. The Buyer and Seller shall thereupon attempt in
good faith to resolve their dispute. If the Buyer and the Seller do not
agree upon the December Fixed Asset Amount within twenty (20) days of the
delivery of the Buyers notice of objection, then the Independent
Accountant shall determine the December Fixed Asset Amount. If the
Independent Accountant is requested to determine the December Fixed Asset
Amount, then (A) the Buyer and the                                                                                                                                                                                                                                                                                                                                                                                        

32



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Seller shall each submit to the Independent Accountant in writing,
not later than ten (10) days after the Independent Accountant is retained
for such purpose, their respective positions with respect to the December
Fixed Asset Amount, together with such supporting documentation as they
deem necessary or as the Independent Accountant reasonably requests, and
(B) the Independent Accountant shall, within ten (10) days after
receiving the positions of both the Buyer and the Seller and all
supplementary supporting documentation requested by the Independent
Accountant, render its decision as to the December Fixed Asset Amount,
which decision shall be final and binding on, and non-appealable by, the
Parties. The fees and expenses of the Independent Accountant related to
the resolution of the December Fixed Asset Amount shall be paid by the
Party whose estimate of the December Fixed Asset Amount is farthest from
the Independent Accountants final calculation of thereof.

(j) Transfer of Divested Items.Prior to the Closing, the Seller Entities
will cause the Company to transfer all of the Divested Items to the Seller.

(k) Amendment or Cancellation of Certain Agreements.The Company and the
Seller Entities shall use their best efforts to have caused, at or before
Closing, each of Donna Estelle, Paul Rocheleau and Corey Stone to cancel his
or her existing employment/severance agreement, to relinquish any rights he or
she might have under the UIL Holdings Corporation Change in Control Severance
Plan, and to enter into a new employment/severance agreement, in form and
substance reasonably satisfactory to the Buyer; provided, however, that if the
Company and the Seller Entities are unable, despite their best efforts, to
cause any such individual to cancel his or her existing employment/severance
agreement, to relinquish any rights he or she might have under the UIL Holdings
Corporation Change in Control Severance Plan, and to enter into a new
employment/severance agreement, in form and substance reasonably satisfactory
to the Buyer, the Seller Entities shall satisfy any termination liabilities
associated therewith prior to the Closing.

6.     POST-CLOSING COVENANTS.The Parties agree as follows with respect to
the period following the Closing.

(a) General.In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 8 below). The Company
and the Seller Entities acknowledge and agree that from and after the Closing,
the Buyer will be entitled to possession of all documents, books, records,
agreements, and financial data of any sort relating to the Company, other than
items described in Section 6(a) of the Disclosure Schedule. The Buyer agrees
to provide the Seller with reasonable access to all documents, books and
records of the Company for purposes of the preparation of any Tax Returns by
the Seller Entities after the Closing and for any other reasonable purpose.

(b) Litigation Support.In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge,

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complaint, claim or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction which arises within two (2) years after
the Closing Date and involving the Company, each of the other Parties will
cooperate with such Party, its Affiliates and their counsel in the contest or
defense, make available their personnel and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).

(c) Transition.The Seller Entities will refer all customer inquiries
relating to the Company to the Buyer from and after the Closing.

(d) Employees. Effective as of the Closing, the Buyer shall cause the
Company to continue the employment of all active Employees and of all Employees
who are on vacation, disability, family leave, layoff or other approved leave
from active employment with the Company as of the Closing Date, and who in any
case where they are not actively employed on the Closing Date actually return
to active service with the Company within twelve (12) months (such Employees
being referred to as Transferred Employees). Upon and after the Closing
Date, the Buyer shall (i) cause the Company to continue the Transferred
Employees employment at a wage or salary level (including short-term incentive
compensation) that is substantially equivalent to the level provided to the
Transferred Employees immediately prior to the Closing and (ii) cause the
Company to continue to honor only those employment agreements and employment
letters specifically listed in Section 4(m)(ix) of the Disclosure Schedule (as
such agreements and letters may be amended, restated or supplemented in
accordance with the terms of this Agreement). If any Transferred Employees
employment is terminated within twelve (12) months after the Closing, the Buyer
shall pay severance as described in Section 6(d) of the Disclosure Schedule (or
pursuant to such Transferred Employees employment agreement, if applicable).

(e) Employee Benefit Plans.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Effective as of the Closing Date, the Buyer shall either cause
the Company to provide, or itself shall provide, to the Transferred
Employees, benefit programs that are comparable and equivalent in all
material respects to the benefits provided to the other employees of the
Buyer, either through inclusion of the Transferred Employees in the
Buyers benefit programs, or through a combination of the foregoing and
of continuation of certain existing Employee Benefit Plans.                                                                                                          
|
| | (ii) As of the Closing Date, the Buyer shall cause the Company to
maintain a defined contribution plan for the benefit of Transferred
Employees (which plan may be an existing plan or plans of the Buyer) (a
Successor 401(k) Plan) and shall take all necessary actions, if any, to
qualify such plan under the applicable provisions of the Code and shall
make any and all appropriate filings and submissions to the appropriate
governmental agencies. As of the Closing Date or as soon thereafter as
administratively feasible, the Seller Entities shall cause the
Transferred Employees who

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | are participants in the Seller 401(k) Plan to become fully vested in
their accounts under such plan, to the extent they are not already fully
vested, and shall permit the Transferred Employees who are participants
in the Seller 401(k) Plan to elect to receive a distribution of their
vested accounts. The Buyer shall cause the Successor 401(k) Plan to take
all necessary actions to permit the Transferred Employees to elect to
directly roll over their accounts under the Seller 401(k) Plan into the
Successor 401(k) Plan, including any participant loans outstanding (other
than those loans that are in default); provided, however, that the
Successor 401(k) Plan shall not accept rollovers of any shares of capital
stock of the Parent or any non-cash amounts other than notes related to
participant loans. The Buyer and the Seller Entities shall cooperate
fully in facilitating such rollovers.                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (iii) The Buyer shall, or shall cause the Company to, (1) waive any
limitations to pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Transferred Employees under any welfare benefit plan in which such
employees may be eligible to participate after the Closing to the extent
that such limitations did not apply or had been satisfied by Transferred
Employees and their covered dependents, (2) provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to
the Closing for the year in which the Closing occurs in satisfying any
applicable deductible or out-of- pocket requirements under any welfare
benefit plan in which such employees may be eligible to participate after
the Closing, and (3) recognize all service of the Transferred Employees
rendered as employees of the Company prior to the Closing, and during the
period that the Company and any Subsidiary of the Company were
subsidiaries of the Parent, for all purposes (including, without
limitation, purposes of eligibility to participate, vesting credit,
entitlement for benefits, and benefit accrual) in any employee benefit
plan in which such employees may be eligible to participate after the
Closing.
|
| | (iv) Effective as of the Closing Date, the Transferred Employees
shall cease to participate actively in any of the employee benefit plans
of the Parent, and the Company shall cease to be a contributing employer
under any such Employee Benefit Plan; provided, however, that the Company
shall make any employer contribution required to be made with respect to
its own Employee Benefit Plans and its participation in the Employee
Benefit Plans of the Parent up through the Closing Date, provided that
such contributions are made in the Ordinary Course of Business. Neither
The United Illuminating Company nor the Seller Entities shall transfer
any assets or liabilities with respect to any Transferred Employee who
has an accrued benefit under The United Illuminating Company Pension
Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (v) After the Closing, the Seller Entities shall be responsible for
providing contribution coverage required under Section 4980B of the Code
and Title I, Part 6 of ERISA to all former employees of the Company who
terminated employment on or before such date or in connection with the
transactions contemplated by this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (vi) After the Closing, the Seller Entities shall take such actions
as are necessary to ensure that neither the Company, the Buyer nor any
Affiliate of the Buyer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | has any liability whatsoever related to any Affiliate Plan, including but
not limited to any defined benefit plan, as defined in Section 3(35),
any Multiemployer Plan, any other plan subject to Title IV of ERISA, and
any post-retirement health or medical plan.                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (vii) As soon as practicable after the determination of the Purchase
Price pursuant to Section 2(b)(ii) above, the Company shall satisfy the
obligations under the American Payment Systems, Inc. 2001 Phantom Stock
Plan by paying all participants in the Plan such amounts that are due and
payable under such plan as a result of the transactions contemplated by
this Agreement and the related cancellation of such plan. The Buyer will
cause the Company to issue an invoice to the Seller Entities for such
amounts, including all applicable payroll and withholding Taxes, and the
Seller Entities shall reimburse the Company for such expense within ten
(10) days of receipt thereof.

(f) Confidentiality.The Parties will treat and hold as such all of the
Confidential Information of the other Parties, refrain from using any such
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or the Seller, as the case may be, or destroy (and
certify the destruction in writing), at the request and option of the Buyer or
the Seller, as applicable, all tangible embodiments (and all notes, summaries
and copies) of such Confidential Information which are in its possession. In
the event that any Party is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information of another Party, that Party will notify the applicable Party
promptly of the request or requirement so that the applicable Party may seek an
appropriate protective order or waive compliance with the provisions of this
Section 6(f). If, in the absence of a protective order or the receipt of a
waiver hereunder, any Party is, on the advice of counsel, compelled to disclose
any Confidential Information to any tribunal, that Party may disclose the
Confidential Information to the tribunal; provided, however, that the
disclosing Party shall use his or its reasonable best efforts to obtain, at the
reasonable request of the applicable Party, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the applicable Party shall designate.

(g) Covenant Not to Compete.For a period of five (5) years from and
after the Closing Date, the Seller Entities will not engage directly or
indirectly in any business that the Company conducts as of the Closing Date in
North America. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6(g) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

(h) Insurance.The Buyer shall maintain liability insurance in respect of
all products sold and services rendered by the Company in such amounts and in
such forms as deemed reasonable by the Buyer.

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(i) Access to Information.For a period of four (4) years after the
Closing Date, upon reasonable notice, the Buyer, the Company and the Seller
Entities agree to furnish or cause to be furnished to each other and their
representatives access, during normal business hours, to such information
(including records pertinent to the Company) and assistance relating to the
Company as is reasonably necessary for financial reporting and accounting
matters, the valuation of any claim for indemnification under Section 8 hereof,
the preparation and filing of any Tax Returns, reports or forms or the defense
of any Tax claim or assessment; provided, however, that such access does not
unreasonably disrupt the normal operations of the Party or Parties furnishing
cooperation; provided further, however, that the Party requesting cooperation
shall pay the reasonable out-of-pocket costs incurred by the Party or Parties
furnishing cooperation.

(j) Nonassignable Contracts and Permits.To the extent that any contract
or permit (including any consent, approval or authorization of any governmental
authority) for which assignment to the Buyer is provided for in this Agreement
is not assignable without the consent of another Person, including an
applicable governmental authority, this Agreement shall not constitute an
assignment or an attempted assignment thereof if such assignment or attempted
assignment would constitute a breach thereof. The Seller Entities and Buyer
shall continue to use their commercially reasonable best efforts to obtain the
consent of such other Person to the assignment of any such contract or permit
to the Buyer in all cases in which such consent is or may be required for such
assignment. If such consent shall not be obtained, the Seller Entities and the
Buyer shall cooperate with each other in any reasonable arrangement designed to
provide the Buyer with the benefits under any such contract or permit to the
extent lawful and the Buyer shall be obligated to perform the obligation with
respect thereto, any other provision of this Agreement to the contrary
notwithstanding.

(k) Guarantee.The Parties acknowledge that (i) the Company is party to
that certain Walk-In Payment Agency Agreement between the Company and BellSouth
Affiliate Services Corporation (BellSouth) dated as of August 9, 2002 and
(ii) the Seller has guaranteed certain of the Companys obligations under such
agreement pursuant to that certain Guarantee dated as of August 9, 2002 (the
Guarantee). The Parties hereby agree to use commercially reasonable efforts
to cause BellSouth to agree to terminate the Guarantee prior to the Closing.

7.     CONDITIONS TO OBLIGATION TO CLOSE.

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



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the representations and warranties set forth in Section 3(a) and
Section 4 above shall be true and correct in all material respects at and
as of the Closing Date;

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) the Seller Entities shall have performed and complied in all
material respects with all of the covenants of the Seller Entities
hereunder that are required to be performed or complied with prior to the
Closing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (iii) no action, suit, or proceeding (other than any action, suit or
proceeding to which Sections 5(b) or 7(a)(v) refer or relate) shall be
pending before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent or materially delay consummation of
any of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, (C) materially and adversely affect the right of the Buyer
to own the Company Shares and to control the Company, or (D) materially
and adversely affect the right of the Company to own its assets and to
operate its businesses (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
|
| | (iv) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section 7(a)
(i) - (iii) is satisfied in all respects;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (v) the Parties and the Company shall have received all of the
authorizations, consents, and approvals of governments and governmental
agencies pursuant to the HSR Act and as set forth in Section 7(a)(v) of
the Disclosure Schedule (collectively, the Requisite Consents);
provided, however, that the foregoing condition to the obligation of the
Buyer shall not apply to any failure to obtain any such authorization,
consent or approval that arises from the Buyers breach of any
representation, warranty or covenant hereunder or the Buyers withdrawal
of its application for any such authorization, consent or approval;                                                                                                                                                                                                                                                                                 
|
| | (vi) Any Person required in connection with the transactions
contemplated hereby to file a notification and report form in compliance
with the HSR Act shall have filed such form.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (vii) the Buyer shall have received from counsel to the Seller an
opinion in form and substance as set forth in Exhibit B attached hereto,
addressed to the Buyer, and dated as of the Closing Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (viii) all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (ix) the Buyer shall have received the current updated corporate
record book, including without limitation the Company bylaws, stock
transfer ledger, minutes, resolutions, consents, and all other corporate
documents; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (x) the Seller Entities shall have caused the Company to transfer
all of the Divested Items to the Seller.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

38



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The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.

(b) Conditions to Obligation of the Seller.The obligation of the Seller
Entities to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and as of the
Closing Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (ii) the Buyer shall have performed and complied in all material
respects with all of the covenants of the Buyer hereunder that are
required to be performed or complied with prior to the Closing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (iii) no action, suit, or proceeding (other than any action, suit or
proceeding to which Sections 5(b) or 7(b)(v) refer or relate) shall be
pending before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent or materially delay consummation of
any of the transactions contemplated by this Agreement or (B) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
|
| | (iv) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in Section 7(b)
(i) - (iii) is satisfied in all respects;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (v) the Parties and the Company shall have received all of the
Requisite Consents; provided, however, that the foregoing condition to
the obligation of the Seller Entities shall not apply to any failure to
obtain any such authorization, consent or approval that arises from the
Seller Entities breach of any representation, warranty or covenant
hereunder or the Seller Entities withdrawal of its application for any
such authorization, consent or approval;                                                                                                                                                                                                                   
|
| | (vi) Any Person required in connection with the transactions
contemplated hereby to file a notification and report form in compliance
with the HSR Act shall have filed such form;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (vii) the Seller Entities shall have received from counsel to the
Buyer an opinion in form and substance as set forth in Exhibit C attached
hereto, addressed to the Seller, and dated as of the Closing Date; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (viii) all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Seller Entities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

39



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The Seller Entities may waive any condition specified in this Section 7(b) if
they execute a writing so stating at or prior to the Closing.

8.     REMEDIES FOR BREACHES OF THIS AGREEMENT.

(a) Survival.Unless otherwise specifically provided herein, all of the
covenants, representations and warranties of the Seller Entities contained in
this Agreement shall survive the Closing and continue in full force and effect
for a period of two (2) years thereafter, provided that the representations
and warranties contained in Section 3(a)(i) (Organization of the Seller
Entities), Section 3(a)(iii)(A) (Non-contravention), Section 3(a)(v) (Company
Shares), Section 3(b)(i) (Organization of the Buyer), Section 3(b)(iii)(A)
(Non-contravention), Section 4(a) (Organization of the Company), Section 4(b)
(Capitalization) and Section 4(c)(i) (Non-contravention) shall survive
indefinitely, and the representations and warranties contained in Section 4(j)
(Tax Matters), shall continue in full force and effect until the expiration of
the applicable statute of limitation with respect to such matters. The
covenants, representations and warranties of the Buyer contained in this
Agreement shall survive the Closing and continue in full force and effect for a
period of two (2) years thereafter. This Section 8 shall survive so long as any
covenant, representation, warranty or indemnification obligation of any Party
survives hereunder.

(b) Indemnification Provisions for Benefit of the Buyer.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Subject to the limitations contained in this Section 8, after
Closing, the Seller Entities hereby jointly and severally agree to
indemnify the Buyer and its officers and directors, shareholders and
Affiliates against and hold them harmless from any loss, liability,
claim, damage or expense (including reasonable legal fees and expenses)
other than punitive damages, lost profit, or consequential or incidental
damages (a Loss) suffered or incurred by any such indemnified party
caused by, resulting from arising out of or relating to (A) any breach
of any representation or warranty of the Seller Entities contained in
this Agreement (B) any breach of any covenant of the Seller Entities
contained in this Agreement which by its terms requires performance after
the Closing Date, (C) any Taxes of the Company or APS-Cal attributable to
taxable periods ending prior to or on the Closing Date, including
liabilities of the Company under consolidated, combined or unitary income
or franchise Tax Returns and liabilities related to the Tax Returns of
the Seller Entities or members of the Parent Consolidated Group but
excluding any Taxes for which there is an adequate accrual or reserve on
the Closing Date Balance Sheet or any Taxes attributable to transactions
not in the Ordinary Course of Business occurring after the Closing which
are effectuated or initiated by the Buyer or the Company after the
Closing, (D) the Divested Items and (E) the Wallingford Condition.

40



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) The Buyer acknowledges and agrees that neither the Seller
Entities nor any of their Affiliates shall have any liability under any
provision of this Agreement for any Loss to the extent that such Loss
relates to actions taken by or omitted to be taken by the Buyer or the
Company after the Closing Date or such Loss arises in the conduct of the
business of the Company by the Buyer or the Company after the Closing
Date, provided that such Loss is not a direct result of any action taken
by the Seller Entities after the Closing.

(c) Indemnification Provisions for Benefit of the Seller Entities and its
Affiliates.Subject to the limitations contained in this Section 8, after the
Closing, the Buyer and the Company hereby jointly and severally agree to
indemnify the Parent, the Seller and their respective officers, directors,
shareholders and Affiliates against, and hold them harmless from, any Loss
suffered or incurred by any such indemnified party caused by, resulting from,
arising out of, or relating to (i) any breach of any representation or warranty
of the Buyer contained in this Agreement which by the terms of this Section 8
survives the Closing, (ii) any breach of any covenant of the Buyer contained in
this Agreement which by its terms requires performance after the Closing Date,
(iii) any claim, proceeding or suit under any local, state, federal or foreign
law, which relates to actions taken by the Buyer or the Company at any time
after the Closing with regard to the employment of the Companys employees;
(iv) the operation of the business of the Company and the ownership of the
assets of the Company following the Closing Date, provided that such Loss is
not a direct result of any action taken by the Seller Entities after the
Closing; (v) any Tax attributable to (A) the Taxable periods that begin after
the Closing Date, (B) the portion of any Tax attributable to the Overlap Period
to the extent allocable to the period commencing after the Closing Date as set
forth in Section 9(c) and (C) any Tax periods that end on or before the Closing
Date if such Tax is attributable to transactions not in the Ordinary Course of
Business occurring after the Closing Date which are effectuated or initiated
after the Closing Date by the Buyer or the Company and (vi) if the Parties are
not able to cause BellSouth to agree to terminate the Guarantee, any Loss in
respect of the Guarantee.

(d) Limitations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) No Party shall be liable under Section 8 for Losses hereunder,
unless the aggregate of all Losses for which any Party would, but for
this Section 8(d), be liable on a cumulative basis is an amount equal to
or in excess of $1,500,000 (the "Basket Amount) and then only for
amounts in excess of the Basket Amount; provided, however, that the
foregoing limitation shall not apply to claims for indemnification made
by the Buyer pursuant to (A) Section 8(b)(i)(A) in respect of any breach
of any representation or warranty made in Section 4(j) above, (B) Section
8(b)(i)(B) in respect of the obligations of the Seller Entities to
reimburse the Company under Section 5(i)(ii) above and 6(e)(vii) above,
(C) Section 8(b)(i)(C), (D) Section 8(b)(i)(D) and (E) Section 8(b)(i)(E)
(the provisions described in the foregoing clauses (A) through (E), the
Buyer Excluded Provisions); and provided, further, that the foregoing
limitation shall not apply to claims for indemnification made by the
Seller Entities pursuant to (x) Section 8(c)(ii) in respect of the
obligation of the Buyer to pay the Purchase Price under Section 2(b)
above, (y) Section 8(c)(v) and (z) Section 8(c)(vi) (the provisions
described in the foregoing clauses (x) through (z), the Seller Excluded
Provisions).

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Absent fraud or knowing and intentional material
misrepresentations, the aggregate amount of Losses for which any Party
shall be liable pursuant to Section 8(b) or Section 8(c) above shall not
exceed an amount equal to thirty-five percent (35%) of the Purchase
Price, as adjusted pursuant to Section 2(b) above; provided, however,
that the foregoing limitation shall not apply to claims for
indemnification made (A) by the Buyer pursuant to the Buyer Excluded
Provisions, and (B) by the Seller Entities pursuant to the Seller
Excluded Provisions.
|
| | (iii) In determining the amount of any Loss to be indemnified
pursuant to Section 8(b) or Section 8(c), any qualifications or
exceptions relating to Material Adverse Effect and/or materiality shall
be disregarded, it being understood that such qualification or exceptions
are applicable only to the determination of whether a breach has
occurred.                                                                                                                                                                                                             

(e) Other Limitations.From and after the Closing, no claim for indemnity
shall be made by either the Buyer or the Seller Entities if such claim is based
on or related to an event or facts disclosed to such Party in this Agreement.

(f) Losses Net of Insurance, Etc.The amount of any Loss for which
indemnification is provided under this Section 8 shall be net of (i) in the
case of Section 8(b), any accruals or reserves on the Closing Date Balance
Sheet, (ii) any amounts recovered by the Indemnified Party pursuant to any
indemnification by or indemnification agreement with any third party and (iii)
any insurance proceeds or other cash receipts or sources of reimbursement
received as an offset against such Loss, except to the extent that any such
insurance is provided under fronting, captive or retrospectively rated policies
that would ultimately result in such claims being borne by the Indemnified
Party (and no right of subrogation shall accrue to any insurer or third party
indemnitor hereunder) (each such source named in clauses (i), (ii) and (iii), a
Collateral Source). If the amount to be netted hereunder from any payment
required under Sections 8(b) or 8(c) is determined after payment by the
indemnifying party of any amount otherwise required to be paid to an
Indemnified Party pursuant to this Section 8, the Indemnified Party shall repay
to the indemnifying party, promptly after such determination, any amount that
the indemnifying party would not have had to pay pursuant to this Section 8 had
such determination been made at the time of such payment. The amount of any
Loss for which indemnification is provided under this Section 8 shall include
all costs incurred by the Indemnified Party in seeking recovery from Collateral
Sources if the Indemnifying Party has demanded such action in accordance with
this Section 8(f). In the event that an Indemnified Party makes a claim for
indemnification under this Section 8, the Indemnifying Party shall have the
option, in its sole discretion, to demand that the Indemnified Party seek
recovery from any Collateral Source for such claim. Any Indemnifying Party
may, in its sole discretion, require any Indemnified Party to grant an
assignment of the right of such Indemnified Party to assert a claim against any
Collateral Source if the Indemnifying Party has first fully satisfied the claim
by the Indemnified Party. In the event of such assignment, the Indemnifying
Party will pursue such claim at its own expense.

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(g) Termination of Indemnification.The obligations to indemnify and hold
harmless a Person hereto pursuant to Section 8(b) and Section 8(c), shall
terminate when the applicable representation or warranty terminates pursuant to
Section 8(a), provided, however, that as to clauses (b) and (c) above, such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the Person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the Party
providing the indemnification, provided, further, that any such claim shall be
deemed to have been withdrawn and waived two (2) years after being made, unless
(A) court proceedings shall have commenced with respect to such claim within
such two (2) year period, or (B) such claim shall have been waived or satisfied
within such two (2) year period.

(h) Procedures Relating to Indemnification.A Party seeking
indemnification pursuant to Section 8(b) and Section 8(c), (an Indemnified
Party) shall give prompt notice to the Party from whom such indemnification is
sought (the Indemnifying Party) of the assertion of any claim or assessment,
or the commencement of any action, suit, audit or proceeding, by a third party
in respect of which indemnity may be sought hereunder (a Third Party Claim)
and will give the Indemnifying Party such information with respect thereto as
the Indemnifying Party may reasonably request; provided, however, that no
failure to give such notice shall relieve the Indemnifying Party of any
liability hereunder (except to the extent the Indemnifying Party has suffered
actual prejudice thereby). Thereafter, the Indemnified Party shall deliver to
the Indemnifying Party, within ten (10) business days after the Indemnified
Partys receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnified Party relating to the Third Party Claim.
The Indemnifying Party shall have the right, exercisable by written notice to
the Indemnified Party within thirty (30) days of receipt of notice from the
Indemnified Party of the commencement of or assertion of any Third Party Claim,
to assume and control the defense of such Third Party Claim, using counsel
selected by the Indemnifying Party and reasonably acceptable to the Indemnified
Party. Should the Indemnifying Party so elect to assume the defense of a Third
Party Claim, the Indemnifying Party will not be liable to the Indemnified Party
for legal expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof. Regardless of whether the Indemnifying Party elects
to assume the defense of any such Third Party Claim, the Indemnified Party
shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Indemnifying Partys prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned and the Indemnifying Party will not admit any liability, consent to
the entry of any judgment or enter into any settlement or compromise with
respect to such Third Party Claim, without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld, delayed or
conditioned unless such settlement or judgment involved only the payment of
money damages by the Indemnifying Party and does not involve an injunction or
other equitable relief that may affect an Indemnified Party and includes an
unconditional release of the Indemnified Party. The Indemnifying Party or the
Indemnified Party, as the case maybe, shall in any event have the right to
participate, at its own expense, in the defense of any Third Party Claim which
the other is defending. Whether or not the Indemnifying Party chooses to
defend or prosecute any claim involving a third party, all the Parties hereto
shall cooperate in the defense or prosecution thereof and shall furnish such
records, information and testimony, and attend such conferences, discovery
proceedings,

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hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation shall include reasonable access during normal
business hours afforded to the Indemnifying Party to, and reasonable retention
by the Indemnified Party of, records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder, and the Indemnifying Party shall reimburse the
Indemnified Party for all its reasonable out-of-pocket expenses in connection
therewith.

(i) Exclusive Remedy.Each of the Parties hereto agrees that its sole and
exclusive remedy after the Closing with respect to any and all claims relating
to this Agreement, the Company, the events giving rise to this Agreement and
the transactions provided for herein or contemplated hereby, other than for
fraud or intentional misconduct shall be pursuant to the indemnification
provisions contained in this Section 8. Without limiting the generality or
effect of the foregoing, as a material inducement to the other Parties hereto
entering into this Agreement, each of the Buyer and the Seller hereby waive,
from and after the Closing, any claim or cause of action, known and unknown,
foreseen and unforeseen, which it or any of its Affiliates (including after the
Closing, the Company) may have against the other Parties hereto, including
without limitation under the common law or federal or state securities laws,
trade regulation laws or other laws (including CERCLA and any other
Environmental Laws), by reason of this Agreement, the events giving rise to
this Agreement and the transactions provided for herein or contemplated hereby
or thereby, except for claims or causes of action brought under and subject to
the terms and conditions of the indemnification provisions contained in this
Section 8.

(j) Mitigation.Notwithstanding any other provision of this Agreement to
the contrary, any Indemnified Party shall use commercially reasonable efforts
to mitigate all Losses, relating to a claim under these indemnification
provisions, including availing itself of any defenses, limitations, rights of
contribution, and other rights at law or equity. The Indemnified Partys
commercially reasonable efforts shall include the reasonable expenditure of
money to mitigate or otherwise reduce or eliminate any Loss for which
indemnification would otherwise be due, and the Indemnifying Party shall, to
the extent that an Indemnified Partys Loss exceeds the Basket Amount,
reimburse the Indemnified Party for its reasonable expenditures (except for any
portion of the wages, salary, benefits, overhead or other costs attributable to
the Indemnified Party and its officers, directors, employees, agents) in
undertaking the mitigation and shall, to such extent, take such expenses into
account in calculating the aggregate amount of the Sellers liability for the
Buyers indemnifiable Losses or the Buyers liability for the Sellers
indemnifiable Losses, as the case may be.

9.     TAX MATTERS.The following provisions shall govern the allocation of
responsibility as between the Buyer and the Seller Entities for certain tax
matters following the Closing Date:

(a) Consolidated Return.The Seller Entities shall cause the Company to
be included in the consolidated Income Tax Returns of the Parent Consolidated
Group for all periods ending on or prior to the Closing Date for which the
Company is required or permitted to be so included and shall pay the Taxes
attributable to such Tax Returns. The Seller Entities shall

44



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cause to be prepared and timely filed any other federal, state, foreign or
local Income Tax Return required or permitted to be filed by the Company for
all periods ending on or prior to the Closing Date and pay the Taxes
attributable to such Tax Returns. Any such Income Tax Returns that include
periods ending on or before the Closing Date shall, insofar as they relate to
the Company, be on a basis consistent with the last previous such Tax Returns
filed with respect to the Company (based on a closing of the Company books),
unless the Buyer or the Seller Entities conclude that there is no reasonable
basis for such position under applicable law. Neither the Seller Entities nor
the Company (prior to the Closing Date) shall file or cause to be filed any
amended Tax Return or claims for refund or settle any audit with respect to the
Company without the prior written consent of the Buyer, which consent shall not
be unreasonably withheld or delayed. Neither the Buyer nor the Company (after
the Closing Date) shall file or cause to be filed any amended Tax Return or
claims for refund with respect to any period ending on or before the Closing
Date without the prior written consent of the Seller Entities, which consent
shall not be unreasonably withheld or delayed.

(b) Tax Periods Ending on or Before the Closing Date.The Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company for all periods ending on or prior to the Closing Date which
are required to be filed after the Closing Date other than Income Tax Returns.
The Buyer shall provide the Seller Entities with a draft of each such Tax
Return described in the preceding sentence at least thirty (30) days prior to
the due date for filing such Tax Returns. At least fifteen (15) days prior to
the due date for the filing of such Tax Returns, the Seller Entities shall
notify the Buyer of the existence of any reasonable objection the Seller
Entities may have to any items set forth on such draft Tax Returns. If after
consulting in good faith the Seller Entities and the Buyer are unable to
resolve such objections, such objections shall be resolved by treating items on
such returns in a manner consistent with the past practices of the Company with
respect to such items unless otherwise required by law. Notwithstanding any
other provision in this Agreement to the contrary, the Seller Entities shall
reimburse the Buyer for Taxes of the Company with respect to such periods
within fifteen (15) days after payment by the Buyer or the Company of such
Taxes to the extent such Taxes are not reserved on the Closing Date Balance
Sheet.

(c) Tax Periods Beginning Before and Ending After the Closing Date.The
Buyer shall prepare or cause to be prepared and filed or cause to be filed any
Tax Returns of the Company for Tax periods which begin before the Closing Date
and end after the Closing Date (the Overlap Period), and the Buyer shall pay,
or cause to be paid, all Taxes shown as due on any such Tax Returns. The Buyer
shall provide the Seller Entities with a draft of such Overlap Period Tax
Returns at least thirty (30) days prior to the due date for filing such Tax
Returns. At least fifteen (15) days prior to the due date for the filing of
such Tax Returns, the Seller Entities shall notify the Buyer of the existence
of any reasonable objection the Seller Entities may have to any items set forth
on such draft Tax Returns. If after consulting in good faith the Seller
Entities and the Buyer are unable to resolve such objections, such objections
shall be resolved by treating items on such returns in a manner consistent with
the past practices of the Company with respect to such items unless otherwise
required by law. The Seller Entities shall pay to the Buyer within thirty (30)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
taxable period ending on the Closing Date to the extent such Taxes are not
reserved on the Closing Date Balance Sheet.

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For purposes of this Section 9, in the case of any Taxes that are imposed on a
periodic basis and are payable for an Overlap Period, the portion of such Tax
which relates to the portion of such taxable period ending on the Closing Date
shall in the case of any Taxes other than Income Taxes or sales and use Taxes,
be deemed to be the amount of such Tax for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the taxable
period ending on the Closing Date and the denominator of which is the number of
days in the entire taxable period, and in the case of any Tax based upon or
related to Income Tax or sales and use Tax be deemed equal to the amount which
would be payable if the relevant taxable period ended on the Closing Date. Any
credits relating to a taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Company.

(d) Refunds and Tax Benefits.Any Tax refunds that are received by the
Buyer or the Company, and any amounts credited against Tax to which the Buyer
or the Company become entitled, that relate to Tax periods or portions thereof
ending on or before the Closing Date shall be for the account of the Seller,
and the Buyer shall pay over to the Seller any such refund or the amount of any
such credit within thirty (30) days after receipt or entitlement thereto. In
addition, to the extent that a claim for refund or a proceeding results in a
payment or credit against Tax by a Taxing Authority to the Buyer or the Company
of any amount accrued on the Closing Balance Sheet, the Buyer shall pay such
amount to the Seller within thirty (30) days after receipt or entitlement
thereto.

(e) Cooperation on Tax Matters.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Buyer, the Company and the Seller Entities shall cooperate
fully, as and to the extent reasonably requested by the other Parties, in
connection with the filing of Tax Returns pursuant to this Section 9 and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon another Partys
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The
Company and the Seller Entities agree (A) to retain all books and records
with respect to Tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by the Buyer or
the Seller Entities, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into
with any Taxing Authority, and (B) to give the other Parties reasonable
written notice prior to transferring, destroying or discarding any such
books and records and, if another Party so requests, the Company or the
Seller Entities, as the case may be, shall allow the such Party to take
possession of such books and records.
|
| | (ii) The Buyer and the Seller Entities further agree, upon request,
to use their commercially reasonable best efforts to obtain any
certificate or other document from any Taxing Authority or any other
Person as may be necessary to mitigate, reduce                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).                                                                                                                                      
| |                                                                                                                                                                                                                                                                        
| | (iii) The Buyer and the Seller Entities further agree, upon request,
to provide the other Parties with all information that such Parties may
be required to report pursuant to Section 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.

(f) Tax Sharing Agreements.All tax sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.

(g) Certain Taxes.All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any state gains
tax, transfer tax and any similar tax imposed in any state or subdivision),
shall be paid by the Buyer when due, and the Buyer will, at its own expense,
file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable law, the Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation.

(h) Representation.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Seller Entities shall have the right to represent the
interests of the Company in any Tax audit or administrative or court
proceeding relating to Tax Returns for any periods or portions thereof
ending on or prior to the Closing Date. Following the Closing, in the
event of an audit of any Tax Return of the Seller Entities or with
respect to which either of the Seller Entities has any liability, the
Buyer shall promptly notify the Seller Entities of such audit and the
Buyer shall execute, or cause the Company to execute, powers of attorney
under applicable laws authorizing the designated representative of the
Seller Entities to represent the Company with respect thereto. The Buyer
shall make available or shall cause the Company to make available to the
Seller Entities, at the expense of the Seller Entities, any and all books
and records of the Company and other documents requested by the Seller
Entities and shall make available employees of the Company reasonably
necessary to enable the Seller Entities to defend any audit or other
preceding with respect to any such Tax Returns.
|
| | (ii) The Seller Entities shall not enter into any settlement of or
otherwise compromise any Tax matter that materially affects or may
materially affect the Tax liability of the Buyer or the Company for any
period ending after the Closing Date, including the portion of the
Overlap Period that is after the Closing Date, without the prior written
consent of the Buyer, which consent shall not be unreasonably withheld or
delayed. The Seller Entities shall keep the Buyer fully and timely
informed with respect to the commencement, status and nature of any Tax
matter. The Seller Entities shall, in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | good faith, allow the Buyer, at its sole expense, to make comments
to the representative of the Seller Entities, regarding the conduct of or
positions taken in any such proceeding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) Except as otherwise provided above, the Buyer shall have the
sole right to control any audit or examination by any Taxing Authority,
initiate any claim for refund or amend any Tax Return, and contest,
resolve and defend against any assessment for additional Taxes, notice of
Tax deficiency or other adjustment of Taxes of, or relating to, the
income, assets or operations of the Company for all taxable periods
ending after the Closing Date; provided, however, that the Buyer shall
not, and shall cause its Affiliates (including the Company) not to, enter
into any settlement of any contest or otherwise compromise any issue with
respect to the portion of the Overlap Period ending on or prior to the
Closing Date and shall not amend any Tax Return with respect to any
period ending on or prior to the Closing Date without the prior written
consent of one of the Seller Entities, which consent shall not be
unreasonably withheld or delayed.

(i) Confidentiality.Any information obtained under this Section 9 shall
be kept confidential, except as may be otherwise necessary in connection with
filing any Tax Return (or amended Tax Return) or refund claim, determining any
Tax liability or right to a refund, conducting or defending any audit or other
proceeding with respect to Taxes or otherwise effectuating the terms of this
Agreement. Notwithstanding anything herein to the contrary, any Party hereto
(and any employee, representative or other agent of the Party) may disclose to
any and all persons, without limitation of any kind, the U.S. federal income
tax treatment and U.S. federal income tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure; provided, however,that such information relating
to the tax treatment or tax structure is required to be kept confidential to
the extent necessary to comply with any applicable federal or state securities
laws.

(j) Section 1445.The Seller shall furnish to the Buyer on or before the
Closing Date a non-foreign person affidavit as required by Section 1445 of the
Code.

(k) Section 338 Election.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) At the sole election of the Buyer, to be exercised within ninety
(90) days after the Closing Date (or such other time specified by the
Buyer, but subject to the time limitations set forth below), the Seller
and/or the Parent, as appropriate, and the Buyer will jointly complete
and make an election under Section 338(h)(10) (with respect to the
Company and/or its Subsidiaries) of the Code (the 338(h)(10) Election)
on Form 8023 or in such other manner as may be required by rule or
regulation of the Internal Revenue Service, and at the sole election of
the Buyer, the Seller and/or the Parent, as appropriate, will jointly
make an election in the manner required under any analogous provisions of
state or local law as the Buyer will designate or as will be required,
concerning the transactions contemplated by this Agreement. The Buyer
will, with the assistance and cooperation of the Seller, prepare all such
Section 338(h) (10) forms required as attachments to Form 8023 (and all
forms under analogous provisions of state or local law) in accordance
with applicable Tax laws, and Buyer will deliver such forms

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and related documents to the Seller at least forty-five (45) days
prior to the due date of filing. The Seller will deliver to the Buyer at
least fifteen (15) days prior to the due date of filing copies of such
completed and fully executed forms as are required to be filed under
Section 338(h)(10) of the Code (and analogous provisions of state and
local law). The Buyer will timely file such forms with the appropriate
Tax authorities. The Buyer and the Seller will use their best efforts to
agree, as soon as practicable after Closing but in no event later than
one hundred twenty (120) days following the Closing Date, on the
computation of the modified aggregate deemed sale price (MADSP) (as
defined under U.S. Department of Treasury Regulations). The Buyer and
the Seller shall each file a consistent Form 8883 within the time period
required pursuant to the Code and regulations thereunder. The Seller
agrees to cooperate with the Buyer in making the required elections and
filing the applicable forms with respect to the Section 338(h)(10)
Election and required state and local filings.                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ii) The Seller and Buyer agree that Buyer will perform or cause to
be performed an initial valuation of assets and allocation of the
Purchase Price for purposes of Section 338 of the Code at the sole cost
and expense of the Buyer. The Buyer will provide the Seller with drafts
of such valuation of assets and allocation of MADSP (which will be
prepared on a basis consistent with this Section 9(k) hereto) and the
proposed Form 8883 within one hundred twenty (120) days after the Closing
Date. Seller will have forty-five (45) days to provide the Buyer with
any objections to such drafts. If the Seller objects to the computation
or allocation by the Buyer of such amounts, and the Buyer and Seller are
unable to reach agreement on the computation or allocation within thirty
(30) business days after notification by the Seller of its objection, the
Buyer and the Seller will jointly engage an independent national
accounting firm to resolve the disagreement (such resolution to be final
and binding upon the Parties) within ten (10) days thereafter. Any fee
payable to the independent accounting firm engaged by the Buyer and the
Seller as provided above will be shared equally by the Seller and the
Buyer. The valuation and allocations determined pursuant to this Section
9(k) will be used for purposes of all relevant Tax Returns, reports and
filings. In the event of a 338(h)(10) Election, the gain or loss from
the deemed asset sale will be included in the Parent Consolidated Groups
Income Tax Return.
|
| | (iii) In the event the Buyer decides to make an election pursuant
to Section 338 of the Code (or any subdivision thereof) or any election
pursuant to comparable state statutes with respect to the purchase of the
Stock, then the Buyer hereby agrees, notwithstanding any representation,
warranty or other provision in this Agreement to the contrary to
indemnify and hold the Seller harmless from any incremental tax liability
imposed upon the Seller as a result of such election. The amount of the
indemnity (the 338 Indemnity Amount) shall be equal to the amount that
the Purchase Price must be increased to result in the Seller receiving
the same after-Tax cash benefit (prior to any reduction for a
consolidated return net operating loss) as would result if the Section
338 election was not made, taking into account the consequences of such
election with respect to both federal and state Taxes. Buyer shall pay
the 338 Indemnity Amount within thirty (30) days of receipt of notice by
Seller of the calculation of the 338                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Indemnity Amount. Notwithstanding any provision in this Agreement
to the contrary, the 338 Indemnity Amount shall not exceed $500,000.00.

(l) Phantom Stock Option Plan.Pursuant to the Companys 2001 Phantom
Stock Option Plan, the vesting of all outstanding phantom stock options will
accelerate as a result of the transactions contemplated by this Agreement, and
the award payments to the holders of phantom stock options will be paid out
pursuant to Section 6(e)(vii). Any deduction attributable to the payment of
such awards pursuant to Section 6(e)(vii) shall be treated as pre-Closing Tax
items and shall be included in the Tax Return of the Parent Consolidated Group
for the period ending on, or including, the Closing Date.

(m) Purchase Price Adjustment. Unless otherwise specifically provided for
in this Agreement, any (i) indemnity payments, pursuant to Section 8 or
otherwise, and (ii) any adjustments to the Purchase Price, pursuant to Section
2(b), Section 5(i) or otherwise, shall be treated for all Tax purposes as
adjustments to the Purchase Price to the maximum extent permitted under the
Code (or other applicable Tax law).

10.     TERMINATION.

(a) Termination of Agreement.Certain of the Parties may terminate this
Agreement as provided below:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the Buyer on the one hand and the Seller Entities on the other
may terminate this Agreement by mutual written consent at any time prior
to the Closing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (ii) the Buyer may terminate this Agreement by giving written notice
to the Seller Entities at any time prior to the Closing (A) in the event
a Seller Entity has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, the Buyer
has notified the Seller Entities of the breach, and the breach has
continued without cure for a period of ten (10) days after the notice of
breach; (B) if the Closing shall not have occurred on or before June 30,
2004 (unless the condition precedent to Closing set forth in Section
7(a)(v) is the only condition precedent of the Buyer that remains
unsatisfied on such date, in which case the Buyer may not terminate this
Agreement until July 31, 2004); or (C) by reason of the failure of any
condition precedent under Section 7(a) hereof (unless the failure results
from the Buyer itself breaching any material representation, warranty or
covenant contained in this Agreement); provided, however,that
notwithstanding any language to the contrary contained in this Agreement,
if any breach by a Seller Entity of any material representation, warranty
or covenant can be cured by the payment of money (including any breach
that constitutes or would constitute a Material Adverse Effect), any
Seller Entity shall have the option, but not the obligation, to cure such
breach by either, at the option of the Seller Entity, (i) making payment
to the Person entitled to payment (e.g., a governmental authority) and/or
(ii) agreeing to a reduction of the Purchase Price in an amount equal to
the amount to be paid to such Person. Upon any election by a Seller
Entity in accordance with the foregoing sentence, the Buyer shall not be
entitled to terminate this Agreement on account of the applicable breach
and further, in the case of

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | an election pursuant to clause (ii) of the foregoing sentence, promptly
after the Closing, the Buyer shall pay or cause the Company to pay the
Person entitled to such payment; provided further, that in no event shall
any of the Seller Entities be required to expend any monies in connection
with the Buyers breach of any material representation, warranty or
covenant under this Agreement or with respect to the Buyers compliance
or noncompliance with any applicable law (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state and local governments (and all
agencies thereof) whether arising before or after the Closing; and                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iii) the Seller Entities may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, a Seller
Entity has notified the Buyer of the breach, and the breach has continued
without cure for a period of ten (10) days after the notice of breach;
(B) if the Closing shall not have occurred on or before June 30, 2004
(unless the condition precedent to Closing set forth in Section 7(b)(v)
is the only condition precedent of the Seller Entities that remains
unsatisfied on such date, in which case the Seller Entities may not
terminate this Agreement until July 31, 2004); or (C) by reason of the
failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from a Seller Entity itself breaching any
material representation, warranty, or covenant contained in this
Agreement).

(b) Effect of Termination.If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Sections 6(f) and Section 9(i)
above shall survive termination indefinitely.

11.     MISCELLANEOUS.

(a) Press Releases and Public Announcements.No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement, prior to the Closing, without the prior written approval of the
Buyer and the Seller Entities; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities (in
which case the disclosing Party will use its reasonable best efforts to advise
the other Parties prior to making the disclosure).

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

(c) Entire Agreement.This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior

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understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.

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

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

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

(g) Notices.All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:

|                                |  |                            
|------------------------------- |  | ---------------------------
|If to the Parent or the Seller: |  | Copy to:                   
|                                |  |                            
|Louis Paglia                    |  | William A. Perrone         
|Chief Financial Officer         |  | Wiggin & Dana LLP          
|UIL Holdings Corporation        |  | 400 Atlantic Street        
|157 Church Street               |  | Stamford, CT 06901         
|New Haven, CT 06510             |  |                            
|                                |  |                            
|If to the Buyer:                |  | Copy to:                   
|                                |  |                            
|Mark A. Johnson                 |  | Laura E. Binion            
|Vice Chairman                   |  | General Counsel            
|CheckFree Corporation           |  | CheckFree Corporation      
|4411 East Jones Bridge Road     |  | 4411 East Jones Bridge Road
|Norcross, GA 30092              |  | Norcross, GA 30092         

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may

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change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.

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

(i) Venue.EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO
THE EXCLUSIVE PERSONAL JURISDICTION OF ANY FEDERAL OR STATE COURT LOCATED IN
AND FOR NEW YORK, NEW YORK IN THE EVENT ANY DISPUTE ARISES OUT OF THIS
AGREEMENT, (B) AGREES THAT IT SHALL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C)
AGREES THAT IT SHALL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT IN ANY
COURT OTHER THAN A FEDERAL OR STATE COURT SITTING IN AND FOR NEW YORK, NEW
YORK.

(j) Waiver of Jury Trial.EACH PARTY TO THIS AGREEMENT WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

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

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

(m) Expenses.Each of the Parties and the Company will bear his or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby, except
that the Seller Entities and the Buyer shall each pay one-half of all filing
fees incurred under the HSR Act.

(n) Construction.The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute

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or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word including shall
mean including without limitation.

(o) Incorporation of Exhibits and Schedules.The Exhibits and Disclosure
Schedules identified in this Agreement and any certificates delivered at
Closing pursuant to Section 7 hereof are incorporated herein by reference and
made a part hereof.

[Signature page follows]

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

| |  |                          |  |                          
| |  | ------------------------ |  | -------------------------
| |  | CHECKFREE CORPORATION   
| |  |                          |  |                          
| |  | By:                      |  | /s/ Mark A. Johnson      
| |  |                          |  |                          
| |  | Name:                    |  | Mark A. Johnson          
| |  | Title:                   |  | Vice Chairman            
| |  |                          |  |                          
| |  | UIL HOLDINGS CORPORATION
| |  |                          |  |                          
| |  | By:                      |  | /s/ Nathaniel D. Woodson 
| |  |                          |  |                          
| |  | Name:                    |  | Nathaniel D. Woodson     
| |  | Title:                   |  | Chairman, President & CEO
| |  |                          |  |                          
| |  | UNITED RESOURCES, INC.  
| |  |                          |  |                          
| |  | By:                      |  | /s/ Nathaniel D. Woodson 
| |  |                          |  |                          
| |  | Name:                    |  | Nathaniel D. Woodson     
| |  | Title:                   |  | Chairman & President     

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