**Exhibit10.30**

 

**AGREEMENT FOR THE SALEAND PURCHASE OF THEGAITHERSBURG BUSINESS**

 

This Agreement for the Sale andPurchase of the Gaithersburg Business (this “Agreement”) is made and enteredinto this 8th day of October, 2003, effective as of the Effective Time by andbetween On-Site Sourcing, Inc., a Delaware corporation (“Seller”), and ColornetPrinting and Graphics, Inc., a Maryland close corporation (“Buyer”).

 

**RECITALS**

 

A.            Seller,which has facilities located in seven states, provides digital imaging, reprographicand digital printing services throughout the United States of America (the“Overall Business”).

 

B.            Seller’sdigital printing and off-set printing business operated located at 18630Woodfield Road, Gaithersburg, Maryland 20879-4711 (the “GaithersburgBusiness”), has been operated by Seller as a separate business segment from theOverall Business.

 

C.            Sellerdesires to sell, and Buyer desires to purchase, the Gaithersburg Business as agoing concern effective as of the Effective Time for the consideration, on theterms, and subject to the conditions set forth in this Agreement.

 

The parties, intending to be legallybound, hereby agree as follows:

 

**ARTICLE 1.  DEFINITIONS AND USAGE**

 

**1.1****         ****DEFINITIONS.**

 

The definitions of certain capitalizedterms and variations thereof used in this Agreement are as set forth on Schedule 1.1.

 

**1.2****         ****USAGE.**

 

(a)           In this Agreement, unless aclear contrary intention appears:

 

(i)            thesingular number includes the plural number and vice versa;

(ii)           reference to any Person includessuch Person’s successors and assigns but, if applicable, only if suchsuccessors and assigns are not prohibited by this Agreement, and reference to aPerson in a particular capacity excludes such Person in any other capacity orindividually;

(iii)          reference to any gender includeseach other gender;

(iv)          reference to any agreement,document or instrument means such agreement, document or instrument as amended,modified or supplemented and in effect from time to time in accordance with theterms thereof;

 

----

 

(v)           reference to any LegalRequirement means such Legal Requirement as amended, modified, codified,replaced or reenacted, in whole or in part, and in effect from time to time,including rules and regulations promulgated thereunder, and reference to anysection or other provision of any Legal Requirement means that provisionof such Legal Requirement from time to time in effect and constituting thesubstantive amendment, modification, codification, replacement or reenactmentof such section or other provision;

(vi)          “hereunder,” “hereof,” “hereto,”and words of similar import shall be deemed references to this Agreement as awhole and not to any particular Article, Section or other provisionhereof;

(vii)         “including” (and withcorrelative meaning “include”) means including without limiting the generalityof any description preceding such term;

(viii)        “or”is used in the inclusive sense of “and/or”;

(ix)           with respect to thedetermination of any period of time, “from” means “from and including” and “to”means “to but excluding”; and

(x)            referencesto documents, instruments or agreements shall be deemed to refer as well to alladdenda, exhibits, or schedules thereto.

 

(b)           Unless otherwise specifiedherein, all accounting terms used herein shall be interpreted, and allaccounting determinations hereunder shall be made, in accordance with GAAP.

 

(c)           This Agreement was negotiated bythe parties with the benefit of legal representation, and any rule ofconstruction or interpretation otherwise requiring this Agreement to beconstrued or interpreted against any party shall not apply to any constructionor interpretation hereof.

 

**ARTICLE 2.  SALE AND TRANSFER OF ASSETS**

 

**2.1****         ****ASSETS TO BESOLD. **Uponthe terms and subject to the conditions set forth in this Agreement, at theClosing but effective as of the Effective Time, Seller shall sell, convey,assign, transfer and deliver to Buyer, and Buyer shall purchase and acquirefrom Seller, free and clear of any Encumbrances other than PermittedEncumbrances, the Gaithersburg Business as a going concern, including all ofSeller’s right, title and interest in and to all of Seller’s property andassets, real, personal or mixed, tangible and intangible, of every kind anddescription, which were at the Effective Time (or which at any time during theperiod from September 24, 2003, to the Effective Time were) located at theGaithersburg Facility or used in the Gaithersburg Business, including thoseassets used in the preparation, copying, printing, binding, drilling, labeling,collating, assembling and sale of its digital printing and off-set printingproducts and the furnishing of related services to customers (including graphicdesign, mailing, special finishing, storage, fulfillment and delivery) as wellas any goodwill associated therewith, including the following (but excludingthe Excluded Assets):

 

(a)           the Gaithersburg Lease,including those items listed on Schedule 2.1(a);

(b)           all Gaithersburg TangiblePersonal Property, including those items listed on Schedule 2.1(b);

(c)           all Gaithersburg Software whichwas located at the Gaithersburg Facility on or after September 24, 2003,including those listed on Schedule 2.1(c);

 

2

----

 

(d)           all Gaithersburg Inventories;

(e)           all Gaithersburg Contracts,including those Contracts with customers of the Gaithersburg Business listed onSchedule 2.1(e)(i) and those Contracts with vendors or suppliers ofthe Gaithersburg Business listed on Schedule 2.1(e)(ii), and alloutstanding offers or solicitations made by or to Seller to enter into anyContract related to the Gaithersburg Business;

(f)            allGaithersburg Government Authorizations, in each case if and to the extenttransferable to Buyer;

(g)           all Gaithersburg Records*;*

(h)           all Gaithersburg IntangibleRights and Property;

(i)            allGaithersburg Claims;

(j)            theright to prepaid expense with respect to Heidelberg Service Contract 700006240for Heidelberg QuickMaster DI 46-4 (PLUS VERSION) 991225, Serial No. 991225;and

(k)           all other properties and assetsof every kind, character and description, tangible or intangible, owned bySeller and used or held for use in connection with the Gaithersburg Business,whether or not similar to the items specifically set forth above.

 

All of the property and assets to betransferred to Buyer hereunder are herein referred to collectively as the“Assets.”

 

Notwithstanding the foregoing, thetransfer of the Assets pursuant to this Agreement shall not include theassumption of any Liability arising out of or related to the Assets unlessBuyer expressly assumes that Liability pursuant to Section 2.4(a).

 

**2.2****         ****EXCLUDED ASSETS. **Notwithstanding anything to thecontrary contained in Section 2.1 or elsewhere in this Agreement, allassets of the Seller not specifically identified in Section 2.1(collectively, the “Excluded Assets”) are not part of the sale and purchasecontemplated hereunder, are excluded from the Assets, and shall remain theproperty of Seller after the Effective Time. Notwithstanding anything to thecontrary contained in Section 2.1 or elsewhere in this Agreement, theExcluded Assets shall also include, without limitation, the following:

 

(a)           all cash, short-term investmentsand other cash equivalents as of the Effective Time;

(b)           all Accounts Receivable whicharose before the Effective Time;

(c)           all rights to payment fromcustomers of Seller arising out of the Gaithersburg Business which (i) do notconstitute Accounts Receivable which arose before the Effective Time, (ii)relate to products which were substantially completed but which were not beenshipped to or received by the customer at the Effective Time, and (iii) areidentified on Schedule 2.2(c), including any claim, remedy or otherright related thereto;

(d)           all Gaithersburg TangiblePersonal Property which was consumed, expended or sold by Seller in theOrdinary Course of Business from September 24, 2003 to the Effective Time;

(e)           all Gaithersburg Inventoriesconsumed, expended or sold by Seller from September 24, 2003, to theEffective Time and any products described in Section 2.2(c)(ii);

(f)            allContracts with customers as to which Seller fully performs its obligationsprior to the Effective Time, all Contracts with customers as to which Sellerhas been paid in whole or in part, or has accrued an Account Receivable, priorto or at the Effective Time, and all Contracts with

 

3

----

 

customers as to which Seller isentitled to any payment under Section 2.2(c) after the Effective Time;

(g)           all Gaithersburg Intangible Rightsand Property sold by Seller in the Ordinary Course of Business fromSeptember 24, 2003, to the Effective Time, and all Gaithersburg IntangibleProperty Rights and Property the Seller’s Contract for which expired orterminated in the Ordinary Course of Business prior to the Effective Time;

(h)           all Gaithersburg Claims (i) forrefund of Taxes and other governmental charges of whatever nature, and (ii)that are collected by, satisfied or paid to the Seller prior to the EffectiveTime;

(i)            allrights of Seller under this Agreement, the Bill of Sale, the SecurityAgreement, the Lender Subordination Agreement, the Gaithersburg LeaseAssignment, the Assignment and Assumption Agreement, and the Promissory Note;

(j)            allrights to the name On-Site Sourcing and any variations thereof and anytrademarks or trade names related thereto;

(k)           any asset or right relating tothe any of the Retained Liabilities; and

(l)            theassets listed on Schedule 2.2(l).

 

**2.3****         ****CONSIDERATION. **The consideration for the Assets(the “Purchase Price”) will be (a) One Million Four Hundred Twenty-fiveThousand Dollars ($1,425,000.00) and (b) the assumption of the AssumedLiabilities.  In accordance withSection 2.7(b), at the Closing, the Purchase Price shall be delivered byBuyer to Seller as follows: (a) Nine Hundred Twenty-five Thousand Dollars($925,000) by wire transfer, cashier’s check or certified check, as set forthin Section 2.7(b)(i); (b) Five Hundred Thousand Dollars ($500,000.00)payable in the form of the Promissory Note (and the corresponding grant of asecurity interest); and (c) the balance of the Purchase Price by the executionand delivery of the Assignment and Assumption Agreement.

 

**2.4****         ****LIABILITIES.**

 

(a)           On the Closing Date, buteffective as of the Effective Time, Buyer shall assume sole responsibility forand agree to retain, pay, perform or discharge only the following Liabilitiesof Seller (the “Assumed Liabilities”):

 

(i)            anyLiability arising after the Effective Time under any of the Assets;

(ii)           any Liability of Buyer arisingout of or relating to Buyer’s Breach of this Agreement, the Bill of Sale, theSecurity Agreement, the Lender Subordination Agreement, the Gaithersburg LeaseAssignment, the Assignment and Assumption Agreement, or the Promissory Note;and

(iii)          fifty percent (50%) of theMaryland sales and use tax due and payable with respect to the ContemplatedTransactions.

 

(b)           The Retained Liabilities shallremain the sole responsibility of and shall be retained, paid, performed anddischarged solely by Seller. “Retained Liabilities” shall mean every Liabilityof Seller other than the Assumed Liabilities, including:

 

(i)            alltrade accounts payable, including all trade accounts payable arising out of theGaithersburg Business, prior to the Effective Time;

 

4

----

 

(ii)           all Liability under theGaithersburg Lease arising prior to the Effective Time, including any Liabilityarising out of or relating to a Breach that occurred prior to the EffectiveTime (subject to the Gaithersburg Lease Assignment);

(iii)          all Liability arising out of orrelated to any Breach that occurred prior to the Effective Time under, arisingout of or related to any Asset;

(iv)          all Liability under, arising outof or related to any Excluded Asset, including any Liability arising out of orrelating to Seller’s loan agreements, credit facilities or any securityinterest related thereto;

(v)           all Liability arising out of orrelating to products or services of Seller to the extent prepared, provided orsold prior to the Effective Time, including under any warranty given by Sellerwith respect to such products or services, other than to the extent assumedunder Section 2.4(a);

(vi)          all Liability for Taxes,including (A) any Taxes arising as a result of Seller’s operation of itsbusiness or ownership of the Assets prior to the Effective Time, (B) any Taxesthat will arise as a result of the sale of the Assets pursuant to thisAgreement, other than to the extent assumed under Section 2.4(a)(iii), and(C) any deferred Taxes of any nature;

(vii)         any Liability under any Contractnot assumed by Buyer under Section 2.4(a), including any Liability arisingout of or relating to Seller’s loan agreements, credit facilities or anysecurity interest related thereto;

(viii)        any Environmental,Health and Safety Liabilities arising out of or relating to the operation ofSeller’s business (including the Gaithersburg Business prior to the EffectiveTime only) or Seller’s leasing, ownership or operation of real property(including the Gaithersburg Lease prior to the Effective Time only), subject tothe Gaithersburg Lease Assignment;

(ix)           any Liability under the Seller’sEmployee Plans, whether or not affected employees are hired by Buyer;

(x)            anyLiability arising prior to or at the Effective Time, or arising out of orrelated to the Contemplated Transactions (excluding Buyer’s employment of oroffer to employ any Seller employee after the Effective Time), under orrelating to payroll, vacation, sick leave, workers’ compensation, unemploymentbenefits, pension benefits, employee stock option or profit-sharing plans,health care plans or benefits or any other employee plans or benefits of anykind for Seller’s employees or former employees or both maintained by Seller,  including any Liability under COBRA, whetheror not affected employees are hired by Buyer;

(xi)           any Liability arising prior toor at the Effective Time, or arising out of or related to the ContemplatedTransactions (excluding Buyer’s employment of any Seller employee after theEffective Time), under any employment, severance, retention or terminationagreement with any employee of Seller or any of its Related Persons, whether ornot affected employees are hired by Buyer;

(xii)          any Liability arising prior toor at the Effective Time, or arising out of or related to the ContemplatedTransactions, arising out of or relating to any employee grievance, whether ornot the affected employees are hired by Buyer, so long as the foregoing are notaffected by actions taken by Buyer which are not contemplated by thisAgreement;

 

5

----

 

(xiii)         anyLiability to indemnify, reimburse or advance amounts to any officer, director,employee or agent of Seller;

(xiv)        any Liability to distribute toany of Seller’s shareholders or otherwise apply all or any part of theconsideration received hereunder;

(xv)         anyLiability arising out of any Proceeding pending as of the Effective Time;

(xvi)        any Liability arising out of anyProceeding commenced after the Effective Time and arising out of or relating to any occurrence or event happeningprior to the Effective Time;

(xvii)       anyLiability arising out of or resulting from Seller’s compliance or noncompliancewith any Legal Requirement or Order of any Governmental Body;

(xviii)      anyLiability of Seller under this Agreement or any other document executed inconnection with the Contemplated Transactions;

(xix)         any Liability of Seller basedupon Seller’s acts or omissions occurring after the Effective Time; and

(xx)          any Liability of Seller forbrokerage or finders’ fees or other similar payments in connection with thesale of the Gaithersburg Business or the Assets or the ContemplatedTransactions, including to any Person identified on Schedule 3.19.

 

**2.5****         ****ALLOCATION. **The Purchase Price shall beallocated in accordance with Exhibit 2.5. After the Closing, the partiesshall make consistent use of the allocation, fair market value and useful livesspecified in Exhibit 2.5 for all Tax purposes and in all filings,declarations and reports with the IRS in respect thereof, including the reportsrequired to be filed under Section 1060 of the Code. Buyer shall prepareand deliver IRS Form 8594 to Seller within ninety (90) days after the ClosingDate to be filed with the IRS. In any Proceeding related to the determinationof any Tax, neither Buyer nor Seller shall contend or represent that suchallocation is not a correct allocation.

 

**2.6****         ****CLOSING. **The purchase and sale providedfor in this Agreement (the “Closing”) will take place at the offices of Buyer’scounsel Shulman, Rogers, Gandal, Pordy & Ecker, P.A., 11921 Rockville Pike,Third Floor, Rockville, Maryland 20852, commencing at 3:00 p.m. (local time)on  October 8, 2003, unless Buyerand Seller otherwise agree.

 

**2.7****         ****CLOSING OBLIGATIONS. **In addition to any otherdocuments to be delivered under other provisions of this Agreement, at theClosing:

 

(a)           Seller shall deliver to Buyer,together with funds sufficient to pay all Taxes necessary for  the transfer, filing or recording thereof(excluding any Maryland sales and use tax, which is governed bySection 2.7(d) below):

 

(i)            anassignment and assumption agreement in the form of Exhibit 2.7(a)(i) totransfer the Gaithersburg Lease from Seller to Buyer with the consent of theLandlord (the “Gaithersburg Lease Assignment”), executed by Seller andLandlord;

(ii)           a bill of sale for all of theAssets other than the Gaithersburg Lease and the Gaithersburg IntellectualProperty Assets in the form of Exhibit 2.7(a)(ii) (the “Bill of Sale”),executed by Seller;

 

6

----

 

(iii)          an assignment of theGaithersburg Intellectual Property Assets in the form of Exhibit 2.7(a)(iii),which assignment shall also contain Buyer’s undertaking and assumption of theAssumed Liabilities (the “Assignment and Assumption Agreement”), executed bySeller;

(iv)          such other deeds, bills of sale,assignments, certificates of title, documents and other instruments of transfer and conveyance as may reasonably berequested by Buyer, each in form and substance satisfactory to Buyer and itslegal counsel and executed by Seller;

(v)           a security agreement betweenBuyer, as the debtor, and Seller, as the secured party, in the form of Exhibit2.7(a)(v) (the “Security Agreement”), executed by Seller;

(vi)          a “Subordination of DebtAgreement” between Seller, as the subordinating creditor, and People’s Capitaland Leasing Corp. (the “Lender”), as the senior creditor, with the assent ofBuyer, and a lien subordination letter from Seller to Lender, whereby, ingeneral and among other things, Seller agrees to the subordination of Seller’ssecurity interests to Lender’s security interests, in the forms attached as Exhibit2.7(a)(vi) (collectively, the “Lender Subordination Agreement”), both of whichexecuted by Seller;

(vii)         a certificate executed by Selleras to the accuracy of Seller’s representations and warranties as of theEffective Time (as though made at and as of the Effective Time) and as of dateof the Closing Date, and as to Seller’s compliance with and performance of itscovenants and obligations to be performed or complied with at or before theClosing; and

(viii)        acertificate of the Secretary or an Assistant Secretary of Seller certifying, ascomplete and accurate as of the Closing, attached copies of the certificate ofincorporation and bylaws of Seller, certifying and attaching all requisiteresolutions or actions of Seller’s board of directors and (if applicable)shareholders approving the execution and delivery of this Agreement and theconsummation of the Contemplated Transactions, and certifying to the incumbencyand signatures of the officers of Seller executing this Agreement and any otherdocument relating to the Contemplated Transactions.

 

(b)           Buyer shall deliver to Seller:

 

(i)            NineHundred Twenty-five Thousand Dollars ($925,000) by wire transfer of immediatelyavailable funds to an account specified by Seller in a writing delivered toBuyer prior to the Closing Date, or by cashier’s check or certified check;

(ii)           a non-negotiable securedpromissory note executed by Buyer and payable to Seller in the principal amountof Five Hundred Thousand Dollars ($500,000.00) in the form of Exhibit2.7(b)(ii) (the “Promissory Note”);

(iii)          theAssignment and Assumption Agreement, executed by Buyer;

(iv)          theGaithersburg Lease Assignment, executed by Buyer;

(v)           theSecurity Agreement, executed by Buyer;

(vi)          as to the Lender SubordinationAgreement, the “Subordination of Debt Agreement” executed by Buyer to assentthereto;

(vii)         a certificate executed by Buyeras to the accuracy of Buyer’s representations and warranties as of theEffective Time (as though made at and as of the Effective Time) and as of dateof the Closing Date, and as to Buyer’s compliance with and performance of itscovenants and obligations to be performed or complied with at or before theClosing; and

 

7

----

 

(viii)        acertificate of the Secretary or Assistant Secretary of Buyer certifying, ascomplete and accurate as of the Closing, attached copies of the articles ofincorporation and bylaws of Buyer and certifying and attaching all requisiteresolutions or actions of Buyer’s shareholders (Buyer being a closedcorporation without a board of directors) approving the execution and deliveryof this Agreement and the consummation of the Contemplated Transactions andcertifying to the incumbency and signatures of the officers of Buyer executingthis Agreement and any other document relating to the ContemplatedTransactions.

 

(c)           Exceptas otherwise provided on Schedule 2.7(c), Lender shall have or beentitled to a first priority security interest or other Encumbrance (“Lender’sEncumbrance”) in or on all Assets, and all other property and assets of Buyer,including the Buyer’s accounts receivable, fixed assets and other tangible andintangible property  (“Buyer’s OtherAssets”).  As is more fully set forth inthe Lender Subordination Agreement, the Promissory Note and the SecurityAgreement, Seller shall have or be entitled to a junior lien in the Assets andBuyer’s Other Assets; provided, however, that Seller shall not beentitled to any lien or other Encumbrance on those items listed in Schedule 2.7(c).  As is more fully set forth in the SecurityAgreement, under certain circumstances and subject to certain terms andconditions, Seller has agreed to subordinate its Encumbrances on Assets andBuyer’s Other Assets to those of certain Post-Closing Lenders (as defined inthe Promissory Note).

 

(d)           At Closing Seller shall pay andbe solely responsible for fifty percent (50%) of the Maryland sales and use taxdue or payable with respect to the Contemplated Transactions.  At Closing Buyer shall pay to Seller theother fifty percent (50%) of the Maryland sales and use tax due or payable withrespect to the Contemplated Transactions.

 

**2.8****         ****CONSENTS.**

 

(a)           As more fully set forth inSection 5.3(a), it shall be a condition to Buyer’s obligation toconsummate the Closing that the Landlord and Seller shall have Consented to thesale, assignment and transfer of the Gaithersburg Lease from Seller to Buyer byexecuting and delivering the Gaithersburg Lease Assignment at or prior toClosing, which Gaithersburg Lease Assignment shall be in full force and effectat Closing.

 

(b)           As more fully set forth inSection 5.3(b), it shall be a condition to Buyer’s obligation toconsummate the Closing that the Lender and Seller shall have Consented to theSecurity Agreement, and Consented to the subordination of the security interestgranted by Buyer to Seller by executing and delivering the Lender SubordinationAgreement at or prior to Closing, which Lender Subordination Agreement shall bein full force and effect at Closing.

 

(c)           Except as otherwise provided on Schedule 2.8(c),if there are any Consents, excluding those referred to in Sections 2.8(a) and2.8(b),  necessary for the sale,assignment and transfer of any Assets to Buyer (the “Nonmaterial Consents”)which have not been obtained (or otherwise are not in full force and effect)prior to or at Closing, Buyer shall elect at the Closing, in the case of each

 

8

----

 

such Asset as to which such NonmaterialConsents were not obtained (or otherwise are not in full force and effect) (the“Restricted Assets”), whether to:

 

(i)            acceptthe assignment of such Restricted Asset, in which case, as between Buyer andSeller, such Restricted Asset shall, to the maximum extent practicable andnotwithstanding the failure to obtain the applicable Nonmaterial Consent, betransferred at the Closing pursuant to the Bill of Sale, Assignment andAssumption Agreement or as otherwise provided under this Agreement; or

(ii)           reject the assignment of suchRestricted Asset, in which case, notwithstanding Sections 2.1 and 2.4, (A)neither this Agreement, the Bill of Sale, the Assignment and AssumptionAgreement, nor any other document related to the consummation of theContemplated Transactions shall constitute a sale, transfer, assignment,assumption, conveyance or delivery, or an attempted sale, transfer, assignment,assumption, conveyance or delivery, of such Restricted Asset, and  (B) Seller shall retain such RestrictedAsset and all Liabilities arising therefrom or relating thereto.

 

**ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER**

 

As of the Effective Time (as thoughmade at and as of the Effective Time) and as of the Closing Date, Sellerrepresents and warrants to Buyer as follows:

 

**3.1****         ****ORGANIZATION AND GOODSTANDING.**

 

(a)           Seller is a Delaware corporationduly organized, validly existing and in good standing under the laws of theState of Delaware, with full corporate power and authority to conduct itsbusiness as it is now being conducted, to own or use the properties and assetsthat it purports to own or use, and to perform all its obligations under orrelated to the Assets. Seller is duly qualified to do business as a foreigncorporation and is in good standing under the laws of the State of Maryland.

 

(b)           Seller has no Subsidiary andduring the period from January 1, 2000, to the Closing Date theGaithersburg Business was not owed or operated by any Subsidiary of Seller.

 

**3.2****         ****ENFORCEABILITY;AUTHORITY; NO CONFLICT.**

 

(a)           This Agreement constitutes thelegal, valid and binding obligation of Seller, enforceable against Seller inaccordance with its terms. Upon the execution and delivery by Seller of theGaithersburg Lease Assignment, the Bill of Sale, the Assignment and AssumptionAgreement, the Security Agreement, the Lender Subordination Agreement, and eachother agreement to be executed or delivered by Seller at the Closing(collectively, the “Seller’s Closing Documents”), each of Seller’s ClosingDocuments will constitute the legal, valid and binding obligation of Seller,enforceable against Seller in accordance with its terms. Seller has the absoluteand unrestricted right, power and authority to execute and deliver thisAgreement and the Seller’s Closing Documents and to perform its obligationsunder this Agreement and the Seller’s Closing Documents, and such action hasbeen duly authorized by all necessary corporate action.

 

9

----

 

(b)           Neither the execution anddelivery of this Agreement by Seller, nor the consummation or performance ofany of the Contemplated Transactions by Seller, will give any Person the rightto prevent, delay or otherwise interfere with any of the ContemplatedTransactions pursuant to:

 

(i)            anyprovision of the Seller’s certificate of incorporation or bylaws;

(ii)           any resolution adopted by theboard of directors or the shareholders of Seller;

(iii)          any Legal Requirement or anyOrder to which the Gaithersburg Business, or any of the Assets, may be subject,except where such breach would not result in a material adverse effect;

(iv)          any Gaithersburg Contract thatis an Asset; or

(vi)          result in the imposition orcreation of any Encumbrance upon or with respect to any of the Assets(excluding under the Security Agreement or any security agreement betweenLender and Buyer).

 

(c)           Except as set forth in Schedule 3.2(c),Seller is not required to give any notice to or obtain any Consent from anyPerson in connection with the execution and delivery of this Agreement or theconsummation or performance of any of the Contemplated Transactions.

 

**3.3****         ****ASSETS. **The Assets (a) constitute all ofthe assets, tangible and intangible, of any nature whatsoever, necessary tooperate the Gaithersburg Business in the manner operated by Seller fromSeptember 24, 2003, to the Effective Time, and (b) include all of theoperating assets of Seller used in the Gaithersburg Business.  The Assets do not constitute all orsubstantially all of Seller’s assets.

 

**3.4****         ****LEASED REALPROPERTY. **The only real property in which Seller has aleasehold interest which was used in or related to the Gaithersburg Businessfrom September 24, 2003, to the Effective Time is the GaithersburgFacility.  During the period from thecommencement of the Gaithersburg Lease to the Effective Time, the GaithersburgFacility was not used for any business or purpose other than the GaithersburgBusiness.

 

**3.5****         ****TITLE TO ASSETS;ENCUMBRANCES.**

 

(a)           Seller owns good and marketabletitle to its leasehold interest in the Gaithersburg Facility, free and clear ofany Encumbrances other than (i) those described in Schedule 3.5(a),(ii) the Gaithersburg Lease and (iii) liens for Taxes for the current tax yearwhich are not yet due and payable, and for which Seller is liable under theGaithersburg Lease (“Permitted Real Estate Encumbrances”).  A true and complete copy of the GaithersburgLease has been delivered to Buyer.

 

(b)           Seller owns good andtransferable title to all of the other Assets free and clear of anyEncumbrances other than those described in Schedule 3.5(b)(“Permitted Non-Real Estate Encumbrances” and, together with the Permitted RealEstate Encumbrances, the “Permitted Encumbrances”).

 

10

----

 

**3.6****         ****CONDITION OFGAITHERSBURG FACILTY.**

 

(a)           To the Seller’s Knowledge, useof the Gaithersburg Facility for the purposes for which it is presently beingused by the Gaithersburg Business is permitted as of right under all applicablezoning legal requirements and is not subject to “permitted nonconforming” useor structure classifications.  To theSeller’s Knowledge, all Improvements on or at the Gaithersburg Facility withinthe premises subject to the Gaithersburg Lease are in compliance with allapplicable Legal Requirements, including those pertaining to zoning, buildingand the disabled, are in good repair and in good condition, ordinary wear andtear excepted.  To the Seller’sKnowledge, the Gaithersburg Facility abuts on and has direct vehicular accessto a public road or has access to a public road via a permanent, irrevocable,appurtenant easement benefiting the real property subject to the GaithersburgLease or comprising a part of the real property subject to the GaithersburgLease, is supplied with public or quasi-public utilities and other servicesappropriate for the operation of the Gaithersburg Business. To the Seller’sKnowledge, there is no existing or proposed plan to modify or realign anystreet or highway or any existing or proposed eminent domain proceeding thatwould result in the taking of all or any part of the real property subject tothe Gaithersburg Lease (including the Gaithersburg Facility) or that wouldprevent or hinder the continued use of the Gaithersburg Facility as heretoforeused in the conduct of the Gaithersburg Business.

 

(b)           Each item of GaithersburgTangible Personal Property is in good repair and good operating condition,ordinary wear and tear excepted, is suitable for immediate use in the OrdinaryCourse of Business. No item of Gaithersburg Tangible Personal Property is inneed of repair or replacement other than as part of routine maintenance in theOrdinary Course of Business.  AllGaithersburg Tangible Personal Property used in the Gaithersburg Business is inthe possession of Seller.

 

**3.7****         ****GAITHERSBURGINVENTORIES. **Since September 24, 2003, there has been nomaterial change in the condition of the Gaithersburg Inventory.  The Gaithersburg Inventory does not includeany Inventory not owned by Seller, including goods already sold.  The quantities of each item of theGaithersburg Inventory (whether raw materials, work-in-process or finished goods)are not excessive but are reasonable in relation to the Gaithersburg Businessas heretofore conducted.

 

**3.8****         ****TAXES.**

 

(a)           There are no Encumbrances on anyof the Assets that arose in connection with any failure (or alleged failure) topay any Tax.

 

(b)           There is no tax sharingagreement, tax allocation agreement, tax indemnity obligation or similarwritten or unwritten agreement, arrangement, understanding or practice withrespect to Taxes (including any advance pricing agreement, closing agreement orother arrangement relating to Taxes) that is included among the Assets orrelates to the Gaithersburg Business.

 

**3.9****         ****NO MATERIAL ADVERSECHANGE. **SinceSeptember 24, 2003, there has not been any material adverse change in theGaithersburg Business, including its operations, prospects, assets, results ofoperations or condition (financial or other), and, to Seller’s Knowledge, noevent has occurred or circumstance exists that could reasonably be expected toresult in such a material

 

11

----

 

adverse change; provided, however,that in no event shall any of the following constitute a material adversechange in the business, operations, prospects, assets, results of operations orcondition of the Gaithersburg Business: (i) any change resulting fromconditions affecting the industry which includes the Gaithersburg Business orfrom changes in general business or economic conditions; (ii) any changeresulting from the announcement or pendency of any of the transactionscontemplated by this Agreement; or (iii) any change resulting from complianceby Seller with the terms of, or the taking of any action contemplated orpermitted by, this Agreement.

 

**3.10****       ****EMPLOYEE BENEFITS.**

 

(a)           Neither Seller nor any entitythat would be treated as a single employer with Seller for such purposesmaintains or has maintained within the preceding six years any employee benefitplan subject to Title IV of ERISA.

 

(b)           Seller has, at all times,complied, and currently complies, in all material respects with the applicablecontinuation requirements for its welfare benefit plans, including (1)Section 4980B of the Code (as well as its predecessor provision,Section 162(k) of the Code) and Sections 601 through 608, inclusive, ofERISA, which provisions are herein referred to collectively as “COBRA,” and (2)any applicable state statutes mandating health insurance continuation coveragefor employees.

 

(c)           Except for the continuationcoverage requirements of COBRA, Seller has no obligations or potentialliability for benefits to employees, former employees or their respectivedependents of the Gaithersburg Business following termination of employment orretirement.

 

(d)           No written or oralrepresentations have been made by Seller to any employee or former employee ofSeller who is or was employed at the Gaithersburg Facility or otherwiseemployed or engaged in the Gaithersburg Business promising or guaranteeing anyemployer payment or funding for the continuation of medical, dental, life ordisability coverage for any period of time beyond the end of the current planyear (except to the extent of coverage required under COBRA) that would becomethe responsibility of Buyer.  To thefullest extent permitted by Legal Requirements, Seller is allocated all COBRAresponsibility arising out of or relating to this Agreement or the ContemplatedTransactions.  Seller has made nowritten or oral representations to any employee or former employee of Sellerconcerning the employee benefits of Buyer.

 

**3.11****       ****COMPLIANCE WITH LEGALREQUIREMENTS; GOVERNMENT AUTHORIZATIONS.**

 

(a)           Seller is, and at all timessince January 1, 2003, has been, in compliance with each material LegalRequirement that is or was applicable to the Gaithersburg Business.  To Seller’s Knowledge, no event has occurredor circumstance exists with respect to the Gaithersburg Business that (with orwithout notice or lapse of time) (A) may constitute or result in a materialviolation by Seller of, or a material failure on the part of Seller to complywith, any material Legal Requirement with respect to the Gaithersburg Businessor (B) may give rise to any material obligation on the part of Seller toundertake, or to bear all or any portion of the cost of, any remedial action ofany nature with respect

 

12

----

 

to the Gaithersburg Business.  Seller has not received, at any time sinceJanuary 1, 2003, any notice or other communication (whether oral orwritten) from any Governmental Body or any other Person regarding (A) anyactual, alleged, possible or potential material violation of, or materialfailure to comply with, any Legal Requirement with respect to the GaithersburgBusiness or (B) any actual, alleged, possible or potential obligation on thepart of Seller to undertake, or to bear all or any portion of the cost of, anymaterial remedial action of any nature with respect to the GaithersburgBusiness.

 

(b)           Schedule 3.11(b)contains a complete and accurate list of each Gaithersburg GovernmentAuthorization the absence of which would have a material adverse effect on theGaithersburg Business.  EachGaithersburg Government Authorization is valid and in full force and effect.The Gaithersburg Government Authorizations collectively constitute all of theGovernment Authorizations necessary to permit Seller to lawfully conduct andoperate the Gaithersburg Business in the manner in which it currently conductsand operates the Gaithersburg Business and to permit Seller to own and use theAssets in the manner in which it currently owns and uses such Assets.

 

**3.12****       ****LEGAL PROCEEDINGS;ORDERS.**

 

(a)           There is no pending or, toSeller’s Knowledge, threatened Proceeding by or against Seller that relates toand is likely to materially affect the Gaithersburg Business or any of theAssets.  To Seller’s Knowledge, thereare no pending or threatened Proceeding that may have the effect of preventing,delaying, making illegal or otherwise interfering with, any of the ContemplatedTransactions or Seller’s performance thereunder.  To the Seller’s Knowledge, no event has occurred or circumstanceexists that is reasonably likely to give rise to or serve as a legitimate basisfor the commencement of any such Proceeding.

 

(b)           There is no Order to which theGaithersburg Business or any of the Assets is subject.

 

**3.13****       ****ABSENCE OF CERTAINCHANGES AND EVENTS. **SinceSeptember 24, 2003, Seller has operated the Gaithersburg Business only inthe Ordinary Course of Business and there has not been any:

 

(a)           payment (except in the OrdinaryCourse of Business) or increase by Seller of any bonuses, salaries or othercompensation to any Seller employee employed at the Gaithersburg Facility orotherwise employed or engaged in the Gaithersburg Business, or entry into anyemployment, severance or similar Contract with any Seller employee employed atthe Gaithersburg Facility or otherwise employed or engaged in the GaithersburgBusiness;

 

(b)           [reserved];

 

(c)           damage to or destruction or lossof any material asset or property of Seller used in or related to theGaithersburg Business, whether or not covered by insurance;

 

13

----

 

(d)           entry into, termination of orreceipt of notice of termination of any material license, distributorship,dealer, sales representative, joint venture, credit or similar Contract towhich Seller is a party used in the Gaithersburg Business;

 

(e)           sale (other than sales in theOrdinary Course of Business), lease or other disposition of any material assetor property of Seller used in the Gaithersburg Business;

 

(f)            cancellationor waiver of any claims or rights with a value to Seller in excess of $10,000related to the Gaithersburg Business;

 

(g)           indication by any customer,vendor or supplier of the Gaithersburg Business of an intention to discontinueor materially change the terms of its relationship with Seller with respect tothe Gaithersburg Business;

 

(h)           material change in theaccounting methods used by Seller with respect to the Gaithersburg Business; or

 

(i)            Contractby Seller to do any of the foregoing.

 

**3.14****       ****GAITHERSBURGCONTRACTS; NO DEFAULTS.**

 

(a)           Except as set forth on  Schedule 3.14(a),there are no Gaithersburg Contracts that:

 

(i)            werenot entered into in the Ordinary Course of Business;

(ii)           are with any labor union orother employee representative of a group of employees relating to wages, hoursand other conditions of employment;

(iii)          involve a sharing of profits,losses, costs or liabilities by Seller with any other Person, other than Selleremployees;

(iv)          provide for payments to or byany Person based on sales, purchases or profits, other than direct payments forgoods, products or services;

(v)           contain covenants that in anyway purport to restrict Seller’s business activity or limit the freedom ofSeller to engage in any line of business or to compete with any Person;

(vi)          contain a power of attorneygranted by Seller; or

(vii)         contain or grant any warranty,guaranty and/or other similar undertaking with respect to the contractualperformance by Seller which were entered into other than in the Ordinary Courseof Business.

 

(b)           Schedule 3.14(b)identifies all Gaithersburg Contracts (the “Material Gaithersburg Contracts”)that:

 

(i)            involveexpenditures, including capital expenditures, by Seller in excess of TenThousand Dollars ($10,000);

(ii)           involve performance of servicesor delivery of goods or materials to Seller of an amount or value in excess ofTen Thousand Dollars  ($10,000);

 

14

----

 

(iii)          involve performance of servicesor delivery of goods or materials by Seller of an amount or value in excess ofTen Thousand Dollars  ($10,000); or

(iv)          was entered into other than inthe Ordinary Course of Business.

 

(c)           Except as set forth in Schedule 3.14(c):

 

(i)            eachMaterial Gaithersburg Contract identified or required to be identified in Schedule 3.14(b)is in full force and effect and is valid and enforceable in accordance with itsterms; and

(ii)           each Material GaithersburgContract identified or required to be identified in Schedule 3.14(b)  is assignable by Seller to Buyer without theConsent of any other Person.

 

(d)           Except as set forth in Schedule 3.14(d):

 

(i)            Selleris, and at all times since January 1, 2003, has been, in materialcompliance with all applicable terms and requirements of each MaterialGaithersburg Contract;

(ii)           to Seller’s Knowledge, eachother Person that has or had any obligation or liability under any MaterialGaithersburg Contract is, and at all times since January 1, 2003, hasbeen, in material  compliance with allapplicable terms and requirements of such Material Gaithersburg Contract;

(iii)          to the Seller’s Knowledge, noevent has occurred since January 1, 2003, and no circumstance exists, that(with or without notice or lapse of time) may contravene, conflict with orresult in a material Breach of, or give Seller or any other Person the right todeclare a default or exercise any remedy or right under, or to cancel,terminate or modify, any Material Gaithersburg Contract; and

(iv)          Seller has not given to orreceived from any other Person, at any time since January 1, 2003, anynotice or other communication (whether oral or written) regarding any actual,alleged, possible or potential violation or Breach of, or default under, anyMaterial Gaithersburg Contract.

 

(e)           There are no renegotiations of,attempts or demands to renegotiate, or outstanding rights to renegotiate anymaterial amounts paid or payable to Seller under Material GaithersburgContracts with any Person.

 

(f)            EachMaterial Gaithersburg Contract has been entered into without the commission ofany act alone or in concert with any other Person, or any consideration havingbeen paid or promised, that is or would be in violation of any material LegalRequirement.

 

**3.15****       ****ENVIRONMENTAL MATTERS.**

 

(a)           To Seller’s Knowledge, Selleris, and at all times has been, in material compliance with, and has not beenand is not in material violation of or liable under, any Environmental Law withrespect to the Gaithersburg Business and the Assets.

 

15

----

 

(b)           To the Seller’s Knowledge, thereare no pending or threatened claims, Encumbrances, or other restrictions of anynature against Seller resulting from any Environmental, Health and SafetyLiabilities or arising under or pursuant to any Environmental Law with respectto the Gaithersburg Facility or any of the Assets.

 

(d)           To the Seller’s Knowledge,neither Seller nor any other Person for whose conduct is or may be heldresponsible has any Environmental, Health and Safety Liabilities with respectto the Gaithersburg Facility.

 

**3.16****       ****EMPLOYEES.**

 

(a)           Seller has not violated theWorker Adjustment and Retraining Notification Act (the “WARN Act”) or anysimilar state or local Legal Requirement. The employment terminations inconnection with the sale of the Gaithersburg Business located at theGaithersburg Facility do not result in a sufficient number of employmentterminations to trigger application of the WARN Act.

 

(b)           To the Knowledge of Seller, noofficer, director, agent, employee, consultant, or contractor of Seller isbound by any Contract that purports to limit the ability of such officer,director, agent, employee, consultant, or contractor (i) to engage in, performor continue to perform any conduct, activities, duties, obligations orpractices with respect to the Gaithersburg Business or (ii) to assign to Selleror to any other Person any rights to any invention, improvement, or discovery.

 

**3.17****       ****LABOR DISPUTES;COMPLIANCE.**

 

(a)           To the Knowledge of the Seller,Seller has complied in all material respects with all Legal Requirements relatingto employment practices, terms and conditions of employment, equal employmentopportunity, nondiscrimination, immigration, wages, hours, benefits, andcollective bargaining, the payment of social security and similar Taxes andoccupational safety and health. Seller is not liable for the payment of anyTaxes, fines, penalties, or other amounts, however designated, for failure tocomply with any of the foregoing Legal Requirements.

 

(b)           Except as disclosed in Schedule 3.17(b),(i) Seller has not been, and is not now, a party to any collective bargainingagreement or other labor contract; (ii) since January 1, 2000, there hasnot been, there is not presently pending or existing, and to Seller’s Knowledgethere is not threatened, any strike, slowdown, picketing, work stoppage oremployee grievance process involving the Gaithersburg Business; (iii) toSeller’s Knowledge no event has occurred or circumstance exists that couldprovide the basis for any work stoppage or other labor dispute with respect tothe Gaithersburg Business; (iv) there is not pending or, to Seller’s Knowledge,threatened against or affecting Seller any Proceeding relating to the allegedviolation of any Legal Requirement pertaining to labor relations or employmentmatters with respect to the Gaithersburg Business, including any charge orcomplaint filed with the National Labor Relations Board or any comparableGovernmental Body, and there is no organizational activity or other labordispute against or affecting Seller with respect to the Gaithersburg Business;(v) no application or petition for an election of or for certification of acollective bargaining agent is pending with respect to the GaithersburgBusiness; (vi) no grievance or arbitration Proceeding exists that might have an

 

16

----

 

adverse effect upon the GaithersburgBusiness; (vii) there is no lockout of any employees by Seller, and no suchaction is contemplated by Seller, with respect to the Gaithersburg Business;and (viii) to Seller’s Knowledge there has been no charge of discriminationfiled against or threatened against Seller with the Equal EmploymentOpportunity Commission or similar Governmental Body arising out of theGaithersburg Business.

 

**3.18****       ****INTELLECTUAL PROPERTYASSETS.  **Schedule 3.18contains a complete and accurate list of all Gaithersburg Software Contracts,except for any license implied by the sale of a product and perpetual, paid-uplicenses for commonly available Software programs with a value of less than$1,000 under which Seller is the licensee.

 

**3.19****       ****BROKERS ORFINDERS. **Exceptas set forth on Schedule 3.19,****Seller has not incurred any obligation orliability, contingent or otherwise, for brokerage or finders’ fees or othersimilar payments in connection with the sale of the Gaithersburg Business orthe Assets or the Contemplated Transactions.

 

**3.20****       ****SECURITIES LAWMATTERS.**

 

(a)           Seller is acquiring thePromissory Note for its own account and not with a view to its distributionwithin the meaning of Section 2(11) of the Securities Act.

 

(b)           Seller confirms that Buyer hasmade available to Seller the opportunity to ask questions of the officers ofBuyer and to acquire such additional information about the business andfinancial condition of Buyer as Seller has requested.

 

**3.21****       ****DISCLOSURE.**

 

(a)           No representation or warranty orother statement made by Seller in this Agreement, the certificates deliveredpursuant to Section 2.7(a) or otherwise in connection with theContemplated Transactions, contains any untrue statement or omits to state amaterial fact necessary to make any of them, in light of the circumstances inwhich it was made, not misleading.

 

(b)           Seller does not have Knowledgeof any fact that has specific application to Gaithersburg Business or theAssets (other than general economic or industry conditions) and that maymaterially adversely affect the Gaithersburg Business or the Assets that hasnot been set forth in this Agreement.

 

**ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER**

 

As of the Effective Time (as thoughmade at and as of the Effective Time) and as of the Closing Date, Buyerrepresents and warrants to Seller as follows:

 

**4.1****         ****ORGANIZATION AND GOODSTANDING. **Buyeris a corporation duly organized, validly existing and in good standing underthe laws of the State of Maryland, with full corporate power and authority toconduct its business as it is now conducted, to own or use its properties and

 

17

----

 

assets that it purports to own or useand to perform all its obligations hereunder. Buyer is a close corporation without a board of directors.

 

**4.2****         ****ENFORCEABILITY;AUTHORITY; NO CONFLICT.**

 

(a)           This Agreement constitutes thelegal, valid and binding obligation of Buyer, enforceable against Buyer inaccordance with its terms. Upon the execution and delivery by Buyer of theAssignment and Assumption Agreement, the Promissory Note, the GaithersburgLease Assignment, the Security Agreement, and each other agreement to beexecuted or delivered by Buyer at Closing (collectively, the “Buyer’s ClosingDocuments”), each of the Buyer’s Closing Documents will constitute the legal,valid and binding obligation of Buyer, enforceable against Buyer in accordancewith its respective terms. Buyer has the absolute and unrestricted right, powerand authority to execute and deliver this Agreement and the Buyer’s ClosingDocuments and to perform its obligations under this Agreement and the Buyer’sClosing Documents, and such action has been duly authorized by all necessarycorporate action.

 

(b)           Neither the execution anddelivery of this Agreement by Buyer nor the consummation or performance of anyof the Contemplated Transactions by Buyer will give any Person the right toprevent, delay or otherwise interfere with any of the Contemplated Transactionspursuant to:

 

(i)            anyprovision of Buyer’s articles of incorporation or bylaws;

(ii)           any resolution adopted by theshareholders of Buyer;

(iii)          any Legal Requirement or Orderto which Buyer may be subject; or

(iv)          any Contract to which Buyer is aparty or by which Buyer may be bound.

 

Except for the Lender, Buyer is not andwill not be required to obtain any Consent from any Person in connection withthe execution and delivery of this Agreement or the consummation or performanceof any of the Contemplated Transactions.

 

**4.3****         ****LEGAL PROCEEDINGS;ORDERS.**

 

(a)           ToBuyer’s Knowledge, there is no pending or threatened Proceeding that may havethe effect of preventing, delaying, making illegal or otherwise interferingwith, any of the Contemplated Transactions or Buyer’s performancethereunder.  To the Buyer’s Knowledge,no event has occurred or circumstance exists that is reasonably likely to giverise to or serve as a legitimate basis for the commencement of any suchProceeding.

 

(b)           To Buyer’s Knowledge, there isno Order to which the Gaithersburg Business or any of the Assets will besubject on or after Closing Date.

 

**4.4****         ****NO MATERIAL ADVERSECHANGE. **Withinthe preceding sixty days, there has not been any material adverse change inBuyer, including its operations, prospects, assets, results of operations orcondition (financial or other), and, to Buyer’s Knowledge, no event hasoccurred or circumstance exists that could be reasonably be expected to resultin such a material adverse change; provided, however, that in noevent shall any of the following constitute a material adverse

 

18

----

 

change in the business, operations,prospects, assets, results of operations or condition of the Buyer: (i) any changeresulting from conditions affecting the industry which includes the Buyer’sbusiness or from changes in general business or economic conditions; (ii) anychange resulting from the announcement or pendency of any of the transactionscontemplated by this Agreement; or (iii) any change resulting from complianceby Buyer with the terms of, or the taking of any action contemplated orpermitted by, this Agreement.  Withinthe past one hundred eighty days, Buyer has not defaulted on or obtainedforbearance with respect to any material obligation, including any debtobligation.

 

**4.5****         ****BROKERS OR FINDERS.**  Except to MBO Finance (Buyer’s equipmentloan broker), Buyer has not incurred any obligation or liability, contingent orotherwise, for brokerage or finders’ fees or other similar payment inconnection with the Contemplated Transactions.

 

**4.6****         ****DISCLOSURE.**

 

(a)           No representation or warranty orother statement made by Buyer in this Agreement, the certificates deliveredpursuant to Section 2.7(b) or otherwise in connection with theContemplated Transactions, contains any untrue statement or omits to state amaterial fact necessary to make any of them, in light of the circumstances inwhich it was made, not misleading.

 

(b)           Buyer does not have Knowledge ofany fact that has specific application to Buyer (other than general economic orindustry conditions) and that may materially adversely affect the ability ofthe Buyer to satisfy its obligations to the Seller in connection with theContemplated Transactions.

 

**4.7****         ****SOLVENCY.**

 

(a)           Buyer is not now insolvent andwill not be rendered insolvent by any of the Contemplated Transactions. As usedin this Section, “insolvent” means that the sum of the debts and other probableLiabilities of Buyer exceeds the present fair saleable value of Buyer’s assets.

 

(b)           Immediately after giving effectto the consummation of the Contemplated Transactions: (i) Buyer will be able topay its Liabilities as they become due in the usual course of its business;(ii) Buyer will not have unreasonably small capital with which to conduct itspresent or proposed business; (iii) Buyer will have assets (calculated at fairmarket value) that exceed its Liabilities; and (iv) taking into account allpending and threatened litigation, final judgments against Buyer in actions formoney damages are not reasonably anticipated to be rendered at a time when, orin amounts such that, Buyer will be unable to satisfy any such judgmentspromptly in accordance with their terms (taking into account the maximumprobable amount of such judgments in any such actions and the earliestreasonable time at which such judgments might be rendered) as well as all otherobligations of Buyer. The cash available to Seller, after taking into accountall other anticipated uses of the cash, will be sufficient to pay all suchdebts and judgments promptly in accordance with their terms, including, withoutlimitation, the Promissory Note.

 

19

----

 

**ARTICLE 5. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE**

 

Buyer’s obligation to purchase theAssets and to take the other actions required to be taken by Buyer at theClosing is subject to the satisfaction, at or prior to the Closing, of each ofthe following conditions (any of which may be waived in writing by Buyer, inwhole or in part):

 

**5.1****         ****ACCURACY OFREPRESENTATIONS.**

 

(a)           All of Seller’s representationsand warranties in this Agreement (considered collectively), and each of theserepresentations and warranties (considered individually), shall be accurate inall material respects as of the Effective Time (as though made at and as of theEffective Time) and as of the Closing Date.

 

(b)           Each of the Seller’srepresentations and warranties in Sections 3.2(a), and each of therepresentations and warranties in this Agreement that contains an expressmateriality qualification, shall be accurate in all material respects as of thedate of Effective Time (as though made at and as of the Effective Time) and asof the Closing Date.

 

**5.2****         ****SELLER’S PERFORMANCE.  **All of the covenants andobligations that Seller is required to perform or to comply with pursuant tothis Agreement at or prior to the Closing (considered collectively), and eachof these covenants and obligations (considered individually), shall have beenduly performed and complied with in all material respects.  The Seller’s covenant and obligation inSection 2.7(d) shall have been duly performed and complied with in allrespects.

 

**5.3****         ****CONSENTS.**

 

(a)           The Landlord and Seller shallhave Consented to the sale, assignment and transfer of the Gaithersburg Leasefrom Seller to Buyer by executing and delivering the Gaithersburg LeaseAssignment, which Gaithersburg Lease Assignment (when signed by Buyer atClosing) shall be in full force and effect.

 

(b)           The Lender and Seller shall haveConsented to the Security Agreement, and Consented to the subordination of thesecurity interest granted by Buyer to Seller thereby by executing anddelivering the Lender Subordination Agreement, which the Lender Subordination Agreementshall be in full force and effect.

 

**5.4****         ****ADDITIONALDOCUMENTS. **Sellershall have caused the documents and instruments required by Section 2.7(a)and the following documents to be delivered (or tendered subject only toClosing) to Buyer:

 

(a)           Releases of all Encumbrances onthe Assets, other than Permitted Encumbrances;

 

(b)           Certificates dated as of a datenot earlier than the tenth (10th) business day prior to the Closingas to the good standing of Seller and payment of all applicable state Taxes bySeller, executed by the appropriate officials of the State of Maryland; provided,however, that if Buyer waives this condition, Seller shall provide thesame within thirty (30) days of the Closing Date; and

 

20

----

 

(c)           Such other documents as Buyermay reasonably request for the purpose of:

 

(i)            evidencingthe accuracy of any of Seller’s representations and warranties;

(ii)           evidencing the performance bySeller of, or the compliance by Seller with, any covenant or obligationrequired to be performed or complied with by Seller prior to or at Closing;

(iii)          evidencing the satisfaction ofany condition referred to in this Article 5; or

(iv)          otherwise facilitating theconsummation or performance of any of the Contemplated Transactions.

 

**5.5****         ****NO PROCEEDINGS.**  There shall not have been commenced orthreatened against Buyer, or against any Related Person of Buyer, anyProceeding (a) involving any challenge to, or seeking Damages or other reliefin connection with, any of the Contemplated Transactions or (b) that may havethe effect of preventing, delaying, making illegal, imposing limitations orconditions on or otherwise interfering with any of the ContemplatedTransactions.

 

**5.6****         ****NO CONFLICT.**  Neither the consummation nor the performanceof any of the Contemplated Transactions will, directly or indirectly (with orwithout notice or lapse of time), contravene or conflict with or result in aviolation of any applicable Legal Requirement or Order.

 

**5.7****         ****GOVERNMENTAUTHORIZATIONS.**  Buyer shall havereceived such Gaithersburg Government Authorizations as are necessary ordesirable to allow Buyer to operate the Gaithersburg Business and from andafter the Closing.

 

**5.8****         ****EMPLOYEES. **Seller shall have terminated allof Seller’s Active Employees, effective immediately before Closing, except forthose Active Employees who shall remain employed by Seller after Closing whoare identified on Schedule 5.8 (the “Retained ActiveEmployees”).  Buyer shall not have anyLiability for any of the Retained Active Employees.

 

**5.9****         ****FINANCING.**  Buyer shall have obtained, on terms andconditions satisfactory to Buyer in its sole and absolute discretion, financingsecured by any or all of the Assets, or any or all other assets of Buyer, inthe amount of at least Nine Hundred Twenty-five Thousand Dollars ($925,000) inorder to consummate the Contemplated Transactions, and Buyer shall have closedon said financing.

 

**ARTICLE 6. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE**

 

Seller’s obligation to sell the Assetsand to take the other actions required to be taken by Seller at the Closing issubject to the satisfaction, at or prior to the Closing, of each of thefollowing conditions (any of which may be waived in writing by Seller in wholeor in part):

 

21

----

 

**6.1****         ****ACCURACY OFREPRESENTATIONS**.

 

(a)           All of Buyer’s representationsand warranties in this Agreement (considered collectively), and each of theserepresentations and warranties (considered individually), shall be accurate inall material respects as of the date of this Agreement.

 

(b)           Each of the Buyer’srepresentations and warranties in Sections 4.2(a), and each of therepresentations and warranties in this Agreement that contains an expressmateriality qualification, shall be accurate in all material respects as of thedate of this Agreement.

 

**6.2****         ****BUYER’S PERFORMANCE.**  All of the covenants and obligations thatBuyer is required to perform or to comply with pursuant to this Agreement at orprior to the Closing (considered collectively), and each of these covenants andobligations (considered individually), shall have been performed and compliedwith in all material respects.  TheBuyer’s covenant and obligation in Section 2.7(d) shall have been dulyperformed and complied with in all respects.

 

**6.3****         ****CONSENTS.**

 

(a)           The Landlord and Buyer shallhave Consented to the sale, assignment and transfer of the Gaithersburg Leasefrom Seller to Buyer by executing and delivering the Gaithersburg LeaseAssignment, which Gaithersburg Lease Assignment (when signed by Seller atClosing) shall be in full force and effect.

 

(b)           The Lender shall have Consentedto the Security Agreement, and Consented to the subordination of the securityinterest granted by Buyer to Seller thereby, by executing and delivering theLender Subordination Agreement, which Lender Subordination Agreement (whensigned by Seller at Closing) shall be in full force and effect.

 

**6.4****         ****ADDITIONAL DOCUMENTS.**  Buyer shall have caused the documents andinstruments required by Section 2.7(b) and the following documents to bedelivered (or tendered subject only to Closing) to Seller:

 

(a)           [reserved]

 

(b)           such other documents as Sellermay reasonably request for the purpose of

 

(i)            evidencingthe accuracy of any of Buyer’s representations and warranties;

(ii)           evidencing the performance byBuyer of, or the compliance by Buyer with, any covenant or obligation requiredto be performed or complied with by Buyer;

(iii)          evidencingthe satisfaction of any condition referred to in this Article 6;

(iv)          evidencing the Buyer’s abilityto pay the Promissory Note in accordance with its terms; or

(v)           otherwise facilitating theconsummation or performance of any of the Contemplated Transactions.

 

**6.5****         ****NO PROCEEDINGS.**  There shall not have been commenced orthreatened against Seller, or against any Related Person of Seller, anyProceeding (a) involving any challenge to, or seeking

 

22

----

 

Damages or other relief in connectionwith, any of the Contemplated Transactions or (b) that may have the effect ofpreventing, delaying, making illegal, imposing limitations or conditions on orotherwise interfering with any of the Contemplated Transactions.

 

**6.6****         ****NO CONFLICT.**  Neither the consummation nor the performanceof any of the Contemplated Transactions will, directly or indirectly (with orwithout notice or lapse of time), contravene or conflict with or result in aviolation of any applicable Legal Requirement or Order.

 

**ARTICLE 7. ADDITIONAL COVENANTS**

 

**7.1****         ****EMPLOYEES AND EMPLOYEEBENEFITS.**

 

(a)           For the purpose of thisAgreement, the term “Active Employees” shall mean all employees employed at theEffective Time by Seller at the Gaithersburg Facility or otherwise exclusivelyemployed or engaged by Seller at the Effective Time in the GaithersburgBusiness, including employees on temporary leave of absence, including familymedical leave, military leave, temporary disability or sick leave, butexcluding employees on long-term disability leave.  The term “Hired Active Employees” shall mean the Active Employeeswho are offered and accept employment with Buyer.

 

 (b)          Buyer shall offer employment tothose Active Employees listed on Schedule 7.1(b) (as statedthereon), and may, but shall not be obligated to, offer employment to any orall of the other Active Employees except the Retained Active Employees.  Immediately after Closing, excluding theHired Active Employees and the Retained Active Employees, substantially all theother Active Employees shall be available for hiring by Buyer, in its sole andabsolute discretion.  Excluding theRetained Active Employees, after Closing Seller shall not discourage any ActiveEmployee from joining or accepting employment with Buyer, or otherwiseinterfere with Seller’s efforts to employ any Active Employee.

 

(c)           It is understood and agreed that(i) Buyer’s expressed intention to extend offers of employment to the ActiveEmployees as set forth in this Agreement (including those listed on Schedule 7.1(b))shall not constitute any commitment, Contract or understanding (expressed orimplied) of any obligation on the part of Buyer to a post-Closing employmentrelationship of any fixed term or duration or upon any terms or conditionsother than those that Buyer may establish pursuant to individual offers ofemployment, and (B) employment offered by Buyer is “at will” and may beterminated by Buyer or by an employee at any time for any reason (subject toany written commitments to the contrary made by Buyer or an employee and LegalRequirements). Nothing in this Agreement shall be deemed to prevent or restrictin any way the right of Buyer to terminate, reassign, promote or demote any ofthe Hired Active Employees after the Closing or to change adversely orfavorably the title, powers, duties, responsibilities, functions, locations,salaries, other compensation or terms or conditions of employment of suchemployees.

 

(d)           [reserved]

 

23

----

 

(e)           Seller shall be solelyresponsible for (i) the payment of all wages, compensation and otherremuneration due to Active Employees with respect to their services asemployees of Seller through the Effective Time, (ii) the payment of anytermination, severance or similar payments required to be paid due to theContemplated Transactions, and (iii) the provision of health plan continuationcoverage in accordance with the requirements of COBRA and Sections 601 through608 of ERISA.

 

(f)            Sellershall be solely liable for any claims made or incurred by Active Employees andtheir beneficiaries under Seller’s Employee Plans, all subject to the terms ofthe applicable Employee Plans.

 

(g)           All Hired Active Employees whoare participants in Seller’s retirement plans shall retain their accruedbenefits under Seller’s retirement plans as of the Effective Time, and Seller(or Seller’s retirement plans) shall retain sole liability for the payment ofsuch benefits as and when such Hired Active Employees become eligible thereforunder such plans.

 

(h)           Neither Seller nor its RelatedPersons will make any transfer of pension or other employee benefit plan assetsto Buyer.

 

(i)            Buyerwill set its own initial terms and conditions of employment for the HiredActive Employees and others it may hire, including work rules, benefits andsalary and wage structure, all as permitted by law.  Buyer is not obligated to assume any collective bargainingagreements under this Agreement.

 

(j)            Unlessprohibited by applicable Legal Requirements or by the applicable employeebenefit plan (or any related insurance policy), the Hired Active Employees willbe allowed credit for their service with the Seller for vesting and eligibilityto participate purposes only (and not for accrual of benefits), in the employeebenefit plans of the Buyer; provided, however, that if the HiredActive Employee did not participate in a similar Employee Plan maintained bythe Seller, such service shall not be required to be credited for the HiredActive Employees under the benefit plan maintained by the Buyer. Unless prohibitedby applicable Legal Requirements or by the applicable employee benefit plan (orany related insurance policy), the Hired Active Employees (and, as applicable,their covered dependents) will be allowed to participate in all such benefitplans of the Buyer without being subject to any waiting periods (assuming suchHired Active Employee satisfied any waiting period under the correspondingEmployee Plan of Seller) or any restrictions or limitations for pre-existingconditions.  If anything set forth inthis Section 7.1(j) is prohibited by the applicable employee benefit plan(or any related insurance policy), Buyer covenants and agrees to use reasonableefforts to obtain a waiver of such prohibition or to otherwise obtainappropriate consent thereto.

 

(k)           Buyer shall not have anyresponsibility, liability or obligation, whether to Active Employees, formeremployees, their beneficiaries or to any other Person, with respect to anyemployee benefit plans, practices, programs or arrangements (including theestablishment, operation or termination thereof and the notification andprovision of COBRA coverage extension) maintained by Seller.

 

24

----

 

**7.2****         ****PAYMENT OF TAXESRESULTING FROM SALE OF ASSETS BY SELLER**.  Except as otherwise provided in Sections 2.7(d), 5.2 and 6.2,Seller shall pay in a timely manner all Taxes resulting from or payable inconnection with the sale of the Assets pursuant to this Agreement, regardlessof the Person on whom such Taxes are imposed by Legal Requirements.

 

**7.3****         ****PAYMENT OFLIABILITIES.**  Each of Buyer andSeller shall pay, or make adequate provision for the payment in full all of itsrespective Liabilities under this Agreement.

 

**7.4****         ****RESTRICTION ONDISSOLUTION, REORGANIZATIONS AND DISTRIBUTIONS.**  Seller shall not dissolve, or make anydistribution of the proceeds received pursuant to this Agreement, until thelater of (a) Seller’s payment, or adequate provision for payment, of all of itsobligations pursuant to Sections 7.2 and 7.3, or (b) the lapse of more than oneyear after the Closing Date.  Buyershall not dissolve or take any other corporate action that would impair itsability to satisfy its obligations to Seller pursuant to the Promissory Noteuntil such Promissory Note is paid in full.

 

**7.5****         ****REMOVING EXCLUDEDASSETS.**  Within a reasonabletime after Closing (and in no event later than November 30, 2003), Sellershall remove all Excluded Assets from the Gaithersburg Facility. Such removalshall be done in such manner as to avoid any damage to the GaithersburgFacility and any disruption of the business operations conducted by Buyer afterthe Closing.  Any damage to the Assetsor to the Gaithersburg Facility resulting from such removal shall be paid bySeller within thirty (30) days after said removal.  Should Seller fail to remove the Excluded Assets as required bythis Section, Buyer shall have the right, but not the obligation, (a) to removethe Excluded Assets at Seller’s sole cost and expense; (b) to store theExcluded Assets and to charge Seller all storage costs associated therewith;(c) to treat the Excluded Assets as unclaimed and to proceed to dispose of thesame under the laws governing unclaimed property; or (d) to exercise any otherright or remedy conferred by this Agreement or otherwise available at law or inequity. Seller shall promptly reimburse Buyer for all costs and expensesincurred by Buyer in connection with any Excluded Assets not removed by Selleron or before the Closing Date.

 

**7.6****         ****REPORTS AND RETURNS.**  Seller shall promptly after the Closingprepare and file all reports and returns required by Legal Requirementsrelating to the business of Seller as conducted using the Assets, to andincluding the Effective Time.

 

**7.7****         ****ASSISTANCE INPROCEEDINGS.**  Seller will cooperatewith Buyer and its counsel, and Buyer will cooperate with Seller and itscounsel, in the contest or defense of, and make available its respectivepersonnel and provide any testimony and access to its respective books andRecords in connection with, any Proceeding involving or relating to (a) anyContemplated Transaction or (b) any action, activity, circumstance, condition,conduct, event, fact, failure to act, incident, occurrence, plan, practice,situation, status or transaction on or before the Closing Date involvingSeller, the Assets or the Gaithersburg Business.  Notwithstanding the foregoing, neither Seller nor Buyer shall berequired to cooperate with the other in connection with a claim of one partyagainst the other.

 

25

----

 

**7.8****         ****NONCOMPETITION,NONSOLICITATION AND NONDISPARAGEMENT.**

 

(a)           (i)            For a period of five (5) yearsafter the Closing Date, Seller shall not (A) engage in, render or otherwiseprovide, or (B) directly or indirectly invest in, own, manage, operate,finance, control, advise, or render services to any Person engaged in,rendering or otherwise providing off-set printing or Non-Offset Printingservices to any Existing Customers;  provided,however, that Seller, solely through Seller’s existing VirginiaFacility, may continue to provide Non-Offset Printing services to thosecustomers identified as the “Shared Customers” in Schedule 7.8(a)(i)(the “Shared Customers”).

 

(ii)           For a period of five (5) years after the Closing Date,Seller shall not (A) engage in, render or otherwise provide, or (B) directly orindirectly invest in, own, manage, operate, finance, control, advise, or renderservices to any Person engaged in, rendering or otherwise providing off-setprinting services within the Restricted Area.

 

(iii)          Notwithstanding anything contained in Section 7.8(a)(i)to the contrary and for the avoidance of doubt, Seller may continue to provideto any customer, electronic imaging and photocopying services (includingbindery services and related packaging) without limitations.

 

(iv)          Notwithstanding any other provision of thisSection 7.8(a), Seller may purchase or otherwise acquire up to (but notmore than) four percent (4%) of any class of the securities of any Person (butmay not otherwise participate in the activities of such Person) if suchsecurities are listed on any national or regional securities exchange or havebeen registered under Section 12(g) of the Exchange Act.

 

(v)           For purposes of this Agreement, (A) “Existing Customers”shall mean the customers of the Gaithersburg Business identified on Schedule 7.8(a)(v),(B) “Non-Offset Printing” shall mean non-offset color printing and high volume,black and white duplication (including bindery services and related packagingservices), and (C) the “Restricted Area” shall mean (1) Montgomery, PrinceGeorge’s, Anne Arundel, Howard, Frederick and Baltimore Counties, Maryland, (2)Fairfax, Loudoun and Arlington Counties, and the Cities of Alexandria andFairfax, Virginia, and (3) the District of Columbia.

 

(b)           (i)            For a period of five (5) yearsafter the Closing Date, Seller shall not, directly or indirectly:

 

(1)           solicit the business of any Existing Customer for a purposethat would violate Section 7.8(a);

(2)           cause, induce or attempt to cause or induce any ExistingCustomer (other than Shared Customers), supplier, vendor, licensee, licensor,franchisee, employee, consultant or other business relation of Buyer to ceasedoing business with Buyer, to deal with any competitor of Buyer, or in any wayinterfere with its relationship with Buyer for a purpose that would violateSection 7.8(a);

(3)           cause, induce or attempt to cause or induce any Person whowas at the Effective Time, or who was at any time within the twelve (12) monthspreceding the Effective Time, an Existing Customer (other than SharedCustomers), supplier,

 

26

----

 

vendor, licensee, licensor, franchisee, employee, consultantor other business relation of Seller to cease doing business with Buyer, todeal with any competitor of Buyer, or in any way interfere with itsrelationship with Buyer; or

(4)           hire, retain or attempt to hire or retain any employee ofBuyer or individual providing full-time services as an independent contractorto Buyer, or in any way interfere with the relationship between Buyer and anyof its employees or individuals providing full-time services as independentcontractors; provided, however, that thisSection 7.8(b)(i)(4) shall not apply to Active Employees.

 

(ii)           Neither Seller nor its RelatedPerson shall (1) employ, hire or otherwise engage, at any time during thesixty-three (63) month period immediately following the Effective Time, EdwardPerlman, Donald Broomall, or Albert Barnett, or (2) employ, hire or otherwiseengage, at any time during the twenty-four (24) month period immediatelyfollowing the Effective Time, any other Active Employee; provided, however,that either Seller or its Related Person, at any time, may employ, hire orotherwise engage (A) any such other Active Employee (i.e., any Active Employeeother than Edward Perlman, Donald Broomall, or Albert Barnett) who, at any timeafter the Effective Time, is affirmatively terminated by Buyer as an employeeof Buyer or (B) any Retained Active Employee.

 

(c)           After the Closing Date, Sellerwill not disparage Buyer, Buyer’s name, any of Buyer’s shareholders, directors,officers, employees or agents, or Buyer’s business operations (including theGaithersburg Business).  After the ClosingDate, Buyer will not disparage Seller, Seller’s name, any of Seller’sdirectors, officers, employees or agents, or Seller’s business operations.

 

(d)           If a final judgment of a courtor tribunal of competent jurisdiction determines that any covenant, term orprovision contained in this Section 7.8 is invalid, illegal orunenforceable, then the parties agree that the court or tribunal will have thepower to reduce the scope, duration or geographic area of the covenant, term orprovision, to delete specific words or phrases or to replace any invalid,illegal or unenforceable covenant, term or provision with a covenant, term orprovision that is valid, legal and enforceable and that comes closest toexpressing the intention of the invalid, illegal or unenforceable term orprovision. This Section 7.8 will be enforceable as so modified after theexpiration of the time within which the judgment may be appealed. ThisSection 7.8 is reasonable and necessary to protect and preserve Buyer’slegitimate business interests and the value of the Gaithersburg Business andthe Assets, and to prevent any unfair advantage conferred on Seller.

 

**7.9****         ****CUSTOMER AND OTHERBUSINESS RELATIONSHIPS.** After the Closing and for a period of six (6) months, Seller willcooperate with Buyer, at Buyer’s sole expense, in its efforts to continue andmaintain for the benefit of Buyer those business relationships of Sellerexisting prior to the Closing and arising out of the Gaithersburg Business orthe Assets, including relationships with lessors, employees, regulatoryauthorities, licensors, customers, suppliers, vendors and others, provided,however, that such cooperation shall in no event be required in a mannerthat is materially disruptive or otherwise interferes or conflicts withSeller’s business.

 

27

----

 

**7.10****       ****USE OF BUYER’SSERVICES AND REFERRAL OF BUSINESS TO BUYER.**

 

(a)           For a period of five (5) yearsafter the Closing Date, Seller shall use Buyer for all of Seller’s and itsRelated Person’s off-set printing needs or requests within the Restricted Area;provided, however, that the prices, terms, quality and deliverythereof offered by Buyer to Seller or its Related Person, as the case may be,are competitive with other printing companies offering such digital printingand off-set printing services within the Restricted Area and providedfurtherthat Seller shall not be required to use Buyer for Non-Offset Printing providedby Seller’s existing Virginia Facility.

 

(b)           For a period of five (5) yearsafter the Closing Date, Seller shall refer to Buyer all Third Party requestsfor off-set printing services, and inquiries regarding digital printing oroff-set printing services, which are received by Seller or its Related Persons(other than requests and inquiries regarding Non-Offset Printing to be providedby Seller’s existing Virginia Facility).

 

**7.11****       ****BULK SALES. **Buyer and Seller hereby waivecompliance with the bulk-transfer provisions of the Uniform Commercial Code (orany similar law) of Maryland and Virginia (the “Bulk Sales Laws”) in connectionwith the Contemplated Transactions.

 

**7.12****       ****BUYER FINANCIALSTATEMENTS.**  During the periodfrom the Closing Date to the date on which the Promissory Note is paid orsatisfied in full, Buyer, upon the request of Seller, agrees to provide financialstatements of Buyer’s business operations. All such financial statements of Buyer provided to Seller shall be usedby Seller solely to evaluate the value and collectability of the unpaid balanceof the Promissory Note or in a Proceeding to collect the unpaid balance of thePromissory Note.  All such financialstatements of Buyer provided to Seller shall be deemed Confidential Informationsubject to Article 9.  Buyer shallprovide Seller with prompt notice (and in any event within 5 business days) ofany uncured default with respect any obligation of Buyer to the Lender or ofany uncured breach or default with respect to the Gaithersburg Lease.  Any such notice shall detail the nature ofthe uncured default or breach and the Buyer’s proposed remedy thereof.

 

**7.13  FURTHER ASSURANCES.**  The parties shall cooperate reasonably witheach other and with their respective Representatives in connection with anysteps required to be taken as part of their respective obligations under thisAgreement, and shall (a) furnish upon request to each other such furtherinformation; (b) execute and deliver to each other such other documents; and(c) do such other acts and things, all as the other party may reasonablyrequest for the purpose of carrying out the intent of this Agreement and theContemplated Transactions; provided, however, that neither Partyshall be required to dispose of or make any changes to its business, expend anymaterial funds, or incur any other material burden in order to comply with thisSection 7.13.  Notwithstandinganything to contrary contained in this Agreement, to the extent necessary toeffect the intent of the parties with respect to the Effective Time of theContemplated Transactions and otherwise, the parties agree and acknowledge thatcertain transition services will be required by the Seller’s employees duringthe period from the Effective Time until the Closing and that Buyer and Sellershall cooperate fully with respect to meeting obligations to the ActiveEmployees, including, if necessary, reimbursement of salary and benefits duringsuch period for Hired Active Employees by Buyer to Seller.

 

28

----

 

**7.14****       ****USE OF SELLER’S NAME.**  For a period of ninety (90) days after theClosing Date, the Buyer may refer to the Gaithersburg Business as “formerlyOn-Site Sourcing’s Gaithersburg Facility” (or using words of similar import) onthe telephone, in e-mail and other electronic communications, in correspondenceand in other communications, including those with Existing Customers, potentialcustomers, vendors and suppliers.

 

**ARTICLE 8. INDEMNITIES; REMEDIES**

 

**8.1****         ****SURVIVAL.**  All representations, warranties, covenantsand obligations in this Agreement, the certificates delivered pursuant toSection 2.7, and any other certificate or document delivered pursuant tothis Agreement shall survive the Closing and the consummation of theContemplated Transactions, subject to Section 8.6. The right toindemnification, reimbursement or other remedy based upon such representations,warranties, covenants and obligations shall not be affected by anyinvestigation (including any environmental investigation or assessment)conducted with respect to, or any Knowledge acquired (or capable of beingacquired) at any time, whether before or after the execution and delivery ofthis Agreement, with respect to the accuracy or inaccuracy of or compliancewith any such representation, warranty, covenant or obligation. The waiver ofany condition based upon the accuracy of any representation or warranty, or onthe performance of or compliance with any covenant or obligation, will notaffect the right to indemnification, reimbursement or other remedy based uponsuch representations, warranties, covenants and obligations.

 

**8.2****         ****INDEMNIFICATION ANDREIMBURSEMENT BY SELLER.** Seller will indemnify and hold harmless Buyer, and its Representatives,shareholders and Related Persons (collectively, the “Buyer IndemnifiedPersons”), and will reimburse the Buyer Indemnified Persons for any loss,liability, claim, damage, expense (including costs of investigation anddefense, court costs and reasonable attorneys’ fees and expenses), whether ornot involving a Third-Party Claim (collectively, “Damages”), arising from or inconnection with:

 

(a)           any Breach of any representationor warranty made by Seller in (i) this Agreement, (ii) the certificatesdelivered pursuant to Section 2.7, (iii) any transfer instrument or (iv)any other certificate, document, writing or instrument delivered by Sellerpursuant to this Agreement;

 

(b)           any Breach of any covenant orobligation of Seller in this Agreement or in any other certificate, document,writing or instrument delivered by Seller pursuant to this Agreement;

 

(c)           any Liability arising out of theownership or operation of the Gaithersburg Business or the Assets prior to theEffective Time other than the Assumed Liabilities;

 

(d)           any brokerage or finder’s feesor commissions or similar payments based upon any agreement or understandingmade, or alleged to have been made, by any Person with Seller (or any Personacting on its) in connection with any of the Contemplated Transactions;

 

29

----

 

(e)           any product printed, produced ordelivered by, or any services provided by, Seller, in whole or in part, priorto or on the Closing Date;

 

(f)            anynoncompliance with any Bulk Sales Laws in respect of the ContemplatedTransactions;

 

(g)           any Employee Plan established ormaintained by Seller; or

 

(h)           any Retained Liabilities.

 

**8.3****         ****INDEMNIFICATION ANDREIMBURSEMENT BY SELLER—ENVIRONMENTAL MATTERS.**  In addition to the other indemnificationprovisions in this Article 8, Seller will indemnify and hold harmlessBuyer and the other Buyer Indemnified Persons, and will reimburse Buyer and theother Buyer Indemnified Persons, for any Damages (including costs of cleanup,containment or other remediation) arising from or in connection with:

 

(a)           any Environmental, Health andSafety Liabilities arising out of or relating to the ownership or operation bySeller on or prior to the Effective Time of the Assets or the GaithersburgBusiness; or

 

(b)           any bodily injury (includingillness, disability and death, regardless of when any such bodily injuryoccurred, was incurred or manifested itself), personal injury, property damage(including trespass, nuisance, wrongful eviction and deprivation of the use ofreal property) or other damage of or to any Person or any Assets in any wayarising from or allegedly arising from any Hazardous Activity conducted bySeller with respect to the Gaithersburg Business or the Assets prior to theEffective Time or from any Hazardous Material that was Released or allegedlyReleased by Seller on or at the Gaithersburg Facility or Assets at any time onor prior to the Effective Time.

 

Buyer will be entitled to control anyRemedial Action, any Proceeding relating to an Environmental claim and, exceptas provided in the following sentence, any other Proceeding with respect towhich indemnity may be sought under this Section 8.3. The proceduredescribed in Section 8.9 will apply to any claim solely for monetarydamages relating to a matter covered by this Section 8.3.

 

**8.4****         ****INDEMNIFICATION ANDREIMBURSEMENT BY BUYER.** Buyer will indemnify and hold harmless Seller, and its Representatives,and Related Persons (collectively, the “Seller Indemnified Persons”), and willreimburse the Seller Indemnified Persons, for any Damages arising from or inconnection with:

 

(a)           any Breach of any representationor warranty made by Buyer (i) this Agreement, (ii) the certificates deliveredpursuant to Section 2.7, (iii) any other certificate, document, writing orinstrument delivered by Buyer pursuant to this Agreement;

 

(b)           any Breach of any covenant orobligation of Buyer in this Agreement or in any other certificate, document,writing or instrument delivered by Buyer pursuant to this Agreement;

 

30

----

 

(c)           any Liability arising out of theownership or operation of the Gaithersburg Business or the Assets after the EffectiveTime;

 

(d)           any claim by any Person forbrokerage or finder’s fees or commissions or similar payments based upon anyagreement or understanding alleged to have been made by such Person with Buyer(or any Person acting on Buyer’s behalf) in connection with any of theContemplated Transactions; or

 

(e)           any Assumed Liabilities.

 

**8.5****         ****LIMITATIONS ONAMOUNT—SELLER.**  Seller shall haveno liability (for indemnification or otherwise) with respect to claims underSection 8.2(a) until the total of all Damages with respect to such mattersexceeds Fourteen Thousand Two Hundred Fifty Dollars ($14,250) and then only forthe amount by which such Damages exceed Fourteen Thousand Two Hundred FiftyDollars ($14,250). However, this Section 8.5 will not apply to claims underSection 8.2(b) through (h) or to matters arising in respect of Sections3.2, 3.5, 3.8, 3.15, 3.19, or 3.20 or to any Breach of any of Seller’srepresentations and warranties of which the Seller had Knowledge at any timeprior to the date on which such representation and warranty is made or anyintentional Breach by Seller of any covenant or obligation.

 

**8.6****         ****LIMITATIONS ONAMOUNT—BUYER.**  Buyer will have noliability (for indemnification or otherwise) with respect to claims underSection 8.4(a) until the total of all Damages with respect to such mattersexceeds Fourteen Thousand Two Hundred Fifty Dollars ($14,250) and then only forthe amount by which such Damages exceed Fourteen Thousand Two Hundred FiftyDollars ($14,250). However, this Section 8.6 will not apply to claimsunder Section 8.4(b) through (e) or matters arising in respect of Sections4.2, 4.5, 4.7, or to any Breach of any of Buyer’s representations andwarranties of which Buyer had Knowledge at any time prior to the date on whichsuch representation and warranty is made or any intentional Breach by Buyer ofany covenant or obligation.

 

**8.7****         ****TIME LIMITATIONS.**

 

(a)           Seller will have liability (forindemnification or otherwise) with respect to any Breach of (i) a covenant orobligation to be performed or complied with prior to the Closing Date (otherthan those in Sections 2.1 and 2.4 and Articles 7 and 9, as to which a claimmay be made at any time) or (ii) a representation or warranty (other than thosein Sections 3.5, 3.8, 3.15, 3.19, or 3.20, as to which a claim may be made atany time), only if on or before September 30, 2006, Buyer notifies Sellerof a claim specifying the factual basis of the claim in reasonable detail tothe extent then known by Buyer.

 

(b)           Buyer will have liability (forindemnification or otherwise) with respect to any Breach of (i) a covenant orobligation to be performed or complied with prior to the Closing Date (otherthan those in Sections 2.3 and 2.4 and Articles 7 and 9, as to which a claimmay be made at any time) or (ii) a representation or warranty (other than thatset forth in Sections 4.2, 4.5 or 4.7, as to which a claim may be made at anytime), only if on or before September 30, 2006, Seller notifies Buyer of a

 

31

----

 

claim specifying the factual basis ofthe claim in reasonable detail to the extent then known by Seller.

 

**8.8****         ****RIGHT OF SETOFF.**  The terms of the Promissory Note provide forcertain rights of set-off with respect to the parties’ mutual obligations.Neither the exercise of nor the failure to exercise such rights of setoff willconstitute an election of remedies or limit the parties in any manner in theenforcement of any other remedies that may be available to them.

 

**8.9****         ****THIRD-PARTY CLAIMS.**

 

(a)           Promptly after receipt by aPerson entitled to indemnity under Section 8.2, 8.3 (to the extentprovided in the last sentence of Section 8.3) or 8.4 (an “IndemnifiedPerson”) of notice of the assertion of a Third-Party Claim against it, suchIndemnified Person shall give notice to the Person obligated to indemnify undersuch Section (an “Indemnifying Person”) of the assertion of suchThird-Party Claim, provided that the failure to notify the IndemnifyingPerson will not relieve the Indemnifying Person of any liability that it mayhave to any Indemnified Person, except to the extent that the IndemnifyingPerson demonstrates that the defense of such Third-Party Claim is prejudiced bythe Indemnified Person’s failure to give such notice.

 

(b)           If an Indemnified Person givesnotice to the Indemnifying Person pursuant to Section 8.9(a) of theassertion of a Third-Party Claim, the Indemnifying Person shall be entitled toparticipate in the defense of such Third-Party Claim and, to the extent that itwishes (unless (i) the Indemnifying Person is also a Person against whom theThird-Party Claim is made and the Indemnified Person determines in good faiththat joint representation would be inappropriate or (ii) the IndemnifyingPerson fails to provide reasonable assurance to the Indemnified Person of itsfinancial capacity to defend such Third-Party Claim and provide indemnificationwith respect to such Third-Party Claim), to assume the defense of suchThird-Party Claim with counsel satisfactory to the Indemnified Person. After noticefrom the Indemnifying Person to the Indemnified Person of its election toassume the defense of such Third-Party Claim, the Indemnifying Person shallnot, so long as it diligently conducts such defense, be liable to theIndemnified Person under this Article 8 for any fees of other counsel orany other expenses with respect to the defense of such Third-Party Claim, ineach case subsequently incurred by the Indemnified Person in connection withthe defense of such Third-Party Claim, other than reasonable costs ofinvestigation. If the Indemnifying Person assumes the defense of a Third-PartyClaim, (i) such assumption will conclusively establish for purposes of thisAgreement that the claims made in that Third-Party Claim are within the scopeof and subject to indemnification, and (ii) no compromise or settlement of suchThird-Party Claims may be effected by the Indemnifying Person without theIndemnified Person’s Consent unless (A) there is no finding or admission of anyviolation of Legal Requirement or any violation of the rights of any Person;(B) the sole relief provided is monetary damages that are paid in full by theIndemnifying Person; and (C) the Indemnified Person shall have no liabilitywith respect to any compromise or settlement of such Third-Party Claimseffected without its Consent. If notice is given to an Indemnifying Person ofthe assertion of any Third-Party Claim and the Indemnifying Person does not,within ten (10) days after the Indemnified Person’s notice is given, givenotice to the Indemnified Person of its election to assume the defense of suchThird-Party Claim, the

 

32

----

 

Indemnifying Person will be bound byany determination made in such Third-Party Claim or any compromise orsettlement effected by the Indemnified Person.

 

(c)           Notwithstanding the foregoing,if an Indemnified Person determines in good faith that there is a reasonableprobability that a Third-Party Claim may adversely affect it or its RelatedPersons other than as a result of monetary damages for which it would beentitled to indemnification under this Agreement, the Indemnified Person may,by notice to the Indemnifying Person, assume the exclusive right to defend,compromise or settle such Third-Party Claim, but the Indemnifying Person willnot be bound by any determination of any Third-Party Claim so defended for thepurposes of this Agreement or any compromise or settlement effected without itsConsent (which may not be unreasonably withheld).

 

(d)           Notwithstanding the provisionsof Section 10.4, Seller hereby consent to the nonexclusive jurisdiction ofany court in which a Proceeding in respect of a Third-Party Claim is broughtagainst any Buyer Indemnified Person for purposes of any claim that a BuyerIndemnified Person may have under this Agreement with respect to suchProceeding or the matters alleged therein and agree that process may be servedon Seller with respect to such a claim anywhere in the world.

 

(e)           With respect to any Third-PartyClaim subject to indemnification under this Article 8: (i) both theIndemnified Person and the Indemnifying Person, as the case may be, shall keepthe other Person fully informed of the status of such Third-Party Claim and anyrelated Proceedings at all stages thereof where such Person is not representedby its own counsel, and (ii) the parties agree (each at its own expense) torender to each other such assistance as they may reasonably require of eachother and to cooperate in good faith with each other in order to ensure theproper and adequate defense of any Third-Party Claim.

 

(f)            Withrespect to any Third-Party Claim subject to indemnification under thisArticle 8, the parties agree to cooperate in such a manner as to preservein full (to the extent possible) the confidentiality of all ConfidentialInformation and the attorney-client and work-product privileges. In connectiontherewith, each party agrees that: (i) it will use its commercially reasonableefforts, in respect of any Third-Party Claim in which it has assumed or participatedin the defense, to avoid production of Confidential Information (consistentwith applicable law and rules of procedure), and (ii) all communicationsbetween any party hereto and counsel responsible for or participating in thedefense of any Third-Party Claim shall, to the extent possible, be made so asto preserve any applicable attorney-client or work-product privilege.

 

**8.10****       ****OTHER CLAIMS.**  A claim for indemnification for any matternot involving a Third-Party Claim may be asserted by notice to the party fromwhom indemnification is sought and shall be paid promptly after such notice.

 

**8.11****       ****INDEMNIFICATION INCASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE.**  THE INDEMNIFICATION PROVISIONS IN THISARTICLE 8 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY ISBASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS(INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW,

 

33

----

 

FRAUDULENT TRANSFER ACT, OCCUPATIONALSAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGALREQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROMWHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT,CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION ORTHE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKINGINDEMNIFICATION.

 

**ARTICLE 9. CONFIDENTIALITY.**

 

**9.1****         ****DEFINITION OFCONFIDENTIAL INFORMATION.**

 

(a)           As used in this Agreement, theterm “Confidential Information” includes any and all of the followinginformation of Seller or Buyer that has been or may hereafter be disclosed inany form, whether in writing, orally, electronically or otherwise, or otherwisemade available by observation, inspection or otherwise by either party or itsRepresentatives (collectively, a “Disclosing Party”) to the other party or itsRepresentatives (collectively, a “Receiving Party”):

 

(i)            allinformation that is a trade secret under applicable trade secret or other law;

(ii)           all information concerningproduct specifications, data, know-how, formulae, compositions, processes,designs, sketches, photographs, graphs, drawings, samples, inventions andideas, past, current and planned research and development, current and plannedprinting or distribution methods and processes, customer lists, current andanticipated customer requirements, price lists, market studies, business plans,computer hardware, Software and computer software and database technologies,systems, structures and architectures;

(iii)          all information concerning thebusiness and affairs of the Disclosing Party (which includes historical andcurrent financial statements, financial projections and budgets, tax returnsand accountants’ materials, historical, current and projected sales, capitalspending budgets and plans, business plans, strategic plans, marketing andadvertising plans, publications, client and customer lists and files,contracts, the names and backgrounds of key personnel and personnel training techniquesand materials, however documented), and all information obtained from review ofthe Disclosing Party’s documents or property or discussions with the DisclosingParty regardless of the form of the communication; and

(iv)          all notes, analyses, compilations,studies, summaries and other material prepared by the Receiving Party to theextent containing or based, in whole or in part, upon any information includedin the foregoing.

 

(b)           Any trade secrets of aDisclosing Party shall also be entitled to all of the protections and benefitsunder applicable trade secret law and any other applicable law. If anyinformation that a Disclosing Party deems to be a trade secret is found by acourt of competent jurisdiction not to be a trade secret for purposes of thisArticle 9, such information shall still be considered ConfidentialInformation of that Disclosing Party for purposes of this Article 9 to theextent included within the definition. In the case of trade secrets, Buyer andSeller each hereby waives any requirement that

 

34

----

 

the other party submit proof of theeconomic value of any trade secret or post a bond or other security.

 

**9.2****         ****RESTRICTED USE OFCONFIDENTIAL INFORMATION.**

 

(a)           Each Receiving Party acknowledgesthe confidential and proprietary nature of the Confidential Information of theDisclosing Party and agrees that such Confidential Information (i) shall bekept confidential by the Receiving Party; (ii) shall not be used for any reasonor purpose other than to evaluate and consummate the Contemplated Transactionsor as otherwise specifically permitted by this Agreement; and (iii) withoutlimiting the foregoing, shall not be disclosed by the Receiving Party to anyPerson, except in each case as otherwise expressly permitted by the terms ofthis Agreement or with the prior written consent of an authorizedrepresentative of Seller with respect to Confidential Information of Seller oran authorized representative of Buyer with respect to Confidential Informationof Buyer.  Buyer and Seller shall eachdisclose the Confidential Information of the other party only to itsRepresentatives who require such material for the purpose of evaluating theContemplated Transactions or for any other purpose specifically permitted bythis Agreement, and are informed by Buyer or Seller, as the case may be, of theobligations of this Article 9 with respect to such information. Buyer andSeller shall each (A) enforce the terms of this Article 9 as to itsrespective Representatives; (B) take such action to the extent necessary tocause its Representatives to comply with the terms and conditions of thisArticle 9; and (C) be responsible and liable for any breach of theprovisions of this Article 9 by it or its Representatives.

 

(b)           Unless and until this Agreementis terminated, Seller shall maintain as confidential any ConfidentialInformation of the Seller relating to the Gaithersburg Business, any of theAssets or the Assumed Liabilities.

 

(c)           From and after the Closing, theprovisions of Section 9.2(a) above shall not apply to or restrict in anymanner Buyer’s use of any Confidential Information of the Seller relating tothe Gaithersburg Business, any of the Assets or the Assumed Liabilities.

 

**9.3****         ****EXCEPTIONS.**  Sections 9.2(a) and (b) do not apply to thatpart of the Confidential Information of a Disclosing Party that a ReceivingParty demonstrates (a) was, is or becomes generally available to the publicother than as a result of (i) a breach of this Article 9 by the ReceivingParty or its Representatives or (ii) a breach prior to Closing of theConfidentiality Agreement by the Receiving Party or its Representatives; (b)was or is developed by the Receiving Party independently of and withoutreference to any Confidential Information of the Disclosing Party; or (c) was,is or becomes available to the Receiving Party on a non-confidential basis froma Third Party not bound by a confidentiality agreement or any legal, fiduciaryor other obligation restricting disclosure. Notwithstanding anything to the contrary in this Agreement, any party tothis Agreement (and each employee, representative, or other agent of suchparty) may disclose to any and all persons, without limitation of any kind, thetax treatment and tax structure of the transactions described in this Agreementand all materials of any kind (including opinions or other tax analysis) thatare provided to it relating to such tax treatment and tax structure.

 

35

----

 

**9.4****         ****LEGAL PROCEEDINGS.**  If a Receiving Party becomes compelled inany Proceeding or is requested by a Governmental Body having regulatoryjurisdiction over the Contemplated Transactions to make any disclosure that isprohibited or otherwise constrained by this Article 9, that ReceivingParty shall provide the Disclosing Party with prompt notice of such compulsionor request so that it may seek an appropriate protective order or otherappropriate remedy or waive compliance with the provisions of thisArticle 9. In the absence of a protective order or other remedy, theReceiving Party may disclose that portion (and only that portion) of theConfidential Information of the Disclosing Party that, based upon advice of theReceiving Party’s counsel, the Receiving Party is legally compelled to discloseor that has been requested by such Governmental Body, provided, however,that the Receiving Party shall use reasonable efforts to obtain reliableassurance that confidential treatment will be accorded by any Person to whomany Confidential Information is so disclosed. The provisions of thisSection 9.4 do not apply to any Proceedings between the parties to thisAgreement.

 

**9.5****         ****RETURN OR DESTRUCTIONOF CONFIDENTIAL INFORMATION.** If this Agreement is terminated, each Receiving Party shall (a) destroyall Confidential Information of the Disclosing Party prepared or generated bythe Receiving Party without retaining a copy of any such material; (b) promptlydeliver to the Disclosing Party all other Confidential Information of theDisclosing Party, together with all copies thereof, in the possession, custodyor control of the Receiving Party or, alternatively, with the written consentof the Disclosing Party, destroy all such Confidential Information; and (c)certify all such destruction in writing to the Disclosing Party, provided,however, that the Receiving Party may retain a list that contains generaldescriptions of the information it has returned or destroyed to facilitate theresolution of any controversies after the Disclosing Party’s ConfidentialInformation is returned.

 

**9.6****         ****ATTORNEY-CLIENTPRIVILEGE.**  The DisclosingParty is not waiving, and will not be deemed to have waived or diminished, anyof its attorney work product protections, attorney-client privileges or similarprotections and privileges as a result of disclosing its ConfidentialInformation (including Confidential Information related to pending orthreatened litigation) to the Receiving Party, regardless of whether theDisclosing Party has asserted, or is or may be entitled to assert, suchprivileges and protections. The parties (a) share a common legal and commercialinterest in all of the Disclosing Party’s Confidential Information that issubject to such privileges and protections; (b) are or may become jointdefendants in Proceedings to which the Disclosing Party’s ConfidentialInformation covered by such protections and privileges relates; (c) intend thatsuch privileges and protections remain intact should either party becomesubject to any actual or threatened Proceeding to which the Disclosing Party’sConfidential Information covered by such protections and privileges relates;and (d) intend that after the Closing the Receiving Party shall have the rightto assert such protections and privileges. No Receiving Party shall admit,claim or contend, in Proceedings involving either party or otherwise, that anyDisclosing Party waived any of its attorney work-product protections,attorney-client privileges or similar protections and privileges with respectto any information, documents or other material not disclosed to a ReceivingParty due to the Disclosing Party disclosing its Confidential Information(including Confidential Information related to pending or threatenedlitigation) to the Receiving Party.

 

36

----

 

**ARTICLE 10. GENERAL PROVISIONS**

 

**10.1****       ****EXPENSES.**  Except as otherwise provided in thisAgreement, each party to this Agreement will bear its respective fees andexpenses incurred in connection with the preparation, negotiation, executionand performance of this Agreement and the Contemplated Transactions, includingall fees and expense of its Representatives. If this Agreement is terminated, the obligation of each party to pay itsown fees and expenses will be subject to any rights of such party arising froma Breach of this Agreement by another party.

 

**10.2****       ****PUBLIC ANNOUNCEMENTS.**  The parties acknowledge that Seller is apublic company subject to the Exchange Act and the SEC rules and regulationsthereunder.  Except as to the extentrequired by law (including the Exchange Act and any SEC rules or regulationsthereunder), without the prior written consent of the other party, neitherSeller or Buyer or its respective Representatives will make, directly orindirectly, any public comment, statement, announcement, press release,communication or similar publicity with respect to this Agreement or theContemplated Transactions; provided, however, Seller and Buyermay make disclosures with respect to this Agreement or the ContemplatedTransactions to its respective Representatives, the Landlord or theLender.  If Seller or Buyer is requiredby law (including the Exchange Act or the SEC rules and regulations thereunder)to make any such disclosure, such party must first provide to the other partythe content of the proposed disclosure, the reasons that such disclosure isrequired by law, and the time and place that the disclosure will be made.  Upon the consummation of Closing, Seller andBuyer will jointly issue a customary press release, the form and content ofwhich shall be as mutually agreed by Seller and Buyer.  Seller and Buyer will consult with eachother concerning the means by which Seller’s employees, customers, suppliers,vendors and others having dealings with Seller will be informed of thisAgreement or the Contemplated Transactions.

 

**10.3****       ****NOTICES**.  All notices, Consents, waivers and othercommunications required or permitted by this Agreement shall be in writing andshall be deemed given to a party when (a) delivered to the appropriate addressby hand or by nationally recognized overnight courier service (costs prepaid);or (b) received or rejected by the addressee, if sent by certified mail, returnreceipt requested, in each case to the following addresses and marked to the attentionof the person (by name or title) designated below (or to such other address orperson as a party may designate by notice to the other party):

 
| Seller: |   |                                                                                                                         |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------|
|    |   | On-Site Sourcing, Inc.  832 North Henry Street  Alexandria, VA  22314  Attention: Jason Parikh, Chief Financial Officer |

 

With a copy of notice to Seller, that shall not be required for thereto be adequate notice hereunder:

 
|   |   | Wilmer Cutler & Pickering  1600 Tysons Boulevard, 10th Floor  Tysons Corner, Virginia 22102  Attention: Thomas W. White |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

 

37

----

 
| Buyer: |   | Colornet Printing and Graphics, Inc.  19200F Chennault Way  Gaithersburg, MD  208789  Attention: Max Wepasnick, Treasurer |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

 

With a copyof notice to Buyer, that shall not be required for there to be adequate noticehereunder:

 
|   |   | Shulman, Rogers, Gandal, Pordy &  Ecker, P.A.  11921 Rockville Pike, Third Floor  Rockville, Maryland 20852  Attention:  Christopher C. Roberts |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**10.4****       ****JURISDICTION; SERVICEOF PROCESS.**  Any Proceedingarising out of or relating to this Agreement or any Contemplated Transactionmay be brought only in the courts of the State of Maryland, County ofMontgomery, or, if it has or can acquire jurisdiction, in the United StatesDistrict Court for the Southern District of Maryland, and each of the partiesirrevocably submits to the exclusive jurisdiction of each such court in anysuch Proceeding, waives any objection it may now or hereafter have to venue orto convenience of forum, agrees that all claims in respect of the Proceedingshall be heard and determined only in any such court and agrees not to bringany Proceeding arising out of or relating to this Agreement or any ContemplatedTransaction in any other court. The parties agree that either or both of themmay file a copy of this Section with any court as written evidence of theknowing, voluntary and bargained agreement between the parties irrevocably towaive any objections to venue or to convenience of forum. Process in anyProceeding referred to in the first sentence of this section may be servedon any party anywhere in the world.

 

**10.5****       ****ENFORCEMENT OFAGREEMENT.**  Each partyacknowledges and agrees that it would be irreparably damaged if any of theprovisions of this Agreement are not performed in accordance with theirspecific terms and that any Breach of this Agreement by the other party couldnot be adequately compensated in all cases by monetary damages alone.Accordingly, in addition to any other right or remedy to which the parties maybe entitled, at law or in equity, each party shall be entitled to enforce anyprovision of this Agreement by a decree of specific performance and totemporary, preliminary and permanent injunctive relief to prevent Breaches orthreatened Breaches of any of the provisions of this Agreement, without postingany bond or other undertaking.

 

**10.6****       ****WAIVER; REMEDIESCUMULATIVE.**  The rights andremedies of the parties to this Agreement are cumulative and not alternative.Neither any failure nor any delay by any party in exercising any right, poweror privilege under this Agreement or any of the documents referred to in thisAgreement will operate as a waiver of such right, power or privilege, and nosingle or partial exercise of any such right, power or privilege will precludeany other or further exercise of such right, power or privilege or the exerciseof any other right, power or privilege. To the maximum extent permitted byapplicable law, (a) no claim or right arising out of this Agreement or any ofthe documents referred to in this Agreement can be discharged by one party, inwhole or in part, by a

 

38

----

 

waiver or renunciation of the claim orright unless in writing signed by the other party; (b) no waiver that may begiven by a party will be applicable except in the specific instance for whichit is given; and (c) no notice to or demand on one party will be deemed to be awaiver of any obligation of that party or of the right of the party giving suchnotice or demand to take further action without notice or demand as provided inthis Agreement or the documents referred to in this Agreement.

 

**10.7****       ****ENTIRE AGREEMENT ANDMODIFICATION.**  This Agreementsupersedes and terminates all prior agreements, whether written or oral,between the parties with respect to its subject matter (including the Letter ofIntent and the Confidentiality Agreement) and constitutes (along with theSchedules, Exhibits and other documents delivered pursuant to this Agreement) acomplete and exclusive statement of the terms of the agreement between theparties with respect to its subject matter. The Recitals are herebyincorporated into this Agreement. Unless the context indicates otherwise, all references to this Agreementinclude its Schedules and Exhibits. This Agreement may not be amended, supplemented, or otherwise modifiedexcept by a written agreement executed by the party to be charged with theamendment.

 

**10.8****       ****SCHEDULES.**

 

(a)           The information in certainSchedules constitutes (i) exceptions to particular representations, warranties,covenants and obligations as set forth in this Agreement or (ii) descriptionsor lists of assets and liabilities and other items referred to in thisAgreement. If there is any inconsistency between the statements in thisAgreement and those in the Schedules (other than an exception expressly setforth as such in the Schedules with respect to a specifically identifiedrepresentation or warranty), the statements in this Agreement will control.

 

(b)           The statements in the Schedulesrelate only to the provisions in the Section of this Agreement to whichthey expressly relate and not to any other provision in this Agreement, exceptthat if a disclosure in the Schedules of any particular exception reasonablyputs the parties on notice of an exception to a related Section of thisAgreement, such disclosure shall be deemed to apply to both the particularSection noted in the Schedules and the related Section of thisAgreement.

 

**10.9****       ****ASSIGNMENTS,SUCCESSORS AND NO THIRD-PARTY RIGHTS.**  No party may assign any of its rights or delegate any of itsobligations under this Agreement without the prior written consent of the otherparty, except that Buyer may collaterally assign its rights hereunder to theLender, or any banks or commercial finance or other lending institutions regularlyengaged in the business of lending money (excluding venture capital, investmentbanking or similar institutions and their affiliates which sometimes engage inlending activities but which are primarily engaged in investments in equitysecurities), providing financing or re-financing to  Buyer.  Subject to thepreceding sentence, this Agreement will apply to, be binding in all respectsupon and inure to the benefit of the successors and permitted assigns of theparties. Nothing expressed or referred to in this Agreement will be construedto give any Person other than the parties to this Agreement any legal orequitable right, remedy or claim under or with respect to this Agreement or anyprovision of this Agreement, except such rights as shall inure to a successoror permitted assignee pursuant to this Section 10.9.

 

39

----

 

**10.10****     ****SEVERABILITY.**  If any provision of this Agreement is heldinvalid, illegal or unenforceable by any court of competent jurisdiction, theother provisions of this Agreement will remain in full force and effect. Anyprovision of this Agreement held invalid, illegal or unenforceable only in partor degree will remain in full force and effect to the extent not held invalid,illegal or unenforceable.

 

**10.11****     ****CONSTRUCTION.**  The headings of Articles and Sections inthis Agreement are provided for convenience only and will not affect itsconstruction or interpretation. All references to “Articles” and “Sections”refer to the corresponding Articles and Sections of this Agreement, includingthe Schedules and Exhibits, unless otherwise specifically provided in thisAgreement.

 

**10.12****     ****TIME OF ESSENCE.**  With regard to all dates and time periodsset forth or referred to in this Agreement, time is of the essence.

 

**10.13****     ****GOVERNING LAW.**  This Agreement will be governed by andconstrued under the laws of the State of Maryland without regard toconflicts-of-laws principles that would require the application of any otherlaw.

 

**10.14****     ****EXECUTION OFAGREEMENT.**  This Agreement maybe executed in one or more counterparts, each of which will be deemed to be anoriginal copy of this Agreement and all of which, when taken together, will bedeemed to constitute one and the same agreement. The exchange of copies of thisAgreement and of signature pages by facsimile transmission shall constituteeffective execution and delivery of this Agreement as to the parties and may beused in lieu of the original Agreement for all purposes. Signatures of theparties transmitted by facsimile shall be deemed to be their originalsignatures for all purposes.

 

IN WITNESS WHEREOF, the parties, bytheir duly authorized officers, have executed and delivered this Agreement asof the date first written above.

 
| SELLER:                                          |                                  | BUYER:                                                               |
|--------------------------------------------------|---------------------------------------|----------------------------------------------------------------------|
| On-Site  Sourcing, Inc.,  a Delaware corporation |                                  | Colornet  Printing and Graphics, Inc.,  a Maryland close corporation |
|                                             |                                  |                                                                 |   |   |
|                                             |                                  |                                                                 |   |   |
| By:                                              |                                  |                                                                 | By: |   |
|                                             | Jason Parikh, Chief Financial Officer |                                                                 |   | Max L. Wepasnick, Chief Executive  Officer |

 

53118– Asset Purchase Agreement (SRGPE second final 10-7).doc

 

40

----

 

**SCHEDULE 1.1**

 

**DEFINITIONS**

 

For purposes of this Agreement, thefollowing capitalized terms and variations thereof have the meanings specifiedor referred to in this Schedule 1.1:

 

“Accounts Receivable” — (a) all tradeaccounts receivable and other rights to payment from customers of Seller andthe full benefit of all security for such accounts or rights to payment,including all trade accounts receivable representing amounts receivable inrespect of goods shipped or products sold or services rendered to customers ofSeller, (b) all other accounts or notes receivable of Seller and the fullbenefit of all security for such accounts or notes, and (c) any claim, remedyor other right related to any of the foregoing.

 

“Agreement” — as defined in the firstparagraph of this Agreement.

 

“Assets” — as defined inSection 2.1.

 

“Assignment and Assumption Agreement” —as defined in Section 2.7(a)(iii).

 

“Assumed Liabilities” — as defined inSection 2.4(a).

 

“Bill of Sale” — as defined inSection 2.7(a)(ii).

 

“Breach” — any breach of, or anyinaccuracy in, any representation or warranty or any breach of, or failure toperform or comply with, any covenant, agreement or obligation, in or of thisAgreement or any other Contract, or any event which with the passing of time orthe giving of notice, or both, would constitute such a breach, inaccuracy orfailure.

 

“Bulk Sales Laws” — as defined inSection 7.11.

 

“Buyer” — as defined in the firstparagraph of this Agreement.

 

“Buyer Indemnified Persons” — asdefined in Section 8.2.

 

“Claims” — claims of Seller againstThird Parties, whether choate or inchoate, known or unknown, or contingent ornon-contingent, including all claims for refund of Taxes and other governmentalcharges of whatever nature.

 

“Closing” — as defined inSection 2.6.

 

“Closing Date” — the date on which theClosing actually takes place.

 

“COBRA” — as defined inSection 3.10(b).

 

41

----

 

“Code” — the Internal Revenue Code of1986.

 

“Confidential Information” — as definedin Section 9.1(a).

 

“Confidentiality Agreement” – the“Mutual Non-Disclosure, Non-Use, Non-Solicitation and Standstill Agreement”dated August 11, 2003, between Seller and Buyer.

 

“Consent” — any approval, consent,ratification, waiver or other authorization.

 

“Contemplated Transactions” — all ofthe transactions contemplated by this Agreement.

 

“Contracts” — any agreement, contract,purchase order, job ticket, Lease, consensual obligation, promise orundertaking (whether written, oral or in electronic format, and whether expressor implied), whether or not legally binding, arising out of or relating to theOverall Business.

 

“Damages” — as defined inSection 8.2.

 

“Disclosing Party” – as defined inSection 9.1(a).

 

“Effective Time” – 11:59 pm onSeptember 30, 2003.

 

“Employee Plans” – all “employeebenefit plans” as defined by Section 3(3) of ERISA, all specified fringebenefit plans as defined in Section 6039D of the Code, and all otherbonus, incentive-compensation, deferred-compensation, profit-sharing,stock-option, stock-appreciation-right, stock-bonus, stock-purchase,employee-stock-ownership, savings, severance, change-in-control,supplemental-unemployment, layoff, salary-continuation, retirement, pension,health, life-insurance, disability, accident, group-insurance, vacation,holiday, sick-leave, fringe-benefit or welfare plan, and any other employeecompensation or benefit plan, agreement, policy, practice, commitment, contractor understanding (whether qualified or nonqualified, currently effective orterminated, written or unwritten) and any trust, escrow or other agreementrelated thereto that (i) is maintained or contributed to by Seller or any othercorporation or trade or business controlled by, controlling or under commoncontrol with Seller (within the meaning of Section 414 of the Code orSection 4001(a)(14) or 4001(b) of ERISA) (“ERISA Affiliate”) or has beenmaintained or contributed to in the last six (6) years by Seller or any ERISAAffiliate, or with respect to which Seller or any ERISA Affiliate has or mayhave any liability, and (ii) provides benefits, or describes policies orprocedures applicable to any current or former director, officer, employee orservice provider of Seller or any ERISA Affiliate, or the dependents of anythereof, regardless of how (or whether) liabilities for the provision ofbenefits are accrued or assets are acquired or dedicated with respect to thefunding thereof .

 

“Encumbrance” — any charge, claim,lien, option, pledge, security interest, mortgage, right of first option, rightof first refusal or similar restriction, including any restriction on use,transfer, receipt of income or exercise of any other attribute of ownership.

 

42

----

 

“Environment” — soil, land surface orsubsurface strata, surface waters (including navigable waters and oceanwaters), groundwaters, drinking water supply, stream sediments, ambient air(including indoor air), plant and animal life and any other environmentalmedium or natural resource.

 

“Environmental, Health and SafetyLiabilities” — any cost, damages, expense, liability, obligation or otherresponsibility arising from or under any Environmental Law or OccupationalSafety and Health Law, including those consisting of or relating to:

(a)           any environmental, health orsafety matter or condition (including on-site or off-site contamination,occupational safety and health and regulation of any chemical substance or product);

(b)           any fine, penalty, judgment,award, settlement, legal or administrative proceeding, damages, loss, claim,demand or response, remedial or inspection cost or expense arising under anyEnvironmental Law or Occupational Safety and Health Law;

(c)           financial responsibility underany Environmental Law or Occupational Safety and Health Law for cleanup costsor corrective action, including any cleanup, removal, containment or otherremediation or response actions (“Cleanup”) required by any Environmental Lawor Occupational Safety and Health Law (whether or not such Cleanup has beenrequired or requested by any Governmental Body or any other Person) and for anynatural resource damages; or

(d)           any other compliance, correctiveor remedial measure required under any Environmental Law or Occupational Safetyand Health Law.

 

The terms “removal,” “remedial” and“response action” include the types of activities covered by the United StatesComprehensive Environmental Response, Compensation and Liability Act of 1980(CERCLA).

 

“Environmental Law” — any LegalRequirements designed to minimize, prevent, punish or remedy the consequencesof actions that damage or threaten the Environment or public health or safety.

 

“ERISA” — the Employee RetirementIncome Security Act of 1974.

 

“Exchange Act” — the SecuritiesExchange Act of 1934.

 

“Excluded Assets” — as defined inSection 2.2.

 

“Existing Customers” — as defined inSection 7.8(a)(v).

 

“GAAP” — generally accepted accountingprinciples for financial reporting in the United States, applied on aconsistent basis.

 

“Gaithersburg Business” — as defined inRecital B.

 

“Gaithersburg Claims” – all Claimswhich are at the Effective Time (or which at any time during the period fromJune 30, 2003, to the Effective Time were) used in the GaithersburgBusiness or arising out of the Gaithersburg Business.

 

43

----

 

“Gaithersburg Contracts” – all SellerContracts which are at the Effective Time (or which at any time during theperiod from June 30, 2003, to the Effective Time were) used in theGaithersburg Business or related to the Gaithersburg Business including SellerContracts with customers, vendors or suppliers of the Gaithersburg Business,but excluding (a) all Contracts with customers as to which Seller fullyperforms its obligations prior to the Effective Time, (b) all Contracts withcustomers as to which Seller has been paid in whole or in part, or has accruedan Account Receivable, prior to the Effective Time, and (c) all Contracts withcustomers as to which Seller will be entitled to any payment underSection 2.2(d) after the Effective Time.

 

“Gaithersburg Facility” – the premiseslocated at 18630 Woodfield Road, Gaithersburg, Maryland 20879-4711, which aresubject to the Gaithersburg Lease.  TheGaithersburg Business is located at the Gaithersburg Facility.

 

“Gaithersburg GovernmentAuthorizations” – all Government Authorizations (including all pendingapplications therefor or renewals thereof) which are at the Effective Time (or whichat any time during the period from June 30, 2003, to the Effective Timewere) used in the Gaithersburg Business, including any occupancy permit for theGaithersburg Facility and any business licenses for the Gaithersburg Business,but excluding any Government Authorizations which expire or terminate in theOrdinary Course of Business  prior tothe Effective Time.

 

“Gaithersburg Intangible Rights andProperty” – all intangible rights and property which are at the Effective Time(or which at any time during the period from June 30, 2003, to theEffective Time were) located at the Gaithersburg Facility or used in theGaithersburg Business, including all Gaithersburg Intellectual Property Assets,going concern value and goodwill of the Gaithersburg Business, telephone,telecopy and e-mail addresses and listings used in the Gaithersburg Business orrelated to the Gaithersburg Business, covenants of confidentiality,non-competition or non-solicitation in favor of Seller used in the GaithersburgBusiness or related to the Gaithersburg Business.

 

“Gaithersburg Intellectual PropertyAssets” – all Trade Secrets which are at the Effective Time (or which at anytime during the period from June 30, 2003, to the Effective Time were)located at the Gaithersburg Facility, used in the Gaithersburg Business orrelated to the Gaithersburg Business, but excluding (a) all Trade Secrets whichare sold by Seller in the Ordinary Course of Business prior to the EffectiveTime, and (b) all Trade Secrets the Seller’s Contract for which expires orterminates in the Ordinary Course of Business prior to the Effective Time.

 

“Gaithersburg Inventories” – allInventories which are at the Effective Time (or which at any time during theperiod from June 30, 2003, to the Effective Time were) located at theGaithersburg Facility, used in the Gaithersburg Business or related to theGaithersburg Business, but excluding all Inventories which are consumed,expended or sold by Seller in the Ordinary Course of Business prior to theEffective Time.

 

“Gaithersburg Lease” – the “Agreement”dated April 27, 2000, between Seller, as the tenant, and the Landlord, asthe landlord, relating to the premises located at 18630 Woodfield Road,

 

44

----

 

Gaithersburg, Maryland 20879-4711,including the five-year renewal provision set forth in Section 39 thereof.

 

“Gaithersburg Lease Assignment” – asdefined in Section 2.7(a)(i).

 

“Gaithersburg Records” – all Recordswhich are at the Effective Time (or which at any time during the period fromJune 30, 2003, to the Effective Time were) located at the GaithersburgFacility, used in the Gaithersburg Business or related to the GaithersburgBusiness, including lists and Records of or relating to customers of theGaithersburg Business (including Records of such customers’ names, addresses,telephone/fax numbers, e-mail addresses and contacts, and of such customers’business, order, payment and credit history, correspondence, and creditrating), referral sources, production reports and Records, service, maintenanceand warranty Records, equipment logs, operating guides and manuals, financialand accounting Records, creative materials, advertising materials, promotionalmaterials, studies, reports, correspondence and other similar documents andRecords.  Notwithstanding the precedingsentence, with respect to personnel Records, the Gaithersburg Records shallinclude, subject to Legal Requirements, only the name, residence address,social security number and Seller’s date of hire for the Hired ActiveEmployees, which shall be set forth on Schedule 5.8.

 

“Gaithersburg Software” – all Softwarewhich is at the Effective Time (or which at any time during the period fromJune 30, 2003, to the Effective Time was) located at the Gaithersburg Facility,used in the Gaithersburg Business or related to the Gaithersburg Business, butexcluding (a) all Software which is consumed, expended or sold by Seller in theOrdinary Course of Business prior to the Effective Time and (b) all Softwarethe Seller’s Lease for which expires or terminates in the Ordinary Course ofBusiness prior to the Effective Time.

 

“Gaithersburg Tangible PersonalProperty” – all Tangible Personal Property which is at the Effective Time (orwhich at any time during the period from June 30, 2003, to the EffectiveTime was) located at the Gaithersburg Facility or used in the GaithersburgBusiness.

 

“Government Authorization” — anyConsent, license, registration or permit issued, granted, given or otherwisemade available by or under the authority of any Governmental Body or pursuantto any Legal Requirement, and all pending applications therefor or renewalsthereof.

 

“Governmental Body” — any:

(a)           federal, state, local,municipal, foreign or other government;

(b)           governmental or quasi-governmentalauthority of any nature (including any agency, branch, department, board,commission, court, tribunal or other entity exercising governmental orquasi-governmental powers);

(c)           body exercising, or entitled toexercise, any administrative, executive, judicial, legislative, police,regulatory or taxing authority or power; or

(d)           official of any of theforegoing.

 

“Hazardous Activity” — thedistribution, generation, handling, importing, management, manufacturing,processing, production, refinement, Release, storage, transfer, transportation,

 

45

----

 

treatment or use (including anywithdrawal or other use of groundwater) of Hazardous Material in, on, under,about or from the Gaithersburg Facility or any part thereof into theEnvironment and any other act, business, operation or thing that increases thedanger, or risk of danger, or poses an unreasonable risk of harm, to persons orproperty on or off the Gaithersburg Facility.

 

“Hazardous Material” — any substance,material or waste which is regulated by any Governmental Body, including anymaterial, substance or waste which is defined as a “hazardous waste,”“hazardous material,” “hazardous substance,” “extremely hazardous waste,”“restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic substance”under any provision of Environmental Law, and including petroleum, petroleumproducts, asbestos, presumed asbestos-containing material orasbestos-containing material, urea formaldehyde and polychlorinated biphenyls.

 

“Improvements” — all buildings,structures, fixtures and improvements located on any real property, includingthose under construction.

 

“Indemnified Person”— as defined inSection 8.9(a).

 

“Indemnifying Person” — as defined inSection 8.9(a).

 

“Inventories” — all inventories ofSeller, including all finished goods, work in process, raw materials,consumables, spare parts and all other materials and supplies to be used orconsumed by Seller in the production of finished goods.

 

“IRS” — the United States InternalRevenue Service and, to the extent relevant, the United States Department ofthe Treasury.

 

“Knowledge” — an individual will bedeemed to have Knowledge of a particular fact or other matter if (a) thatindividual is actually aware of that fact or matter, or (b) a prudentindividual could be expected to discover or otherwise become aware of that factor matter in the course of conducting a reasonably comprehensive investigationregarding the accuracy of any representation or warranty contained in thisAgreement.  A Person (other than anindividual) will be deemed to have Knowledge of a particular fact or othermatter if any individual who is serving, or who has at any time served, as adirector, officer or general manager of that Person (or in any similarcapacity) has, or at any time had, Knowledge of that fact or other matter (asset forth in clauses (a) and (b) above), and any such individual will be deemedto have conducted a reasonably comprehensive investigation regarding the accuracyof the representations and warranties made herein by that Person or individual.

 

“Landlord” — 18630 LaytonsvillePartnership, which is the landlord under the Gaithersburg Lease.

 

“Lease” — any lease or rentalagreement, license, right to use agreement, or installment or conditional saleagreement relating to any tangible or intangible personal property or fixtures,including those pertaining to the leasing, licensing or use of any TangiblePersonal Property or Software, but excluding the Gaithersburg Lease.

 

46

----

 

“Legal Requirement” — any federal,state, local, municipal or foreign law, ordinance, principle of common law,code, regulation, rule, statute or treaty.

 

“Lender” – as defined inSection 2.7(a)(vi).

 

“Lender Subordination Agreement” – asdefined in Section 2.7(a)(vi).

 

“Letter of Intent” – the letter ofintent dated September 22, 2003, from Buyer to Seller, countersigned asaccepted by Buyer on September 22, 2003.

 

“Liability” — with respect to any Person,any liability, debt or obligation of such Person of any kind, character ordescription, whether known or unknown, absolute or contingent, accrued orunaccrued, disputed or undisputed, liquidated or unliquidated, secured orunsecured, joint or several, due or to become due, vested or unvested,executory, determined, determinable or otherwise, and whether or not the sameis required to be accrued on the financial statements of such Person.

 

“Material Gaithersburg Contact” – asdefined in Section 3.14(b).

 

“Nonmaterial Consents” – as defined inSection 2.8(c).

 

“Non-Offset Printing” - as defined inSection 7.8(a)(v).

 

“Occupational Safety and Health Law” —any Legal Requirement designed to provide safe and healthful working conditionsand to reduce occupational safety and health hazards, including theOccupational Safety and Health Act, and any program, whether governmental orprivate (such as those promulgated or sponsored by industry associations andinsurance companies), designed to provide safe and healthful workingconditions.

 

“Order” — any order, injunction,judgment, decree, ruling, assessment or arbitration award of any GovernmentalBody or arbitrator.

 

“Ordinary Course of Business” — anaction taken by a Person will be deemed to have been taken in the OrdinaryCourse of Business only if that action:

(a)           is consistent in nature, scopeand magnitude with the past practices of such Person and is taken in theordinary course of the normal, day-to-day operations of such Person;

(b)           does not require authorizationby the board of directors or shareholders of such Person and does not requireany other separate or special authorization of any nature; and

(c)           is similar in nature, scope andmagnitude to actions customarily taken, without any separate or specialauthorization, in the ordinary course of the normal, day-to-day operations ofother Persons that are in the same line of business as such Person.

 

“Overall Business” – as defined inRecital A.  Prior to the Effective Time,the Overall Business includes the Gaithersburg Business.

 

47

----

 

“Permitted Encumbrances” — as definedin Section 3.5(b).

 

“Person” — an individual, soleproprietorship, partnership, corporation, business trust, limited liabilitycompany, limited liability partnership, joint stock company, trust,unincorporated association, joint venture, or other entity or a GovernmentalBody.

 

“Proceeding” — any action, arbitration,audit, hearing, investigation, litigation or suit (whether civil, criminal,administrative, judicial or investigative, whether formal or informal, whetherpublic or private) commenced, brought, conducted or heard by or before, orotherwise involving, any Governmental Body or arbitrator.

 

“Promissory Note” — as defined in Section 2.7(b)(ii).

 

“Purchase Price” — as defined inSection 2.3.

 

“Receiving Party” – as defined inSection 9.1(a).

 

“Record” — information or data that iswritten, type, printed or otherwise inscribed on a tangible medium or that isstored in an electronic or other medium and is retrievable in perceivable form.

 

“Related Person” —

(a)           With respect to a particularindividual:

(i)            eachother member of such individual’s Family;

(ii)           any Person that is directly orindirectly controlled by any one or more members of such individual’s Family;

(iii)          any Person in which members ofsuch individual’s Family hold (individually or in the aggregate) a MaterialInterest; and

(iv)          any Person with respect to whichone or more members of such individual’s Family serves as a director, officer,partner, executor or trustee (or in a similar capacity).

(b)           With respect to a specifiedPerson other than an individual:

(i)            anyPerson that directly or indirectly controls, is directly or indirectlycontrolled by or is directly or indirectly under common control with suchspecified Person;

(ii)           any Person that holds a MaterialInterest in such specified Person;

(iii)          each Person that serves as adirector, officer, partner, executor or trustee of such specified Person (or ina similar capacity);

(iv)          any Person in which suchspecified Person holds a Material Interest; and

(v)           any Person with respect to whichsuch specified Person serves as a general partner or a trustee (or in a similarcapacity).

For purposes of this definition, (a)“control” (including “controlling,” “controlled by,” and “under common controlwith”) means the possession, direct or indirect, of the power to direct orcause the direction of the management and policies of a Person, whether throughthe ownership of voting securities, by contract or otherwise, and shall beconstrued as such term is used in the rules promulgated under the SecuritiesAct; (b) the “Family” of an individual includes (i) the individual, (ii) theindividual’s spouse, (iii) any other natural person who is related to theindividual or the individual’s spouse within the second degree and (iv) anyother natural person who resides with

 

48

----

 

such individual; and (c) “MaterialInterest” means direct or indirect beneficial ownership (as defined in Rule13d-3 under the Exchange Act) of voting securities or other voting interestsrepresenting at least ten percent (10%) of the outstanding voting power of aPerson or equity securities or other equity interests representing at least tenpercent (10%) of the outstanding equity securities or equity interests in aPerson.

 

“Release” — any release, spill,emission, leaking, pumping, pouring, dumping, emptying, injection, deposit,disposal, discharge, dispersal, leaching or migration on or into theEnvironment or into or out of any property.

 

“Remedial Action” — all actions,including any capital expenditures, required or voluntarily undertaken (a) toclean up, remove, treat or in any other way address any Hazardous Material orother substance; (b) to prevent the Release or Threat of Release or to minimizethe further Release of any Hazardous Material or other substance so it does notmigrate or endanger or threaten to endanger public health or welfare or theEnvironment; (c) to perform pre-remedial studies and investigations orpost-remedial monitoring and care; or (d) to bring all Facilities and the operations conducted thereon intocompliance with Environmental Laws and environmental Government Authorizations.

 

“Representative” — with respect to aparticular Person, any director, officer, manager, employee, agent, consultant,advisor, accountant, financial advisor, legal counsel or other representativeof that Person.

 

“Retained Active Employees” — asdefined in Section 5.8(a).

 

“Restricted Assets” – as defined inSection 2.8(c).

 

“Retained Liabilities” — as defined inSection 2.4(b).

 

“SEC” — the United States Securitiesand Exchange Commission.

 

“Securities Act” — the Securities Actof 1933, as amended.

 

“Security Agreement” – as defined inSection 2.7(a)(v).

 

“Seller” — as defined in the firstparagraph of this Agreement.

 

“Shared Customers” — as defined inSection 7.8(a)(i).

 

“Software” — all computer software andsubsequent versions thereof, including source code, object, executable orbinary code, objects, comments, screens, user interfaces, report formats,templates, menus, buttons and icons and all files, data, materials, manuals,design notes and other items and documentation related thereto or associatedtherewith, including Software which is owned by Seller or leased or licensed toSeller.

 

49

----

 

“Subsidiary” — with respect to anyPerson (the “Owner”), any corporation or other Person of which securities orother interests having the power to elect a majority of that corporation’s orother Person’s board of directors or similar governing body, or otherwisehaving the power to direct the business and policies of that corporation orother Person (other than securities or other interests having such power onlyupon the happening of a contingency that has not occurred), are held by theOwner or one or more of its Subsidiaries.

 

“Tangible Personal Property” — allfixed assets, machinery, equipment, tools, furniture, office equipment,computer hardware, supplies, materials, vehicles and other items of tangiblepersonal property (other than Inventories) of every kind owned, leased orlicensed by Seller (whether or not carried on Seller’s books), together withany express or implied warranty by the manufacturers, sellers, lessors orlicensors of any item or component part thereof and all maintenance records andother documents relating thereto.

 

“Tax” — any income, gross receipts,license, payroll, employment, excise, stamp, property, environmental, customs,vehicle or other title or registration, franchise, employees’ incomewithholding, foreign or domestic withholding, social security, unemployment,disability, real property, personal property, sales, use, transfer, valueadded, alternative, add-on minimum and other tax, fee, assessment, levy,tariff, charge or duty of any kind whatsoever and any interest, penalty,addition or additional amount thereon imposed, assessed or collected by orunder the authority of any Governmental Body or payable under any tax-sharingagreement or any other Contract.

 

“Tax Return” — any return (includingany information return), report, statement, schedule, notice, form,declaration, claim for refund or other document or information filed with orsubmitted to, or required to be filed with or submitted to, any GovernmentalBody in connection with the determination, assessment, collection or payment ofany Tax or in connection with the administration, implementation or enforcementof or compliance with any Legal Requirement relating to any Tax.

 

“Third Party” — a Person that is not aparty to this Agreement.

 

“Third-Party Claim” — any claim againstany Indemnified Person by a Third Party, whether or not involving a Proceeding.

 

“Trade Secrets” – all know-how, tradesecrets, confidential or proprietary information, customer lists, Software,technical information, data, process, technology, and plans.

 

50

----

 

**SCHEDULE 2.1(a)**

 

**LEASEHOLDIMPROVEMENTS**

 

1.             MDLocation Leasehold Improvements

2.             MDRemodeling Cost

3.             LeaseholdImprovements-Electricals

4.             AirconBlower

5.             (3)71/2 ton and (1) 5 ton split aircon system

6.             MDLeaseholder Improvements

7.             NewPress Installation cost

8.             Concreteslab replacement

9.             PempoUprights and Beams – LI

10.           Floorpreparation and application of floor coating system

11.           Paintingof ONSS MD

12.           Electricalconnections for new machine

13.           Cabling,electricals MD

14.           InstallLightings MD

15.           MDImprovements, ceiling, metal studs, doors, insulation

16.           MDImprovement eqpt rental

17.           Circuitfor Bay, lights, Exterior, Receiving Booths, Office

18.           Circuitfor Press, F/Lift, Charger, Bindry, Heat Machine

19.           Renovation,electrical hook-ups, cabling connections

20.           Restroomrenovations

21.           Floorrenovation

22.           LeaseholdImprovement – Gaithersburg

23.           LeaseholdImpr Gaithersburg

24.           Cabling,electrical MD

25.           Remodelingbathrooms/entranc

26.           Renovationwork

27.           Carpentry,concrete plumbing

28.           InstallFurnaces

 

51

----

 

**SCHEDULE 2.1(b)**

 

**EQUIPMENT**

 
| Rosback Stitching Machine                                |
|----------------------------------------------------------|
| Imation 447L-Auto Laminator                              |
| GBC Model 111PM 16 DB-2                                  |
| Versa Punch Model WP 7000                                |
| 7500 Booklet Maker                                       |
| APPLE G3 266 MAC                                         |
| PROSIGNIA 200 SERVER                                     |
| Compaq deskpro  6400x/1000/cd6/64                        |
| 3Com Superstack II Baseline  10/100 24 port              |
| Deskpro EP Celeron 433  4.3GB Computer                   |
| Polar Cutter 45’ Digital  Programmble cutter        |
| Stahl Folder Model B-26  w/cont feeder                   |
| Heidelberg Automatic letter  Press                       |
| Heidelberg KBS Diecutter                                 |
| Heidelberg KBS Diecutter                                 |
| Miller Diecutter 28”  Simplex                       |
| Miscellaneous Press Eqpt                                 |
| Smart 340 Scanner Scitex                                 |
| G3 Mac Workstation                                       |
| G3 Mac Workstation                                       |
| MIsc Office Equipment                                    |
| Blaze 96 Scitex Imaging  Workstation                     |
| Compaq Proliant 1600 PIII  550 Mhz                       |
| Compaq Deskpro EP PIII  128MB 10GB PC                    |
| Apple Power Mac  G4 MT Computer                     |
| Cisco DSU/CSU Module for  Cisco 2000 - Network Equipment |
| Compaq Proliant ML330T,  733MHZ, 64MB PC                 |
| Compaq Deskpro EP 667  Computer                          |
| Compaq EESKPRO EP 667  Computer                          |
| Heidelberg Clamping bars,  Grippers, Motor for suction   |
| Willy Scissors Jack                                      |
| New Heidelberg Quickmaster  4-Color Offset Press         |
| Gretag Densitometer                                      |
| S206V Punching Tool                                      |
| Packaging Assembly USP13-Q  230V                         |
| (6) Stel Modular stations                                |
| (8) Panel Concept Stations                               |
| (2) Steelcase Modular  Stations                          |
| Punch Tool 4:1 O/S Oval  .2475P                          |
| (11) Tract #400 Ergonomic  swivel chairs                 |
| CHallenge Single cornering  machine                      |
| Dell 4100 Series PIII  800MHZ 10GB PC                    |
| Horizon Collator/Saddle  Stitcher-to manuf. booklets     |
| Compaq Deskpro EN SFF 700  mhz 128 MB Computer           |
| HP 1100CXI Printer                                       |

 

52

----

 
| Compaq 36.4GB Hot Plug HD                                     |
|---------------------------------------------------------------|
| Control cables for  Heildeberg Press                          |
| CI-3000 Coil Inserter                                         |
| HP Designjet 5000PS 42inch  6-color printer                   |
| Apple PowerMac G4 Computer                                    |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| DELL PIII 933 GX110 Low  Profile 133 Hhz PC                   |
| Digicoil Coi Inserter                                         |
| Gretag Densitometer                                           |
| Heidelberg Press SM74-6P3+L                                   |
| Compaq Proliant ML350                                         |
| (4) 256MB SR+DRAM                                             |
| (4) 9.1 GB Pluggable Wide  Ultra (Hard Drive)                 |
| Comapq Smart Array 431  Contoller                             |
| (5) Workbench, steel                                          |
| Shelvings                                                     |
| Desk 36 in, w. Hutch                                          |
| Corner Desk, Cherry, Slate                                    |
| Corner Hutch, Cherry, Slate                                   |
| (4) Cabinets, File, 3-drawer                                  |
| Openview PRO MON Port  switch                                 |
| American Power Back Pro UPS  1400VA                           |
| Ethernet bar code-500 emp  cap                                |
| Symbol ls2104 laser sccan  w/trigger                          |
| Sym ocanywhere v10 h/r box  host/remote                       |
| Dymo lavelwriter el60 mac  & win                          |
| 1Brisque4 with trendsetter  connectivity                      |
| 1Trendsetter 3230s                                            |
| 1 Spectrum  oprion/trendsetter 3230-factory install           |
| 1 External disk tower for  bisque w/73GB drive                |
| 3-73GB Drives for external  tower                             |
| Stainless steel sink                                          |
| Optra E312L Laser Printer                                     |
| New 2001 Chev white                                           |
| Compaq EP Series P350 (Tsfr  fr VA, added as new, not in FAS) |
| Dell 600 celeron computer,  17” monitor                  |
| CI-3000 Coil Inserter                                         |
| HP5000 42” Upgrade kit dye  to UV                        |
| HP5500PS 60” UV printer                                  |
| Model T1850 73” rotary  trimmer, base and waste catcher  |
| Power mac G4 dual 1.25GHz  w/apple studio 17” flat panel |
| Apple studio display, 20”  cinema display (flat panel)   |
| HP Laserjet 5si                                               |
| Canon Laserclass 9500 fax                                     |
| Dell Optiplex GX110                                           |

 

53

----

 
| Toshiba TV 19”                       |
|-------------------------------------------|
| Philco TV                                 |
| Macbeth TD904                             |
| APC Backups Pro 650                       |
| APC Backups 500                           |
| APC Backups 450                           |
| NuArc Model VLT51F Drafting  table        |
| Fujifilm Color Art CA680T  III            |
| Fujifilm FLH85P Plate  Processor          |
| NELA Ternes Plate Puncher  Model Infinity |
| Fuji PS800HB FUJI PS-Plate  Processor     |
| Douthitt Corp. Frame Vacuum  Plate        |
| Large Drafting table                      |
| Bacher Plate puncher                      |
| Heidelberg plate puncher                  |
| Dell Power Edge 2400                      |
| Compaq Personal Workstation  500A         |
| APC Backups 650                           |
| APC backups 650                           |
| Lacie CD Recordable                       |
| Storage Dimensions Tape  drive            |
| HP Sure Store Tape 2000                   |
| Umax Vista S8                             |
| On-Line power power supply                |
| Weldotron                                 |
| Nygren-Dahly 3 hole punch                 |
| Challenge Hole Puncher                    |
| Trimmer FC 20A                            |
| Polar Mohr                                |
| Compaq Deskpro                            |
| APC Backups 500                           |
| Snap Server                               |
| Encad Novajet Pro 60E                     |
| Compaq deskpro                            |

 

54

----

 

**SCHEDULE 2.1(c)**

 

**SOFTWARE**

 

1.             (a)           SoftwareLicense Agreement dated as of July 24, 2000, between printCafe Systems,Inc., and Seller, including Attachment 1.1, Attachment 1.2, and Addendum –Other Terms and Conditions.

 

(b)           Invoicesfrom printCafe relating to Item 1(a) above dated October 3, 2002, andOctober 30, 2001, respectively (all paid in full).

 

2.             Axtent Raptor Firewall V6.5

 

3.             MOLP Level C Win 2000 Server

 

4.             MS MOL 5.0 SQL Server

 

5.             Microsoft Business 5.0 Office 2000 Bus.5.0

 

6.             MS Office – Mac.

 

7.             Claris Filemaker Pro v. 5.0

 

8.             Adobe Illustrator 9.0 Upgrade for PowerMac

 

9.             Adobe pagemaker Plus. Pothoshop 5.5.Illus8.0 Acrob 4.0

 

55

----

 

**SCHEDULE 2.1(e)(i)**

 

**CONTRACTSWITH CUSTOMERS**

 

1.             Purchase Order #RV39544 dated 02-01-00from Lockheed Martin Corporation to Seller.

 

2.             Order for Supplies or Services#263-00056485 -00-BPA/G dated 05/10/02 from various Institutes of NIH toSeller.

 

56

----

 

**SCHEDULE 2.1(e)(ii)**

 

**CONTRACTSWITH VENDORS OR SUPPLIERS**

 

1.             (a)           HeidelbergService Contract 700006240 for Heidelberg QuickMaster DI 46-4 (PLUS VERSION)991225, Serial No. 991225.

 

(b)           Invoice#702087971 dated 07/27/02 from Heidelberg to Seller relating to Item #1(a)above (paid in full).

 

2.             Lease Agreement No. E608678,Schedule No,. 00240, between Avaya Financial Services and Seller,including the purchase option therein.

 

57

----

 

**SCHEDULE 2.2(c)**

 

**CERTAINRIGHTS TO PAYMENTWHICH ARE NOT ACCOUNTS RECEIVABLE**

 

Subject to verification by Buyer promptly after Closing:

 
| 1. |   | Invoice #705415 from Washington Printing Supplies |   | $ | 2,060.30 |   |
|----|--------|---------------------------------------------------|--------|---|----------|--------|
| 2. |   | Invoice #95-69609 from Kohl & Madden          |   | $ | 3,476.86 |   |
| 3. |   | Invoice #9002133549 from Xpedex                   |   | $ | 5,175.92 |   |
| 4. |   | Invoice #256514 from Frank Parsons                |   | $ | 3,531.22 |   |

 

58

----

** **

**SCHEDULE 2.2(l)**

 

**CERTAIN EXCLUDEDASSETS**

 

1.             Cannon 105 with RIPattachment. Serial # MND016445.

2.             Xerox Docutech Serial# W11-036797.

3.   1995 GMC W4 14’ Box Truck VIN#J8DB4B1K1S7015530.

 

59

----

 

**SCHEDULE 2.7(c)**

 

**Buyer Encumbrances orLeases Prior to Effective Time**

 

Neither Lender nor Seller shallbe entitled to any Encumbrance on the following:

 

1.             Gaithersburg Lease.

2.             The items listed inthe chart below:

 
|   |   | **Equipment Encumbered or Leased**                                                       |   | **Secured  Party**                      |   | **Financing  Statement**                                                |
|--------|--------|------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------------------------------|
| 1.     |   | Plate  Burner/Scorer                                                                     |   | Vector  Financial                       |   | capital  lease (no UCC on record at SDAT or Mont. Co., MD)              |
| 2.     |   | Konica 7075  Copier                                                                      |   | Advanta  Leasing                        |   | capital  lease - SDAT Financing Statement  #181054845  filed 8/4/2000   |
| 3.     |   | Company  Truck –  Toyota 4 Runner                                              |   | Toyota  Financing Cc                    |   | see  certificate of title                                               |
| 4.     |   | Company  Truck – GM delivery van                                                    |   | GMAC                                    |   | see  certificate of title                                               |
| 5.     |   | Duplo  Bookmaker and related items, as more fully described in the financing  statement  |   | Heller/GE  Capital                      |   | SDAT  Financing Statement   #181078004   filed 3/26/2001                |
| 6.     |   | Company  Truck – Ford delivery truck                                                |   | Ford Motor  Credit                      |   | see  certificate of title                                               |
| 7.     |   | Proofers/CTP/Mail  and related items, as more fully described in the financing statement |   | US Bancorp                              |   | SDAT   Financing Statement   #181131077   filed 9/23/2002               |
| 8.     |   | Komori L528                                                                              |   | Heller/GE  Capital                      |   | chattel  mortgage (no UCC on record at SDAT or Mont. Co., MD)           |
| 9.     |   | Konica 7085  Copier, as more fully described in the financing statement                  |   | US Bancorp                              |   | SDAT   Financing Statement   #181154907   filed 5/15/2003               |
| 10.    |   | Toshiba  copier, as more fully described in the financing statement                      |   | ABB  Structured Finance (Americas) Inc. |   | true lease -  SDAT   Financing Statement   #181125303   filed 7/18/2002 |

 

60

----

 

**SCHEDULE 2.8(c)**

 

**GREATAMERICA LEASE**

 

1.             Withrespect to the Lease Agreement last signed 12/3/99 between GreatAmerica LeasingCorporation and Seller, including the purchase option therein:

 

(a)           If Seller can buyoutsaid lease for $3,104 or less (16 monthly payments x $194/month = $3,104), thenSeller shall so buyout said lease and promptly thereafter Buyer shall reimbursethe Seller in the amount of said buyout.

 

(b)           If Seller is unable tobuyout said lease for $3,104 or less, then Seller shall assign said lease toBuyer, and Buyer shall accept said assignment.

 

61

----

 

**SCHEDULE 3.2(c)**

 

**SELLER’S REQUIREDNOTICES AND CONSENTS**

 

Seller needs to obtain Consentswith respect to the following:

 

1.             GaithersburgLease.

 

2.             LeaseAgreement last signed 12/3/99 between GreatAmerican Leasing Corporation andSeller, including the purchase option therein.

 

3.             LeaseAgreement No. E608678, Schedule No,. 00240, between Avaya Financial Servicesand Seller, including the purchase option therein.

 

4.             SoftwareLicense Agreement dated as of July 24, 2000, between printCafe Systems, Inc.,and Seller, including Attachment 1.1, Attachment 1.2, and Addendum – OtherTerms and Conditions.

 

5.             Consentof ONSS Board of Directors.

 

6.             Consentof Wachovia (formally First Union) Bank in the form already provided to Sellerprior to Closing.

 

7.             Consent to assignmentfor Heidelberg Service Contract.

 

8.             Releasefrom Branch Banking & Trust relating to a financing statement filed byCommerce Bank, in the form provided to Seller prior to Closing.

 

62

----

 

**SCHEDULE 3.5(a)**

 

**CERTAIN PERMITTEDREAL ESTATE ENCUMBRANCES**

 

1.             Gaithersburg Lease.

 

**SCHEDULE 3.5(b)**

 

**PERMITTED NON-REALESTATE ENCUMBRANCES**

 

1.             None.

 

**SCHEDULE 3.11(b)**

 

**GAITHERSBURGGOVERNMENT AUTHORIZATIONS**

 

1.             Maryland businesslicense.

 

**SCHEDULE 3.14(a)**

 

**CERTAIN GAITHERSBURGCONTRACTS**

 

1.             None.

 

63

----

 

**SCHEDULE 3.14(b)**

 

**MATERIAL GAITHERSBURGCONTRACTS**

 

1.             Potentiallyonly — Purchase Order #RV39544 dated 02-01-00 from Lockheed Martin Corporationto Seller.

 

2.             Potentiallyonly — Order for Supplies or Services #263-00056485 -00-BPA/G dated 05/10/02from various Institutes of NIH to Seller.

 

3.             LeaseAgreement last signed 12/3/99 between GreatAmerican Leasing Corporation andSeller, including the purchase option therein.

 

4.             LeaseAgreement No. E608678, Schedule No,. 00240, between Avaya Financial Servicesand Seller, including the purchase option therein.

 

5.             HeidelbergService Contract 700006240 for Heidelberg QuickMaster DI 46-4 (PLUS VERSION)991225, Serial No. 991225.

 

64

----

 

**SCHEDULE 3.14(c)**

 

**EXCEPTIONS**

 

1.             See Schedule3.2(c) re required Consents.

** **

**SCHEDULE 3.14(d)**

 

**EXCEPTIONS**

 

1.             None.

** **

**SCHEDULE 3.17(b)**

 

**EXCEPTIONS**

 

1.             None.

** **

**SCHEDULE 3.18**

 

**SOFTWARE CONTRACTS**

 

1.             See Schedule2.1(c).

 

**SCHEDULE 3.19**

 

**SELLER’S BROKERS OR FINDERS**

 

1.             Invoice from JuddHill of Blue Star Capital for finder’s fees.

 

**SCHEDULE 5.8**

 

**RETAINED ACTIVEEMPLOYEES**

 

1.             Takia Fagans

2.             Kenneth Minor

 

65

----

 

**SCHEDULE 7.1(b)**

 

**ACTIVE EMPLOYEES TOBE OFFERED EMPLOYMENT BY BUYER**

 

1.             Active Employees to be offeredemployment by Buyer:

 

Altman, Stuart

Barnett, Albert

Broomall, Donald

Broomall, Tony

Edlund, Paul

LeBlanc, Michael

Perlman, Edward

Pusateri, Robert

Reynolds, Theodore

Saah, Jan

Wells, James

Whisman, Joe

 

2.             Active Employees to be offeredemployment by Buyer, but at a reduced rate of pay:

 

Anthony, Robert

Frost, Melva

Remington, Louis

 

66

----

 

**SCHEDULE 7.8(a)(i)**

 

**SHARED CUSTOMERS**

 

 

1.             The Shared Customers are those marked with anasterick on the lists of Existing Customers set forth on Schedule 7.8(a)(v).

 

67

----

 

**SCHEDULE 7.8(a)(v)**

**EXISTING CUSTOMERS**

1.     TheExisting Customers are the following:

 
| **Rep:  Barnett  Custno** |   | **Company**                             |   | **Rep:  Pearlman  Custno** |   | **Company**                                      |   | **Rep:  Broomall  Custno** |   | **Company**                              |   |
|---------------------------|--------|-----------------------------------------|--------|----------------------------|--------|--------------------------------------------------|--------|----------------------------|--------|------------------------------------------|--------|
| AES001                    |   | AES  Corporation                        | *****  | AES001                     |   | AES  Corporation                                 | *****  | AC&001                 |   | Ault  Clark & Assoc., LTD            |   |
| AGM001                    |   | American  Gear Manufacturer’s Assn |   | AGO001                     |   | Agora  Publishing                                |   | ACD001                     |   | Alexandria  Country Day School           |   |
| AHA001                    |   | American  Heart Association             |   | AOC001                     |   | Association  of Community Cancer Centers         |   | APR001                     |   | Ansco  Printing                          |   |
| ALI002                    |   | Alignment  Strategies                   | *****  | ARE002                     |   | Ambrosia  Grille                                 |   | ASC001                     |   | Aspen  Systems Corporation               |   |
| ASI002                    |   | American  Society Interior Designers    |   | ART003                     |   | Art  Litho                                       |   | AWC001                     |   | Austin  Weston Center                    |   |
| CAP001                    |   | Capital  Educators                      | *****  | ASC003                     |   | All  Saints Catholic Church                      |   | BFF001                     |   | Best  Friends Foundation                 |   |
| CCC002                    |   | Core  Communications Corp.              |   | BWC001                     |   | Business  Wire Corp., Inc.                       |   | BSC002                     |   | Bay  Saver, Corp.                        |   |
| EMA001                    |   | Envelope  Manufacturers Association     |   | CD&002                 |   | Cline  Davis & Mann, Inc.                    |   | BSY001                     |   | BAE  Systems                             |   |
| FAA001                    |   | FAA                                     |   | CES001                     |   | Archstone-Smith                                  | *****  | CAC001                     |   | CACI                                     |   |
| FAA002                    |   | FAA  - New England Region               |   | CES003                     |   | Charles  E. Smith Commercial Realty              | *****  | CAM001                     |   | Community  Associations Management       |   |
| FP&001                |   | Florida  Power & Light Company      |   | CFF001                     |   | Cystic  Fibrosis Foundation                      |   | CAT001                     |   | Chemical  Automation Technology          |   |
| HER001                    |   | Hospitality  Education Resource         |   | CFS001                     |   | Consortium  for School Networking                |   | CHO001                     |   | Charleston  Properties                   |   |
| HER002                    |   | HERO                                    |   | CIN006                     |   | Cover,  Inc                                      |   | CIN003                     |   | Concepts,  Inc.                          |   |
| HGY001                    |   | Hills  Gymnastics                       |   | CSP002                     |   | Cystic  Fibrosis Services                        |   | COC001                     |   | Camp  Olympia Country Day School         |   |
| HHM001                    |   | Howard  Hughes Medical Institute        | *****  | DII001                     |   | Dimensions  International                        |   | D&P001                 |   | Designers  & Planners                |   |
| HSP001                    |   | Head  Start Publications                | *****  | DLM001                     |   | DC  Life Media                                   |   | DBI001                     |   | Dragon  Bridge, Inc.                     |   |
| IAC001                    |   | Intl.  Anti-Counterfeiting Coalition    | *****  | FM187                      |   | NCQA                                             |   | DCC003                     |   | Discovery  Creek Children’s Museum  |   |
| IGR002                    |   | Immix  Group                            |   | FM225                      |   | Reznick  Fedder & Silverman                  | *****  | DCI001                     |   | Digital  Color Ink                       |   |
| INT010                    |   | Intellibridge  Corporation              |   | FMC003                     |   | Fraunhofer  MD, Center for Experimental Software |   | EFT001                     |   | Eastcoast  Fundraising t/a Jeanne’s |   |
| JLC001                    |   | Johnston,  Lemon Co., Inc.              |   | HAS001                     |   | Hastings  Group                                  |   | EXP001                     |   | EXPERIS                                  |   |
| MCO005                    |   | MH  Concepts                            |   | HCH001                     |   | Harvest  Church                                  |   | FUT001                     |   | Futrex                                   |   |
| MEM002                    |   | MYER-EMCO                               | *****  | HLC001                     |   | Healthcare  Leadership Council                   |   | GSA001                     |   | GSA/FSS                                  |   |
| MIS001                    |   | Missaticum                              |   | ICG001                     |   | Infinity  Conference Group                       |   | HNS001                     |   | Hughes  Network Systems                  |   |
| NCI002                    |   | NCIIA  - National Collegiate            | *****  | IEC001                     |   | Independent  Electrical Contractors              | *****  | HPI001                     |   | Hewlett  Packard, Inc.                   |   |

 

68

----

 
| NCS001 |   | National  Corrugated Steel Pipe Association | *****  | INF001     |   | Inform  Business Systems Inc                       |   | ICH001     |   | Interfaith  Chapel                      |   |
|--------|--------|---------------------------------------------|--------|------------|--------|----------------------------------------------------|--------|------------|--------|-----------------------------------------|--------|
| NCS002 |   | National  Center for State Courts           | *****  | ISM001     |   | Information  Systems Marketing, Inc.               | *****  | IRR001     |   | Investor  Responsibility Research       |   |
| NEM001 |   | National  Electrical Manufacturer           | *****  | MHM002     |   | M.  H. Meyerson & Co., Inc.                    |   | JG&001 |   | JL  Gainer & Associates             |   |
| NHA001 |   | National  Healthcare Anti-Fraud Assn        | *****  | MLA002     |   | Maxsell  Lawn and Landscaping                      |   | LIN002     |   | LKC,  Inc.                              |   |
| NHA002 |   | NHCAA-Institute  for Health Care            | *****  | MLD001     |   | Marriott  Lodging Design & Production Svcs.    |   | LOC005     |   | Lockheed  Martin                        |   |
| NRA001 |   | NRA  Institute for Legislative Actio        | *****  | MWM001     |   | Moms  With a Mission                               |   | LOC006     |   | Lockheed  Martin Corp                   |   |
| PNA001 |   | National  Associaton of PIA                 |   | NAD001     |   | National  Automobile Dealers                       |   | LOC007     |   | Lockheed  Martin                        |   |
| PTI001 |   | Pal  Tech, Inc.                             | *****  | NIH001     |   | National  Institute of Health                      |   | LTC001     |   | Long  Term Care Planning Services, Inc. |   |
| RRU001 |   | River  Road Unitarian Church                |   | NRI001     |   | National  Reprographics, Inc.                      |   | MBS001     |   | MAC  Business Solutions                 |   |
| SFH002 |   | Society  for Human Resource Management      | *****  | NWM001     |   | Nigeria  Whispers Magazine                         |   | MCO002     |   | MGM  Communications                     |   |
| SMD001 |   | Synectics  for Mgmt Decisions, Inc.         | *****  | PCC005     |   | Pohanka  Collision Center                          |   | MMA001     |   | Most  Mail                              |   |
| SMW001 |   | Sugarloaf  Mountain Works                   |   | PE&001 |   | Pharmaceutical  Education & Research Institute | *****  | MPR001     |   | Minuteman  Press                        |   |
| TAS001 |   | The  Ad Store                               |   | PPI002     |   | Print  Promotions, Inc.                            |   | MST001     |   | Management  Support Technology, Inc.    |   |
| TEP001 |   | The  Export Practitioner                    |   | PRI006     |   | PricewaterhouseCoopers                             |   | NMB001     |   | NEA  Member Benefits                    |   |
| TMC001 |   | The  Mills Corporation                      | *****  | RFS001     |   | Reznik,  Fedder & Silverman                    | *****  | QCR001     |   | Quartermaine  Coffee Roasters           |   |
| TTR001 |   | The  Trademark Register                     |   | SBS001     |   | Swidler  Berlin Shereff Friedman LLP               |   | RHD001     |   | Rockville  Harley Davidson              |   |
| TWI002 |   | Tropic  Wash Inc                            |   | SCB003     |   | St.  Charles Borromeo Parish                       |   | RTI001     |   | Realty  Tools, Inc.                     |   |
| ULI001 |   | Urban  Land Institute                       | *****  | SJT001     |   | St.  John the Apostle R.C. Church                  |   | SBS002     |   | Small  Business Success, Inc.           |   |
| WSC001 |   | Washington  Shakespeare Company             |   | SLS001     |   | Sylvan  Learning Systems, Inc.                     |   | SEX001     |   | Staff  Xpress                           |   |
|   |   | Kenny’s  Jewelry Repair                |   | SRO001     |   | Shulman  Rogers Gandal Pordy                       |   | SJE001     |   | St.  John’s Episcopal School       |   |
|   |   |                                        |   | STC001     |   | St.  Theresa Church                                |   | SWI002     |   | Sue  Widome                             |   |
|   |   | Totals                                      |   | TAF001     |   | The  Assoc. for Research in Vision and Opthamology |   | TCB001     |   | The  Chesapeake Biological Lab.         |   |
|   |   |                                        |   | TCO001     |   | The  Diocese of Arlington                          |   | TCC006     |   | The  Campagna Center                    |   |
|   |   |                                        |   | TMC001     |   | The  Mills Corporation                             | *****  | TTR001     |   | The  Trademark Register                 |   |
|   |   |                                        |   | TTR001     |   | The  Trademark Register                            |   | UAR001     |   | Under  Armour                           |   |
|   |   |                                        |   |       |   |                                               |   | UEF001     |   | Ummah  Endowment Fund                   |   |
|   |   |                                        |   |       |   |                                               |   | WAN001     |   | WANADA                                  |   |
|   |   |                                        |   |       |   |                                               |   | WES001     |   | Westat                                  |   |
|   |   |                                        |   |       |   |                                               |   | ZII001     |   | Zylab  International Inc                |   |

 

69

----

 

**EXHIBIT 2.5**

 

**ALLOCATION OFPURCHASE PRICE**

 

In accordance with IRS Form8594:

 
| (a)    |   | Classes I to V assets (inclusive) | **—** | $ | 1,325,000 |   |
|--------|--------|-----------------------------------|------------|---|-----------|--------|
| (a)    |   | Class VI  assets                  | **—** | $ | 50,000    |   |
| (b)    |   | Class VII  assets                 | **—** | $ | 50,000    |   |
|   |   | Total                             |       | $ | 1,425,000 |   |

 

**EXHIBIT 2.7(a)(i)**

 

**GAITHERSBURG LEASEASSIGNMENT**

 

The Gaithersburg LeaseAssignment shall be in the form attached hereto and incorporated herein.

 

**EXHIBIT 2.7(a)(ii)**

 

**BILL OF SALE**

 

The Bill of Sale shall be inthe form attached hereto and incorporated herein.

 

**EXHIBIT 2.7(a)(iii)**

 

**ASSIGNMENT ANDASSUMPTION AGREEMENT**

 

The Assignment and AssumptionAgreement shall be in the form attached hereto and incorporated herein.

 

**EXHIBIT 2.7(a)(v)**

 

**SECURITY AGREEMENT**

 

The Security Agreement shall bein the form attached hereto and incorporated herein.

 

70

----

 

**EXHIBIT 2.7(a)(vi)**

 

**LENDER SUBORDINATIONAGREEMENT**

 

The Lender SubordinationAgreement (both the Subordination of Debt Agreement and the lien subordinationletter) shall be in the forms attached hereto and incorporated herein.

 

**EXHIBIT 2.7(b)(i)**

 

**PROMISSORY NOTE**

 

The Promissory Note shall be inthe form attached hereto and incorporated herein.

 

71

----