Execution Copy
October
20, 2004 
11:00 AM  




STOCK PURCHASE
AGREEMENT 



BY AND AMONG 



WIDEPOINT CORPORATION 



AND 



OPERATIONAL RESEARCH
CONSULTANTS, INC. 



AND 



THE SHAREHOLDERS 



OF 



OPERATIONAL RESEARCH CONSULTANTS,
INC. 



Dated as of October
14, 2004 










STOCK PURCHASE
AGREEMENT 



        This
STOCK PURCHASE AGREEMENT, dated as of October 14, 2004, is entered into by and
among RICHARD L. MONTGOMERY, FRED D. THORNTON and DANIEL E.
TURISSINI, each a resident of the state of Virginia (each, a
“Shareholder” and collectively, the “Shareholders”); WIDEPOINT
CORPORATION, a Delaware corporation (the “Purchaser”); and
OPERATIONAL RESEARCH CONSULTANTS, INC., a Virginia corporation (the
“Company”). Capitalized terms used and not otherwise defined herein have the
meanings set forth in Article 10. 



RECITALS 



        A.                 The
Shareholders own all of the issued and outstanding capital stock of the
          Company.  




        B.                 The
Purchaser desires to purchase and acquire from each Shareholder, and each
          Shareholder desires to sell and transfer to the Purchaser, the shares of
Company           Common Stock (as defined in Section 2.3(a)) owned by such Shareholder
          immediately prior to the Closing (as defined in Section 1.2), which in the
          aggregate will constitute all of the issued and outstanding Company Common
Stock           at such time, for the consideration, and upon the terms and subject to
the           conditions set forth in this Agreement and the related documents to be
executed           and delivered in connection herewith (the “Acquisition”).  




        C.                 The
Company, the Shareholders and the Purchaser desire to make certain
          representations, warranties, covenants and agreements in connection with the
          Acquisition.  




        NOW,
THEREFORE, in consideration of the covenants, representations and warranties set forth
herein, intending to be legally bound hereby, the parties agree as follows: 



ARTICLE 1 
THE
ACQUISITION  



        1.1    
The Acquisition. Upon the terms and subject to the conditions set forth in this
Agreement and upon the representations and warranties made herein by each of the parties
to the other, on the Closing, the Purchaser shall purchase and acquire from the
Shareholders, and the Shareholders shall sell and transfer to the Purchaser, all shares
of Company Common Stock issued and outstanding immediately prior to the Closing in
exchange for the Acquisition Consideration (as defined in Section 1.4). Following the
Closing, the Purchaser shall own all of the issued and outstanding equity and any other
ownership interests of the Company.  




        1.2    
Closing. Unless this Agreement is earlier terminated pursuant to Section 8.1, the
closing of the Acquisition (the “Closing”), which is expected to take place on
or about October 22, 2004, will take place upon satisfaction or waiver of the conditions
set forth in Article 6, at the offices of Williams Mullen, 8270 Greensboro Drive, Suite
700, McLean, Virginia 22102, unless another place or time is agreed to by the Purchaser
and the Shareholders.  





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        1.3    
Directors and Officers of Company After Closing. Immediately after the Closing, the
directors of the Company shall be Steve L. Komar, James T. McCubbin, Daniel E. Turissini
and Mark C. Fuller, who shall hold office in accordance with the certificate of
incorporation and bylaws of the Company. Immediately after the Closing, Daniel E.
Turissini shall be the President and Chief Executive Officer of the Company, and James T.
McCubbin shall be the Secretary and Treasurer of the Company, each to hold office in
accordance with the bylaws of the Company. 



        1.4    Acquisition
Consideration. 




            (a)                 Upon
the terms and subject to the conditions set forth in this Agreement and           upon
the representations, warranties covenants and agreements of the Company and           the
Shareholders contained herein, and in exchange for all of the shares of           Company
Common Stock issued and outstanding immediately prior to the Closing,           the
Purchaser shall:  




                (i)                 at
the Closing, (x) pay to the Shareholders, as specified in Section           1.4(a)(i)(x)
of the Company Disclosure Schedule, the aggregate of Five Million           Dollars
($5,000,000) payable in a combination of cash and Purchaser Stock, less           the
Receivables Holdback (as hereinafter defined), as specified in Section           1.4(a)
of the Company Disclosure Schedule (the “Aggregate Closing           Amount”),
and (y) cause certificates evidencing the Maximum Stock           Consideration,
designated as specified in Section 1.4(a)(i)(y) of the Company           Disclosure
Schedule, to be issued and delivered to the Escrow Agent and held           pursuant to
the terms of the Escrow Agreement;  




                (ii)                 within
five (5) Business Days after the filing with the Securities and Exchange
          Commission of the Purchaser’s annual report on Form 10-K for the fiscal
          year ended December 31, 2004, cause the Escrow Agent to release the 2004 Stock
          Consideration, in the aggregate amount determined pursuant to Section 1.4(c)
          hereof, and deliver same to the Shareholders;  




                (iii)                 within
five (5) Business Days after the filing with the Securities and Exchange
          Commission of the Purchaser’s annual report on Form 10-K for the fiscal
          year ended December 31, 2005, (x) cause the Escrow Agent to release the 2005
          Stock Consideration, in the aggregate amount determined pursuant to Section
          1.4(d)(i) hereof, and deliver same to the Shareholders and (y) pay to the
          Shareholders, as specified in Section 1.4(a)(iii) of the Company Disclosure
          Schedule, the aggregate amount determined pursuant to Section 1.4(d)(ii) hereof
          (less any set-offs or recoupments as provided under Section 1.5); and  




                (iv)                 five
(5) Business Days after the filing with the Securities and Exchange           Commission
of the Purchaser’s annual report on Form 10-K for the fiscal           year ended
December 31, 2006, pay to the Shareholders, as specified in Section           1.4(a)(iv)
of the Company Disclosure Schedule, the aggregate of the Contingent           Earnout
Payment (less any set-offs or recoupments as provided under Section 1.5)
          (collectively, the Aggregate Closing Amount, the Actual Stock Consideration,
the           Deferred Cash Payment and the Contingent Earnout Payment shall be referred
to as           the “Acquisition Consideration”).  





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            (b)                 Notwithstanding
anything to the contrary in this Agreement, if the parties in           good faith
dispute the amount of any Clawback Amount or Loss (if any) as           provided in
Section 1.5 below, that portion of (i) the Actual Stock           Consideration, (ii) the
Deferred Cash Payment (iii) amounts collected by the           Purchaser that are
attributable to the Receivables Holdback, and/or (iv) the           Contingent Earnout
Payment, that is in dispute shall not be payable to the           Shareholders until
after resolution of such dispute.  




            (c)                 Within
five (5) Business Days after the filing with the Securities and Exchange
          Commission of the Purchaser’s annual report on Form 10-K for the fiscal
          year ended December 31, 2004, the Purchaser shall compute the amount of the
2004           Stock Considerationas follows:  




	 	
If
ORC 2004 EBITDA is less than or equal to the ORC 2004 EBITDA Floor, the amount of the
2004 Stock Consideration will be zero. If ORC 2004 EBITDA is greater than the ORC 2004
EBITDA Target, the amount of the 2004 Stock Consideration will be One Million Dollars
($1,000,000) divided by the Strike Price. If ORC 2004 EBITDA is greater than the ORC 2004
EBITDA Floor but less than the ORC 2004 EBITDA Target, the amount of the 2004 Stock
Consideration shall be equal to (I) the result obtained by multiplying (a) the amount by
which the ORC 2004 EBITDA exceeds the ORC 2004 EBITDA Floor by (b) two, and (II) dividing
the product by the Strike Price. 






            (d)                 Within
five (5) Business Days after the filing with the Securities and Exchange
          Commission of the Purchaser’s annual report on Form 10-K for the fiscal
          year ended December 31, 2005, the Purchaser shall compute the following
amounts:  




	 	(i) 	2005
Stock Consideration






	 	
If
ORC 2005 EBITDA is less than or equal to the ORC 2005 EBITDA Floor, the amount of the
2005 Stock Consideration to be delivered to the Shareholders pursuant to Section
1.4(a)(iii)(x) will be zero. If ORC 2005 EBITDA is greater than the ORC 2005 EBITDA
Floor, the amount of the 2005 Stock Consideration will be equal to the sum of:  







	 	        (x)
            the lesser of (1) $1,500,000 divided by the Strike Price, and (2) the result
               obtained by (I) multiplying (a) the amount by which ORC 2005 EBITDA
exceeds the                ORC 2005 EBITDA Floor by (b) four, and (II) dividing the
product by the Strike                Price; plus 








	 	        (y) if
ORC 2004 EBITDA was less than the ORC 2004 EBITDA Target and ORC 2005 EBITDA
               exceeds the ORC 2005 EBITDA Target, the result obtained by (I) multiplying
(a)                the lesser of (1) the ORC 2004 EBITDA Deficit and (2) the amount by
which ORC                2005 EBITDA exceeds the ORC 2005 EBITDA Target by (b) two and
(II) dividing the                product by the Strike Price.  








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In
no event shall the sum of the 2004 Stock Consideration and the 2005 Stock Consideration
exceed an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) divided
by the Strike Price. In the event the Maximum Stock Consideration exceeds the Actual
Stock Consideration, the shares of Purchaser Stock representing the difference shall be
deemed forfeited by the Shareholders (in the respective amounts applicable to each) and
such shares shall be released and returned to the Purchaser by the Escrow Agent
immediately after the determination made pursuant to this Section 1.4(d)(i). Thereafter,
the Shareholders shall have no claim, lien or other interest in such shares. 






	 	(ii) 	Deferred
Cash Payment Amount






	 	
If
ORC 2005 EBITDA is less than or equal to the ORC 2005 EBITDA Cash Floor, the amount
payable pursuant to Section 1.4(a)(iii)(y) will be zero. If ORC 2005 EBITDA is greater
than the ORC 2005 EBITDA Cash Floor, the amount payable pursuant to Section
1.4(a)(iii)(y) will be equal to the lesser of (1) $500,000 and (2) the product obtained
by (i) multiplying the amount by which ORC 2005 EBITDA exceeds the ORC 2005 EBITDA Cash
Floor by (ii) four, in either case plus interest accrued on such amount at the rate of
four percent (4%) per annum from the date of Closing to the date of payment. 






	 	1.5 	Adjustments
to the Acquisition Consideration.






            (a)                 The
parties agree that the Aggregate Closing Amount payable at Closing shall be
          reduced by the face amount of the Company’s accounts receivable that have
          been outstanding ninety (90) days or more as of Closing (the “Aged
          Receivables”). The amount heldback as provided in the above sentence shall
          be referred to as the “Receivables Holdback.” The Purchaser shall
          retain and deliver the Receivables Holdback as provided in this Section 1.5(a).
          At the end of each calendar month following Closing, the Purchaser shall
deliver           to the Shareholders any amount collected under the Aged Receivables lessany
amounts expended by the Purchaser in connection with any           applicable collection
efforts. The Purchaser shall have no obligation to deliver           or otherwise pay to
the Shareholders any uncollected portion of the Receivables           Holdback.
Notwithstanding anything in the foregoing to the contrary, (i)           following the
one hundred eighty (180) day period immediately following Closing,           the
Purchaser shall have no further obligation to deliver to the Shareholders           any
amount thereafter received under the Aged Receivables and the Purchaser           shall,
in its sole discretion, be entitled to write-off and cease collections           efforts
with respect to any Aged Receivable then outstanding (whether in whole           or in
part); (ii) nothing set forth herein shall obligate the Purchaser in any           way to
engage in collection practices with respect to the Aged Receivables other           than
practices reasonably consistent with its usual and ordinary collection
          practices then in effect; and (iii) the Purchaser shall have no obligation
          whatsoever to collect from any customer for an Aged Receivable that such
          customer disputes.  




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            (b)                 In
the event that any of the Shareholders shall be bound by the terms of this
          Agreement to indemnify or hold harmless any Purchaser Indemnified Party,
          including, without limitation, for any Losses or any Clawback Amount, the
          Purchaser shall be entitled to, but shall not be obligated to, set-off and
          recoup such Losses and/or Clawback Amount against the Acquisition
Consideration;           it being acknowledged and understood that any such set-off or
recoupment may be           made, in the Purchaser’s sole discretion, against any
portion of the           Acquisition Consideration that is not paid at Closing and prior
to payment or           delivery to the Shareholders, including (i) the Actual Stock
Consideration, (ii)           the Deferred Cash Payment, (iii) amounts collected by the
Purchaser that are           attributable to the Receivables Holdback, and/or (iv) the
Contingent Earnout           Payment.  




            (c)                 If
the Company’s 2004 Revenue shall be less than Eight Million Dollars
          ($8,000,000), then the Shareholders, jointly and severally, shall pay to the
          Purchaser upon demand an amount equal to the difference between (i) Eight
          Million Dollars ($8,000,000) and (ii) the Company’s 2004 Revenue (the
          “Clawback Amount”). Each of the Shareholders and the Company hereby
          jointly and severally represents and warrants that the Company’s 2004
          Revenue shall not be less than Eight Million Dollars ($8,000,000). In the event
          the Company’s 2004 Revenue is less than Eight Million Dollars
($8,000,000),           and/or the Purchaser incurs any Losses for which the Purchaser
exercises its           set-off and recoupment rights pursuant to Section 1.5(b), the
Purchaser shall           give written notice to the Shareholders of the Clawback Amount
and/or such           Losses payable hereunder, and any set-off or recoupment against the
Acquisition           Consideration by the Purchaser for any such Clawback Amount and/or
Losses shall           be effective upon the date seven (7) calendar days immediately
following the           date of such notice (the “Set-off Effective Date”);
provided, however,           if the Shareholders dispute such claim in writing to the
Purchaser prior to the           Set-off Effective Date, then the effective date of such
set-off or recoupment           shall be the date the dispute is resolved; provided,
further, however, that           regardless of any dispute between the parties as to any
such set-off or           recoupment, the Purchaser shall be entitled to withhold any
amounts deemed           adequate by the Purchaser for such purpose until the date the
dispute is           resolved.  




            (d)                 In
the event that as of the Set-off Effective Date, the total of (i) the Actual
          Stock Consideration, (ii) the Deferred Cash Payment, (iii) amounts collected by
          the Purchaser that are attributable to the Receivables Holdback and (iv) the
          Contingent Earnout Payment, not yet paid or delivered to the Shareholders is
          insufficient to set-off and recoup any claim for any Clawback Amount and/or any
          Losses, then the Shareholders shall pay to the Purchaser, jointly and
severally,           the difference to the Purchaser within seven (7) calendar days
following the           date of the Purchaser’s above-referenced claim notice.  




            (e)                 No
limitation on any such right of set-off and recoupment provided under this
          Section 1.5 shall otherwise affect any Purchaser Indemnified Party’s
rights           hereunder or otherwise. Such remedy of set-off and recoupment shall be
in           addition to and not in limitation of any injunctive relief or other rights
or           remedies to which any Purchaser Indemnified Party is or may be entitled, at
law           or in equity. The exercise of any such right of set-off and recoupment by
the           Purchaser in good faith, whether or not ultimately determined to be
justified,           will not constitute a breach of this Agreement.  




5 










            (f)                 All
set-offs, recoupments and/or payments of Losses and/or any Clawback Amount
          shall be treated as adjustments to the Acquisition Consideration payable to the
          Shareholders.  




        1.6    
Taking of Necessary Action; Further Action. If, at any time after the Closing, any
such further action is necessary or desirable to carry out the purposes of this Agreement
or to vest the Purchaser or the Company with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company, the officers
and directors of the Company are fully authorized to take, and will take, all such lawful
and necessary action. If, at any time after the Closing, any further action is necessary
or desirable to vest the Shareholders with full right, title and possession to and of the
Acquisition Consideration, the officers and directors of the Purchaser are fully
authorized to take, and will take, all such lawful and necessary action. 



ARTICLE 2

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SHAREHOLDERS  



        The
Company and each Shareholder hereby jointly and severally represent and warrant to the
Purchaser, subject to such exceptions as are specifically disclosed in the disclosure
schedule and schedule of exceptions (the “Company Disclosure Schedule”)
delivered herewith and dated as of the date hereof (which Company Disclosure Schedule
shall (i) be deemed to be representations and warranties as if made hereunder and
(ii) adequately describe the exceptions and specifically reference the Section hereof
to which it applies), as follows: 



        2.1    
Organization and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the Commonwealth of Virginia, and
has full corporate power and authority to conduct its business as now conducted and as
currently proposed to be conducted and to own, use, license and lease its Assets and
Properties. The Company is duly qualified, licensed or admitted to do business and is in
good standing as a foreign corporation in each jurisdiction in which the ownership, use,
licensing or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary. Section 2.1 of the
Company Disclosure Schedule sets forth each jurisdiction where the Company is so
qualified, licensed or admitted to do business and separately lists each other
jurisdiction in which the Company owns, uses or leases from third parties substantial
tangible Assets and Properties, or has employees. 




6 









        2.2    
Authority Relative to this Agreement. The Company has full corporate power and
authority to execute and deliver this Agreement and the other agreements which are
attached (or forms of which are attached) as exhibits hereto (the “Ancillary
Agreements”) to which the Company is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and thereby. The
Company’s board of directors has approved this Agreement and declared its
advisability. The execution and delivery by the Company of this Agreement and the
Ancillary Agreements to which the Company is or will become a party and the consummation
by the Company of the transactions contemplated hereby and thereby, and the performance by
the Company of its obligations hereunder and thereunder, have been duly and validly
authorized by all necessary action by the board of directors of the Company, and no other
action on the part of the board of directors of the Company is required to authorize the
execution, delivery and performance of this Agreement and the Ancillary Agreements to
which the Company is or will become a party and the consummation by the Company of the
transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements
to which the Company is or will become a party have been or will be, as applicable, duly
and validly executed and delivered by the Company and each constitutes or will constitute,
as applicable, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors’ rights
generally and by general principles of equity. 



        2.3    
Capital Stock. 




            (a)                 The
authorized capital stock of the Company consists of Three Thousand Sixty
          (3,060) shares of common stock, $10 par value per share (the “Company
          Common Stock”), of which One Thousand Eight Hundred (1,800) are issued and
          outstanding. All of the issued and outstanding shares of Company Common Stock
          are validly issued, fully paid and non-assessable, have been issued in
          compliance with all applicable federal, state and foreign securities Laws, and
          are owned beneficially and of record by the Shareholders. No shares of Company
          Common Stock are held in treasury or are authorized or reserved for issuance.  




            (b)                 Section
2.3(b) of the Company Disclosure Schedule lists the name and address of           each
Shareholder, and the number of outstanding shares of Company Common Stock           owned
of record and/or beneficially owned by each such Shareholder as of the
          execution of this Agreement.  




            (c)                 No
Company Common Stock has been issued subject to a repurchase option or           buy-back
agreement on the part of the Company.  




            (d)                 There
are no outstanding Equity Equivalents or agreements, arrangements or
          understandings to which the Company is a party (written or oral) to issue any
          Company Options. There is no stock plan of the Company pursuant to which
Company           Options have been issued or are available for issuance.  




            (e)                 There
are no preemptive rights or agreements, arrangements or understandings to           issue
preemptive rights with respect to the issuance or sale of Company Common           Stock
created by statute, the certificate of incorporation or bylaws of the           Company,
or any agreement or other arrangement to which the Company is a party           (written
or oral) or to which it is bound and there are no agreements,           arrangements or
understandings to which the Company is a party (written or oral)           pursuant to
which the Company has the right to elect to satisfy any Liability by           issuing
Company Common Stock or Equity Equivalents.  





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            (f)                 The
Company is not a party or subject to any agreement or understanding, and           there
is no agreement, arrangement or understanding between or among any Persons
          which affects, restricts or relates to voting, giving of written consents,
          dividend rights or transferability of shares with respect to the Company Common
          Stock, including any voting trust agreement or proxy. No debt securities of the
          Company are issued and outstanding.  




        2.4    
Subsidiaries. The Company has no (and prior to the Closing will have no)
Subsidiaries and has not had any Subsidiaries since the Company’s inception. The
Company does not (and prior to the Closing will not) otherwise hold any equity,
membership, partnership, joint venture or other ownership interest in any Person. 



        2.5    
Directors and Officers. The names of each director and officer of the Company on
and his or her position with the Company are listed on Section 2.5 of the Company
Disclosure Schedule. 



        2.6    
No Conflicts. The execution and delivery by the Company of this Agreement and the
Ancillary Agreements to which the Company is or will be a party does not, and the
performance by the Company of its obligations under this Agreement and the Ancillary
Agreements to which the Company is or will be a party and the consummation of the
transactions contemplated hereby and thereby do not and will not: 



            (a)                 conflict
with or result in a violation or breach of any of the terms, conditions           or
provisions of the certificate of incorporation or bylaws (or similar
          organizational documents) of the Company;  




            (b)                 subject
to obtaining the consents, approvals and actions, making the filings and           giving
the notices disclosed in Section 2.6(c) of the Company Disclosure           Schedule, if
any, conflict with or result in a violation or breach of any Law or           Order
applicable to the Company or any of its Assets and Properties; or  




            (c)                 except
as disclosed in Section 2.6(c) of the Company Disclosure Schedule, (i)           conflict
with or result in a violation or breach of, (ii) constitute a default           (or an
event that, with or without notice or lapse of time or both, would           constitute a
default) under, (iii) require the Company to obtain any consent,           approval or
action of, make any filing with or give any notice to any Person as           a result or
under the terms of (except for such consents approvals, orders,           authorizations,
registrations, declarations and filings as may be required under           applicable
state or federal securities laws), (iv) result in or give to any           Person any
right of termination, cancellation, acceleration or modification in           or with
respect to, (v) result in or give to any Person any additional rights or
          entitlement to increased, additional, accelerated or guaranteed payments or
          performance under, (vi) result in the creation or imposition of (or the
          obligation to create or impose) any Lien upon the Company or any of its Assets
          and Properties under or (vii) result in the loss of any material benefit under,
          any of the terms, conditions or provisions of any Contract or License to which
          the Company is a party or by which any of the Assets and Properties of the
          Company is bound.  





8 









        2.7    
Company Financial Statements. Section 2.7 of the Company Disclosure Schedule sets
forth (i) the audited consolidated balance sheets of the Company as of December 31, 2003,
2002 and 2001; (ii) the related audited consolidated statements of operations and
statements of cash flows for such fiscal years ended December 31, 2003, 2002 and 2001;
(iii) the unaudited consolidated balance sheet of the Company as of June 30, 2004; and
(iv) the related unaudited consolidated statement of operations and statement of cash
flows for the six (6) month period ended June 30, 2004 (collectively, the “Company
Financials”). The Company Financials (i) have been prepared in accordance with GAAP,
applied on a consistent basis, (ii) are complete and correct, (iii) are in accordance with
the Books and Records of the Company and (iv) present fairly, in all respects, the
financial condition and operating results of the Company as of the dates and during the
periods indicated therein. 



        2.8    
Minute Books and Stock Records; Organizational Documents. Copies of the minute
books and stock record books of the Company (a) have been provided or made available to
the Purchaser or its counsel prior to the execution of this Agreement, and (b) are
complete and correct in all respects. Such minute books contain a true and complete record
of all actions taken at all meetings and by all written consents in lieu of meetings of
the directors, stockholders and committees of the board of directors of the Company from
the applicable date of the incorporation through the date hereof. The Company has prior to
the execution of this Agreement made available to the Purchaser or its counsel true and
complete copies of the certificate of incorporation and bylaws (or similar organizational
documents) of the Company each as amended through the date hereof. The Company is not in
violation of any provisions of its certificate of incorporation or bylaws (or similar
organizational documents). 



        2.9    
Absence of Changes. Since June 30, 2004 (the “Company Financials Date”),
except as set forth in Section 2.9 of the Company Disclosure Schedule, there has not been
any occurrence or event which, individually or in the aggregate, has had or is reasonably
expected to have any material adverse effect upon the Business or Condition of the
Company. In addition, without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement and except as disclosed in Section 2.9 of the
Company Disclosure Schedule, since the Company Financials Date: 



            (a)                 the
Company has not entered into any Contract, other than with the Purchaser or           its
Affiliates, commitment or transaction or incurred any Liabilities outside of
          the ordinary course of business consistent with past practice;  




            (b)                 the
Company has not entered into any Contract, other than with the Purchaser and
          its Affiliates, as part of a Business Combination;  




            (c)                 the
Company has not altered or entered into any Contract or other commitment to
          alter its interest in any corporation, association, joint venture, partnership
          or business entity in which the Company directly or indirectly holds any
          interest on the date hereof;  




9 










            (d)                 the
Company has not entered into any strategic alliance, joint development or           joint
marketing Contract;  




            (e)                 there
has not been any amendment or other modification (or agreement to do so)           or
violation of the terms of, any of the Contracts set forth or described in the
          Company Disclosure Schedule;  




            (f)                 the
Company has not entered into any transaction with any officer, director,
          stockholder, Affiliate or Associate of the Company, other than pursuant to any
          Contract disclosed to the Purchaser pursuant to Section 2.9, Section 2.18(a) or
          Section 2.20 of the Company Disclosure Schedule or other than pursuant to any
          Contract of employment listed pursuant to Section 2.18(a) of the Company
          Disclosure Schedule;  




            (g)                 the
Company has not entered into or amended any Contract pursuant to which any
          other Person is granted manufacturing, marketing, distribution, licensing or
          similar rights of any type or scope with respect to any products of the Company
          or Company Intellectual Property, other than as contemplated by the Contracts
          and Licenses disclosed in the Company Disclosure Schedule;  




            (h)                 no
Action or Proceeding has been commenced or threatened by or against the
          Company;  




            (i)                 the
Company has not declared or set aside or paid any dividends on or made any
          other distributions (whether in cash, stock or property) in respect of any
          Company Common Stock, or effected or approved any split, combination or
          reclassification of any Company Common Stock, or issued or authorized the
          issuance of any other securities in respect of, in lieu of or in substitution
          for shares of Company Common Stock, or repurchased, redeemed or otherwise
          acquired, directly or indirectly, any shares of Company Common Stock;  




            (j)                 (1)
the Company has not issued, granted, delivered, sold or authorized or           proposed
to issue, grant, deliver or sell, or purchased or proposed to purchase,           any
shares of Company Common Stock or Equity Equivalents, (2) the Company has           not
modified or amended the rights of any holder of any outstanding shares of
          Company Common Stock, and (3) there have not been any agreements, arrangements,
          plans or understandings obligating the Company to make any such modification or
          amendment;  




            (k)                 there
has not been any amendment to the Company’s certificate of           incorporation
or bylaws (or similar organizational documents);  




            (l)                 there
has not been any transfer (by way of a License or otherwise) to any Person           of
rights to any Company Intellectual Property other than as disclosed in           Section
2.9 of the Company Disclosure Schedule;  



10 











            (m)                 the
Company has not made or agreed to make any material disposition or sale of,
          waiver of rights to, license or lease of, or incurrence of any Lien on, any
          Assets and Properties of the Company, other than dispositions of inventory, or
          nonexclusive licenses of Assets or Properties in the ordinary course of
business           of the Company consistent with past practice;  




            (n)                 the
Company has not made or agreed to make any purchase of any Assets and
          Properties of any Person other than acquisitions of inventory, or licenses of
          Assets or Properties, in the ordinary course of business of the Company
          consistent with past practice  




            (o)                 the
Company has not made or agreed to make any capital expenditures or           commitments
for additions to property, plant or equipment of the Company           constituting
capital assets in the aggregate in an amount exceeding Ten Thousand           Dollars
($10,000);  




            (p)                 the
Company has not made or agreed to make any write-off or write-down, any
          determination to write-off or write-down, or revalue, any of the Assets and
          Properties of the Company, or change any reserves or Liabilities associated
          therewith, in the aggregate in an amount exceeding Five Thousand Dollars
          ($5,000);  




            (q)                 the
Company has not made or agreed to make payment, discharge or satisfaction,           in
an amount in excess of Five Thousand Dollars ($5,000), in any one case, or           Ten
Thousand Dollars ($10,000) in the aggregate, of any claim, Liability or
          obligation (whether absolute, accrued, asserted or unasserted, contingent or
          otherwise), other than the payment, discharge or satisfaction in the ordinary
          course of business of Liabilities reflected or reserved against in the Company
          Financials and other than Liabilities incurred in the ordinary course of
          business since the Company Financials Date;  




            (r)                 the
Company has not failed to pay or otherwise satisfy any Liabilities presently
          due and payable of the Company, except such Liabilities which are being
          contested in good faith by appropriate means or procedures and which,
          individually or in the aggregate, are immaterial in amount;  




            (s)                 the
Company has not issued or sold any debt securities of the Company or           guaranteed
any debt securities of others;  




            (t)                 the
Company has not granted any severance or termination pay to any director,
          officer, employee or consultant, except payments made pursuant to written
          Contracts, copies of which have been made available to the Purchaser and which
          are disclosed in Section 2.9 of the Company Disclosure Schedule;  




            (u)                 except
pursuant to a Contract disclosed to the Purchaser pursuant to Section 2.9           or
Section 2.18 of the Company Disclosure Schedule, the Company has not (i)
          granted or approved any increase in salary, rate of commissions, rate of
          consulting fees or any other compensation of any current or former officer,
          director, stockholder, employee, independent contractor or consultant of the
          Company or (ii) paid or agreed or made any commitment to pay any discretionary
          or stay bonus;  



11 











            (v)                 the
Company has not paid or approved the payment of any consideration of any           nature
whatsoever (other than salary, commissions or consulting fees and           customary
benefits paid to any current or former officer, director, stockholder,           employee
or consultant of the Company in the ordinary course of business) to any           current
or former officer, director, stockholder, employee, independent           contractor or
consultant of the Company;  




            (w)                 the
Company has not adopted, entered into, amended, modified or terminated
          (partially or completely) any Plan;  




            (x)                 the
Company has not made any change in accounting policies, principles, methods,
          practices or procedures (including, without limitation, for bad debts,
          contingent liabilities or otherwise, respecting capitalization or expense of
          research and development expenditures, depreciation or amortization rates or
          timing of recognition of income and expense);  




            (y)                 the
Company has not commenced or terminated, or made any material change in, any
          line of business;  




            (z)                 there
has been no physical damage, destruction or other casualty loss (whether           or not
covered by insurance) affecting any of the real or personal property or
          equipment of the Company in the aggregate in an amount exceeding Five Thousand
          Dollars ($5,000); and  




            (aa)                 the
Company has not entered into or approved any contract, arrangement or
          understanding or acquiesced in respect of any arrangement or understanding, to
          do, engage in or cause, or having the effect of, any of the foregoing,
          including, without limitation, with respect to any Business Combination not
          otherwise restricted by the foregoing paragraphs.  




        2.10    
No Undisclosed Liabilities. Except as reflected or reserved against in the Company
Financials (including, without limitation, the notes thereto) or as disclosed in Section
2.10 of the Company Disclosure Schedule, there are no material Liabilities of the Company
or affecting any of its Assets and Properties (other than Liabilities incurred in the
ordinary course of business consistent with past practice since the Company Financials
Date which are not for tort or for breach of contract). 



        2.11    
    Taxes. 




            (a)                 The
Company has filed all Tax Returns required to be filed. All such Tax Returns
          were true, correct and complete in all respects. All Taxes owed by the Company
          (whether or not shown on any Tax Return) have been paid except for Taxes not
yet           due. The Company is not currently the beneficiary of any extension of time
          within which to file any Tax Return. No claim has ever been made in writing by
          any Governmental or Regulatory Authority in any jurisdiction where the Company
          files Tax Returns that the Company is or may be subject to taxation by that
          jurisdiction. There are no security interests on any of the Assets and
          Properties of the Company that arose in connection with any failure (or alleged
          failure) to pay any Tax, other than any security interest for Taxes not yet
due.  




12 










            (b)                 The
Company has withheld and paid all Taxes required to have been withheld and           paid
in connection with amounts paid or owing to any employee, independent
          contractor, creditor, stockholder or other third party.  




            (c)                 There
is no dispute or claim concerning any Tax Liability of the Company either           (i)
claimed or raised by any Governmental or Regulatory Authority in writing or
          (ii) as to which the Company has knowledge based upon contact with any agent of
          any such Governmental or Regulatory Authority. The Company has delivered or
made           available to the Purchaser true, correct and complete copies of all
federal           income Tax Returns filed, formal Tax opinions and examination reports
received,           and statements of deficiencies assessed against or agreed to, by or
on behalf of           the Company since inception.  




            (d)                 The
Company has never waived any statute of limitations in respect of Taxes or
          agreed to any extension of time with respect to a Tax assessment or deficiency.  




            (e)                 The
Company is not a party to or bound by (nor will it prior to the Closing           become
a party to or bound by) any Tax indemnity, Tax allocation, Tax sharing or           gain
recognition agreement (whether written, unwritten or arising under           operation of
federal law as a result of being a member of a group filing           consolidated Tax
Returns (other than a group the common the Purchaser of which           was the Company),
under operation of certain state Laws as a result of being a           member of a
unitary group, or under comparable Laws of other states or foreign
          jurisdictions). The Company has never been required to include any adjustment
in           taxable income for any Tax period (or portion thereof) ending on or after
the           Closing pursuant to Code Sections 481 or 263A or any comparable provisions
under           any state or foreign Tax Laws.  




            (f)                 The
Company does not have any Liability for the Taxes of any Person, other than           the
Company, (A) under Reg. §1.1502-6 (or any similar provision of           state,
local or foreign law), (B) as a transferee or successor, (C) by
          contract or (D) otherwise.  




            (g)                 The
Company has not made any payments, nor is it obligated to make any payments,
          nor is it a party to any Contract, agreement or arrangement covering any
current           or former employee or consultant of the Company that under certain
circumstances           could require it to make or give rise to any payments that are
not deductible as           a result of the provisions set forth in Section 280G of the
Internal Revenue           Code or the treasury regulations thereunder or would result in
an excise tax to           the recipient of any such payment under Section 4999 of the
Internal Revenue           Code.  




            (h)                 The
unpaid Taxes of the Company (A) did not, as of the June 30, 2004, exceed the
          reserve for Tax Liabilities of the Company (rather than any reserve for
deferred           Taxes established to reflect timing differences between book and Tax
income) set           forth on the face of the Company Financials described in Section
2.7(iii) and           (iv) (rather than any notes thereto) and (B) will not exceed such
reserve as           adjusted for operations and transactions through the Closing in
accordance with           past custom and practice of the Company in filing its Tax
Returns.  





13 









        2.12    
    Legal Proceedings.  Except as set forth in Section 2.12 of the Company Disclosure
Schedule: 




            (a)                 there
are no Actions or Proceedings pending or threatened, against or adversely
          affecting the Company or any of its Assets and Properties;  




            (b)                 there
are no facts or circumstances known to the Company that could reasonably           be
expected to give rise to any Action or Proceeding against or adversely
          affecting the Company or any of its Assets and Properties;  




            (c)                 the
Company has not received notice, and does not otherwise have knowledge of,           any
Orders outstanding against the Company; and  




            (d)                 there
are no defects, dangerous or substandard conditions in the products or
          materials sold, distributed or currently proposed to be sold or distributed by
          the Company that could cause bodily injury, sickness, disease, death or damage
          to property, or result in loss of use of property, or any claim, suit, demand
          for arbitration or notice seeking damages for bodily injury, sickness, disease,
          death or damage to property, or loss of use of property. Section 2.12(d) of the
          Company Disclosure Schedule sets forth all Actions or Proceedings against or
          affecting, or threatened against, the Company or any of its Assets and
          Properties during the three-year period prior to the date hereof.  




        2.13    
Compliance with Laws and Orders. Neither the Company, nor any of its respective
directors, officers, Affiliates, agents or employees, has violated in any respect since
the incorporation of the Company, or is currently in default or violation in any respect
under, any Law or Order applicable to the Company or any of its Assets and Properties. The
Company is not aware of any claim of violation, or of any actual violation, of any such
Laws and Orders by the Company since the incorporation of the Company. 



      2.14    
Plans; ERISA.




14 









            (a)                 All
of the Plans of the Company are listed on Section 2.14(a) of the Company
          Disclosure Schedule. Copies of all such Plans have been made available to the
          Purchaser. To the extent applicable, the Plans comply with the requirements of
          the Employee Retirement Income Security Act of 1974, as amended, and the rules
          and regulations promulgated thereunder (“ERISA”) and the Internal
          Revenue Code, and except as disclosed on Section 2.14(a) of the Company
          Disclosure Schedule, no Plan is intended to be qualified under           Section 401(a)
of the Internal Revenue Code or Section 501(a) of the           Internal Revenue
Code. No Plan is covered by Title IV of ERISA or           Section 412 of the
Internal Revenue Code. The Company has not been a           contributing employer to any
multiemployer plan as defined under Section 4001 of           ERISA. Neither the Company
nor any officer or director has incurred any           Liability or penalty under Section 4971
through 4980E of the Code or           Title 1 of ERISA. None of the Plans promises
or provides retiree medical or           other retiree welfare benefits to any person
except as required by applicable           Law, including but not limited to, the
Consolidated Omnibus Budget           Reconciliation Act of 1985, as amended. Each Plan
has been maintained and           administered in all respects in compliance with its
terms and with the           requirements prescribed by any and all Laws, including but
not limited to ERISA           and the Internal Revenue Code, which are applicable to
such Plans. Except as           disclosed on Section 2.14(a) of the Company Disclosure
Schedule, no Action or           Proceeding (excluding claims for benefits incurred in
the ordinary course of           Plan activities) has been brought is threatened, against
or with respect to any           such Plan. All contributions, reserves or premium
payments required to be made           or accrued as of the date hereof to the Plans have
been made or accrued. All           material reports, returns, forms and notices required
to be filed with any           Government or Regulatory Authority or furnished to
participants or beneficiaries           with respect to the Plans by the Internal Revenue
Code, ERISA or any other           applicable Law, have been so filed and furnished.
Except as disclosed on Section           2.14(a) of the Company Disclosure Schedule, the
Company is not under a legal or           contractual obligation to continue any of the
Plans and may terminate any or all           of the Plans at any time in accordance with
the terms of the Plans and           applicable Law without incurring any Liability.  




            (b)                 Neither
the execution and delivery of this Agreement nor the consummation of the
          transactions contemplated hereby will (i) except as set forth in Section
          2.14(b) of the Company Disclosure Schedule, result in any payment or increase
          (including without limitation severance, unemployment compensation, bonus or
          otherwise) becoming due to any current or former director, officer, employee or
          consultant of the Company under any Plan or otherwise, (ii) result in a
          payment or benefit becoming due to any director, officer or employee of the
          Company under any Plan or otherwise which will be characterized as a
          “parachute payment” within the meaning of Section 280G of the
Internal           Revenue Code (but without regard to clause (b)(2)(A)(ii) thereof),
          (iii) increase any benefits otherwise payable under any Plan or
          (iv) result in the acceleration of the time of payment or vesting of any
          such benefits.  




            (c)                 To
the extent applicable, the Company has complied with the continuation health
          care coverage requirements of Section 4980B of the Internal Revenue Code and
          Sections 601 through 608 of ERISA with respect to “qualifying events,”          as
defined in the Internal Revenue Code and ERISA, which occur on or before the
          Closing with respect to any current or former employees of the Company and its
          respective “qualified beneficiaries,” as defined in the Internal
          Revenue Code and ERISA, and with the requirements of the Health Insurance
          Portability and Accountability Act and other applicable health insurance
          requirements in Section 4980D of the Internal Revenue Code and Sections 701
          through 734 of ERISA.  




        2.15    Real
Property. 





15 









            (a)                 Section
2.15(a) of the Company Disclosure Schedule contains a true and correct           list of
(i) each parcel of real property leased, utilized and/or operated by the
          Company (as lessor or lessee or otherwise) (the “Leased Real
          Property”) and (ii) all Liens relating to or affecting any parcel of real
          property referred to in clause (i) to which the Company is a party. True and
          correct copies of the documents under which the Leased Real Property is leased,
          subleased (to or by the Company, or otherwise), utilized and/or operated (the
          “Lease Documents”) have been made available to the Purchaser and such
          Lease Documents are unmodified and in full force and effect. The Company does
          not own any real property other than Company owned leasehold improvements, if
          any, on Leased Real Property. 




            (b)                 Subject
to the terms of the Lease Documents, the Company has a valid and           subsisting
leasehold estate in and the right to quiet enjoyment of each of the           Leased Real
Properties for the full term of the leases (including renewal           periods) relating
thereto. Each Lease Document referred to in Section 2.15(a) is           a legal, valid
and binding agreement, enforceable in accordance with its terms           in all material
respects, except as such enforceability may be limited by           bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or           other similar
Laws relating to the enforcement of creditors’ rights           generally and by
general principles of equity, of the Company, and of each other           Person that is
a party thereto, and except as set forth in Section 2.15(b) of           the Company
Disclosure Schedule, there is no, and the Company has not received           notice of
any, default (or any condition or event which, after notice or lapse           of time or
both, would constitute a default) thereunder. The Company does not           owe
brokerage commissions or finders fees with respect to any such Leased Real
          Property.  




            (c)                 Except
as disclosed in Section 2.15(c) of the Company Disclosure Schedule, all
          improvements on the Leased Real Property (A) comply with and are operated in
          accordance with applicable Laws (including Environmental Laws) and all
          applicable Liens, Approvals, Contracts, covenants and restrictions and (B) are
          in all material respects in good operating condition and in a state of good
          maintenance and repair, ordinary wear and tear excepted, and such improvements
          are in all material respects adequate and suitable for the purposes for which
          they are presently being used and there are no condemnation or appropriation
          proceedings pending or threatened against any of such real property or the
          improvements thereon.  




        2.16    
Tangible Personal Property. The Company is in possession of and has good and
marketable title to, or has valid leasehold interests in or valid rights under Contract to
use, all tangible personal property used in the conduct of its business, including all
tangible personal property reflected on the Company Financials and tangible personal
property acquired since the Company Financials Date, other than property disposed of since
such date in the ordinary course of business consistent with past practice. Except (i) for
the Liens disclosed in Section 2.16 of the Company Disclosure Schedule and purchase money
liens on equipment purchases or product purchases in the ordinary course of the
Company’s business for which the purchase price is not yet due and payable, or (ii)
as disclosed in Section 2.16 of the Company Disclosure Schedule, all such tangible
personal property (including plant, property and equipment) is free and clear of all Liens
and is suitable in all respects for the conduct by the Company of its business as
presently conducted, and is in good working order and condition in all respects, ordinary
wear and tear excepted, and its use complies with all applicable Laws. Section 2.16 of the
Company Disclosure Schedule sets forth all material tangible personal property used in the
conduct of the business of the Company. 



16 










        2.17    
Intellectual Property. 




            (a)                 Section
2.17(a) of the Company Disclosure Schedule lists all Company Registered
          Intellectual Property and lists any proceedings or actions pending as of the
          date hereof before any court or tribunal (including the United States Patent
and           Trademark Office (the “PTO”) or equivalent authority anywhere in
the           world) related to any of the Company Registered Intellectual Property.  




            (b)                 The
Company has all requisite right, title and interest in or valid and           enforceable
rights under Contracts or Licenses to use all Company Intellectual           Property.
Each item of Company Intellectual Property of the Company, including,           without
limitation, all Company Registered Intellectual Property listed in           Section
2.17(a) of the Company Disclosure Schedule, is owned exclusively by the           Company
(excluding Intellectual Property licensed to the Company under any           License) and
is free and clear of any Liens. The Company (i) owns exclusively           all
trademarks, service marks and trade names used by the Company in connection
          with the operation or conduct of the business of the Company, including,
without           limitation, the sale of any products or technology or the provision of
any           services by the Company; provided, however, that the Company may use
trademarks,           service marks and trade names of third parties which are licensed
to the Company           or are in the public domain and (ii) owns exclusively, and has
good title to,           each copyrighted work that is a Company product and each other
work of           authorship that the Company otherwise purports to own.  




            (c)                 To
the extent that any Company Intellectual Property has been developed or           created
by any Person other than the Company, the Company has a written           agreement with
such Person with respect thereto and the Company has either (i)           obtained
ownership of, and is the exclusive owner of, all such Intellectual           Property by
operation of law or by valid assignment of any such rights or (ii)           has obtained
a License under or to such Intellectual Property.  




            (d)                 The
Company has not transferred ownership of or granted any License of or other
          right to use or authorized the retention of any rights to use any Intellectual
          Property that is or was Company Intellectual Property to any other Person.  




            (e)                 The
Company Intellectual Property constitutes all the Intellectual Property used           in
and/or necessary to the conduct of the Company’s business, as currently
          conducted, including the design, development, distribution, marketing,
          manufacture, use, import, license and sale of the products, technology and
          services of the Company.  




            (f)                 Section
2.17(f) of the Company Disclosure Schedule lists all Contracts and           Licenses
(including all inbound Licenses) to which the Company is a party with           respect
to any Intellectual Property. No Person, other than the Company, has           ownership
rights to improvements made by the Company in Intellectual Property           which has
been licensed to the Company.  




            (g)                 Section
2.17(g) of the Company Disclosure Schedule lists all Contracts, Licenses           and
agreements between the Company and any other Person wherein or whereby the
          Company has agreed to, or assumed, any obligation or duty to warrant,
indemnify,           reimburse, hold harmless, guaranty or otherwise assume or incur any
obligation           or Liability, or provide a right of rescission, with respect to the
infringement           or misappropriation by the Company or such other Person of the
Intellectual           Property of any Person other than the Company.  




17 











            (h)                 Except
as disclosed in Section 2.17(h) of the Company Disclosure Schedule, the
          operation of the business of the Company, as currently conducted, including the
          design, development, use, import, manufacture and sale of the products,
          technology or services (including products, technology or services currently
          under development) of the Company does not (i) infringe or misappropriate the
          Intellectual Property of any Person, (ii) violate any License or Contract
          concerning such Intellectual Property (including any provision required by or
          imposed pursuant to 35 U.S.C. §§200-212 in any License or Contract to
          which the Company is a party requiring that products be manufactured
          substantially in the United States (“Made-in-America Requirements”)),
          (iii) violate the rights of any Person (including rights to privacy or
          publicity) or (iv) constitute unfair competition or an unfair trade practice
          under any Law, and the Company has not received notice from any Person claiming
          that such operation or any act, product, technology or service (including
          products, technology or services currently under development) of the Company
          infringes or misappropriates the Intellectual Property of any Person or
          constitutes unfair competition or trade practices under any Law, including
          notice of infringement of third-party patent or other Intellectual Property
          rights from a potential licensor of such rights.  




            (i)                 Each
item of Company Registered Intellectual Property which has actually been
          registered is valid and subsisting, and all necessary registration,
maintenance,           renewal fees, annuity fees and taxes in connection with such
Registered           Intellectual Property have been paid and all necessary documents and
          certificates in connection with such Registered Intellectual Property have been
          filed with the relevant patent, copyright, trademark or other authorities in
the           United States or foreign jurisdictions, as the case may be, for the
purposes of           maintaining such Registered Intellectual Property. Section 2.17(i)
of the           Company Disclosure Schedule lists all actions that must be taken by the
Company           within ninety (90) days from the date hereof, including the payment of
any           registration, maintenance, renewal fees, annuity fees and taxes or the
filing of           any documents, applications or certificates for the purposes of
maintaining,           perfecting, preserving or renewing any Company Registered
Intellectual Property.           In each case in which the Company has acquired ownership
of any Intellectual           Property from any Person, the Company has obtained a valid
and enforceable           assignment sufficient to irrevocably transfer all rights in
such Intellectual           Property (including the right to seek past and future damages
with respect to           such Intellectual Property) to the Company and, to the maximum
extent provided           for by and required to protect the Company’s ownership
rights in and to           such Intellectual Property in accordance with applicable Laws,
the Company has           recorded each such assignment of Registered Intellectual
Property with the           relevant Governmental or Regulatory Authority, including the
PTO or the U.S.           Copyright Office.  




            (j)                 There
are no Contracts or Licenses between the Company and any other Person with
          respect to Company Intellectual Property under which there is any dispute (or,
          to the Company’s knowledge, facts that may reasonably lead to a dispute)
          regarding the scope of such Contract or License, or performance under such
          Contract or License, including with respect to any payments to be made or
          received by the Company thereunder.  




18 










            (k)                 To
the knowledge of the Company, no Person is infringing or misappropriating any
          Company Intellectual Property.  




            (l)                 Except
as set forth in Section 2.17(l) of the Company Disclosure Schedule, the           Company
has taken all commercially reasonable steps to protect their respective           rights
in confidential information and trade secrets of the Company or provided           by any
other Person to the Company subject to a duty of confidentiality. Without
          limiting the generality of the foregoing, the Company has, and enforces, a
          policy requiring each employee, consultant and independent contractor to
execute           proprietary information, confidentiality and invention and copyright
assignment           agreements substantially in the form set forth in Section 2.17(l) of
the Company           Disclosure Schedule, and all current and former employees,
consultants and           independent contractors of the Company have executed such an
agreement and           copies of all such agreements have been provided to the Purchaser
or made           available to the Purchaser for review.  




            (m)                 No
Company Intellectual Property or product, technology or service of the           Company
is subject to any Order, Action or Proceeding that restricts, or that is
          reasonably expected to restrict in any manner, the use, transfer or licensing
of           any Company Intellectual Property by the Company or that may affect the
          validity, use or enforceability of such Company Intellectual Property.  




            (n)                 No
(i) product, technology, service or publication of the Company, (ii) material
          published or distributed by the Company or (iii) conduct or statement of the
          Company, constitutes obscene material, a defamatory statement or material,
false           advertising or otherwise violates any Law.  




            (o)                 Neither
this Agreement nor any transactions to be accomplished pursuant to this
          Agreement will result in the Purchaser’s granting any rights or licenses
          with respect to the Intellectual Property of the Purchaser to any Person
          pursuant to any Contract to which the Company is a party or by which any of its
          Assets and Properties are bound.  




            (p)                 Section
2.17(p) of the Company Disclosure Schedule sets forth a list of (x) all
          software which the Company has licensed from any third party which is used by
          the Company in its products or otherwise in its business (other than
          off-the-shelf software) and (y) a list of all “freeware” and
          “shareware” incorporated into any product now or heretofore shipped
by           the Company. The Company has all rights necessary to the use of such
software,           “freeware” and “shareware.” 




            (q)                 The
products of the Company comply with all applicable standards and with the
          feature specifications and performance standards set forth in the product data
          sheets of the Company. There are no outstanding claims (or facts known to the
          Company that are likely to lead to a claim) for breach of warranties by the
          Company in connection with the foregoing. All product performance comparisons
          heretofore furnished by the Company to customers or the Purchaser are accurate
          in all respects as of the dates so furnished (except that, in the case of
          product performance comparisons made as of a specified earlier date, such
          comparisons shall be accurate as of such specified earlier date, and, in the
          case of product performance comparisons superseded by a subsequent product
          performance comparison furnished to the customer before the customer’s
          acquisition of a product or License on the product covered by the superseded
          comparison, the superseding comparison shall be accurate in all respects and
the           superseded comparison shall be disregarded).  





19 









            (r)                 The
Company has taken all necessary steps to protect and preserve ownership of
          Company Intellectual Property. The Company has secured valid written
assignments           from all consultants and employees who contributed to the creation
or           development of the Company Intellectual Property. In the event that the
          consultant is concurrently employed by the Company and a third party, the
          Company has taken all appropriate steps to ensure that any Company Intellectual
          Property developed by such a consultant does not belong to the third party or
          conflict with the third party’s employment agreement (such steps include
          ensuring that all research and development work performed by such a consultant
          is not performed on the facilities of the third party or using the resources of
          the third party), except as set forth in Section 2.17(r) of the Company
          Disclosure Schedule.  




            (s)                 The
Company has delivered to the Purchaser correct and complete copies of all
          Company Registered Intellectual Property and Company Intellectual Property and
          complete copies of all other written documentation evidencing the Company’s
          ownership and prosecution (if applicable) thereof.  




            (t)                 The
Company is in compliance with any and all security standards and disaster
          recovery plans maintained by the Company designed to protect the Company’s
          information technology.  




            (u)                 None
of the Company or the Shareholders has any knowledge of any new products,
          inventions, procedures or methods of manufacturing or processing that any
          competitors or other third parties have developed that reasonably could be
          expected to supersede or make obsolete any process, product, technology or
          service of the Company.  




        2.18    
Contracts. 




            (a)                 Section
2.18(a) of the Company Disclosure Schedule contains a true and complete           list of
each of the Contracts (true and complete copies of which or, if oral           Contracts,
complete and accurate written descriptions of which, together with           all
amendments and supplements thereto and all waivers of any terms thereof,           have
been made available to the Purchaser prior to the execution of this           Agreement
except as listed in Section 2.18(a) of the Company Disclosure           Schedule), to
which the Company is a party or by which any of its Assets and           Properties are
bound (other than employee offer letters).  



20 











            (b)                 Each
Contract required to be disclosed in Section 2.18(a) of the Company           Disclosure
Schedule is in full force and effect and constitutes a legal, valid           and binding
agreement, enforceable in all respects in accordance with its terms,           except as
such enforceability may be limited by bankruptcy, insolvency,           fraudulent
conveyance, reorganization, moratorium or other similar Laws relating           to the
enforcement of creditors’ rights generally and by general principles           of
equity. Except as disclosed in Section 2.18(b) of the Company Disclosure
          Schedule, no other party to such Contract is in violation or breach of or
          default under any such Contract (or with notice or lapse of time or both, would
          be in violation or breach of or default under any such Contract), and no event,
          occurrence or condition exists which, with the lapse of time, the giving of
          notice, or both, or the happening of any further event or condition, would
          become a default by any party thereunder or give rise to termination rights
          thereunder.  




            (c)                 Except
as disclosed in Section 2.18(c) of the Company Disclosure Schedule, the           Company
is not a party to or bound by any Contract that (i) automatically           terminates or
allows termination by the other party thereto upon consummation of           the
transactions contemplated by this Agreement or (ii) contains any covenant or
          other provision which limits the Company’s ability to compete with any
          Person in any line of business or in any area or territory.  




        2.19    
Government Contracts. 




            (a)                 Section
2.19(a) of the Company Disclosure Schedule contains a complete and           correct list
of all Government Contracts (including subcontracts) that are           either currently
active in performance, or have been active in the past but have           not been closed
after receiving final payment, or have been active in           performance for the five
(5) year period prior to the Closing. For each           Government Contract disclosed,
Section 2.19(a) of the Company Disclosure           Schedule also contains a complete and
correct list of all contracting           officers’ contact information, including
without limitation, full names,           addresses and phone numbers.  




            (b)                 Section
2.19(a) of the Company Disclosure Schedule accurately reports for each
          Government Contract the total net payments made as of the Company Financials
          Date, payments due for work performed, and the Company’s best estimate of
          total projected value.  




            (c)                 Except
as disclosed in Section 2.19(a) of the Company Disclosure Schedule, the           Company
has not bid on or been awarded any “small business set aside           contract,” “woman-owned
set aside contract,” any other “set           aside contract” or other
order or contract requiring small business or           other special status at any time
during the last five (5) years. None of the           Company’s expected sales or
orders will be lost, and the customer relations           of the Company will not be
damaged, as a result of the Company continuing the           operations of the Company as
an entity that does not qualify as a small business           concern.  




            (d)                 The
Company is, and has been since five (5) years prior to the date of this
          Agreement, in compliance with all terms and conditions of each Government
          Contract, and the Company has not received notice of any breach or violation of
          any contract requirement or law or regulation pertaining to any Government
          Contract. No contract termination, default notice or show cause notice is, or
          since the date five (5) years prior to the date of this Agreement has been, in
          effect pertaining to any Government Contract.  




21 










            (e)                 Neither
(i) the Company, nor any of its respective partners, stockholders,           directors or
officers, nor (ii) any of their respective predecessors, has been           debarred,
suspended or excluded from participation in the award of any           Government
Contract or for any reason listed on the List of Parties Excluded           from Federal
Procurement and Nonprocurement Programs nor has any debarment,           suspension or
exclusion proceeding been initiated against the Company or any of           its
predecessors, partners, stockholders, directors or officers.  




            (f)                 There
have been no Actions or Proceedings involving or related to the Company or           any
of its predecessors, partners, stockholders, directors, officers or           employees
with respect to an alleged or potential violation of a contract           requirement or
applicable Law pertaining to any Government Contract, since the           date ten (10)
years prior to the date of this Agreement.  




            (g)                 The
Company has not conducted any internal investigation in connection with           which
the Company has engaged any outside legal counsel, auditor, accountant or
          investigator, or made any disclosure to any Governmental or Regulatory
Authority           or other customer or prime contractor or higher-tier subcontractor
related to           any suspected, alleged or possible violation of a contract
requirement or           violation of applicable Law with respect to any Government
Contract.  




            (h)                 The
Company maintains systems of internal controls that are in compliance with           all
requirements of all of the Government Contracts and of applicable Laws,
          including, without limitation, the Federal Acquisition Regulation           (“FAR”).  




            (j)              Without
limiting the force and affect of Section 2.19(h) above, the Company
          specifically maintains systems of internal controls that:  




	 	(i) 	are
in compliance with the Cost Accounting Standards required by Subpart 30.6 of
               FAR and has practiced such accounting methods since its inception or
shortly                after its inception; and  






	 	(ii) 	promote
the protection of the Company’s Intellectual Property and                Registered
Intellectual Property, including, without limitation, those described                in
Part 27 of FAR, including, without limitation, compliance with the required
               procedures for reporting and electing Intellectual Property and/or
Registered                Intellectual Property.  






            (k)                 Neither
the Company, nor any of the employees, directors, partners, principals,           agents
or assignees of the Company, has violated any legal, administrative or
          contractual restriction concerning the employment of (or discussions concerning
          possible employment with) current or former officials or employees of a state,
          local or federal government (regardless of the branch of government), including
          (not limited to) the so-called “revolving door” restrictions set
forth           at 18 U.S.C. § 207.  




22 










            (l)                 All
representations, certifications and statements executed, acknowledged or
          submitted by or on behalf of the Company to a Governmental or Regulatory
          Authority, prime contractor or higher-tier subcontractor in connection with any
          Government Contract (or change or modification thereto) since five (5) years
          prior to the date of this Agreement, including (but not limited to) any
          statements made in connection with the Procurement Integrity Law, 41 U.S.C.
          § 423, the Lobbying Disclosure Act of 1995, 2 U.S.C. § 1601-1612, the
          Byrd Amendment, 31 U.S.C. § 1352, and their associated implementing
          regulations, contract clauses, representations or certifications were and still
          are complete and correct in all material respects.  




            (m)                 The
Company has no pending or anticipated claims, requests for equitable           adjustment
or requests for waiver or deviation from contract requirements with           respect to
any Government Contract, nor is there any claim or anticipated claim           against
the Company by any customer agency with respect to any Government           Contract,
including, but not limited to, any claim for a reduction in price           under any
Government Contract. There exists no basis for a claim of liability           against the
Company by any Governmental Authority under the Truth in           Negotiations Act
and/or as a result of defective cost and pricing data submitted           by the Company
to any Governmental Authority.  




            (n)                 The
Company has no pending Actions or Proceedings against it by any Person,
          including, but not limited to, any claim for infringement of a patent,
          trademark, copyright or trade secret whose use is connected with the
performance           of a Government Contract.  




            (o)                 Section
2.19(o) of the Company Disclosure Schedule identifies any and all           employees of
the Company who control and/or operate the Assets and Properties of           the Company
used to perform any and all of the Company’s existing           Government Contracts
as disclosed in 2.19(a) of the Company Disclosure Schedule,           and, except as
disclosed in Section 2.19(o) of the Company Disclosure Schedule,           all such
employees shall continue to be employed by the Company at the Closing           as
provided in Section 6.3(f)(iv) and shall continue to so control and operate
          such Assets and Properties of the Company following the Closing.  




        2.20    
Insurance. Section 2.20 of the Company Disclosure Schedule contains a true and
complete list of all insurance policies (by policy number, insurer, expiration date and
type, amount and scope of coverage) held by the Company relating to the Assets and
Properties of the Company, copies of which have been provided or made available to the
Purchaser. In the three (3) year period ending on the date hereof, the Company has
not received any notice from, or on behalf of, any insurance carrier relating to or
involving any adverse change or any change other than in the ordinary course of business,
in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of
a policy, or requiring or suggesting alteration of any of the Assets and Properties of the
Company, purchase of additional equipment or modification of any of the Company’s
methods of doing business. The insurance coverage provided by the policies set forth in
Section 2.20 of the Company Disclosure Schedule will not terminate or lapse by reason of
any of the transactions contemplated by this Agreement or any of the Ancillary Agreements.
Each policy listed in Section 2.20 of the Company Disclosure Schedule is valid and binding
and in full force and effect, all premiums due thereunder have been paid, and neither the
Company, nor the Person to whom such policy has been issued, has received any notice of
cancellation or termination in respect of any such policy or is in default thereunder, and
the Company has no knowledge of any reason or state of facts that is likely to lead to the
cancellation of such policies or of any threatened termination of, or premium increase
with respect to, any of such policies. The insurance policies listed in Section 2.20 of
the Company Disclosure Schedule, (i) in light of the business, operations and Assets and
Properties of the Company are in amounts and have coverages that are reasonable and
customary for Persons engaged in similar businesses and operations and having similar
Assets and Properties and (ii) are in amounts and have coverages as required by any
Contract to which the Company is a party or by which any of their respective Assets and
Properties is bound. Section 2.20 of the Company Disclosure Schedule contains a list of
all claims in excess of Ten Thousand Dollars ($10,000) made under any insurance policies
covering the Company in the last three (3) years. The Company has not received notice that
any insurer under any policy listed (or required to be listed) in Section 2.20 of the
Company Disclosure Schedule is denying, disputing or questioning liability with respect to
a claim thereunder or defending under a reservation of rights clause. 




23 









        2.21    
Affiliate Transactions. 




            (a)                 Except
as disclosed in Section 2.9 or Section 2.21(a) of the Company Disclosure
          Schedule, (i) there are no Contracts or Liabilities between the Company, on the
          one hand, and (A) any current or former officer, director, Shareholder,
          Affiliate or Associate of the Company, or (B) any Person who is an Associate of
          any such officer, director, Shareholder or Affiliate, on the other hand, (ii)
          the Company does not provide or cause to be provided any Assets and Properties,
          services or facilities to any such current or former officer, director,
          Shareholder, Affiliate or Associate, (iii) neither the Company, nor any such
          current or former officer, director, Shareholder, Affiliate or Associate,
          provides or causes to be provided any Assets and Properties, services or
          facilities to the Company, and (iv) the Company does not beneficially own,
          directly or indirectly, any Investment Assets of any such current or former
          officer, director, Shareholder, Affiliate or Associate.  




            (b)                 Except
as disclosed in Section 2.21(b) of the Company Disclosure Schedule, each           of the
Contracts and Liabilities listed in Section 2.21(a) of the Company           Disclosure
Schedule was entered into or incurred, as the case may be, on terms           no less
favorable to the Company than if such Contract or Liability was entered           into or
incurred on an arm’s-length basis on competitive terms.  




        2.22
Employees; Labor Relations. 




            (a)                 The
Company is not a party to any collective bargaining agreement or other           Contract
with any group of employees, labor organization or other representative           of any
of the employees of Company, and there are no activities or proceedings           of any
labor union or other party to organize or represent such employees. There           has
not occurred nor been threatened any strike, slow-down, picketing,
          work-stoppage or other similar labor activity with respect to any such
          employees. The Company is in compliance in all material respects with all Laws
          relating to employment or the workplace, including, without limitation,
          provisions relating to wages, hours, collective bargaining, safety and health,
          work authorization, equal employment opportunity, immigration and the
          withholding of income Taxes, unemployment compensation, worker’s
          compensation, employee privacy and right to know and social security
          contributions. There are no unresolved labor controversies (including
unresolved           grievances and age or other discrimination claims), if any, between
the Company           and Persons employed by or providing services to the Company.  




24 










            (b)                 Each
Person who is an employee of the Company is employed at will. No employee           of
the Company is represented by a union. Each Person who is an independent
          contractor of the Company is properly classified as an independent contractor
          for purposes of all employment related Laws and all Laws concerning the status
          of independent contractors. Section 2.22(b) of the Company Disclosure Schedule
          sets forth, individually and by category, the name of each officer, employee,
          independent contractor and consultant, together with such person’s
position           or function, annual base salary or wage and any incentive, severance
or bonus           arrangements with respect to such person. No current employee of the
Company has           made any threat, or otherwise revealed an intent, to terminate such
          employee’s relationship with the Company for any reason, including because
          of the consummation of the transactions contemplated by this Agreement. The
          Company is not a party to any agreement for the provision of labor from any
          outside agency. Since the Company’s inception, there have been no claims
          against the Company by employees of such outside agencies, if any, with regard
          to employees assigned to work for the Company, and no claims by any
Governmental           or Regulatory Authority with regard to such employees.  




            (c)                 No
officer, employee or consultant of the Company is obligated under any           Contract
or other agreement or subject to any Order or Law that would interfere           with the
Company’s business as currently conducted. Neither the execution           nor
delivery of this Agreement, nor the carrying on of the Company’s           business
as presently conducted nor any activity of such officers, employees or
          consultants in connection with the carrying on of the Company’s business
as           presently conducted, will conflict with or result in a breach of the terms,
          conditions or provisions of, constitute a default under or trigger a condition
          precedent to any rights under any Contract or other agreement under which any
of           such officers, employees or consultants is now bound.  




        2.23
Environmental Matters. 




            (a)                 No
Hazardous Material is present in, on, under or adjacent to any property that
          the Company has at any time owned, operated, occupied, leased or used
(including           both the land and improvements thereon) and no reasonable likelihood
exists that           any Hazardous Material will come to be present in, on, or under any
properties           owned, operated, occupied, leased or used at any time (including
both land and           improvements thereon) by the Company. The Company has not
transported, stored,           used, manufactured, disposed of, sold, released or exposed
its employees or any           other person to any Hazardous Material, or arranged for
the disposal, discharge,           storage or release of any Hazardous Material, or
currently engages in any of the           foregoing activities, in violation of any
applicable statute, rule, regulation,           order, treaty or Law.  




            (b)                 No
Approvals are required to be obtained by the Company under any Environmental
          Laws. The Company has been and is in compliance in all material respects with
          all other limitations, restrictions, conditions, standards, prohibitions,
          requirements, obligations, schedules and timetables contained in the
          Environmental Laws or contained in any regulation, code, plan, order, decree,
          judgment, notice or demand letter issued, entered, promulgated or approved
          thereunder.  




25 










            (c)                 No
Action or Proceeding is pending, or to the Company’s knowledge,           threatened
concerning any Environmental Law, Hazardous Material or any Hazardous           Materials
activity of the Company. The Company is not aware of any fact or           circumstance
that could involve the Company in any environmental litigation or           impose upon
the Company any environmental Liability.  




        2.24
Substantial Customers and Suppliers. Section 2.24 of the Company Disclosure
Schedule lists the ten (10) largest customers of the Company on the basis of revenues
collected or accrued for the Company Financials. Section 2.24 of the Company Disclosure
Schedule lists the ten (10) largest suppliers of the Company on the basis of cost of goods
or services purchased for the Company Financials. Except as disclosed in Section 2.24 of
the Company Disclosure Schedule, no such customer or supplier has ceased or materially
reduced its purchases from or sales or provision of services to the Company since December
31, 2003 or has threatened to cease or reduce such purchases or sales or provision of
services after the date hereof. Except as disclosed in Section 2.24 of the Company
Disclosure Schedule no such customer or supplier is threatened with bankruptcy or
insolvency. 



        2.25
Accounts Receivable. Except as set forth in Section 2.25 of the Company Disclosure
Schedule, the accounts and notes receivable of the Company reflected on the Company
Financials, and all accounts and notes receivable arising subsequent to the Company
Financials Date, (a) arose from bona fide sales transactions in the ordinary course of
business, consistent with past practice, and are payable on ordinary trade terms, (b) are
legal, valid and binding obligations of the respective debtors enforceable in accordance
with their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws relating to the enforcement of creditors’ rights generally and by general
principles of equity, (c) are not subject to any valid set-off or counterclaim, (d) have
been collected or are fully collectible net of reserves according to their terms in
amounts not less than the aggregate amounts thereof carried on the Books and Records of
the Company and (e) do not represent obligations for goods sold on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or return
arrangement other than customers’ rights to inspect goods upon receipt and reject
nonconforming goods. 



        2.26
Inventory. Except to the extent reserved or provided for in the Company Financials,
all inventory of the Company reflected on the balance sheets included in the Company
Financials consisted, and all such inventory acquired since the Company Financials Date
consists, of a quality and quantity usable and saleable in the ordinary course of
business. Except as disclosed in the notes to the Company Financials or in Sections 2.26
or 2.16 of the Company Disclosure Schedule, all items included in the inventory of the
Company are the property of the Company, free and clear of any Lien, are not held by the
Company on consignment from others and conform in all material respects to all standards
applicable to such inventory or its use or sale imposed by Governmental or Regulatory
Authorities. 




26 









        2.27
Other Negotiations; Brokers; Third-Party Expenses. Neither the Company, nor any of
its officers, directors, employees, agents, or stockholders (nor any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting for or on
behalf of the Company), (a) has entered into any Contract that conflicts with any of the
transactions contemplated by this Agreement or (b) except as disclosed in Section 2.27 of
the Company Disclosure Schedule, has entered into any Contract or arrangement with any
Person regarding any transaction involving the Company which is likely to result in the
Purchaser, the Company, or any general partner, limited partner, manager, officer,
director, employee, agent or Affiliate of any of them being subject to any claim for
liability to said Person as a result of entering into this Agreement or consummating the
transactions contemplated hereby. Except as set forth in Section 2.27 of the Company
Disclosure Schedule, no broker, investment banker, financial advisor or other Person is
entitled to any broker’s, finder’s, financial advisor’s or similar fee or
commission in connection with this Agreement and the transactions contemplated hereby
based on arrangements made by or on behalf of the Company; it being acknowledged and
understood by the parties that any such fee or commission shall be solely for the account
of the Shareholders and shall not be an obligation of the Purchaser. 



        2.28
Banks and Brokerage Accounts. Section 2.28 of the Company Disclosure Schedule sets
forth (a) a true and complete list of the names and locations of all banks, trust
companies, securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other similar
relationship, (b) a true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the respective
officers, employees, agents or other similar representatives of the Company having
signatory power with respect thereto and (c) a list of each Investment Asset, the name of
the record and beneficial owner thereof, the location of the certificates, if any,
therefor, and any stock or bond powers or other authority for transfer granted with
respect thereto. 



        2.29
Warranty Obligations. 




            (a)                 Section
2.29(a) of the Company Disclosure Schedule sets forth (i) a list of all           forms
of written warranties, guarantees and written warranty policies of the           Company
in respect of any of the Company’s products and services, which are
          currently in effect (the “Warranty Obligations”), and the duration of
          each such Warranty Obligation, and (ii) each of the Warranty Obligations which
          is subject to any dispute or threatened dispute. True and correct copies of the
          Warranty Obligations have been made available to the Purchaser prior to the
          execution of this Agreement.  




            (b)                 Except
as disclosed in Section 2.29(b) of the Company Disclosure Schedule, (i)           there
have not been any deviations from the Warranty Obligations, and no           salesperson,
employee or agent of the Company, other than corporate officers is           authorized
to undertake warranty obligations to any customer or other Person in           excess of
such Warranty Obligations and (ii) the balance sheets included in the           Company
Financials reflect reasonable reserves for Warranty Obligations. All           products
manufactured or designed by the Company, and all products licensed,           leased,
rented or sold by the Company to other Persons, (A) are free from           material
defects in construction and design and (B) satisfy any and all Contract           or
other specifications related thereto to the extent stated in writing in such
          Contracts or specifications, in each case, in all respects.  




27 










        2.30
Foreign Corrupt Practices Act. Neither the Company, nor any agent, employee or
other Person acting on behalf of the Company, has, directly or indirectly, used any
corporate funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or campaigns
from corporate funds, violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or made any bribe, rebate, payoff, influence payment, kickback or other
similar unlawful payment. 



        2.31
Assignment and Transfer of Assets and Properties. There are no Intellectual
Property, Contracts or other Assets and Properties in use in the business of the Company
that are owned or leased by any of the Shareholders that have not been or will not have
been assigned to the Purchaser, or the Company at or prior to the Closing. No other
Person, including any Shareholder, has or will have any rights therein as of Closing. 



        2.32
Financial Projections. The Company has made available to the Purchaser certain
financial projections with respect to the Company’s business which projections were
prepared for internal use only. The Company represents and warrants that such projections
were prepared in good faith and are based on reasonable assumptions as of the date of this
Agreement. 



        2.33
Approvals. 




            (a)                 Section
2.33(a) of the Company Disclosure Schedule contains a list of all           material
Approvals of Governmental or Regulatory Authorities known to the           Company
relating to the business conducted by the Company which are required to           be
given to or obtained by the Company from any and all Governmental or           Regulatory
Authorities in connection with the consummation of the transactions
          contemplated by this Agreement and the Ancillary Agreements (other than such
          consents, approvals, orders, authorizations, registrations, declarations and
          filings as may be required under state or federal securities laws).  




            (b)                 Section
2.33(b) of the Company Disclosure Schedule contains a list of all           Approvals
which are required to be given to or obtained by the Company from any           and all
Persons other than Governmental or Regulatory Authorities in connection           with
the consummation of the transactions contemplated by this Agreement and the
          Ancillary Agreements.  




            (c)                 Except
as set forth in Section 2.33(c) of the Company Disclosure Schedule, the           Company
has obtained all Approvals from Governmental or Regulatory Authorities
          necessary to conduct the business conducted by the Company in the manner as it
          is currently being conducted and there has been no written notice received by
          the Company of any violation or non-compliance with any such Approvals. All
          Approvals from Governmental or Regulatory Authorities necessary to conduct the
          business conducted by the Company as it is currently being conducted are set
          forth in Section 2.33(c) of the Company Disclosure Schedule.  




28 










        2.34
    Takeover  Statutes.  No Takeover  Statute  applicable to the Company is applicable
 to the  Acquisition  or the other transactions contemplated hereby. 




        2.35
Patriot Act. The Company, and all of its directors, officers, Affiliates, agents
and employees, at all times has been in substantial compliance with the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act) Act of 2001, as amended, and the rules and regulations
promulgated thereunder, as applicable to the Company and its Assets and Properties. 



        2.36
Disclosure. No representation or warranty made by the Company contained in this
Agreement, and no statement contained in the Company Disclosure Schedule or in any
certificate, list or other writing furnished to the Purchaser pursuant to any provision of
this Agreement (including the Company Financials and the notes thereto) contains any
untrue statement of fact or omits to state any fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they were
made, not misleading. The Company has made available to the Purchaser copies of all of the
Contracts and Licenses and other Books and Records which the Purchaser has requested on or
before the date of this Agreement. 



ARTICLE 2A 
REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDERS 



        Each
Shareholder hereby represents and warrants to the Purchaser as follows: 



        2A.1 Ownership
of Company Common Stock. Such Shareholder owns of record and beneficially the number
of issued and outstanding shares of Company Common Stock set forth opposite his name on
Section 2.3(b) of the Company Disclosure Schedule. Such shares are, and when delivered by
such Shareholder to the Purchaser pursuant to this Agreement will be, duly authorized,
validly issued, fully paid, non-assessable and free and clear of any and all Liens, under
the Uniform Commercial Code or otherwise. 



        2A.2
Shareholder Net Worth. Such Shareholder is an individual who, together with his
spouse, has a net worth (i.e., total assets in excess of total liabilities) in excess of
One Million Dollars ($1,000,000). 



        2A.3
Authority Relative to this Agreement. Such Shareholder has full power and authority
to execute and deliver this Agreement and the Ancillary Agreements to which such
Shareholder is a party, to perform his obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which such Shareholder is or will become a party have been or will
be, as applicable, duly and validly executed and delivered by such Shareholder and,
assuming the due authorization, execution and delivery hereof (and, in the case of the
Ancillary Agreements to which the Purchaser is a party, thereof) by, and enforceability
against, the Purchaser, each constitutes or will constitute, as applicable, a legal, valid
and binding obligation of such Shareholder enforceable against him in accordance with its
respective terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws
relating to the enforcement of creditors’ rights generally and by general principles
of equity. 




29 









        2A.4
No Conflicts. The execution and delivery by such Shareholder of this Agreement and
the Ancillary Agreements to which he is a party does not, and the performance by such
Shareholder of his obligations under this Agreement and the Ancillary Agreements to which
he is a party and the consummation of the transactions contemplated hereby and thereby do
not and will not: 



            (a)                 conflict
with or result in a violation or breach of any Law or Order applicable           to such
Shareholder; or  




            (b)                 (i)
conflict with or result in a violation or breach of, (ii) constitute a           default
(or an event that, with or without notice or lapse of time or both,           would
constitute a default) under, (iii) require such Shareholder to obtain any
          consent, approval or action of, make any filing with or give any notice to any
          Person as a result or under the terms of, (iv) result in or give to any Person
          any right of termination, cancellation, acceleration or modification in or with
          respect to, (v) result in or give to any Person any additional rights or
          entitlement to increased, additional, accelerated or guaranteed payments or
          performance under, (vi) result in the creation or imposition of (or the
          obligation to create or impose) any Lien upon any of such Shareholder’s
          Assets and Properties under or (vii) result in the loss of any material benefit
          under, any of the terms, conditions or provisions of any Contract to which such
          Shareholder is a party or by which any of such Shareholder’s Assets and
          Properties is bound.  




        2A.5
Finder’s Fee. Except as set forth in Section 2.27 of the Company Disclosure
Schedule, such Shareholder has not incurred or become liable for any broker’s
commission or finder’s fee relating to or in connection with the transactions
contemplated by this Agreement; it being acknowledged and understood by the parties that
any such fee or commission shall be solely for the account of the Shareholders and shall
not be an obligation of the Purchaser. 



        2A.6
Agreements. Such Shareholder is not a party to any non-competition, trade secret or
confidentiality agreement with any party other than the Company. There are no agreements
or arrangements not contained herein or disclosed in the Company Disclosure Schedule, to
which such Shareholder is a party relating to the business of the Company or to such
Shareholder’s rights and obligations as a stockholder, director or officer of the
Company. Except as set forth in Section 2A.6 of the Company Disclosure Schedule, such
Shareholder does not own, directly or indirectly, on an individual or joint basis, any
interest in, or serves as an officer or director of, any customer, competitor or supplier
of the Company or any organization which has a contract or arrangement with the Company. 




30 









ARTICLE 3 
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER 



        The
Purchaser represents and warrants to the Company and the Shareholders, as follows: 



        3.1 Organization
and Qualification. The Purchaser is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware. The Purchaser has full corporate
power and authority to conduct its business as now conducted and as currently proposed to
be conducted and to own, use and lease its Assets and Properties. The Purchaser is duly
qualified, licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use, licensing or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification, licensing
or admission necessary, except for such failures to be so duly qualified, licensed or
admitted and in good standing that could not reasonably be expected to have a material
adverse effect on the Business or Condition of the Purchaser. 



        3.2
Authority Relative to this Agreement. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to which it
is a party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the Purchaser
of this Agreement and the Ancillary Agreements to which it is a party and the consummation
by the Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action of the Purchaser, and no other
corporate action on the part of the Purchaser is required to authorize the execution,
delivery and performance of this Agreement and the Ancillary Agreements to which it is a
party and the consummation by the Purchaser of the transactions contemplated hereby and
thereby. This Agreement and the Ancillary Agreements to which the Purchaser is a party
have been or will be, as applicable, duly and validly executed and delivered by the
Purchaser and, assuming the due authorization, execution and delivery hereof by the
Company and/or the other parties thereto, constitutes or will constitute, as applicable, a
legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other
similar Laws relating to the enforcement of creditors’ rights generally and by
general principles of equity. 



        3.3
No Conflicts. The execution and delivery by the Purchaser of this Agreement and the
Ancillary Agreements to which it is or will be a party does not, and the performance by
the Purchaser of its obligations under this Agreement and the Ancillary Agreements to
which it is or will be a party and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the certificate of incorporation or bylaws
of the Purchaser. 



31 










ARTICLE 4 
CONDUCT PRIOR TO THE
CLOSING 



        4.1
Conduct of Business of the Company. During the period from the date of this
Agreement and continuing until the earlier of (x) the termination of this Agreement and
(y) the Closing, the Company (unless the Company is required to take such action pursuant
to this Agreement or the Purchaser shall give its prior consent in writing) shall carry on
its business substantially in the usual, regular and ordinary course substantially
consistent with past practice, pay its Liabilities and Taxes consistent with the
Company’s past practices, pay or perform other obligations when due consistent with
the Company’s past practices (other than Liabilities, Taxes and other obligations, if
any, contested in good faith and for which adequate reserves have been established), and,
to the extent consistent with such business, use commercially reasonable efforts to
preserve substantially intact its present business organization, keep available the
services of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, independent contractors and
other Persons having business dealings with it, all with the express purpose and intent of
preserving substantially unimpaired its goodwill and ongoing businesses at and after the
Closing. Except as expressly contemplated by this Agreement, neither the Company nor any
Shareholder shall, without the prior written consent of the Purchaser, take or agree in
writing or otherwise to take, any action that would result in the occurrence of any of the
changes described in Section 2.9 or any other action that would make any representations
or warranties contained in this Agreement untrue or incorrect when made. Neither the
Company nor any Shareholder shall, without the prior written consent of the Purchaser,
take or agree in writing or otherwise to take, any action that would prevent the Company
or any Shareholder from performing or cause the Company or any Shareholder not to perform
its agreements and covenants hereunder or knowingly cause any condition to the
Purchaser’s closing obligations in Section 6.1 or Section 6.3 not to be satisfied. 



        4.2
No Solicitation. Until the earlier of the Closing or the date of termination of
this Agreement pursuant to the provisions of Section 8.1, neither the Company nor any
Shareholder will take, nor will the Company permit any of the Company’s
representatives to take, any of the following actions with any Person other than the
Purchaser and its designees: (a) solicit, encourage, initiate, entertain, accept receipt
of, or review any proposals or offers from, or participate in or conduct discussions with
or engage in negotiations with, any Person relating to any offer or proposal, oral,
written or otherwise, formal or informal, with respect to any possible Business
Combination with the Company (a “Competing Proposed Transaction”), (b) provide
information with respect to the Company to any Person(other than the Purchaser) relating
to (or which the Company believes would be used for the purpose of formulating an offer or
proposal with respect to), or otherwise assist, cooperate with, facilitate or encourage
any effort or attempt by any such Person with regard to, any possible Business Combination
with the Company, (c) agree to, enter into a Contract with any Person(other than the
Purchaser) providing for, or approve a Business Combination with the Company or (d)
authorize or permit any of the Company’s representatives to take any such action. The
Company will notify the Purchaser immediately after receipt by the Company (or any of its
officers, directors, employees, agents, advisors or other representatives) of any proposal
for or inquiry respecting any Competing Proposed Transaction, or any request for nonpublic
information in connection with such proposal or inquiry or for access to the Assets and
Properties, Books and Records of the Company by any Person or entity that informs or has
informed the Company that it is considering making or has made such a proposal or inquiry.
Such notice to the Purchaser shall indicate in reasonable detail the identity of the
Person making such proposal or inquiry and the terms and conditions of such proposal or
inquiry. The Company (and its officers, directors, employees, agents, advisors or other
representatives) immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect to a
Competing Proposed Transaction. The Company agrees not to release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which it is a
party. The Company agrees that it will use commercially reasonable efforts to promptly
inform its officers, directors, key employees and representatives of the obligations
undertaken in this Section 4.2. Nothing in this Section 4.2 shall permit the Company to
terminate this Agreement. The Company, each Shareholder and the Purchaser each acknowledge
that this Section 4.2 was a significant inducement for the Purchaser to enter into this
Agreement and the absence of such provision would have resulted in either (i) a material
reduction in the consideration to be paid to the Shareholders in the Acquisition or (ii) a
failure to induce the Purchaser to enter into this Agreement. 




32 









ARTICLE 5 
ADDITIONAL AGREEMENTS 



        5.1
Access to Information. 




        Subject
in all cases to the Company’s obligations of confidentiality with respect to
third-party confidential information, between the date of this Agreement and the earlier
of the Closing or the termination of this Agreement, upon reasonable notice, the Company
shall (i) give the Purchaser and its officers, appropriate employees, accountants, and
counsel full access, upon reasonable prior notice during normal business hours, to all
buildings, offices and other facilities and to all Books and Records of the Company,
whether located on the premises of the Company or at another location; (ii) permit the
Purchaser to make reasonable inspections upon reasonable prior notice during normal
business hours; (iii) furnish the Purchaser such financial, operating, technical and
product data and other information with respect to the business and Assets and Properties
of the Company as the Purchaser from time to time may reasonably request, including
financial statements and schedules; (iv) allow the Purchaser the opportunity to interview
such customers, suppliers, prime contractors (when the Company is a subcontractor on a
Contract), employees and other personnel and Affiliates of the Company with the
Company’s prior written consent; and (v) assist and cooperate with the Purchaser in
the development of cooperation plans for implementation by the Purchaser and the Company
following the Closing; provided, however, that no investigation made prior to the date of
this Agreement or made pursuant to this Section 5.1 shall affect or be deemed to modify
any representation or warranty made by the Company herein. Subject to Section 5.2 and the
agreements referenced therein, materials furnished to the Purchaser pursuant to this
Section 5.1 may be used by the Purchaser for strategic and integration planning purposes
relating to accomplishing the transactions contemplated hereby. 



33 










        5.2
Confidentiality. The parties acknowledge that the Purchaser and the Company have
previously executed a Letter of Intent, dated July 7, 2004, containing confidentiality
provisions (such provisions of such Letter of Intent, collectively, the
“Confidentiality Agreements”) and have implemented certain confidentiality
procedures pursuant thereto, which Confidentiality Agreements shall continue in full force
and effect in accordance with their terms. Without limiting the foregoing, all information
furnished to the Purchaser and its officers, employees, accountants and counsel by and on
behalf of the Company and its officers, employees, accountants and counsel, and all
information furnished to the Company and its officers, employees, accountants and counsel
by and on behalf of the Purchaser and its officers, employees, accountants and counsel,
shall be covered by the Confidentiality Agreements, and the Purchaser and the Company
shall be fully liable and responsible under the Confidentiality Agreements for any breach
of the terms and conditions thereof by their respective Subsidiaries, officers, employees,
accountants, counsel and other representatives. 



        5.3
Expenses. All fees and expenses incurred by the Company and any of the Shareholders
in connection with the negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby, including all legal, accounting,
financial advisory, consulting, success and all other fees and expenses of third parties
(the “Company Expenses”) shall be the joint and several obligation of the
Shareholders. All fees and expenses incurred by the Purchaser in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, including all legal, accounting, financial advisory,
consulting and all other fees and expenses of third parties, shall be the obligation of
the Purchaser. 



        5.4
Public Disclosure. Promptly after execution of this Agreement, the Purchaser and
the Company shall issue a joint press release relating to this Agreement (the “Joint
Press Release”) to be prepared by the Purchaser. Thereafter, unless otherwise
required by Law (including federal and state securities laws), no public disclosure
(whether or not in response to any inquiry) of the existence of any subject matter of, or
the terms and conditions of, this Agreement shall be made by any Shareholder hereto unless
approved by the Purchaser prior to release. 



        5.5
Notices and Approvals. The Company shall give any notices that the Purchaser may
reasonably request in connection with the Acquisition or that are otherwise required or
contemplated hereunder. The Company and the Purchaser shall obtain all Approvals from
Governmental or Regulatory Authorities or under any of the Contracts or other agreements
as may be required in connection with the Acquisition so as to preserve all rights of and
benefits to the Company thereunder, and each party shall provide the other with such
assistance and information as is reasonably required to obtain such Approvals. 



        5.6
FIRPTA Compliance. On or prior to the Closing, the Company shall deliver to the
Purchaser a properly executed statement in a form reasonably acceptable to the Purchaser
for purposes of satisfying the Purchaser’s obligations (if any) under Treasury
Regulation Section 1.1445-2(c)(3). 




34 









        5.7
Notification of Certain Matters. The Company or each Shareholder, as applicable,
shall give prompt notice to the Purchaser of (a) the occurrence or non-occurrence of any
event, the occurrence or non-occurrence of which is likely to cause any representation or
warranty of the Company or any Shareholder contained in this Agreement to be untrue or
inaccurate at or prior to the Closing and (b) any failure of the Company or any
Shareholder to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.7 shall not limit or otherwise affect any remedies available to
the Purchaser. 



        5.8
Additional Documents and Further Assurances; Cooperation. Each party hereto, at the
request of the other party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things (including all action reasonably necessary to seek
and obtain any and all Approvals of any Governmental or Regulatory Authority or Person
required in connection with the Acquisition; provided, however, that neither party shall
be obligated to consent to any divestitures or operational limitations or activities in
connection therewith and no party shall be obligated to make a payment of money as a
condition to obtaining any such Approval, other than customary filing fees) as may be
necessary or desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby. Each of the Shareholders agrees and acknowledges that he
shall, and shall cause his Affiliates to, assign or transfer to the Company any
Intellectual Property, Contracts and other Assets and Properties that are used in the
business of the Company and are owned or leased by such Shareholder or its Affiliates.
Each party agrees to use reasonable efforts to cause the conditions set forth in Article 6
to be satisfied, where the satisfaction of such conditions depends on action or
forbearance from action by such party. 



        5.9
Resignation of Directors. Except as provided in Section 1.3, the Company and the
Shareholders shall obtain and deliver to the Purchaser at the Closing the resignation of
each director (or equivalent office) and officer of the Company. 



        5.10
Audited Financial Statements; Company’s Auditors. The Company shall cause its
management and its independent accountants to facilitate on a timely basis (a) the
preparation of financial statements (including pro forma financial statements if required)
as required by the Purchaser to comply with applicable SEC regulations, (b) the review of
any Company audit or review work papers, including the examination of selected interim
financial statements and data, and (c) the delivery of such representations from the
Company’s independent accountants as may be reasonably requested by the Purchaser. 



        5.11
Delivery of Stock Ledger and Minute Book of the Company. The Company shall deliver
its stock ledgers and minute books to the Purchaser at the Closing. 



        5.12
Certain Tax Matters.  The following provisions shall govern the allocation of
responsibility as between the Purchaser and the Shareholders for certain tax matters
following the Closing: 




35 









            (a)       Cooperation
on Tax Matters. 




                (i)                 The
Purchaser, the Company and each Shareholder shall cooperate fully, as and to
          the extent reasonably requested by the other party, in connection with the
          filing of Tax Returns for all periods that begin before the Closing and any
          audit, litigation or other Action or Proceeding with respect to Taxes. Such
          cooperation shall include the retention and (upon the other party’s
          request) the provision of records and information which are reasonably relevant
          to any such audit, litigation or other Action or Proceeding and making
employees           available on a mutually convenient basis to provide additional
information and           explanation of any material provided hereunder. The Company and
each Shareholder           shall (A) retain all Books and Records with respect to Tax
matters pertinent to           the Company relating to any taxable period beginning
before the Closing until           the expiration of the statute of limitations (and, to
the extent notified by the           Purchaser or any Shareholder, any extensions
thereof) of the respective taxable           periods, and to abide by all record
retention agreements entered into with any           taxing authority, and (B) give the
Purchaser reasonable written notice prior to           transferring, destroying or
discarding any such Books and Records and, if the           Purchaser so requests, the
Company and each of the Shareholders, as the case may           be, shall allow the
Purchaser to take possession of such Books and Records.  




                (ii)                 The
Purchaser and each Shareholder shall, upon request, use their best efforts           to
obtain any certificate or other document from any Governmental or Regulatory
          Authority or any other Person as may be necessary to mitigate, reduce or
          eliminate any Tax that could be imposed (including without limitation any Tax
          with respect to the transactions contemplated hereby).  




                (iii)                 The
Purchaser and each Shareholder shall, upon request, to provide the other           party
with all information that either party may be required to report pursuant           to
Section 6043 of the Code, and all Treasury Department Regulations promulgated
          thereunder.  




            (b)       Tax
Period Ending on or before Closing. The Purchaser shall prepare or           cause to
be prepared, and file or cause to be filed, all income Tax Returns for           the
Company for all periods ending on or prior to the Closing that are filed           after
the Closing.  




            (c)       Certain
Taxes. All transfer, documentary, sales, use, stamp, registration           and other
such Taxes and fees (including any penalties and interest) incurred in
          connection with this Agreement, shall be paid by the party legally responsible
          therefor when due, and such party will, at their or its own expense, file all
          necessary Tax Returns and other documentation with respect to all such
transfer,           documentary, sales, use, stamp, registration and other such Taxes and
fees, and,           if required by applicable Law, each of the Purchaser and the Company
will, and           will cause its Affiliates to, join in the execution of any such Tax
Returns and           other documentation.  



36   











        5.13
Releases. At Closing, each of the Shareholders covenants and agrees to deliver, and
shall cause each of the officers and directors of the Company to deliver, to the Company a
release (each a “Release”), in such form as is reasonably satisfactory to the
Purchaser, stating that such Shareholder, officer or director (each a “Releasing
Party”), on behalf of himself and his respective successors and assigns, releases and
forever discharges the Company, and each of its past, present or future directors,
officers, trustees, employees, representatives, Affiliates, stockholders, successors and
assigns (collectively, the “Released Parties”) from any and all claims, demands,
Actions or Proceedings, causes of action, orders, obligations, Contracts, agreements,
debts, Indebtedness and Liabilities whatsoever, whether known or unknown, suspected or
unsuspected, both at law and in equity (collectively, “Claims”), which such
Releasing Party now has, has ever had or may hereafter have against any one or all of the
Released Parties for, upon or by reason of, any matter, cause or thing whatsoever, from
the beginning of the world through the date of such Release, including, but not limited
to, any rights to indemnification or reimbursement from the Company, whether pursuant to
its corporate organizational documents, any Contract or otherwise and whether or not
relating to Claims pending on, or asserted after the date of such Release, expressly
excluding, however, any rights of such Releasing Party arising under this Agreement, which
rights shall not be affected in any manner by such Release. Each Release shall also state
that the Releasing Party, on behalf of himself and his successors and assigns, irrevocably
covenants to refrain from, directly or indirectly, asserting any Claim, or commencing,
instituting or causing to be commenced, any Action or Proceeding of any kind against any
Released Party, based upon any matter released by such Release. 



        5.14
Establishment of Option Pool. (a) As soon as practicable, but in no event later
than December 31, 2004, the Purchaser shall take such actions as are necessary to set
aside from the Purchaser’s Stock Option Plan the Option Pool for the exclusive
benefit of the Persons listed on Section 6.3(f) of the Company Disclosure Schedule (the
“Optionees”). 



            (b)                 The
grant of stock options from the Option Pool shall be made to the Optionees           in
such amounts as may be determined by the Compensation Committee of the
          Purchaser, in consultation with Mr. Turissini, pursuant to and in accordance
          with the terms and conditions of the Purchaser’s Stock Option Plan.  




        5.15
Purchaser Stock. Each certificate representing any portion of the Maximum Stock
Consideration or any shares of Purchaser Stock issued pursuant to Section 1.4(a)(i)(x)
will be imprinted with legends substantially in the following form: 



	 	        THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR OTHERWISE DISTRIBUTED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE SECURITIES LAWS COVERING SUCH SECURITIES, OR SUCH
SALE, TRANSFER, ASSIGNMENT, PLEDGE OR DISTRIBUTION IS EXEMPT FROM REGISTRATION UNDER SUCH
ACT AND APPLICABLE SECURITIES LAWS. WIDEPOINT CORPORATION MAY REQUIRE AN OPINION OF
COUNSEL FOR THE HOLDER OF THE SECURITIES (REASONABLY ACCEPTABLE TO WIDEPOINT CORPORATION
AND ITS COUNSEL) STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE OR DISTRIBUTION IS
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE SECURITIES LAWS. THE SECURITIES
EVIDENCED HEREBY ARE FURTHER SUBJECT TO FURTHER RESTRICTIONS AS CONTAINED IN EACH OF THE
STOCK PURCHASE AGREEMENT, DATED AS OF OCTOBER 14, 2004, AND THE ESCROW AGREEMENT, DATED
AS OF OCTOBER 22, 2004.  








37 









No Shareholder shall offer, sell,
assign, pledge, hypothecate or otherwise transfer (“Transfer”) any shares
of the Purchaser Stock acquired pursuant to this Agreement in violation of Rule 144
promulgated under the Securities Exchange Act of 1934, as amended. Each Shareholder may
Transfer all of the shares of Purchaser Stock acquired by such Shareholder pursuant to
this Agreement (x) at any time with respect to a Transfer to any successor or assignee
that is controlled by, under common control with, or controls the Shareholder or who is a
member of the “immediate family” (as such term is defined under Rule 16a-1(e)
promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended) of the Shareholder and (y) after December 31, 2005 with respect to any
other Transfer; provided, however, that before any such Shareholder may
Transfer any such shares of Purchaser Stock, such Shareholder must first furnish the
Purchaser with (i) a written opinion reasonably satisfactory to the Purchaser in form and
substance from counsel reasonably satisfactory to the Purchaser by reason of experience to
the effect that such Shareholder may Transfer the Purchaser Stock as desired without
registration under the Securities Act of 1933, as amended, and (ii) a written undertaking
executed by the desired transferee reasonably satisfactory to the Purchaser in form and
substance agreeing to be bound by any restrictions on Transfer of such shares of the
Purchaser Stock as may then be applicable. 



ARTICLE 6 
CONDITIONS TO CLOSING 



        6.1
Conditions to Obligations of Each Party to Effect the Acquisition. The respective
obligations of each party to this Agreement to effect the Acquisition shall be subject to
the satisfaction at or prior to the Closing of the following conditions: 



            (a)       Governmental
and Regulatory Approvals. Approvals from any Governmental or           Regulatory
Authority (if any) necessary for consummation of the transactions           contemplated
hereby shall have been obtained.  




        (b)       No
Injunctions or Regulatory Restraints; Illegality. No temporary           restraining
order, preliminary or permanent injunction or other Order issued by           any court
of competent jurisdiction or Governmental or Regulatory Authority or           other
legal or regulatory restraint or prohibition preventing the consummation           of the
Acquisition shall be in effect; nor shall there be any Law or Order           enacted,
entered, enforced or deemed applicable to the Acquisition or the other
          transactions contemplated by the terms of this Agreement that would prohibit
the           consummation of the Acquisition or require the Purchaser to (i) hold
separate           the assets of the Company or (ii) not exercise full voting rights with
respect           to its shares of capital stock of the Company or (iii) which would
permit           consummation of the Acquisition only if certain divestitures were made
or if the           Purchaser were to agree to limitations on its or its Subsidiaries’ business
          activities or operations.  




38 











        6.2
Additional Conditions to Obligations of the Shareholders. The obligations of the
Shareholders to consummate the Acquisition and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, exclusively by such
Shareholder: 



            (a)       Representations
and Warranties. The representations and warranties of the           Purchaser
contained in this Agreement shall be accurate in all material respects           (except
for those representations and warranties that are by their terms           qualified by a
standard of materiality, which representations and warranties           shall be true and
correct in all respects) as of the date of this Agreement and           as of the Closing
as if made on and as of the Closing (other than any such           representations and
warranties which by their express terms are made solely as           of a specified
earlier date, which shall be accurate as of such specified           earlier date).  




            (b)       Performance.
The Purchaser shall have performed and complied with in all           material respects
each agreement, covenant and obligation required by this           Agreement to be so
performed or complied with by the Purchaser at or before the           Closing, including
(i) delivery of the Aggregate Closing Amount pursuant to           Section 1.4(a)(i)(x),
in the amount and form specified in Section 1.4(a) of the           Company Disclosure
Schedule, to each Shareholder (or, in the case of any           Purchaser Stock to be
delivered to such Shareholder as part of the Aggregate           Closing Amount,
arrangements necessary to have certificates evidencing such           Purchaser Stock to
be issued by the Purchaser’s transfer agent as promptly           as practicable
shall have been made and documentation to such effect shall be           provided to such
Shareholder at or before the Closing) and (ii) the making of           arrangements
necessary to have the Purchaser’s transfer agent issue           certificates
evidencing the Maximum Stock Consideration to be delivered to the           Escrow Agent
in accordance with Section 1.4(a)(i)(y) as promptly as practicable,           which
arrangements shall be evidenced by documentation to such effect delivered           to
the Shareholders at the Closing.  




            (c)       Closing
Certificate. The Purchaser shall have delivered to the           Shareholders a
certificate, dated the date of the Closing and executed by a duly           authorized
officer, to the effect that each of the conditions specified in           Sections 6.2(a)
and (b) above is satisfied in all respects.  




        6.3
Additional Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to consummate the Acquisition and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, exclusively by the
Purchaser: 



            (a)       Representations
and Warranties. The representations and warranties of the           Company and each
Shareholder contained in this Agreement shall be accurate in           all material
respects (except for those representations and warranties that are           by their
terms qualified by a standard of materiality, which representations and
          warranties shall be true and correct in all respects) as of the date of this
          Agreement and as of the Closing as if made on and as of the Closing (other than
          representations and warranties which by their express terms are made as of a
          specified earlier date, which shall be accurate as of such specified earlier
          date).  




39 










            (b)       Performance.
The Company and each Shareholder shall have performed and           complied with in all
material respects each agreement, covenant or obligation           required by this
Agreement to be so performed or complied with by the Company or           any
Shareholder, as the case may be, at or before the Closing.  




            (c)       Closing
Certificate. The Shareholders shall have delivered to the           Purchaser a
certificate, dated the date of the Closing, to the effect that each           of the
conditions specified in Sections 6.3(a) and (b) above and Section 6.3(h)           below
is satisfied in all respects.  




            (d)       Stock
Certificates. The Shareholders shall have delivered to the           Purchaser the
certificate or certificates representing all of the issued and           outstanding
Company Capital Stock, duly endorsed in blank, or accompanied by a           duly
executed blank stock power.  




            (e)       Legal
Opinion. The Purchaser shall have received a legal opinion from           McCullough
& Nicholas, counsel to the Company and the Shareholders, in the           form set
forth in Exhibit B attached hereto.  




            (f)       Employees.
Except for terminations caused by death or disability, (i) the           persons listed
on Section 6.3(f) of the Company Disclosure Schedule shall           continue to be
employed by the Company at the Closing and shall not have given           any notice or
other indication that they are not willing or do not intend to be           employed by
the Company following the Closing and shall have executed and           delivered to the
Purchaser the Purchaser’s Intellectual Property,           Confidentiality and
Non-Competition Agreement in substantially the form attached           hereto as Exhibit
C (the “Non-Competition Agreement”); (ii) Mr.           Turissini shall be
retained as an employee by the Company and shall have           delivered to the
Purchaser an Employment Agreement in substantially the form           attached hereto as
Exhibit D (the “Employment Agreement”); and           (iii) Mr.
Montgomery shall be retained as a consultant by the Company and shall           have
delivered to the Purchaser a Consulting and Non-Competition Agreement in
          substantially the form attached hereto as Exhibit E.  




            (g)       Approvals.
(i) Approvals, if any, from any Person other than a           Governmental or Regulatory
Authority necessary for consummation of the           transactions contemplated hereby
shall have been obtained, including any           Approvals required to be disclosed in
Section 2.6(c) of the Company Disclosure           Schedule; and (ii) at and after the
Closing, the Company shall have and be           entitled to exercise all of its rights
under the Contracts listed on Section           2.18(a) of the Company Disclosure
Schedule without the payment of any additional           amounts or consideration other
than ongoing fees, royalties or payments that the           Company would otherwise be
required to pay had the transactions contemplated by           this Agreement not
occurred.  




            (h)       Net
Working Capital. The Company shall have not less than One Million Two
          Hundred Thousand Dollars ($1,200,000) in Net Working Capital at the time of
          Closing.  




40 










            (i)       Releases.
Each of the Shareholders and the officers and directors of the           Company shall
have executed and delivered a Release to the Company in accordance           with Section
5.13.  




            (j)       Financing.
The Purchaser shall have obtained on terms and conditions           satisfactory to it,
in its sole and absolute discretion, all of the financing it           needs in order to
consummate the Acquisition and to fund the working capital           requirements of the
Company after the Closing.  




ARTICLE 7 
SURVIVAL OF
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION 



        7.1
Survival of Representations, Warranties, Covenants and Agreements. Notwithstanding
any right of the Purchaser (whether or not exercised) to investigate the affairs of the
Shareholders or the Company (whether pursuant to Section 5.1 or otherwise) or a waiver by
the Purchaser of any condition to Closing set forth in Article 6, the Purchaser shall have
the right to rely fully upon the representations, warranties, covenants and agreements of
the other party contained in this Agreement or in any instrument delivered pursuant to
this Agreement. Except for the representations and warranties set forth in Sections 2.2,
2.3(a), 2.11, 2.14, 2.19, and 2A.1 (which shall survive the Closing and continue until the
applicable statute of limitations has expired), all of the representations and warranties
contained in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Closing and continue until the third anniversary of the Closing (the
“Expiration Date”); provided, however, that all of the representations and
warranties made by the Company contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall expire upon the Closing. For the avoidance of doubt, each
provision of Article 1 and all corresponding Schedules shall survive until the
satisfaction of all obligations described therein, and each provision of Article 9 and
Article 10 shall survive so long as it is relevant to any other surviving provision. No
Action or Proceeding may be instituted to enforce, or seek damages or other remedies with
respect to the breach of any representation or warranty after the expiration of the period
of survival for such representation or warranty as described above. 



        7.2
Indemnification by the Shareholders. After the Closing, the Purchaser and its
Affiliates (including, after the Closing, the Company), officers, directors, employees,
agents, successors and assigns (each a “Purchaser Indemnified Party” and
collectively, the “Purchaser Indemnified Parties”) shall be indemnified and held
harmless by each of the Shareholders, jointly and severally, for any and all Liabilities,
losses, damages of any kind, diminution in value, claims, costs, expenses, fines, fees,
deficiencies, interest, awards, judgments, amounts paid in settlement and penalties
(including, without limitation, attorneys’, consultants’ and experts’ fees
and expenses and other costs of defending, investigating or settling claims) actually
suffered or incurred by them (including, without limitation, in connection with any action
brought or otherwise initiated by any of them) (hereinafter, “Loss(es)”),
arising out of or resulting from: 




41 









            (i)                 any
inaccuracy in or breach (or any claim by any third party alleging or
          constituting an inaccuracy or breach) of any representation or warranty of the
          Company or any of the Shareholders, as of the date of this Agreement, contained
          in this Agreement or in the Ancillary Agreements or any other instrument
          delivered pursuant to this Agreement;  




            (ii)                 any
breach of any covenant or agreement made by the Company or any of the
          Shareholders in this Agreement or in the Ancillary Agreements or any other
          instrument delivered pursuant to this Agreement;  




            (iii)                 Losses
from breach of contract or other claims made by any party alleging to           have had
a contractual or other right to acquire Company Common Stock or any of           the
Company’s Assets and Properties;  




            (iv)                 Losses
with respect to any Company Expenses required to be paid by the           Shareholders
pursuant to Section 5.3;  




            (v)                 Losses
with respect to any Contract resulting from, relating to or arising out           of the
conduct of the Company’s business, including without limitation,           Losses
incurred as the result of any audit, renegotiation, termination, breach           (other
than breaches which occur after the Closing), amendment or adjustment of           any
Contract; or  




            (vi)                 Losses
with respect to the litigation described in Section 7.2 of the Company
          Disclosure Schedule.  




      7.3
Indemnification Procedures.



            (a)                 The
obligations and Liabilities of the Shareholders under this Article 7 with
          respect to Losses arising from claims of any third party which are subject to
          the indemnification provided for in this Article 7 (“Third Party
          Claims”) shall be governed by and contingent upon the terms and conditions
          set forth in this Section 7.3. If any Purchaser Indemnified Party shall receive
          notice of any Third Party Claim, the Purchaser Indemnified Party shall give the
          Shareholders notice of such Third Party Claim within fifteen (15) days of the
          receipt by the Purchaser Indemnified Party of such notice; provided, however,
          that the failure to provide such notice shall not release any of the
          Shareholders from any of his respective obligations under this Article 7. The
          notice of claim shall describe in reasonable detail the facts known to the
          Purchaser Indemnified Party giving rise to such indemnification claim and the
          amount or good faith estimate of the amount arising therefrom.  




42 










            (b)                 Any
of the Shareholders shall be entitled to assume and control the defense of a
          Third Party Claim at his expense and through counsel of his choice (such
counsel           to be reasonably acceptable to the Purchaser Indemnified Party) if he
gives           notice of his intention to do so to the Purchaser Indemnified Party
within           fifteen (15) days of the receipt of such notice from the Purchaser
Indemnified           Party; provided, however, if there exists or is reasonably likely
to exist a           conflict of interest that would make it inappropriate for the same
counsel to           represent both the Purchaser Indemnified Party and any such
Shareholder, then           the Purchaser Indemnified Party shall be entitled to retain
its own counsel, in           each jurisdiction for which counsel is required, at the
expense of the           Shareholders, jointly and severally. In the event that any of
the Shareholders           exercises the right to undertake any such defense against any
such Third Party           Claim as provided above, such Shareholder(s) shall conduct the
defense of the           Third Party Claim actively and diligently and the Purchaser
Indemnified Party           shall cooperate with such Shareholder(s) in such defense and
make available to           such Shareholder(s) at such Shareholder’s expense, all
witnesses, pertinent           records, materials and information in the Purchaser
Indemnified Party’s           possession or under the Purchaser Indemnified Party’s
control relating           thereto as is reasonably required by such Shareholder(s).
Similarly, in the           event the Purchaser Indemnified Party is, directly or
indirectly, conducting the           defense against any such Third Party Claim, the
Shareholders shall cooperate           with the Purchaser Indemnified Party in such
defense and make available to the           Purchaser Indemnified Party, at the
Shareholders’ expense, jointly and           severally, all such witnesses, records,
materials and information in any           Shareholder’s possession or under any
Shareholder’s control relating           thereto as is reasonably required by the
Purchaser Indemnified Party. No such           Third Party Claim may be settled by any
party conducting the defense against           such claim without the prior written
consent of the other party, which consent           shall not be unreasonably delayed or
withheld.  




            (c)                 Each
Shareholder hereby agrees that he will not make any claim for           indemnification
against the Purchaser (or the Company) by reason of the fact           that such
Shareholder was a controlling person, director, officer, employee,           agent or
other representative of the Company or was serving as such for another           Person
at the request of the Company (whether such claim is for Liabilities of           any
kind or otherwise and whether such claim is pursuant to any statute,           charter,
bylaw, Contract or otherwise) with respect to any Action or Proceeding,           Third
Party Claim or other Loss claim brought by any Purchaser Indemnified Party
          against such Shareholder (whether such Action, Proceeding, Third Party Claim or
          other Loss claim is pursuant to this Agreement, applicable law or otherwise).  




        7.4
Right of Offset. As provided in Section 1.5, in the event any amounts are payable
by any Shareholder to Purchaser Indemnified Party pursuant to this Article 7, the
Purchaser may set-off and recoup such amounts against (i) the Actual Stock Consideration,
(ii) the Deferred Cash Payment (iii) amounts collected by the Purchaser that are
attributable to the Receivables Holdback and/or (iv) the Contingent Earnout Payment, to
the extent that any such amount has not been previously paid or delivered to the
Shareholders. The Purchaser’s right to set-off and recoup amounts payable by any
Shareholder is in addition to, and not in lieu of, any other rights the Purchaser may have
at law, in equity, under the terms of this Agreement or otherwise with respect to
recovering such amounts from the Shareholders. 



ARTICLE 8 
TERMINATION, AMENDMENT
AND WAIVER 



        8.1
Termination. Except as provided in Section 8.2, this Agreement may be terminated
and the Acquisition abandoned at any time prior to the Closing: 



            (a)                 by
mutual agreement of all of the Shareholders and the Purchaser;  




43 










            (b)                 by
the Purchaser or all of the Shareholders if: (i) the Closing has not occurred
          before 5:00 p.m. (Eastern Time) on October 31, 2004 (provided, however, that
the           right to terminate this Agreement under this Section 8.1(b)(i) shall not be
          available to any party whose failure, or the failure of any of such party’s
          Subsidiaries or Affiliates, to fulfill any obligation hereunder has been the
          cause of, or resulted in the failure of the Closing to occur on or before such
          date); (ii) there shall be a final nonappealable Order of a federal or state
          court in effect preventing consummation of the Acquisition; or (iii) there
shall           be any Law or Order enacted, promulgated or issued by any Governmental or
          Regulatory Authority that would make consummation of the Acquisition illegal;  




            (c)                 by
the Purchaser if there shall be any Law or Order enacted, promulgated or           issued
or deemed applicable to the Acquisition, by any Governmental or           Regulatory
Authority, which would: (i) prohibit the Purchaser’s ownership           or
operation of all or any portion of the business of the Company or (ii) compel
          the Purchaser to dispose of or hold separate all or any portion of the Assets
          and Properties of the Company as a result of the Acquisition;  




            (d)                 by
the Purchaser if it is not in material breach of its representations,
          warranties, covenants and agreements under this Agreement and there has been a
          material breach of any representation, warranty, covenant or agreement
contained           in this Agreement on the part of the Company and (i) the Company is
not using           its commercially reasonable efforts to cure such breach, or has not
cured such           breach within thirty (30) days, after notice of such breach to the
Company           (provided, however, that, no cure period shall be available for a
breach which           by its nature cannot be cured) and (ii) as a result of such breach
any of the           conditions set forth in Section 6.1 or Section 6.3, as the case may
be, would           not be satisfied prior to the date specified in Section 8.1(b)(i);
and  




            (e)                 by
all of the Shareholders if none of them is in material breach of his
          representations, warranties, covenants and agreements under this Agreement and
          there has been a material breach of any representation, warranty, covenant or
          agreement contained in this Agreement on the part of the Purchaser and (i) the
          Purchaser is not using its commercially reasonable efforts to cure such breach,
          or has not cured such breach within thirty (30) days, after notice of such
          breach to the Purchaser (provided, however, that no cure period shall be
          available for a breach which by its nature cannot be cured), and (ii) as a
          result of such breach any of the conditions set forth in Section 6.1 or Section
          6.2, as the case may be, would not be satisfied as of the date specified in
          Section 8.1(b)(i).  




        8.2
Effect of Termination. In the event of a valid termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Purchaser, the Shareholders or the Company, or
their respective officers, directors or stockholders or Affiliates or Associates;
provided, however, that each party shall remain liable for any breaches of this Agreement
prior to its termination; and provided further that, the provisions of Sections 5.3, 5.4,
5.5 and 8.2, Article 9 (exclusive of Section 9.3) and the applicable definitions set forth
in Article 10 shall remain in full force and effect and survive any termination of this
Agreement. 




44   









        8.3
Amendment. This Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed on behalf of each of the parties hereto. 



        8.4
Extension; Waiver. At any time prior to the Closing, the Purchaser and the
Shareholders may (but shall not be obligated to), to the extent legally allowed, (a)
extend the time for the performance of any of the obligations of the other party hereto,
(b) waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements, covenants or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on behalf of
such party. 



ARTICLE 9 
MISCELLANEOUS
PROVISIONS 



        9.1
Notices. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally or by
facsimile transmission against facsimile confirmation or mailed by a nationally recognized
overnight courier prepaid, to the parties at the following addresses or facsimile numbers: 



        If
to the Purchaser to: 




	 	
WidePoint
Corporation                   
One Lincoln Centre, Suite 1100                   
Oakbrook
Terrace, IL 60181                   
Facsimile No.: 630.629.7559                   
Attn:
 James T. McCubbin 






        with
a copy (which shall not constitute notice) to: 



	Williams Mullen 	and 	Foley Lardner, LLP 
	1666 K Street, N.W 	 	3000 K Street, N.W. 
	Suite 1200 	 	Suite 500 
	Washington, D.C. 20006 	 	Washington, D.C. 20007 
	Facsimile No.: 202.293.5939 	 	Facsimile No.: 202.672.5399 
	Attn: James A. Blalock III, Esq 	 	Attn: Thomas James, Esq. 







        If
to the Company: 




	 	
c/o
Daniel E. Turissini                   
11250 Waples Mill Road                   
South
Toser, Suite 210                   
Fairfax, VA 22030                   
Facsimile No.:
202.264.1900 






45 










        with
a copy (which shall not constitute notice) to: 



	 	
McCullough
& Nicholas, PLLC                   
1412 14th Street                   
Suite 200
                  
Washington, D.C. 20005                   
Facsimile No.:  202.264.1900
                  
Attn:  Richard F. Trimber, Esq. 






        If
to the Shareholders: 




	 	
Richard
L. Montgomery                   
1736 South Park Court                   
Chesapeake, VA
23320                   
Facsimile No.:  202.264.1900 







	 	
Fred
D. Thornton                   
1736 South Park Court                   
Chesapeake, VA
23320                   
Facsimile No.:  202.264.1900  








	 	
Daniel
E. Turissini                   
11250 Waples Mill Road                   
South Tower,
Suite 210                   
Fairfax, VA 22030                   
Facsimile No.:
 202.264.1900 






        with
a copy (which shall not constitute notice) to: 



	 	
McCullough
& Nicholas, PLLC                   
1412 14th Street                   
Suite 200
                  
Washington, D.C. 20005                   
Facsimile No.:  202.264.1900
                 
Attn:  Richard F. Trimber, Esq. 






All such notices, requests and other
communications will (a) if delivered personally to the address as provided in this Section
9.1, be deemed given upon delivery, (b) if delivered by facsimile transmission to the
facsimile number as provided for in this Section 9.1, be deemed given upon facsimile
confirmation, and (c) if delivered by overnight courier to the address as provided in this
Section 9.1, be deemed given on the earlier of the first Business Day following the date
sent by such overnight courier or upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section 9.1). Any party from time to time
may change its address, facsimile number or other information for the purpose of notices
to that party by giving notice specifying such change to the other party hereto. 



46 










        9.2
Entire Agreement. This Agreement (including the Exhibits hereto and the Company
Disclosure Schedule) constitutes the entire Agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof (including
specifically, without limitation, the Letter of Intent dated July 7, 2004, by and between
the Company and the Purchaser), except for the Confidentiality Agreements (which shall
continue in full force and effect and shall survive any termination of this Agreement or
the Closing in accordance with their terms, and shall be deemed to have the same effect on
construction or interpretation of this Agreement as if set forth herein). 



        9.3
Further Assurances; Post-Closing Cooperation. At any time or from time to time
after the Closing, each party shall execute and deliver to the other parties such other
documents and instruments, provide such materials and information and take such other
actions as the other party may reasonably request to consummate the transactions
contemplated by this Agreement and otherwise to cause the other party to fulfill its
obligations under this Agreement and the transactions contemplated hereby. Each party
agrees to cooperate in causing the conditions to its obligations to consummate the
Acquisition to be satisfied. 



        9.4
Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative. 



        9.5
Third-Party Beneficiaries. Except for Section 5.10, the terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights, and this Agreement does not confer any such rights,
upon any other Person other than any Person entitled to indemnity under Section 5.10 or
Article 7; provided, that this Section 9.5 shall not be construed to prohibit an action
for consideration which is unpaid at a time when the Purchaser is then obligated to pay
such amounts pursuant to Article 1. 



        9.6
No Assignment; Binding Effect. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned (by operation of law or otherwise) by any party
without the prior written consent of the other party and any attempt to do so will be
void. Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective successors and
assigns. 




47 









        9.7
Headings. The headings and table of contents used in this Agreement have been
inserted for convenience of reference only and do not define or limit the provisions
hereof. 



        9.8
Invalid Provisions. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never comprised a
part hereof, (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a legal, valid
and enforceable provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible. 



        9.9
Governing Law, Submission to Jurisdiction. This Agreement, any Ancillary Agreements
and any other closing documents shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia as applied to contracts entered into by Virginia
residents and performed entirely in Commonwealth of Virginia, without giving effect to its
principles or rules regarding conflicts of laws, other than such principles directing
application of the laws of Commonwealth of Virginia. Each party hereto irrevocably agrees
that any legal action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by another party hereto or its
successors or assigns shall be brought and determined by either a state court or federal
court sitting in the Commonwealth of Virginia and each party hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction of the aforesaid
courts. Each party hereto hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counter claim or otherwise, in any action or proceeding with respect
to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to serve process in
accordance with this Section 9.9, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and
(iii) this Agreement, or the subject matter hereof, may not be enforced in or by such
courts. 



        9.10
WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, THE PARTIES
HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY ANY PARTY HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR
PROCEEDING. 




48 









        9.11
Construction. The parties hereto agree that this Agreement is the product of
negotiation between sophisticated parties and individuals, all of whom were represented by
counsel, and each of whom had an opportunity to participate in and did participate in, the
drafting of each provision hereof. Accordingly, ambiguities in this Agreement, if any,
shall not be construed strictly or in favor of or against any party hereto but rather
shall be given a fair and reasonable construction without regard to the rule of contra
proferentem. 



        9.12
Counterparts. This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one and the
same instrument. 



        9.13
Specific Performance. The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Notwithstanding Section 9.9, it is
agreed that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity. Nothing in Article 7
shall be construed or interpreted to limit this Section 9.13. 



ARTICLE 10
DEFINITIONS 



        10.1
      Definitions.  As used in this  Agreement,  the  following  defined  terms shall
have the meanings  indicated below:  




        “2004
Stock Consideration” means the portion of the shares of Purchaser Stock included in
the Maximum Stock Consideration that are released from the Escrow Agreement and delivered
to the Shareholders pursuant to Section 1.4(a)(ii) hereof in the amount determined
pursuant to Section 1.4(c) hereof. The 2004 Stock Consideration shall be released and
delivered to each Shareholder in the proportion that the total number of shares of
Purchaser Stock included in the Maximum Stock Consideration and designated in such
Shareholder’s name bears to total number of shares of Purchaser Stock included in the
Maximum Stock Consideration. 



        “2005
Stock Consideration” means the portion of the shares of Purchaser Stock included in
the Maximum Stock Consideration that are released from the Escrow Agreement and delivered
to the Shareholders pursuant to Section 1.4(a)(iii)(x) hereof  in
the amount determined pursuant to Section 1.4(d)(i) hereof. The 2005 Stock Consideration
shall be released and delivered to each Shareholder in the proportion that the total
number of shares of Purchaser Stock included in the Maximum Stock Consideration and
designated in such Shareholder’s name bears to total number of shares of Purchaser
Stock included in the Maximum Stock Consideration. 



        “Acquisition
Consideration” is defined in Section 1.4(a)(iv) hereof. 




49 









        “Actions
or Proceedings” means any action, suit, complaint, subpoena, petition, investigation,
proceeding, arbitration, mediation, litigation or Governmental or Regulatory Authority
investigation, audit, document request or other proceeding, whether civil or criminal, in
law or in equity, or before any arbitrator or Governmental or Regulatory Authority. 



        “Actual
Stock Consideration” means the sum of the 2004 Stock Consideration and the 2005 Stock
Consideration. 



        “Affiliate”
means, as applied to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with, that Person. For the purposes of this
definition, “control” (including with correlative meanings, the terms
“controlling”, “controlled by”, and “under common control
with”) as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that Person,
whether through ownership of voting securities or by contract or otherwise. 



        “Aggregate
Closing Consideration” is defined in Section 1.4(a)(i)(x) hereof. 



        “Agreement”
means this Stock Purchase Agreement, including (unless the context otherwise requires) the
Exhibits, the Company Disclosure Schedule and the certificates and instruments delivered
in connection herewith, or incorporated by reference, as the same may be amended or
supplemented from time to time in accordance with the terms hereof. 



        “Approval”
means any approval, authorization, consent, novation, permit, qualification or
registration, or any waiver of any of the foregoing, required to be obtained from or made
with, or any notice, statement or other communication required to be filed with or
delivered to, any Governmental or Regulatory Authority or any other Person. 



        “Assets
and Properties” of any Person means all assets and properties of every kind, nature,
character and description (whether real, personal or mixed, whether tangible or
intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever
situated), including the goodwill related thereto, operated, owned, licensed or leased by
such Person, including cash, cash equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property. 



        “Associate”
means, with respect to any Person, any corporation or other business organization of which
such Person is an officer or partner or is the beneficial owner, directly or indirectly,
of ten percent (10%) or more of any class of equity securities, any trust or estate in
which such Person has a substantial beneficial interest or as to which such Person serves
as a trustee or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person. 



        “Books
and Records” means all files, documents, instruments, papers, books and records
relating to the Business or Condition of the Company, including, without limitation,
financial statements, internal reports, Tax Returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title policies,
minute books, stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs (including data processing files and records),
retrieval programs, operating data and plans and environmental studies and plans,
excluding, however, in all cases any materials that contain any confidential information
of any third party (other than the Company) that is restricted by agreement or applicable
law from being disclosed to the Purchaser and/or Persons. 




50 









        “Business
Combination” means, with respect to any Person, (a) any merger, consolidation, share
exchange, reorganization or other business combination transaction to which such Person is
a party, (b) any sale, or other disposition of all or substantially all of the capital
stock or other equity interests of such Person (except for issuances of common stock upon
conversion of preferred stock outstanding on the date hereof or the exercise of options or
warrants outstanding on the date hereof or issued in accordance with this Agreement), (c)
any tender offer (including a self tender), exchange offer, recapitalization,
restructuring, liquidation, dissolution or similar or extraordinary transaction, (d) any
sale, dividend or other disposition of all or a substantial portion of the Assets and
Properties of such Person (including by way of exclusive license or joint venture
formation) other than sales of inventory and the granting of licenses in the ordinary
course of such Person’s business and consistent with past practice, or (e) the
entering into of any agreement or understanding, the granting of any rights or options, or
the acquiescence of such Person, to do any of the foregoing. 



        “Business
Day” means a day other than Saturday, Sunday or any day on which banks located in the
State of New York are authorized or obligated to close. 



        “Business
or Condition of the Purchaser” means the business, condition (financial or
otherwise), results of operations, prospects or Assets and Properties of the Purchaser and
its Subsidiaries, considered in the aggregate. 



        “Business
or Condition of the Company” means the business, condition (financial or otherwise),
results of operations, prospects or Assets and Properties of the Company, considered in
the aggregate. 



        “Company
Common Stock” is defined in Section 2.3(a) hereof. 



        “Company Disclosure
Schedule” means the schedules delivered to the Purchaser by or on behalf of the
Company in connection with the execution of this Agreement, containing all lists,
descriptions, exceptions and other information and materials as are required to be
included therein in connection with the representations and warranties made by the Company
in Article 2 or otherwise. 



        “Company
Intellectual Property” shall mean any Intellectual Property that (a) is owned by the
Company; (b) is licensed to Company; or (c) is used in or necessary for the conduct of the
business of the Company as presently conducted. 




51 









        “Company
Options” means any Option to purchase or otherwise acquire Company Common Stock. 



        “Company Registered
Intellectual Property” means all Registered Intellectual Property owned by the
Company. 



        “Company’s
2004 Revenue” means the amount of the gross revenues of the Company for the twelve
months ending December 31, 2004, as determined in accordance with GAAP and in a manner
consistent with the determination of gross revenues of the Company for the twelve months
ended December 31, 2003 set forth in the Company Financials. 



        “Contingent
Earnout Payment” means the lesser of (i) Two Million Dollars ($2,000,000) and (ii)
fifty percent (50%) of the Company’s EBITDA above Four Million Five Hundred Thousand
Dollars ($4,500,000) for the two (2) year period ending December 31, 2006, adjusted for
such period to exclude the benefit of any capitalized expenses related to Version 2 of the
Company’s External Certificate Authority Software. 



        “Contract”
means any note, bond, mortgage, contract, license, lease, sublease, covenant, commitment,
power of attorney, proxy, indenture, or other agreement or arrangement, oral or written,
including any Government Contract. 



        “Corporate
Flow Downs” means all expenses incurred by the Purchaser after the date of the
Closing that are (i) unrelated to the operation of the Company and (ii) are either
assigned to the Company by the Purchaser or paid by the Company on behalf of the
Purchaser. 



        “Deferred
Cash Payment” means the aggregate amount paid to the Shareholders pursuant to Section
1.4 (a)(iii)(x) of this Agreement. 



        “EBITDA”
means, for any specified period, the earnings before interest, taxes, depreciation and
amortization of the Company as calculated by the Company and the Purchaser’s
independent auditors in accordance with GAAP consistently applied; provided, however, that
solely for purposes of calculating EBITDA of the Company under this Agreement, (i) the
Purchaser’s acquisition or pre-closing integration costs, (ii) the Company’s
post-Closing integration costs, and (iii) any Corporate Flow Downs shall be disregarded
and have no effect on the amount so calculated. 



        “Environmental
Law” means any federal, state, local or foreign environmental, health and safety or
other Law relating to of Hazardous Materials, including the Comprehensive, Environmental
Response Compensation and Liability Act, the Clean Air Act, the Federal Water Pollution
Control Act, the Solid Waste Disposal Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the California Safe Drinking Water and Toxic Enforcement Act. 



        “Equity
Equivalents” means securities (including Options to purchase any shares of Company
Common Stock) which, by their terms, are or may be exercisable, convertible or
exchangeable for or into common stock, preferred stock or other securities at the election
of the holder thereof. 




52 









        “Escrow
Agent” means Williams Mullen, in its capacity as escrow agent under the Escrow
Agreement. 



        “Escrow
Agreement” means that certain agreement by and among the Shareholders, the Purchaser
and the Escrow Agent, substantially in the form attached hereto as Exhibit A, pursuant to
which the Maximum Stock Consideration shall be held and the Actual Stock Consideration
shall be released and delivered to the Shareholders in accordance with Sections 1.4(a)(ii)
and 1.4(a)(iii)(x) hereof. 



        “GAAP”
means, with respect to the preparation, determination or calculation of any financial
information, generally accepted accounting principles in the United States, as in effect
at the time of such preparation, determination or calculation. 



        “Government
Contract” means any Contract to which the Company is a party with any Governmental or
Regulatory Authority or any Contract to which the Company is a party that is a subcontract
(at any tier) with another Person that holds either a prime contract with any Governmental
or Regulatory Authority or a subcontract (at any tier) under such a prime contract. 



        “Governmental
or Regulatory Authority” means any court, tribunal, arbitrator, authority, agency,
bureau, board, commission, department, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or other
political subdivision, and shall include any stock exchange, quotation service and the
National Association of Securities Dealers. 



        “Hazardous
Material” means (a) any chemical, material, substance or waste including, containing
or constituting petroleum or petroleum products, solvents (including chlorinated
solvents), nuclear or radioactive materials, asbestos in any form that is or could become
friable, radon, lead-based paint, urea formaldehyde foam insulation or polychlorinated
biphenyls, (b) any chemicals, materials, substances or wastes which are now defined as or
included in the definition of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” “extremely hazardous wastes,”
“restricted hazardous wastes,” “toxic substances,” “toxic
pollutants” or words of similar import under any Environmental Law; or (c) any other
chemical, material, substance or waste which is regulated by any Governmental or
Regulatory Authority or which could constitute a nuisance. 



        “Indebtedness”
of any Person means all obligations of such Person (a) for borrowed money, (b) evidenced
by notes, bonds, debentures or similar instruments, (c) for the deferred purchase price of
goods or services (other than trade payables or accruals incurred in the ordinary course
of business), (d) under capital leases classified as such under GAAP and (e) in the nature
of guarantees of the obligations described in clauses (a) through (d) above of any other
Person. 



53 










        “Intellectual
Property” means all trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and service name rights,
patents and patent rights, utility models and utility model rights, copyrights, mask work
rights, brand names, trade dress, product designs, product packaging, business and product
names, logos, slogans, rights of publicity, trade secrets, inventions (whether patentable
or not), invention disclosures, improvements, processes, formulae, industrial models,
processes, designs, specifications, technology, methodologies, computer software
(including all source code and object code), firmware, development tools, flow charts,
annotations, all Web addresses, sites and domain names, all data bases and data
collections and all rights therein, any other confidential and proprietary right or
information, whether or not subject to statutory registration, and all related technical
information, manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, utility models, trademarks, service marks
and copyrights, and the right to sue for past infringement, if any, in connection with any
of the foregoing, and all documents, disks, records, files and other media on which any of
the foregoing is stored. 



        “Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder. 



        “Investment
Assets” means all debentures, notes and other evidences of Indebtedness, stocks,
securities (including rights to purchase and securities convertible into or exchangeable
for other securities), interests in joint ventures and general and limited partnerships,
mortgage loans and other investment or portfolio assets. 



        “Law”
or “Laws” means any law, statute, order, decree, consent decree, judgment, rule,
regulation, ordinance or other pronouncement having the effect of law whether in the
United States, any foreign country, or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority. 



        “Liabilities”
means all Indebtedness, obligations and other liabilities of a Person, whether absolute,
accrued, contingent (or based upon any contingency), known or unknown, fixed or otherwise,
or whether due or to become due. 



        “License”
means any Contract that grants a Person the right to use or otherwise enjoy the benefits
of any Intellectual Property (including any covenants not to sue with respect to any
Intellectual Property). 



        “Liens”
means any mortgage, pledge, assessment, security interest, lease, lien, easement, license,
covenant, condition, restriction, adverse claim, levy, charge, option, equity, adverse
claim or restriction or other encumbrance of any kind, or any conditional sale Contract,
title retention Contract or other Contract to give any of the foregoing, except for any
restrictions on transfer generally arising under any applicable federal or state
securities law. 



        “Losses”
is defined in Section 7.2. 





54 









        “Maximum
Stock Consideration” means Five Million Five Hundred Fifty-Five Thousand Five Hundred
and Fifty-six (5,555,556) shares (computed by dividing Two Million Five Hundred Thousand
Dollars ($2,500,000) by Forty-five Cents ($0.45)) of Purchaser Stock delivered to the
Escrow Agent pursuant to Section 1.4(a)(i)(y). 



        “Net
Working Capital” means the total net cash, accounts receivable (other than accounts
receivable listed in Section 2.25 of the Company Disclosure Schedule or which are
otherwise overdue by more than sixty (60) days) and other current assets of the Company
minus accounts payable and other current liabilities of the Company. 



        “Option”
with respect to any Person means any security, right, subscription, warrant, option,
“phantom” stock right or other Contract that gives the right to (a) purchase or
otherwise receive or be issued any shares of capital stock or other equity interests of
such Person or any security of any kind convertible into or exchangeable or exercisable
for any shares of capital stock or other equity interests of such Person or (b) receive
any benefits or rights similar to any rights enjoyed by or accruing to the holder of
shares of capital stock or other equity interests of such Person, including any rights to
participate in the equity, income or election of directors of such Person. 



        “Option
Pool” means that certain pool of incentive stock options to be set aside under the
Purchaser’s Stock Option Plan pursuant to Section 5.14 of this Agreement. The number
of incentive stock options in the Option Pool shall be equal to the result obtained by
dividing $500,000 by the Strike Price. 



        “ORC
2004 EBITDA” means the Company’s EBITDA for the twelve months ended December 31,
2004, adjusted upward by the amount of the allowable recasted expenses specified on
Schedule 2.7A of the Company Disclosure Schedule. 



        “ORC
2004 EBITDA Floor” means One Million Six Hundred Thousand Dollars ($1,600,000). 



        “ORC 2004
EBITDA Target” means Two Million One Hundred Thousand Dollars ($2,100,000). 



        “ORC
2004 EBITDA Deficit” means the amount, if any, by which the ORC EBITDA Target exceeds
ORC 2004 EBITDA. 



        “ORC
2005 EBITDA” means the Company’s EBITDA for the twelve months ended December 31,
2005. 



        “ORC
2005 EBITDA Cash Floor” means One Million Nine Hundred Seventy-five Thousand Dollars
($1,975,000). 




55 









        “ORC
2005 EBITDA Floor” means One Million Six Hundred Thousand Dollars ($1,600,000). 



        “ORC 2005
EBITDA Target” means Two Million One Hundred Thousand Dollars ($2,100,000). 



        “Order”
means any writ, judgment, decree, injunction or similar order of any Governmental or
Regulatory Authority (in each such case whether preliminary or final). 



        “Person”
means any natural person, corporation, general partnership, limited partnership, limited
liability company or partnership, proprietorship, other business organization, trust,
union, association or Governmental or Regulatory Authority. 



        “Plan”
mean (a) each of the “employee benefit plans” (as such term is defined in
Section 3(3) of ERISA, of which any of the Company or any member of the same controlled
group of businesses as the Company within the meaning of Section 4001(a)(14) of ERISA (an
“ERISA Affiliate”) is a sponsor or participating employer or as to which the
Company or any of its ERISA Affiliates makes contributions or is required to make
contributions, and (b) any employment, severance or other arrangement or policy of the
Company or any of its ERISA Affiliates (whether written or oral) providing for health,
life, vision or dental insurance coverage (including self-insured arrangements),
workers’ compensation, disability benefits, supplemental unemployment benefits,
vacation benefits or retirement benefits, fringe benefits, or for profit sharing, deferred
compensation, bonuses, stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits. 



        “Purchaser
Stock” means the common stock of the Purchaser, par value $0.001 per share. 



        “Purchaser’s
Stock Option Plan” means the 1997 Stock Incentive Plan of the Company, as amended
from time to time, pursuant to which up to 3,000,000 shares of common stock have been
reserved for issuance as incentive awards to employees, officers, directors and
consultants of the Company or its affiliates. 



        “Receivables
Holdback” is defined in Section 1.5(a). 



        “Registered
Intellectual Property” shall mean all United States, international and foreign: (a)
patents and patent applications (including provisional applications); (b) registered
trademarks and service marks, applications to register trademarks and servicemarks,
intent-to-use applications, or other registrations or applications to trademarks or
servicemarks; (c) registered copyrights and applications for copyright registration; (d)
any mask work registrations and applications to register mask works; and (e) any other
Intellectual Property that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any Governmental or
Regulatory Authority. 




56 









        “Strike
Price” means either (i) if the Purchaser’s proposed acquisition of another
company for an approximate purchase price of Five Million Dollars ($5,000,000) or more is
completed on or prior to December 31, 2004, $0.55 per share, or (ii) if the Purchaser does
not complete the acquisition of another company for an approximate purchase price of Five
Million Dollars ($5,000,000) or more on or prior to December 31, 2004, $0.45 per share. 



        “Subsidiary”
means any Person in which the Purchaser, as the context requires, directly or indirectly
through Subsidiaries or otherwise, beneficially owns at least fifty percent (50%) of
either the equity interest in, or the voting control of, such Person, whether or not
existing on the date hereof. 



        “Takeover
Statute” means a “fair price,” “moratorium,” “control share
acquisition” or other similar antitakeover statute or regulation enacted under state
or federal laws in the United States, including, without limitation, Section 203 of the
Delaware General Corporation Law. 



        “Tax”
or “Taxes” means (a) any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Internal Revenue Code
Section 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not, (b) any Liability for the payment of any amounts of the type
described in clause (a) as a result of being a member of an affiliated, consolidated,
combined or unitary group for any taxable period, and (c) any Liability for the
payment of any amounts of the type described in clause (a) or (b) as a result of any
express or implied obligation to indemnify any other Person. 



        “Tax
Returns” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof. 



        10.2
Construction. 




            (a)                 Unless
the context of this Agreement otherwise requires, (i) words of any gender
          include each other gender and the neuter, (ii) words using the singular or
          plural number also include the plural or singular number, respectively, (iii)
          the terms “hereof,” “herein,” “hereby” and
          derivative or similar words refer to this entire Agreement as a whole and not
to           any particular Article, Section or other subdivision, (iv) the terms
          “Article” or “Section” or other subdivision refer to the
          specified Article, Section or other subdivision of the body of this Agreement,
          (v) the phrases “ordinary course of business” and “ordinary
          course of business consistent with past practice” refer to the business
and           practice of the Company, (vi) the words “include,”          “includes” and
“including” shall be deemed to be followed by           the phrase “without
limitation,” and (vii) when a reference is made in           this Agreement to
Exhibits, such reference shall be to an Exhibit to this           Agreement unless
otherwise indicated. All accounting terms used herein and not           expressly defined
herein shall have the meanings given to them under GAAP. When           used herein, the
terms “party” or “parties” refer to the           Purchaser, on the
one hand, and the Company (prior to the Closing) and the           Shareholders, on the
other, and the terms “third party” or “third           parties” refers
to Persons other than the Purchaser, the Company or the           Shareholders.  




57 










            (b)                 When
used herein, the phrase “to the knowledge of” any Person or           “known
to” any Person, means (i) with respect to any Person who is an           individual,
the actual knowledge of such Person, (ii) with respect to any other           Person, the
actual knowledge of the directors and officers of such Person and           other
individuals that have a similar position or have similar powers and duties           as
the officers and senior management of such Person, and (iii) in the case of
          each of (i) and (ii), the knowledge of facts that such individuals should have
          after due inquiry. For this purpose, “due inquiry” with respect to
any           matter means inquiry of and consultations with (A) the directors and
officers of           such Person and other individuals that have a similar position or
have similar           powers and duties as such officers and directors, (B) other
employees of and the           advisors to such Person, including legal counsel and
outside auditors, who have           principal responsibility for the matter in question
or are otherwise likely to           have information relevant to the matter, and (C) the
stockholders owning more           than ten percent (10%) of the equity interests, by
vote or value, of such           Person.  




[SIGNATURE PAGE
FOLLOWS] 

























58 













        IN
WITNESS WHEREOF, the Purchaser, the Company and the Shareholders, have caused this
Agreement to be signed by their duly authorized representatives, all as of the date first
written above. 



		WIDEPOINT CORPORATION
	

 	By: ________________________
		Name: Steve L. Komar
		Title: CEO
	

 	OPERATIONAL RESEARCH CONSULTANTS, INC.
		By: ________________________
		Name: Fred D. Thornton
		Title: Chairman of the Board
	

 	_______________________________
		RICHARD L. MONTGOMERY
	

 	_______________________________
	 	FRED D. THORNTON
	

 	_______________________________
		DANIEL E. TURISSINI
















EXHIBITS AND COMPANY
DISCLOSURE SCHEDULE 



Exhibits 



	Exhibit A	Form of Escrow Agreement
	Exhibit B	Legal Opinion
	Exhibit C	Non-Competition Agreement
	Exhibit D	Employment Agreement
	Exhibit E	Consulting and Non-Competition Agreement






Company Disclosure
Schedule 


	Section 1.4(a)(i)(x)	Aggregate Closing Amount Allocation
	Section 1.4(a)(i)(y)	Instructions for Designation of Maximum Stock Consideration
	Section 1.4(a)(iii)	Deferred Cash Payment Allocation
	Section 1.4(a)(iv)	Contingent Earnout Payment Allocation
	Section 2.1	Jurisdictions
	Section 2.3(b)	Shareholders
	Section 2.5	Directors and Officers
	Section 2.6 (c)	Conflicts and Consents
	Section 2.7	Company Financials
	Section 2.7A	Allowable Recasted Expenses for Fiscal 2004
	Section 2.9	Absence of Changes
	Section 2.10	Material Liabilities
	Section 2.12	Legal Proceedings
	Section 2.12(d)	History of Actions and Proceedings
	Section 2.14(a)	Plans
	Section 2.14(b)	Plan Payments and Benefits
	Section 2.15(a)	Leased Real Property
	Section 2.15(b)	Default Under Lease Documents
	Section 2.15(c)	Leased Real Property Improvements
	Section 2.16	Tangible Personal Property and Liens
	Section 2.17(a)	Registered Intellectual Property
	Section 2.17(f)	Intellectual Property Contracts and Licenses
	Section 2.17(g)	Intellectual Property Obligations and Liabilities
	Section 2.17(h)	Intellectual Property Violations
	Section 2.17(i)	Maintenance of Registered Intellectual Property
	Section 2.17(l)	Protection of Confidential Information and Trade Secrets
	Section 2.17(p)	Software, Freeware and Shareware
	Section 2.17(r)	Protection of Intellectual Property Developed by Consultants
	Section 2.18(a)	Contracts
	Section 2.18(b)	Contract Violations
	Section 2.18(c)	Contract Termination and Restrictive Covenants













		
	Section 2.19(a)	Government Contracts
	Section 2.19(o)	Government Contract Employees
	Section 2.20	Insurance Policies
	Section 2.21(a)	Affiliate Transactions
	Section 2.21(b)	Unfavorable Terms of Affiliate Transactions
	Section 2.22(b)	Officers, Employees, Independent Contractors and Consultants
	Section 2.24	Largest Customers and Suppliers
	Section 2.25	Accounts Receivable
	Section 2.26	Inventory
	Section 2.27	Brokers and Third Party Expenses
	Section 2.28	Bank Accounts and Investment Assets
	Section 2.29(a)	Warranty Obligations
	Section 2.29(b)	Deviations from and Reserves for Warranty Obligations
	Section 2.33(a)	Approvals of Governmental and Regulatory Authorities
	Section 2.33(b)	Other Approvals
	Section 2.33(c)	Approval Noncompliance
	Section 2A.6	Shareholder Interests in Competitors and Suppliers
	Section 6.3(f)	Key Employees
	Section 7.2	Litigation Covered by Shareholder Indemnification












EXHIBIT A 



Form of Escrow Agreement 










EXHIBIT B 



Legal Opinion 










EXHIBIT C 



Non-Competition
Agreement 










EXHIBIT D 



Employment Agreement 










EXHIBIT E 



Consulting and
Non-Competition Agreement 










Section 1.4(a)(i)(x) 



Aggregate Closing
Amount Allocation 










Section 1.4(a)(i)(y) 



Instructions for
Designation of Maximum Stock Consideration 



Section 1.4(a)(iii) 



Deferred Cash Payment
Allocation 










Section 1.4(a)(iv) 



Contingent Earnout
Payment Allocation 










Section 2.1 



Jurisdictions 










Section 2.3(b) 



Shareholders 










Section 2.5 



Directors and Officers 










Section 2.6(c) 



Conflicts and Consents 










Section 2.7 



Company Financials 










Section 2.9 



Absence of Changes 










Section 2.10 



Material Liabilities 










Section 2.12 



Legal Proceedings 










Section 2.12(d) 



History of Actions and
Proceedings 










Section 2.14(a) 



Plans 










Section 2.14(b) 



Plan Payments and
Benefits 










Section 2.15(a) 



Leased Real Property 










Section 2.15(b) 



Default Under Lease
Documents 










Section 2.15(c) 



Leased Real Property
Improvements 










Section 2.16 



Tangible Personal
Property and Liens 










Section 2.17(a) 



Registered Intellectual
Property 










Section 2.17(f) 



Intellectual Property
Contracts and Licenses 










Section 2.17(g) 



Intellectual Property Obligations
and Liabilities 










Section 2.17(h) 



Intellectual Property
Violations 










Section 2.17(i) 



Maintenance of
Registered Intellectual Property 










Section 2.17(l) 



Protection of
Confidential Information and Trade Secrets 










Section 2.17(p) 



Software, Freeware and
Shareware 










Section 2.17(r) 



Protection of
Intellectual Property Developed by Consultants 










Section 2.18(a) 



Contracts 










Section 2.18(b) 



Contract Violations 










Section 2.18(c) 



Contract Termination
and Restrictive Covenants 










Section 2.19(a) 



Government Contracts 










Section 2.19(o) 



Government Contract
Employees 










Section 2.20 



Insurance Policies 










Section 2.21(a) 



Affiliate Transactions 










Section 2.21(b) 



Unfavorable Terms of
Affiliate Transactions 










Section 2.22(b) 



Officers, Employees, Independent
Contractors and Consultants 










Section 2.24 



Largest Customers and
Suppliers 










Section 2.25 



Accounts Receivable 










Section 2.26 



Inventory 










Section 2.27 



Brokers and Third Party
Expenses 










Section 2.28 



Bank Accounts and
Investment Assets 










Section 2.29(a) 



Warranty Obligations 










Section 2.29(b) 



Deviations from and
Reserves for Warranty Obligations 










Section 2.33(a) 



Approvals of
Governmental and Regulatory Authorities 










Section 2.33(b) 



Other Approvals 










Section 2.33(c) 



Approval Noncompliance 










Section 2A.6 



Shareholder Interests
in Competitors and Suppliers 










Section 6.3(f) 



Key Employees 












Section 7.2 



Litigation Covered by Shareholder
Indemnification