Exhibit
2.4




AGREEMENT
AND PLAN OF MERGER




BY AND
AMONG




DELTADATA,
INC.


(d/b/a
DELTA COMMUNICATIONS GROUP)




ZANETT,
INC.




ZANETT
MERGER SUB DCG, INC.




and




THE
MAJORITY SHAREHOLDER OF DELTADATA, INC.




Dated as
of November 30, 2003









TABLE
OF CONTENTS
 
 ARTICLE
    I.
              
              DEFINITIONS
      AND CONSTRUCTION
              
              11.1
              
              Definitions
              
              11.2
              
              Construction
              
              4ARTICLE
      II.
              
              THE
      MERGER
              
              42.1
              
              The
      Merger
              
              42.2
              
              Effective
      Time Of The Merger; Closing
              
              52.3
              
              Deliveries
      by DCG and the Majority DCG Shareholder
              
              52.4
              
              Surviving
      Corporation
              
              6ARTICLE
      III.
              
              EFFECT
      OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; MERGER
      CONSIDERATION
              
              63.1
              
              Effect
      on Merger Sub Capital Stock
              
              63.2
              
              Effect
      on Shares; Exchange of Certificates
              
              63.3
              
              Merger
      Consideration
              
              73.4
              
              Payment
      of Merger Consideration
              
              7ARTICLE
      IV.
              
              REPRESENTATIONS
      AND WARRANTIES OF DCG
              
              104.1
              
              Organization;
      Qualification and Capital Stock; Corporate Records
              
              104.2
              
              No
      Violations of Laws or Agreements, Consents or Defaults
              
              114.3
              
              No
      Subsidiaries
              
              114.4
              
              Financial
      Information
              
              114.5
              
              Absence
      of Certain Changes
              
              124.6
              
              Licenses;
      Regulatory Approvals
              
              134.7
              
              Regulatory
      Matters
              
              134.8
              
              Tax
      Matters
              
              144.9
              
              Litigation
      Claims
              
              154.10
              
              Properties,
      Contracts; Leases and Other Agreements; Bank Accounts
              
              154.11
              
              Employee
      Matters; Benefit Plans; ERISA
              
              174.12
              
              Personnel
              
              194.13
              
              Title
      to and Condition of Properties
              
              194.14
              
              Product
      and Service Warranties
              
              194.15
              
              Intellectual
      Property
              
              204.16
              
              Insurance
              
              214.17
              
              Relationships
              
              214.18
              
              Compliance
      With Laws
              
              214.19
              
              Environmental
      Matters
              
              224.20
              
              No
      Undisclosed Liabilities or Obligations
              
              224.21
              
              Receivables
              
              224.22
              
              Related
      Party Transactions
              
              224.23
              
              Vote
      Required
              
              234.24
              
              Brokers
              
              234.25
              
              Disclosure
              
              234.26
              
              Revolving
      Credit Agreements
              
              234.27
              
              Reorganization
              
              23ARTICLE
      V.
              
              REPRESENTATIONS
      AND WARRANTIES OF THE MAJORITY DCG SHAREHOLDER
              
              245.1
              
              Shareholder
      Power and Authority; Ownership
              
              245.2
              
              Securities
      Matters
              
              25ARTICLE
      VI.
              
              REPRESENTATIONS
      AND WARRANTIES OF PARENT AND MERGER SUB
              
              256.1
              
              Organization,
      Existence and Capital Stock
              
              256.2
              
              Power
      and Authority
              
              266.3
              
              No
      Violations of Laws or Agreements, Consents or Defaults
              
              266.4
              
              SEC
      Filings
              
              276.5
              
              Subsidiaries
              
              276.6
              
              No
      Contracts or Liabilities
              
              276.7
              
              Related
      Party Transactions
              
              276.8
              
              Brokers
              
              276.9
              
              Reorganization
              
              27
  
  ARTICLE
      VII.
              
              SURVIVAL
      OF REPRESENTATIONS; INDEMNIFICATION
              
              287.1
              
              Survival
      of Representations
              
              287.2
              
              Indemnification
              
              297.3
              
              Conditions
      of Indemnification
              
              307.4
              
              Remedies
      Cumulative
              
              30ARTICLE
      VIII.
              
              COVENANTS
              
              308.1
              
              Public
      Disclosures
              
              308.2
              
              Confidentiality
              
              308.3
              
              Hiring
      of Accountant
              
              308.4
              
              Determination
      of Actual EBITDA After Closing
              
              308.5
              
              Creation
      of DCG Stock Option Plan
              
              318.6
              
              Howard
      Norton  to be Appointed to Management Committee
              
              318.7
              
              Release
      of Howard Norton from DCG Guarantees
              
              318.8
              
              Annual
      Financial Statements
              
              318.9
              
              Accounting
      Disputes
              
              328.10
              
              Audit;
      Cooperation
              
              328.11
              
              Key
      Man Life Insurance
              
              328.12
              
              Operating
      Cash Shortfall
              
              32ARTICLE
      IX.
              
              MISCELLANEOUS
              
              339.1
              
              Notices
              
              339.2
              
              Further
      Assurances
              
              339.3
              
              Governing
      Law
              
              339.4
              
              Right
      of Setoff
              
              339.5
              
              Consent
      to Jurisdiction
              
              339.6
              
              Integration
      of Exhibits and Schedules
              
              339.7
              
              Entire
      Agreement
              
              349.8
              
              Expenses
              
              349.9
              
              Counterparts
              
              349.10
              
              Binding
      Effect
              
              34
  
  AGREEMENT
AND PLAN OF MERGER
  THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of November
30, 2003, by and among DELTADATA, INC. a California corporation doing business
under the name DELTA COMMUNICATIONS GROUP (“DCG”), ZANETT, INC., a Delaware
corporation (“Parent”), ZANETT MERGER SUB DCG, INC., a Delaware corporation and
a wholly-owned subsidiary of Parent (“Merger Sub”), and Howard Norton, an
individual residing in the State of California and owner of a majority of the
outstanding capital stock of DCG (the “Majority DCG Shareholder”).
  W I T N E
S S E T H:
  WHEREAS,
each of the Boards of Directors of DCG, Parent and Merger Sub have approved the
merger of DCG with and into Merger Sub upon the terms and subject to the
conditions set forth herein and in accordance with the Delaware General
Corporation Law and the California Corporations Code;
  WHEREAS,
Parent, Merger Sub, DCG and the Majority DCG Shareholder desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the Merger; and WHEREAS, for federal income tax
purposes, it is intended that the Merger shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”).
  NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
representations, warranties, covenants and agreements of the parties hereto
agree as follows:
  ARTICLE
I.  DEFINITIONS AND CONSTRUCTION
  1.1           Definitions.
  “Affiliate”
shall mean, as to any Person, any other Person controlled by, under the control
of, or under common control with, such Person.  As used in this
definition, “control” shall mean possession, directly or indirectly, of the
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
  “Annual
Financial Statements” shall have the meaning ascribed to such term in Section
8.8.
  “Balance
Sheet” shall mean the balance sheet of DCG included in the DCG Financial
Statements.
  “Benefit
Plans” shall mean any profit sharing, group insurance, medical, dental and/or
hospitalization, stock option, pension, retirement, bonus, deferred
compensation, stock bonus or stock purchase plan, or collective bargaining
agreements, contracts or other arrangements under which pensions, deferred
compensation or other retirement benefits are being paid or may become payable
by a party, or any other employee welfare or benefit agreements, plans or
arrangements, as defined in Section 3(3) of ERISA, any plan created in
accordance with Section 125 of the Code, or any nonqualified employee benefit
plans or deferred compensation, bonus, stock or incentive plans, or other
employee benefit or fringe benefit programs, established for the benefit of a
party’s former or current officers, directors or employees, including each trust
or other agreement with any custodian or any trustee for funds held under any
such agreement plan or agreement.
  “Bonus
Performance Period” shall mean the three-year period commencing on December 1,
2003 and ending on November 30, 2006.
  “Bonus
EBITDA Target” means $2,074,800.
  “Books
and Records” shall mean (i) the minute books containing the minutes of all
meetings and written consents of the shareholders and directors (and all
committees thereof) and (ii) all books and records of DCG prior to the Closing
Date, including customer lists, reports, plans, projections and advertising and
marketing materials and financial and accounting books and records.
  1
  “Business”
shall mean the business currently carried on by DCG pursuant to which DCG
provides information technology consulting services for network integration of
public and private networks.
  “Business
Day” shall mean any day other than a Saturday, Sunday or legal holiday in the
State of New York.
  “Cal.
Corp. Code” shall mean the California Corporations Code, as
amended.
  “Closing”
shall mean the exchange of the Shares for the Initial Cash Payment and Initial
Stock Payment as set forth herein.
  “Closing
Date” shall mean the date on which the Closing is completed.
  “Code”
shall mean the Internal Revenue Code of 1986, as amended.
  “DCG
Financial Statements” shall mean DCG’s unaudited balance sheets as of December
31, 2000, 2001 and 2002 and November 30, 2003 and related statements of income,
statements of change in shareholders’ equity and statements of cash flows for
such years, each prepared in accordance with GAAP.
  “DGCL”
shall mean the Delaware General Corporation Law, as amended.
  “Disclosure
Documents” shall mean all agreements and documents referred to in any of the
Schedules, together with all other agreements and documents disclosed by DCG to
Parent during Parent’s due diligence investigation conducted prior to the
Closing Date which are attached hereto as ANNEX A.
  “EBITDA”
means, for any period, earnings before (i) interest income and interest expense,
(ii) taxes based on income, and (iii) depreciation and amortization expense for
that period, calculated in accordance with GAAP.
  “EBITDA
Target” means (i) $460,000 for the first Performance Period, (ii) $529,000 for
the second Performance Period, and (iii) $608,350 for the third Performance
Period.
  “Encumbrance”
shall mean a mortgage, charge, pledge, lien, option, restriction, claim, right
of first refusal, right of preemption, third party right or interest or other
encumbrance or security interest of any kind or similar right or any other
matter affecting title.
  “Environmental
Laws” means all federal, state and local, provincial and foreign, civil and
criminal laws, regulations, rules, ordinances, codes, decrees, judgments,
directives or judicial or administrative orders, agreements or settlements
relating to pollution or protection of the environment, natural resources or
human health and safety, including, without limitation, laws relating to
releases or threatened releases of Hazardous Substances (including, without
limitation, releases or threatened releases to ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport, disposal or handling of Hazardous
Substances.  “Environmental Laws” include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
9601 et seq.), the Hazardous Materials Transportation Law (49 U.S.C. 5101 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act
(42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et
seq.), the Oil Pollution Act (33 U.S.C. 2701 et seq.), the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational
Safety and Health Act (29 U.S.C.  651 et seq.), each as amended to
date and all other state laws similar to any of the above.
  “Environmental
Liabilities” means all liabilities of DCG that (i) arise under or relate to
violations of Environmental Laws or arise in connection with or related to any
matter disclosed or required to be disclosed on Schedule 4.19 and (ii) are
attributable to actions or omissions occurring or conditions existing on or
prior to the Closing Date.
  2
  “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
  “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, together with
all rules and regulations promulgated thereunder.
  “GAAP”
shall mean, at any particular time, accounting principles generally accepted in
the United States of America, consistently applied on a going concern basis and,
with respect to interim financial statements, subject to normal year-end
adjustments and excluding all final notes thereto.
  “Hazardous
Substances” means: (i) all Materials or Substances (whether or not wastes,
contaminants or pollutants) that are or become regulated by any of the
Environmental Laws; (ii) all Materials or Substances that are or become defined
or described by any of the Environmental Laws as “hazardous” or “toxic” or a
“pollutant,” “contaminant,” “hazardous substance,” “hazardous waste,” “extremely
hazardous waste,” “acutely hazardous waste” or “acute hazardous waste;” and
(iii) petroleum, including crude oil or any fraction thereof, asbestos,
including asbestos containing materials, and polychlorinated
biphenyls.
  “Management
Committee” shall mean the Management Committee appointed from time to time by
the Board of Directors of Parent.
  “Materials
or Substances” shall mean all elements, compounds, substances, matrices or
mixtures that are hazardous, toxic, ignitable, reactive or
corrosive.
  “Percentage
Interest” shall mean the quotient obtained by dividing one by the number of
Shares issued and outstanding immediately prior to the Effective
Time.
  “Parent
Stock” shall mean the Parent’s common stock, $0.001 par value per
share.
  “Performance
Period” shall mean each of the three successive annual periods commencing on
December 1 and ending on November 30 following the Closing Date.
  “Person”
shall mean an individual, company, partnership, limited liability company,
limited liability partnership, joint venture, trust or unincorporated
organization, joint stock corporation or other similar organization, government
or any political subdivision thereof, or any other legal entity.
  “Receivables”
shall mean the accounts receivable, trade receivables, notes receivable and
other receivables arising out of or related to DCG’s operations, as of (i)
December 31, 2002 or (ii) the close of business on November 30, 2003, as the
context may require, in each case determined in accordance with
GAAP.
  “Related
Agreements” shall mean all instruments, agreements and other documents executed
and delivered or to be executed and delivered pursuant to this Agreement
including without limitation the Ownership and Nondisclosure Agreements, the
Employment Agreements, the Consulting Agreements, the Lock-up Agreements and the
Option Cancellation and Release Agreements.
  “Reserves”
shall mean those reserves for bad debts, contractual adjustments and
disallowances, self-insured risks, risk management and unspecified uninsured
liabilities, established and maintained by DCG and reflected in the Financial
Statements.
  “Schedules”
shall mean the disclosure schedules delivered by DCG to Parent pursuant to this
Agreement.
  “Shares”
shall mean all issued and outstanding shares of DCG’s common stock, no par
value.
  3
  “Taxes”
shall mean all taxes, assessments, charges, duties, fees, levies or other
governmental charges, including but not limited to, all federal, state local,
foreign or other income, profits, unitary, business, franchise, capital stock,
real property, personal property, intangible taxes, withholding, FICA, medicare,
unemployment compensation, disability, transfer, sales, use, excise and other
taxes, assessments, charges, duties, fees, or levies of any kind whatsoever
(whether or not requiring the filing of Tax Returns) and all deficiency
assessments, additions to tax, penalties and interest.
  “Tax
Returns” shall mean any return, amended return or other report (including but
not limited to elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with any taxing or governmental
authority.
  1.2           Construction.
  (a)           The
headings and captions used herein are intended for convenience of reference
only, and shall not modify or affect in any manner the meaning or interpretation
of any of the provisions of this Agreement.
  (b)           As
used herein, the singular shall include the plural, the masculine and feminine
genders shall include the neuter, and the neuter gender shall include the
masculine and feminine, unless the context otherwise requires.
  (c)           The
words “hereof”, “herein”, and “hereunder”, and words of similar import, when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
  (d)           All
references herein to Sections, Schedules or Exhibits shall be deemed to refer to
Sections of and Schedules or Exhibits to this Agreement, unless specified to the
contrary.  All Exhibits and Schedules to this Agreement are integral
parts of this Agreement as if fully set forth herein.
  (e)           The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.”
  (f)           “To
the knowledge”, “to the best knowledge, information and belief” or any similar
phrase shall be deemed to mean that an individual or the directors or executive
officers of an entity (i) is actually aware of a particular fact or matter or
(ii) could be expected to discover or otherwise become aware of that fact or
matter in the course of conducting a reasonable investigation regarding the
accuracy of any representation or warranty contained in this
Agreement.
  (g)           “Material
adverse change” or “material adverse effect” means, with respect to a specified
party, any change or effect, as the case may be, that has, or is reasonably
likely to have, individually or in the aggregate, a material adverse impact on
the assets, business, financial position of such party and its subsidiaries
taken as a whole.
  (h)           As
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party’s role in drafting this
Agreement.
  ARTICLE
II.  THE MERGER
  2.1           The
Merger.  Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the DGCL and the Cal. Corp. Code, at the
Effective Time (as defined in Section 2.2 hereof), DCG shall be merged with and
into Merger Sub in accordance with the provisions of Section 252 of the DGCL and
Section 1108(d) of the Cal. Corp. Code (the “Merger”).  Following the
Effective Time, the separate existence of DCG shall cease, and Merger Sub shall
continue as the surviving corporation in the Merger (hereinafter sometimes
referred to as the “Surviving Corporation”) as a business corporation
incorporated under the laws of the State of Delaware under the name “Delta
Communications Group, Inc.” and shall succeed to and assume all the rights and
obligations of DCG in accordance with the DGCL and the Cal. Corp.
Code.
  4
  2.2           Effective
Time Of The Merger; Closing.
  (a)           The
Merger shall become effective at such time (the “Effective Time”) as a duly
executed Certificate of Merger (the “Certificate of Merger”) is filed with the
Secretary of State of the State of Delaware and with the Secretary of State of
the State of California.
  (b)           Subject
to the terms and conditions hereof, the closing of the Merger and the
transactions contemplated by this Agreement (the “Closing”) will occur
simultaneously with the execution of this Agreement.  The Closing
shall be held at the offices of Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, PA 19103-6996 fax: (215) 988-2757 or at such
other place as Parent, Merger Sub and DCG may agree.
  2.3           Deliveries
by DCG and the Majority DCG Shareholder.  Subject to the terms and
conditions hereof, prior to the Closing, DCG and/or the Majority DCG Shareholder
shall deliver or cause to be delivered to Parent each of the
following:
  (a)           A
certificate, dated as of the Closing Date, executed by the Secretary of DCG,
certifying as to (a) DCG’s articles of incorporation, (b) DCG’s by-laws, (c)
resolutions with respect to the transactions contemplated by this Agreement
adopted by DCG’s board of directors and shareholders and attached to such
certificate, and (d) incumbency and signatures of the persons who have executed
this Agreement, and any other documents, certificates and agreements to be
executed and delivered at the Closing pursuant to this Agreement or any of the
Related Agreements on behalf of DCG.
  (b)           An
opinion of Saul Ewing, LLP, counsel to DCG, dated the Closing Date, in form and
substance reasonably satisfactory to Parent.
  (c)           Ownership
and Nondisclosure Agreements signed by each employee, officer, consultant or
contractor of DCG identified on Schedule 4.15(g) substantially in the form of
Exhibit A (collectively, the “Ownership and Nondisclosure
Agreements”).
  (d)           Employment
agreements executed by each of Howard Norton and Robert Anderson substantially
in the form of Exhibit B-1 (the “Employment Agreements”).
  (e)           Consulting
agreements executed by each of Rick Monteilh and Jim Bucklin substantially in
the form of Exhibit B-2 (the “Consulting Agreements”).
  (f)           Lock-up
agreements executed by each shareholder of DCG substantially in the form of
Exhibit C (collectively, the “Lock-up Agreements”).
  (g)           A
Pay-off letter from Sunwest Bank stating that the revolving credit agreement
with Sunwest Bank (the “Sunwest Credit Agreement”) may be paid in full
immediately by the Surviving Corporation or Parent after the Closing and may be
terminated without any additional fees or expenses, including but not limited to
termination fees, other than payment of the amounts drawn under the Sunwest
Revolving Credit Agreement as of Closing and any applicable interest accrued
after Closing (the “Sun West Pay-Off Letter”) and evidence that Sunwest Bank
will relinquish any liens or right to setoff against the Surviving Corporation,
including the filing of any UCC-3 termination statements to effect such
release.
  (h)           A
Pay-off letter from Textron Financial Corporation stating that the revolving
credit agreement with Textron Financial Corporation (the “Textron Credit
Agreement”) may be paid in full immediately by the Surviving Corporation or
Parent after the Closing and may be terminated without any additional fees or
expenses, including but not limited to termination fees, other than payment of
the amounts drawn under the Textron Revolving Credit Agreement as of Closing and
any applicable interest accrued after Closing (the “Textron Pay-Off Letter”) and
evidence that Textron Financial Corporation will relinquish any liens or right
to setoff against the Surviving Corporation, including the filing of any UCC-3
termination statements to effect such release.
  5
  (i)           An
option cancellation and release agreement, substantially in form of Exhibit D,
duly executed by each holder of an unexpired issued and outstanding option to
purchase Shares granted under the DeltaData, Inc. 1998 Stock Option Plan
(collectively, the “Option Cancellation and Release Agreements”).
  2.4           Surviving
Corporation.
  (a)           The
certificate of incorporation of Merger Sub shall be the certificate of
incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and of the DGCL.
  (b)           The
by-laws of Merger Sub shall be the by-laws of the Surviving Corporation, until
duly amended in accordance with their terms and as provided by the certificate
of incorporation of the Surviving Corporation and the DGCL.
  (c)           Those
individuals designated as directors on Schedule 2.4 shall, from and after the
Effective Time, be the directors of the Surviving Corporation until their
respective successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation’s certificate of incorporation and by-laws.
  (d)           Those
individuals designated as officers on Schedule 2.4 shall, from and after the
Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation’s certificate of incorporation and by-laws
  (e)           If
at any time after the Effective Time, any party shall consider that any further
deeds, assignments, conveyances, agreements, documents, instruments or
assurances in law or any other things are necessary or desirable to vest,
perfect, confirm or record in the Surviving Corporation the title to any
property, rights, privileges, powers and franchises of DCG by reason of, or as a
result of, the Merger, or otherwise to carry out the provisions of this
Agreement, the remaining parties, as applicable, shall execute and deliver, upon
request, any instruments or assurances, and do all other things necessary or
proper to vest, perfect, confirm or record title to such property, rights,
privileges, powers and franchises in the Surviving Corporation, and otherwise to
carry out the provisions of this Agreement.
  ARTICLE
III.  EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; MERGER CONSIDERATION
  3.1           Effect
on Merger Sub Capital Stock.  As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
capital stock of Merger Sub, each issued and outstanding share of capital stock
of Merger Sub shall remain outstanding and represent a validly issued, fully
paid and nonassessable share of common stock of the Surviving
Corporation.
  3.2           Effect
on Shares; Exchange of Certificates.  As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares, each Share issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive one Percentage Interest of the
Merger Consideration.  At the Closing, immediately after the Effective
Time, the shareholders of DCG (the “DCG Shareholders”) shall surrender to the
Surviving Corporation all of the outstanding certificates representing the
Shares in exchange for the Merger Consideration payable to the DCG Shareholders
at Closing.  Until such certificates are surrendered, outstanding
certificates formerly representing Shares shall be deemed for all purposes as
evidencing the right to receive the Merger Consideration into which such shares
have been converted as though said surrender and exchange had taken
place.  In no event will a holder of shares be entitled to interest on
the Merger Consideration issuable in respect of such Shares.
  6
  3.3           Merger
Consideration.
  (A)           The
“Merger Consideration” shall consist of:
  (i)           An
amount of cash equal to $328,370 payable to the DCG Shareholders, at the Closing
in accordance with Section 3.4(a) (the “Initial Cash Payment”);
  (ii)           an
amount of cash equal to $435,000 payable to the DCG Shareholders after the
Closing in accordance with Section 3.4(c) (the “Contingent Cash
Payments”);
  (iii)           a
number of shares of Parent Stock calculated by dividing $235,000 by the product
of (A) the average closing price of a share of Parent Stock as reported on
NASDAQ for the three (3) consecutive trading days ending on the day prior to
date of Closing and (B) 0.925, such shares to be issuable to the DCG
Shareholders in accordance with Section 3.4(b) (the “Initial Stock
Payment”).  Parent shall not be required to issue any fractional
shares or scrip with respect to the Initial Stock Payment.  All
fractional shares shall be rounded up to the nearest whole number of shares of
Parent Stock; and
  (iv)           a
number of shares of Parent Stock calculated by dividing $965,000 by the average
closing price of a share of Parent Stock as reported on NASDAQ for the ten (10)
consecutive trading days ending on the day prior to the applicable issuance
date, such shares to be issuable to the DCG Shareholders after the Closing in
accordance with Section 3.4(d) (the “Contingent Stock
Payments”).  Parent shall not be required to issue any fractional
shares or scrip with respect to the Contingent Stock Payments.  All
fractional shares shall be rounded up to the nearest whole number of shares of
Parent Stock.
  (v)           a
number of shares of Parent Stock calculated by dividing $400,000 by the average
closing price of a share of Parent Stock as reported on NASDAQ for the ten (10)
consecutive trading days ending on the day prior to the applicable issuance
date, such shares to be issuable to the DCG Shareholders after the Closing in
accordance with Section 3.4(f) (the “Bonus Stock Payment”).  Parent
shall not be required to issue any fractional shares or scrip with respect to
the Final Contingent Stock Payment.  All fractional shares shall be
rounded up to the nearest whole number of shares of Parent Stock.
  3.4           Payment
of Merger Consideration.
  (a)           Initial
Cash Payment.  At the Closing, upon surrender to Parent of
certificates representing all and not less than all of the Shares issued and
outstanding immediately prior to the Effective Time, Parent shall pay to each
DCG Shareholder an amount of cash equal to the product of (i) the number of
Shares held by such DCG Shareholder immediately prior to the Effective Time,
(ii) the Percentage Interest, and (iii) the Initial Cash Payment.  The
Initial Cash Payment will be payable by means of wire transfers to accounts
specified in writing to Parent not less than five Business Days before the
Closing Date.
  (b)           Initial
Stock Payment.  At the Closing, upon surrender to Parent of
certificates representing all and not less than all of the Shares issued and
outstanding immediately prior to the Effective Time, Parent shall issue and
deliver to each DCG Shareholder a certificate, registered in the name of such
DCG Shareholder, representing a number of shares of Parent Stock equal to the
product of (i) the number of Shares held by such DCG Shareholder immediately
prior to the Effective Time, (ii) the Percentage Interest, and (iii) the Initial
Stock Payment.
  7
  (c)           Contingent
Cash Payment. For each Performance Period, upon complete satisfaction of the
Performance Period Requirements set forth below, Parent shall pay each DCG
Shareholder an amount of cash determined in accordance with the following
formula:
  CCP
              =
              1/3*(S
      * PI * 435,000)
  Where:
  CCP
              =
              The
      amount of cash payable by Parent to such DCG Shareholder with respect to
      such Performance Period.
  S
              =
              The
      number of Shares held by such DCG Shareholder immediately prior to the
      Effective Time.PI
              =
              The
      Percentage Interest.
  With
respect to each Performance Period, the requirements set forth in paragraphs 1-3
below (the “Performance Period Requirements”) must be satisfied as a condition
precedent to Parent’s obligation to pay the Contingent Cash Payments for such
Performance Periods:
  1.           During
each Performance Period, the EBITDA of the Surviving Corporation must be equal
to or exceed that Performance Period’s EBITDA Target; and
  2.           Procuring,
paying and maintaining key-man life insurance in the amount of $2,000,000 for
Howard Norton, with Parent listed as owner and beneficiary of such policy;
and
  3.           Each
of Howard Norton, Robert Anderson, Rick Monteilh and Jim Bucklin, shall be in
compliance with all non-competition sections in each of their respective
Employment Agreement or Consulting Agreement to which such individual is a
party.  For purposes of this Section 3.6(c), any attempt by such
individual to have the above referenced sections of the Employment Agreement or
Consulting Agreement to which such individual is a party deemed void or
unenforceable by a court of law or equity shall be deemed to be a violation of
the Performance Period Requirements.
  (d)           Contingent
Stock Payment. Upon complete satisfaction of the Performance Period
Requirements, for each Performance Period, Parent shall deliver to each DCG
Shareholder a certificate representing a number of shares of Parent Stock
determined in accordance with the formula set forth below within 30 days of
Parent’s delivery to the DCG Shareholders of the applicable Annual Financial
Statements (which delivery shall not be later than 30 days following the end of
such Performance Period):
  CSP
              =
              1/3*(S
      * PI * (965,000/ ZTA))
  Where:
  CSP
              =
              The
      number of shares of Parent Stock issuable by Parent to such DCG
      Shareholder with respect to such Performance
  Period.
  S
              =
              The
      number of Shares held by such DCG Shareholder immediately prior to the
      Effective Time.PI
              =
              The
      Percentage Interest
  ZTA
              =
              The
      average closing price of a share of Parent Stock as reported on NASDAQ for
      the ten (10) consecutive trading days ending on the date immediately
      preceding the issue date.
  With
respect to each Performance Period, the Performance Period Requirements must be
satisfied as a condition precedent to Parent’s obligation to issue and deliver
the Contingent Stock Payments for such Performance Period.
  8
  (e)           Catch-up
Payments.
  (i)           In
the event that the Surviving Corporation (i) reports less than the EBITDA Target
in either the first or second Performance Period, then, within 30 days after the
end of the next measurement quarter following the end of such Performance Period
(the “NMQ”), the DCG Shareholders may prepare and deliver to Parent a statement
(a “Catch-up Statement”) that recalculates the Contingent Cash Payment and
Contingent Stock Payment for such Performance Period using a specified amount of
EBITDA from the NMQ.  Within thirty days after receiving a Catch-up
Statement, Parent shall pay the Contingent Cash Payment and shall issue the
Parent Stock representing the Contingent Stock Payment using the average closing
price of a share of Parent Stock as reported on NASDAQ for the ten (10)
consecutive trading days ending on the day prior to the date of such issuance.
Any amount of EBITDA that is borrowed from a NMQ and used in connection with a
Catch-up Statement shall, for purposes of this Article III, irrevocably be
deducted from the EBITDA for the Performance Period in which it actually
occurs.
  (ii)           In
the event that the Surviving Corporation generates for the three Performance
Periods taken as a whole a combined EBITDA equal to or higher than $1,597,350,
then, within 30 days after the end of the third Performance Period, the DCG
Shareholders may issue a Catch-up Statement that recalculates the Contingent
Cash Payment and Contingent Stock Payment for any Performance Period in respect
of which no contingent payment was previously made. Within thirty days after
receiving such Catch-up Statement, Parent shall pay the Contingent Cash Payment
and issue the Parent Stock, using the average closing price of a share of Parent
Stock as reported on NASDAQ for the ten (10) consecutive trading days ending on
the day prior to the date of such issuance, representing the Contingent Stock
Payment for any Performance Period’s in which such Contingent Cash Payment and
Contingent Stock Payment was not made.
  (f)           Bonus
Stock Payment. If, during the Bonus Performance Period, taken as a whole, the
EBITDA of the Surviving Corporation is equal to or exceeds the Bonus EBITDA
Target, Parent shall deliver to each DCG Shareholder a certificate representing
a number of shares of Parent Stock determined in accordance with the formula set
forth below within 30 days of Parent’s delivery to the DCG Shareholders of the
third and last Annual Financial Statements (which delivery shall not be later
than 30 days following the end of the Bonus Performance Period):
  BSP
              =
              S *
      PI * (400,000 / ZTA)
  Where:
  BSP
              =
              The
      number of shares of Parent Stock issuable by Parent to such DCG
      Shareholder with respect to the Bonus Performance
  Period.
  S
              =
              The
      number of  Shares held by such DCG Shareholder immediately prior
      to the Effective Time.
  PI
              =
              The
      Percentage Interest.
  ZTA
              =
              The
      average closing price of a share of Parent Stock as reported on NASDAQ for
      the ten (10) consecutive trading days ending on the date immediately
      preceding the issue date.
  (g)           Taxes.  All
Taxes incurred in connection with this Agreement, the Related Agreements and the
transactions contemplated hereby and thereby shall be paid by the Surviving
Corporation, excluding any such Taxes incurred by a holder of
Shares.  The DCG Shareholders shall prepare or cause to be prepared,
at their sole expense, and file or cause to be filed, and pay or cause to be
paid, all Tax Returns and all Taxes, together with any interest or penalties
applicable to such Taxes, for DCG for all periods prior to the Closing Date
which are filed after the Closing Date.  The DCG Shareholders shall
permit the Surviving Corporation to review and comment on each such Tax Return
described in the preceding sentence.  All Tax sharing agreements or
similar agreements with respect to or involving DCG shall be terminated as of
the Closing Date and, after the Closing Date, Surviving Corporation shall not be
bound thereby or have any liability thereunder.
  9
  ARTICLE
IV.  REPRESENTATIONS AND WARRANTIES OF DCG
  As a
material inducement for Parent and Merger Sub to enter into this Agreement and
to consummate the transactions contemplated hereby, DCG and the DCG Shareholders
hereby jointly and severally make the following representations and warranties
as of the date hereof, each of which is relied upon by Parent and Merger Sub
regardless of any investigation made or information obtained by or on behalf of
Parent:
  4.1           Organization;
Qualification and Capital Stock; Corporate Records.
  (a)           DCG
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California, and has the corporate power to own all of its
property and assets, to incur all of its liabilities and to carry on its
Business as now being conducted.
  (b)           DCG
is duly qualified to do business and in good standing in each jurisdiction in
which the nature or conduct of the Business or the character or location of its
properties makes such qualification necessary, listed on Schedule
4.1(b),
  (c)           The
names of the directors and officers of DCG, together with the offices they hold,
are set forth on Schedule 4.1(c).  Attached to Schedule 4.1(c) are
true and complete copies of (i) the articles of incorporation of DCG, together
with all amendments thereto and (ii) the by- laws of DCG, together with all
amendments thereto, as currently in effect.
  (d)           The
authorized capital stock of DCG consists of 10,000,000 shares of common stock,
no par value, and 5,000,000 shares of preferred stock, no par value, of which
5,460,013 shares of common stock are duly and validly issued and outstanding,
are fully paid and non-assessable and no shares of preferred stock are
outstanding. Other than the Shares, since its date of incorporation, DCG has not
issued any shares of its capital stock, nor has DCG effected any stock split or
otherwise changed its capitalization.
  (e)           None
of the outstanding shares of DCG’s capital stock has been issued in violation of
any preemptive rights of the current or past shareholders of DCG, or any stock
purchase agreement or other agreement to which DCG was or is a party or
bound.
  (f)           Except
for options to purchase 65,000 Shares granted under the DeltaData, Inc. 1998
Stock Option Plan, each of which shall be cancelled or converted into Shares
prior to Closing pursuant to Option Cancellation and Release Agreements
substantially in the form provided on Exhibit D (the “Option Cancellation
Agreements”), there are no unexpired issued or outstanding options, warrants,
rights to subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of DCG, or contracts, commitments, understandings or
arrangements by which DCG is or may be obligated to issue additional shares of
its capital stock or options, warrants or rights to purchase or acquire any
additional shares of its capital stock.
  (g)           Except
as set forth on Schedule 4.1(g), since January 1, 2003, DCG has not (i) paid any
dividend to any of its equity owners, (ii) made any other distribution on or
with respect to, or redeemed or otherwise acquired, any equity interest in DCG,
(iii) made or permitted any change in the authorized, issued, or treasury shares
of its equity securities, or (iv) taken any action which, if taken after the
date of this Agreement, would require the prior written consent of Parent and/or
Merger Sub pursuant to this Agreement.  There is no liability for
dividends declared or accumulated but unpaid with respect to any of the
Shares.
  (h)           DCG
has not made any distributions to any holders of Shares or participated in or
effected any issuance, exchange or retirement of Shares, or otherwise changed
the equity interests of holders of Shares in contemplation of effecting the
Merger within the one year immediately preceding the date of this
Agreement.
  (i)           Except
as set forth on Schedule 4.1(i), DCG has not conducted business under any name
other than its own. Schedule 4.1(i) includes a list of all of DCG’s fictitious
name registrations.
  10
  (j)           Subject
to the satisfaction of the conditions precedent set forth herein, DCG has the
corporate power to execute, deliver and perform this Agreement and the Related
Agreements to which DCG is a party, and, subject to the satisfaction of the
conditions precedent set forth herein, has taken all action required by its
articles of incorporation, by-laws or otherwise, to authorize the execution,
delivery and performance of this Agreement and the Related
Agreements.  The execution and delivery of this Agreement has been
approved by the Board of Directors of DCG.  This Agreement is a valid
obligation of DCG, legally binding upon it and enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
  (k)           The
Books and Records of DCG are complete and correct and have been maintained in
accordance with good business practice.  True and complete copies of
all minutes, resolutions, stock certificates and stock transfer ledgers of DCG
are contained in the minute books and stock transfer ledgers that have been
delivered to the Parent for inspection and will be delivered to the Parent at
the Closing.  The minute books, stock certificate books, stock
transfer records and such other books and other corporate records as may be
requested by Parent, are complete and correct in all material
respects.
  4.2           No
Violations of Laws or Agreements, Consents or Defaults.
  (a)           The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement and the Related Agreements will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the articles of incorporation or by-laws of DCG
or (ii) any statute, order, decree, proceeding, rule, or regulation of any court
or governmental agency or body, United States or foreign, having jurisdiction
over DCG, any assets of DCG or the DCG Shareholders.
  (b)           Except
as set forth in Schedule 4.2(b), the delivery of this Agreement, the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby will not result in a breach or violation of the term of, or constitute a
default under, or require notice to any third party under, any agreement,
instrument, or commitment to which DCG or any of the DCG Shareholders is party,
by which it or any of the DCG Shareholders is bound, or to which any of DCG’s
property is subject, and no consent or approval is required from any third party
for the Merger.
  (c)           DCG
is not in default under, or in violation of any provision of, its articles of
incorporation, by-laws, any promissory note, indenture or any evidence of
indebtedness or security thereto, lease, purchase contract or other commitment,
or any other agreement that is material to the Business of DCG.
  4.3           No
Subsidiaries.  Except as disclosed on Schedule 4.3, DCG does not own
stock in and does not control, directly or indirectly, any other corporation,
association or business organization. DCG is not a party to any joint venture or
partnership.
  4.4           Financial
Information.
  (a)           Attached
hereto as Schedule 4.4(a) are true and complete copies of the DCG Financial
Statements. Except as set forth on Schedule (a), the DCG Financial Statements
(except as may be disclosed therein), fairly present in all material respects
the financial position and the results of operations, changes in shareholders
equity and cash flows of DCG as of the dates and for the periods indicated, and
do not include or omit any material fact, the result of which inclusion or
omission is to make the DCG Financial Statements materially misleading. The DCG
Financial Statements provide in all material respects for all bad and doubtful
debts, material liabilities (actual, contingent, deferred or otherwise) and
material financial commitments existing as of the dates thereof.
  (b)           Except
for obligations incurred in the ordinary course of business since December 31,
2002, DCG has no material unrecorded liability or obligation required to be
reflected or disclosed in the DCG Financial Statements which is not so reflected
or disclosed, and DCG has no material liability or obligation in the amount of
$10,000 or more, whether accrued, absolute, contingent or otherwise, as of the
respective dates of the DCG Financial Statements not required to be reflected or
disclosed in the DCG Financial Statements.
  11
  (c)           Except
as set forth on Schedule 4.4(c), there are no liabilities or obligations of DCG
whether known or unknown, asserted or unasserted, absolute or contingent accrued
or unaccrued, liquidated or unliquidated, due or to become due, required in
accordance with GAAP to be reserved against or disclosed in the DCG Financial
Statements, which, are not so reserved or disclosed, nor, to the knowledge of
DCG, is there any past or present fact, situation, circumstance, condition or
other basis for any present or future action, suit or proceeding, hearing,
charge, complaint, claim or demand against DCG giving rise to any such liability
or obligation.
  (d)           Except
as disclosed on Schedule 4.4(d), the DCG Financial Statements do not reflect any
material income or expense that was unusual in nature, nonrecurring,
extraordinary, or otherwise not in the ordinary course of DCG’s Business,
consistent with past practices.
  (e)           All
tangible assets used by DCG in the Business are reflected in the DCG Financial
Statements.
  4.5           Absence
of Certain Changes.  Since December 31, 2002, except as set forth on
Schedule 4.5, and except for transactions contemplated by this Agreement, DCG
has conducted the Business only in the ordinary course and consistent with past
practice, and has not:
  (a)           suffered
any material adverse change;
  (b)           incurred
any liabilities or obligations (absolute, accrued, contingent or otherwise)
except current liabilities incurred and liabilities under contracts entered into
in the ordinary course of business and consistent with past practice (including
obligations or liabilities arising from one transaction or a series of related
or similar transactions, and all periodic installments or payments under any
lease or other agreement providing for periodic installments or payments, as a
single obligation or liability), or increased, or experienced any change in any
assumptions underlying or methods of calculating any bad debt, contingency or
other reserves;
  (c)           declared,
set aside or paid any dividend or distribution in respect of shares of the
capital stock of DCG or redeemed, purchased or otherwise acquired any DCG
capital stock;
  (d)           issued,
delivered, or sold, or authorized the issuance, delivery or sale of, any share
of capital stock or any option or rights with respect thereto, or modification
or amendment of any right of any holder of outstanding shares of capital stock
or options with respect thereto;
  (e)           paid,
discharged or satisfied any claims, liabilities or obligations (absolute,
accrued, contingent, known or unknown, or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Balance Sheet or incurred in the ordinary course of business and consistent
with past practice since the Balance Sheet Date;
  (f)           permitted
or allowed any of the assets or properties of DCG to be subjected to any
mortgage, pledge, lien, security interest encumbrance, restriction or charge of
any kind;
  (g)           written
down the value of any inventory or written off as uncollectible any notes or
accounts receivable;
  (h)           canceled
any debts, or waived any claims or rights of substantial value;
  (i)           sold,
transferred or otherwise disposed of any of its properties or assets, except in
the ordinary course of business and consistent with past practice;
  12
  (j)           disposed
of or permitted to lapse any rights to the use of any patent, trademark, trade
name or copyright, or disposed of or disclosed to any Person other than an
Affiliate any invention, discovery, know-how, trade secret, formula, process or
other intellectual property not theretofore a matter of public
knowledge;
  (k)           granted
any general increase in the compensation of employees of DCG (including any such
increase pursuant to any bonus, pension, profit sharing or other plan or
commitment) or any increase in the compensation payable or to become payable to
any employee of DCG in excess of merit increases consistent with past practice,
and no such increase is customary on a periodic basis or required by agreement
or understanding;
  (l)           made
any capital expenditure or commitment for capital expenditures, other than those
capital expenditures or commitments that have been paid in full;
  (m)           made
any change in any method of accounting or accounting practice or failed to
maintain the books and records of DCG in the ordinary course of business and
consistent with past practice;
  (n)           failed
to maintain any of its properties or equipment in good operating condition and
repair, subject to ordinary wear and tear;
  (o)           failed
to maintain in full force and effect all existing policies of insurance at least
at such levels as were in effect prior to such date or canceled any such
insurance or, to its knowledge, taken or failed to take any action that would
enable the insurers under such policies to avoid liability for claims arising
out of occurrences prior to the Closing;
  (p)           entered
into any transaction or made or entered into any material contract or
commitment, or terminated or amended any material contract or commitment, except
in the ordinary course of business and consistent with past practice, and not in
excess of current requirements;
  (q)           taken
any action that could reasonably be expected to have a material adverse effect
on the business organization of DCG or DCG’s current relationships with its
customers, employees, suppliers, distributors, advertisers, subscribers or
others having business relationships with DCG; or
  (r)           agreed
in writing or otherwise to take any action with respect to any of the matters
described in this Section 4.5.
  4.6           Licenses;
Regulatory Approvals.  DCG holds all licenses, certificates and other
regulatory approvals required or necessary to be applied for or obtained in
connection with the Business as presently conducted by DCG. All such licenses,
certificates and other approvals are listed on Schedule 4.6.  Except
as set forth on Schedule 4.6, all such licenses, certificates and other
regulatory approvals relating to the Business, operations and facilities of DCG
are in full force and effect. Any and all past litigation concerning such
licenses, certificates and regulatory approvals, and all claims and causes of
action raised therein, have been finally adjudicated, and, in the case of such
litigation finally adjudicated since the Balance Sheet Date such adjudication
has not had a material adverse effect on DCG. Except as set forth on Schedule
4.6, no such license, certificate or regulatory approval has been revoked,
conditioned (except as may be customary) or restricted, and no action
(equitable, legislative or administrative), arbitration or other process is
pending, or to the knowledge of DCG, threatened, which in any way challenges the
validity of, or seeks to revoke, condition or restrict any such license,
certificate or regulatory approval.
  4.7           Regulatory
Matters.
  (a)           Except
as may be disclosed in Schedule 4.7(a), (i) DCG is not the subject of any
outstanding, and is not aware of any threatened, investigation, audit, review or
other examination of DCG by any federal or state governmental agency having
supervisory or regulatory authority with respect to DCG or the Business, and
(ii) DCG is not subject to, nor has DCG received any notice or advice that it
may become subject to, any order, agreement, memorandum of understanding or
other regulatory enforcement action or proceeding with any federal or state
governmental agency having supervisory or regulatory authority with respect to
DCG or the Business.
  13
  (b)           DCG
is not aware of any proposed or pending change in any law or regulation
affecting the Business which would have a material adverse effect on
DCG.
  4.8           Tax
Matters.
  (a)           DCG
has prepared and filed in accordance with applicable laws, rules and regulations
all federal, state and local income, franchise, excise, sales, use, real and
personal property and other Tax Returns, information statements and reports
required to be filed by it, or DCG has prepared and filed appropriate requests
for extensions to file such Tax Returns and all such requests have been timely
filed and granted and have not expired in accordance with applicable laws, rules
and regulations. All such Tax Returns for the last three (3) years have been
previously disclosed in full to Parent and are listed on Schedule
4.8(a).
  (b)           All
such Tax Returns correctly and completely reflect the information required to be
presented therein, and DCG has not paid any penalty, surcharge, fine or interest
in connection with any alleged underpayment of Taxes.
  (c)           Except
as disclosed on Schedule 4.8(c) (which lists good faith tax disputes which will
be paid by the DCG Shareholders, if required, after the Closing), DCG has paid
all Taxes that have become due and payable to (or claimed to be due and payable
by) any federal, state, county, local, foreign or other taxing
authority.  DCG has made full provision or reserve in the DCG
Financial Statements for all Taxes for which DCG is or may be accountable with
respect to income, profits or gains earned, accrued or received on or before the
dates thereof, including distributions made on or before such dates or provided
for in such DCG Financial Statements, and full and proper provision has been
made in such DCG Financial Statements for deferred Tax in accordance with GAAP
and in the aggregate do not materially fail to provide for potential Tax
liabilities. All estimated Tax payments that have become due and payable prior
to the date of this Agreement have been paid.  No claim has ever been
made by an authority in a jurisdiction where DCG does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.  There are
no liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of DCG.
  (d)           DCG
has properly withheld from the salaries, wages or other compensation paid or
payable to officers, employees, consultants or other persons, and has paid to
the appropriate federal, state or local taxing authorities, any amounts required
to be withheld therefrom under applicable laws, rules or
regulations.
  (e)           To
DCG’s knowledge, no event, transaction, act or omission has occurred which could
result in DCG becoming liable for any Tax which is primarily or directly
chargeable against or attributable to a Person other than DCG or which is
charged by reference to the income or gains of another Person. In the event that
DCG has been part of a consolidated group of taxpayers, DCG is not liable for
any Tax obligations of the other members of the group.
  (f)           To
DCG’s knowledge, no Tax Return (or item in a Tax Return) is currently under
audit by any taxing authority, and there are no agreements for the waiver of any
statute of limitations in respect of any Taxes or for the extension of time for
the assessment or payment of any Tax.  DCG is not, and does not expect
to be, involved in any material dispute in relation to any Tax matters, and to
DCG’s knowledge no taxing authority has investigated or indicated that it
intends to investigate DCG’s Tax matters. DCG is not aware of any facts which
may constitute the basis for the proposal of any Tax deficiencies for any
unexamined year.
  (g)           DCG
is not a party to any agreement, contract, arrangement or plan that has resulted
or would result, separately or in the aggregate, in the payment of (i) any
“excess parachute payment” within the meaning of Code 280G (or any corresponding
provision of state, local or foreign Tax law) and (ii) any amount that will not
be fully deductible as a result of Code 162(m) (or any corresponding provision
of state, local or foreign Tax law).  To the knowledge of DCG, DCG has
not been a United States real property holding corporation within the meaning of
Code  897(c)(2) during the applicable period specified in
Code  897(c)(1)(A)(ii).  DCG has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of
Code  6662.  DCG is not a party to or bound by any Tax
allocation or sharing agreement.  DCG (i) has not been a member of an
“Affiliated Group” filing a consolidated federal income Tax Return and (ii) has
no liability for the Taxes of any Person under Reg.  1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
  14
  (h)           DCG
has not entered into any transaction or course of conduct (other than
legitimate, good faith Tax planning) designed in whole or in part to evade
Taxes.
  (i)           DCG
will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any: (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date in
accordance with Code  481 (or any corresponding or similar provision
of state, local or foreign income Tax law); (ii) “closing agreement” as
described in Code  7121 (or any corresponding or similar provision of
state, local or foreign income Tax law) executed on or prior to the Closing
Date; (iii) intercompany transactions or any excess loss account described in
Treasury Regulations under Code  1502 (or any corresponding or similar
provision of state, local or foreign income Tax law); (iv) installment sale or
open transaction disposition made on or prior to the Closing Date; (v) prepaid
amount received on or prior to the Closing Date; (vi) transfer of intangible
property to which Code  367(d) or Code  482 may
apply.
  4.9           Litigation
Claims.
  (a)           There
is no action, suit, claim, investigation or proceeding, whether at law or in
equity (a “Claim”), pending or, to the knowledge of DCG, threatened that
questions the validity of this Agreement or the Related Agreements or any action
taken or to be taken by DCG or the DCG Shareholders in connection with the
consummation of the transactions contemplated hereby or thereby or which seeks
to prohibit, enjoin or otherwise challenge any of the transactions contemplated
hereby or thereby.
  (b)           Schedule
4.9(b) sets forth an accurate and complete list, and a brief description
(setting forth the names of the parties involved, the court or other
governmental or mediating entity involved, the relief sought and the substantive
allegations and the status thereof), of each Claim pending or, to the knowledge
of DCG, threatened against or affecting DCG.  None of the pending or
threatened Claims set forth on Schedule 4.9(b), if adversely determined, would
individually or in the aggregate, result in a materially adverse effect on
DCG.  To the knowledge of DCG no event has occurred and no
circumstance, matter or set of facts exist which would constitute a valid basis
for the assertion by any third party of any Claim, other than those listed on
Schedule 4.9(b). Except as set forth in Schedule 4.9(b) there is no outstanding
or, to the knowledge of DCG, threatened judgment, injunction, judgment, order or
consent or similar decree or agreement (including, without limitation, any
consent or similar decree or agreement with any governmental entity) against,
affecting or naming DCG.
  (c)           To
DCG’s knowledge, except as disclosed in Schedule 4.9(c), there is no claim
(whether based on statute, negligence, breach of warranty, strict liability or
any other theory) relating directly or indirectly to any product manufactured or
sold, or any services performed, by DCG.
  4.10           Properties,
Contracts; Leases and Other Agreements; Bank Accounts.
  (a)           DCG
does not own any real estate.
  (b)           All
leasehold interests for real property and any material personal property used by
DCG in the Business are held pursuant to lease agreements which are valid and
enforceable in accordance with their terms, the agreements for which are listed
on Schedule 4.10(b).  To the knowledge of DCG, all such properties
comply in all material respects with all applicable private agreements, zoning
requirements and other governmental laws and regulations relating thereto and
there are no condemnation proceedings pending or, to the knowledge of DCG,
threatened with respect to such properties. DCG has not assigned or subleased
its interests under such leases or the assets covered thereby. Each such lease
has been duly and validly executed, is in full force and effect and constitutes
the valid and binding agreement of the parties thereto. Any additional business
offices maintained by DCG during the past two (2) years are also listed by
location on Schedule 4.10(b).
  15
  (c)           Except
as set forth on Schedule 4.10(c), and excluding trade accounts payable incurred
in the ordinary course of business and payable to Persons other than Affiliates
of DCG, DCG does not have any liabilities for borrowed funds, extensions of
credit or other advances that are subject to repayment whether pursuant to a
written agreement, oral understanding or course of conduct, and whether
reflected on the DCG Financial Statements as indebtedness, accounts payable or
otherwise, and any such liability set forth on Schedule 4.10(c) may be prepaid
at any time without premium or penalty.
  (d)           Except
as set forth in Schedule 4.10(d), DCG is not a party to any agreements,
contracts or commitments relating to the acquisition of the assets or capital
stock of any other business enterprise.
  (e)           Except
as set forth in Schedule 4.10(e),  DCG is not a party to any
agreements, loans, contracts, leases, guarantees, letters of credit, lines of
credit or commitments of DCG not referred to elsewhere in this Agreement
which:
  (i)           involve
potential payments by DCG or incurring by DCG of costs or obligations, of more
than $10,000 in the aggregate;
  (ii)           involve
payments based on profits of DCG;
  (iii)           relate
to the future purchase of goods or services in excess of the requirements of the
Business at current levels or for normal operating purposes;
  (iv)           include
powers of attorney or grants of agency by DCG;
  (v)           cannot
be canceled by DCG without penalty or premium on no more than thirty (30) days’
notice;
  (vi)           were
not made in the ordinary course of business; or
  (vii)           otherwise
materially affect the Business or financial condition of DCG.
  (f)           Except
as set forth in Schedule 4.10(f), no contracts material to the Business will
terminate or are subject to modification by reason of the Merger and DCG has not
received notice, of any potential termination or modification of such
contracts.
  (g)           Except
as set forth in Schedule 4.10(g), neither DCG, nor any other party, is in
default, technical or otherwise, of any real estate lease, equipment lease, loan
or credit agreement, or any other contract or agreement to which DCG is a party,
and no event or condition has occurred or exists which, with the passage of
time, giving of notice or both, would cause any party to be in default
thereunder.
  (h)           Set
forth on Schedule 4.10(h) is an accurate and complete list showing the name and
address of each bank, securities broker, mutual fund, investment company,
investment adviser or other financial institution or similar Person with which
DCG has an account, including the account or box number and the names of all
persons and entities authorized to draw thereon or have access
thereto.
  (i)           All
material contracts and agreements to which DCG is a party (“Contracts”) (i) are
valid and enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity); (ii) no Default (as
defined below) exists under any Contract either by DCG or, to the knowledge of
DCG, by any other party thereto; (iii) DCG is not aware of the assertion by any
third party of any claim of Default or breach under any of the Contracts; and
(iv) DCG is not aware of any present intention on the part of any significant
customer or supplier or other business partner of DCG to either (a) terminate or
significantly change its existing business relationship with DCG either now or
in the foreseeable future, or (b) fail to renew or extend its existing business
relationship with DCG at the end of the term of any existing contractual
arrangement such entity may have with DCG.  For purposes of this
Agreement, the term “Default” means, with respect to any Contract, (x) any
breach of or default under such Contract, (y) any event, other than the normal
passage of time, which would (either with or without notice or lapse of time or
both) give rise to any right of termination, cancellation or acceleration of any
obligation to repay with respect to such Contract, or (z) any event, other than
the normal passage of time, which would result in either a significant increase
in the obligations or liabilities of, or a loss of any significant benefit to,
the party in question under such Contract.
  16
  (j)           Set
forth on Schedule 4.10(j) is an accurate and complete list showing all Contracts
whereby DCG is providing products or services of any kind to a third
party.
  (k)           Except
as set forth on Schedule 4.10(k), DCG has not granted any right of first refusal
or similar right in favor of any third party with respect to any material
portion of its properties or assets or entered into any non-competition
agreement or similar agreement restricting its ability to engage in any business
in any location.
  4.11           Employee
Matters; Benefit Plans; ERISA.
  (a)           Except
as may be disclosed in Schedule 4.11(a), DCG has not entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of DCG and, to the knowledge of DCG, there is no present effort nor
existing proposal to attempt to unionize any group of employees of
DCG.
  (b)           Except
as may be disclosed in Schedule 4.11(b):
  (i)           DCG
is and has been in material compliance with all applicable laws relating to
employment and employment practices, terms and conditions of employment and
wages and hours, including, without limitation, any such laws respecting
employment discrimination and occupational safety and health requirements, and
DCG is not engaged in any unfair labor practices;
  (ii)           There
is no material unfair labor practice complaint against DCG pending or, to the
knowledge of DCG, threatened before the National Labor Relations
Board;
  (iii)           There
is no labor dispute, strike, slowdown or stoppage actually pending or, to the
knowledge of DCG, threatened against or directly relating to DCG;
and
  (iv)           DCG
has not experienced any material work stoppage or other material labor
difficulty during the past year.
  (c)           Except
as described and attached to Schedule 4.11(c), DCG is not a party to any
agreement for the employment, retention or engagement or severance of any
officer, employee, agent, advisor or consultant.
  (d)           Schedule
4.11(d) contains a correct and complete list of all Benefit Plans maintained by
DCG or to which DCG or any ERISA Affiliate (as defined below)
contributes.  DCG has delivered or made available to Parent, with
respect to all such Benefit Plans, complete and correct copies of the
following:  all plan documents, handbooks, manuals, collective
bargaining agreements and similar documents governing employment policies,
practices and procedures;  the most recent summary plan descriptions
and any subsequent summaries of material modifications and all other material
employee communications discussing any employee benefit;  Forms series
5500 as filed with the IRS for the three most recent plan years (including all
attachments thereto);  the most recent report of the enrolled actuary
for any plans requiring actuarial valuation;  all trust agreements
with respect to the Benefit Plans;  plan contracts with service
providers or insurers providing benefits for participants or liability insurance
for fiduciaries and other parties in interest or bonding;  the most
recent annual audit and accounting of plan assets for all funded
plans;  and the most recent Internal Revenue Service (“IRS”)
determination letter or opinion letter for all plans qualified under Section
401(a) of the Code.
  17
  (e)           Neither
DCG nor any ERISA Affiliate participates in or maintains or has ever maintained
or been obligated to contribute to a multi- employer plan (as defined in Section
3(37) of ERISA), and neither DCG nor any ERISA Affiliate has withdrawal
liability with respect to any multi-employer plan.
  (f)           Neither
DCG nor any ERISA Affiliate maintains or has ever maintained or been obligated
to contribute to an employee pension benefit plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA.
  (g)           DCG
has made full payment of all amounts it is required, under applicable law or the
terms of each Benefit Plan, to have contributed thereto before the Closing Date
for all periods through and including the close of the last plan year ending
prior to the Closing Date, or proper accruals for such contributions have been
made and are reflected on its balance sheet and books and
records.  DCG will pay such contributions to the Benefit Plans for the
current plan year prior to the Closing Date, or, if any such contributions will
not be due prior to the Closing Date, has made adequate provision for reserves
therefor.  All such contributions are fully deductible by DCG for
purposes of DCG’s federal income taxes, and DCG has no actual or potential
liability for the 10 percent tax imposed by section 4972 of the
Code.
  (h)           All
Taxes, penalties, interest charges and other financial obligations to federal,
state and local governments and to participants or beneficiaries under the
Benefit Plans with respect to any period ending on or before the Closing Date
have been or will be met in full on or before the Closing Date.
  (i)           All
reports, returns, notices and similar documents with respect to the Benefit
Plans required to be filed with any governmental agency or distributed to any
Benefit Plan participant or beneficiary have been duly and timely filed or
distributed.
  (j)           Each
Benefit Plan required to be listed on Schedule 4.11(d) that is intended to be
qualified under Section 401 of the Code is (and from its establishment has been)
the subject of a favorable determination letter or opinion letter issued by the
IRS, and no such determination letter or opinion letter has been revoked nor, to
DCG’s knowledge, has revocation been threatened, nor has any Benefit Plan been
amended since the date of its most recent determination letter or application
therefor in any respect which would adversely affect its qualification or
materially increase its cost, and no Benefit Plan has been amended in a manner
that would require security to be provided in accordance with Section 401(a)(29)
of the Code.  Each trust maintained under any such Benefit Plan is
(and from its establishment has been) exempt from federal income tax under
Section 501 of the Code.
  (k)           Each
Benefit Plan required to be listed on Schedule 4.11(d) complies, in both form
and operation, with the applicable requirements of ERISA, the Code and other
applicable law.  There are no pending investigations by any
governmental agency involving such Benefit Plans, no termination proceedings
involving the Benefit Plans, and, to DCG’s knowledge, no threatened or pending
claims (except for routine claims for benefits), suits or proceedings against
any Benefit Plan or asserting any rights or claims to benefits under any Benefit
Plan which could give rise to any liability nor, to DCG’s knowledge, are there
any facts which could give rise to any liability in the event of any such
investigation, claim, suit or proceeding.
  (l)           Neither
DCG nor any “party in interest” (as defined in section 3(14) of ERISA) or
“disqualified person” (as defined in section 4975(e)(2) of the Code) with
respect to any Benefit Plan has engaged in a “prohibited transaction” (as
defined in Section 4975 of the Code or Section 406 of ERISA) for which a
statutory, administrative, or regulatory exemption is not
available.  No Benefit Plan has been (or will be as a result of the
transactions contemplated hereby) completely or partially terminated or has been
(or will be as a result of the transactions contemplated hereby) subject to a
“reportable event” (as defined in section 4043 of ERISA) or to any event
requiring disclosure under section 4062(e) or 4063(a) of ERISA.
  (m)           DCG
is in full compliance with the continuation coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
health insurance obligations (sometimes referred to as “HIPAA”) imposed by
section 9801 of the Code and Part 7 of Subtitle B of Title I of
ERISA.
  18
  (n)           Other
than the group health plan continuation coverage requirements required by
applicable law (as described in subsection (m) above), the cost of which is
fully paid by the former employee or his or her dependent, DCG does not maintain
retiree life or retiree health plans providing for continuing coverage for any
employee or any beneficiary of an employee after the employee’s termination of
employment.
  (o)           Prior
to the Closing Date, DCG will not establish any new Benefit Plan for the
employees of DCG, except with the written consent of Parent, nor will DCG amend
or modify any existing Benefit Plan as to any benefit or in any other way,
except with the written consent of Parent.
  (p)           Except
as set forth on Schedule 4.11(p), DCG is not a party to any oral or written
agreement with any director, executive, officer or other key employee, the
benefits of which are contingent or the terms of which are materially altered or
permit termination, upon the occurrence of a transaction of the nature
contemplated by this Agreement, and which provides for the payment of in excess
of Fifty Thousand Dollars ($50,000), or agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
  4.12           Personnel.  Schedule
4.12 contains (i) the list of all persons employed by, or engaged as an
independent contractor by, DCG and (ii) an accurate and complete list of the
wage rates for all such persons employed by DCG by
classification.  DCG is not in default with respect to any material
obligation to any of its employees or independent contractors.
  4.13           Title
to and Condition of Properties.
  (a)           Except
as described in Schedule 4.13(a), DCG collectively owns or uses all of the
personal property included in the balance sheet (the “Balance Sheet”) dated as
of November 30, 2003, (the “Balance Sheet Date”) (except assets as have been
disposed of in the ordinary course of DCG’s business since the Balance Sheet
Date), which owned assets are free and clear of all Encumbrances and rights to
possession of third parties, of every type and nature.  The assets of
DCG are sufficient to carry on the business of DCG in the ordinary course as
presently conducted.  Other than as disclosed in Schedule 4.13(a) or
specifically provided for in this Agreement, DCG has not entered into any
leases, licenses, easements or other agreements, recorded or unrecorded,
granting rights to third parties in any real or personal property of DCG, and,
except for property leased by DCG, to DCG’s knowledge, no person or other
company has any right to possession, use or occupancy of any of the property
used by DCG.
  (b)           Except
for inventory that is excess, damaged or obsolete, for which DCG has established
in the aggregate an adequate reserve in the Balance Sheet in accordance with
GAAP, the inventory reflected in the Balance Sheet and not disposed of or
reserved since the date of the Balance Sheet is of good and merchantable
quality, of a quantity and quality saleable in the ordinary course of business
of DCG in accordance with past practices and is adequate as of the date hereof
for the business of DCG as conducted as of such date.
  (c)           Equipment
used by DCG in the conduct of its business is, as of the date hereof, taken as a
whole in good and operating condition (reasonable wear and tear excepted) and is
sufficient to carry on the business of DCG in the ordinary course as it is
presently conducted.
  4.14           Product
and Service Warranties.  Except as set forth on Schedule 4.14, each
product or service delivered or licensed by DCG has been in conformity in all
material respects with all applicable federal, state, local or foreign laws and
regulations, contractual commitments and all express and implied warranties,
and, to the knowledge of DCG, DCG has no liability for replacement or repair
thereof or other damages in connection therewith, except for liabilities
incurred in the ordinary course of business, and no product or service delivered
or licensed by DCG is subject to any guaranty, warranty, or other
indemnity.
  19
  4.15           Intellectual
Property.
  (a)           Except
as set forth on Schedule 4.15(a), DCG owns, free and clear of all liens,
mortgages, security interests, charges and encumbrances of every nature, kind
and description, and has good and merchantable title to, or holds adequate
licenses or otherwise possesses all rights necessary to use, all patents,
trademarks, service marks, trade names, copyrights (including any applications
for any of the foregoing), the domain name www.delta-com.com, all other names
embodying business or product goodwill (or both), inventions, discoveries and
improvements, processes, know-how, trade secrets, scientific, technical,
engineering and marketing data, computer programs, software, including all
object and source codes, programming tools and all other techniques used or
necessary for the conduct of the Business as now conducted (collectively, the
“Intellectual Property”).
  (b)           Schedule
4.15(b) contains an accurate and complete list of (i) all such patents,
trademarks, trade names, service marks, assumed names and copyrights, and all
applications therefor, and, with respect to registered items, contains a list of
all jurisdictions in which such items are registered and all registration
numbers; (ii) all licenses, permits and other agreements relating thereto; and
(iii) all agreements relating to any of the Intellectual Property that DCG is
licensed or authorized to use by others.  The patents, trademarks,
service marks and copyrights, licenses, permits and other agreements
constituting a part of the Intellectual Property and solely owned by DCG, if
any, are valid, subsisting and enforceable, and are duly recorded in the name of
DCG.
  (c)           All
software, other than generally available software such as Microsoft Word, Lotus
1-2-3, and the like, and generally available system development tools, that is
either marketed to customers of DCG as a program or as part of a service to
support the Business is owned by DCG or DCG has the right to use, modify, copy,
sell, distribute, sublicense and make derivative works free and clear of any
limitations or Encumbrance, except as may be set forth in any license agreement
listed in Schedule 4.15(c). To the extent third party software is marketed to
customers of DCG together with the Intellectual Property solely owned by DCG,
the third party rights have been identified in Schedule 4.15(c), all necessary
licenses have been obtained and no royalties or payments are due from DCG to
third parties except as identified on Schedule 4.15(c).
  (d)           Except
as set forth on Schedule 4.15(d), to the knowledge of DCG, DCG has the sole and
exclusive right to use the patents, service marks and copyrights listed in
Schedule 4.15(b) and the trademarks and trade names listed in Schedule 4.15(b),
in each case, in all jurisdictions in which the Business is conducted or in
which any products of the Business are distributed, and the consummation of the
transactions contemplated hereby will not alter or impair any such
rights.
  (e)           No
claims have been asserted by any Person challenging or questioning the
ownership, validity, enforceability or use by DCG of any of the Intellectual
Property and, to the knowledge of DCG, there is no valid basis for any such
claim, and, to the knowledge of DCG, the use or other exploitation of the
Intellectual Property by DCG does not infringe on or dilute the rights of any
Person; and, to the knowledge of DCG, no Person is infringing on the rights of
DCG with respect to any of the Intellectual Property.
  (f)           DCG
has taken all reasonable security measures to protect the secrecy,
confidentiality and value of the Intellectual Property of DCG, including
computer programs, trade secrets and other confidential
information.  Except as disclosed in Schedule 4.15(f), no Person has
any marketing rights to the Intellectual Property of DCG.  No Person
listed in such schedule is in breach or default under its
obligations.
  (g)           Each
employee, officer, consultant and contractor of DCG and/or any other person or
entity developing intellectual property on behalf of DCG as identified on
Schedule 4.15(g) has entered into and executed an ownership and nondisclosure
agreement (collectively, the “Ownership and Nondisclosure Agreements”)
substantially in the form attached to this Agreement as Exhibit A.
  (h)           DCG
has made available to Parent all documents in DCG’s custody, possession or
control with respect to any invention, discovery, process, design, computer
program or other know-how or trade secret included in the Intellectual Property,
which documents shall be accurate in all material respects and reasonably
sufficient in detail and content to identify and explain such invention,
discovery, process, design, computer program or other know-how or trade secret
and to facilitate its full and proper use.
  20
  4.16           Insurance.  All
material insurable properties owned or held by DCG, and all insurable risks
related to the Business, are adequately insured by insurers which are, to DCG’s
knowledge, financially sound and reputable, in such amounts and against fire and
other risks insured against by extended coverage and public liability insurance,
property damage, product liability, general liability, workers compensation,
fidelity bonds, professional liability insurance and errors and omissions
insurance, and against other risks and in such amounts as would be prudently
insured against by comparable businesses and as may be required by law or any
agreement to which DCG is a party.  Schedule 4.16 lists all policies
of insurance owned or held by DCG or insuring its assets. All current premiums
and any other obligations under such insurance have been paid, and all such
policies are valid and enforceable and in full force and effect on the date
hereof.  DCG has not received any notice of cancellation or of premium
increase under any such policies within the last ninety (90) days.
  4.17           Relationships.
  (a)           Other
than general economic conditions, DCG has no knowledge of any present or future
conditions or state of facts or circumstances which would materially adversely
affect DCG after the Closing Date.
  (b)           Schedule
4.17(b) lists the 10 most important customers of DCG as a percentage of revenues
for fiscal years 2002 and the 11 month period ended November 30, 2003. DCG’s
relationships with its customers, clients and vendors are satisfactory, and DCG
has no knowledge of any facts or circumstances, including a change of control in
the ownership of DCG, that might materially alter, negate, impair or in any way
materially adversely affect the continuity of any such relationships and the
Business.
  (c)           Except
as disclosed in Schedule 4.17(c), DCG has no knowledge of and has not received
notice of any complaints, claims or threats, plans or intentions to discontinue
commercial relations or transactions from any customer of DCG, any purchaser of
goods or services from DCG, any employee or independent contractor significant
to the conduct or operation of DCG or any party to any agreement to which DCG is
a party.
  (d)           DCG
has no knowledge of any present or future condition or state of facts or
circumstances, including a change of control in the ownership of DCG, that would
materially prevent the Business of DCG from being carried on after the Closing
Date in essentially the same manner as it is presently being carried
on.
  4.18           Compliance
With Laws.
  (a)           Except
as set forth in Schedule 4.18(a), the operations and activities of DCG has
previously and continues to comply in all material respects with all applicable
Federal, state and local laws, statutes, codes, ordinances, rules, regulations,
permits, judgments, orders, writs, awards, decrees or injunctions (collectively,
the “Laws”) as in effect on or before the date of this Agreement, including
without limitation, all rules and regulations of the Occupational Safety and
Health Administration.  The conduct of the business of DCG as
presently conducted does not conflict with the rights of any other Person or
violate or, with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to accelerate or
loss of rights under, any terms or provisions of its articles of incorporation
or by-laws as presently in effect or, to the knowledge of DCG, any Encumbrance,
lease, license, agreement, Laws or understanding to which DCG is a party or by
which it may be bound or affected.  DCG has received no notice or
communication from any Person asserting a failure to comply with any Laws, nor
has DCG received any notice that any authority or third party intends to seek
enforcement against DCG to compel compliance with any such Laws.
  (b)           (i)
DCG has not made, and, to the knowledge of DCG, no officer, director, employee,
agent or other representative of any of them acting on behalf thereof has made,
directly or indirectly, with respect to the business of DCG, any illegal bribes,
kickbacks or other illegal payments of a similar nature, or illegal political
contributions with corporate funds not recorded in the corporate records of DCG,
illegal payments from corporate funds to governmental officials, or illegal
payments from corporate funds to obtain or retain business either within the
United States or abroad, and (ii) neither DCG nor, to the knowledge of DCG, any
officer, employee or agent of DCG acting on its behalf, nor any other Person
acting on its behalf has, directly or indirectly, within the past three (3)
years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other Person who is or may be in a position
to help or hinder DCG (or assist DCG in connection with any actual or proposed
transaction) which (A) might subject DCG to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (B) if not given in the past
might have had a material adverse effect to DCG, or (C) if not continued in the
future, might result in a material adverse effect to DCG.
  21
  4.19           Environmental
Matters.
  (a)           DCG
has not obtained and is not required to obtain, any permits, licenses or other
authorizations under any applicable Environmental Laws.
  (b)           Except
as set forth on Schedule 4.19, DCG is, to its knowledge, in material compliance
with all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws.  Except as set forth on Schedule 4.19, since DCG’s
incorporation, no written notice, demand, request for information, citation,
summons or complaint has been received or order has been issued, no complaint
has been filed, no suit or action has been instituted, no penalty has been
assessed and no investigation or review is pending or, to the knowledge of DCG,
threatened by any governmental entity or other Person with respect to any (i)
alleged violation by DCG of any Environmental Law or liability thereunder, (ii)
alleged failure by DCG to have any permit, certificate, license, approval,
registration or authorization required under any Environmental Law, (iii)
release of Hazardous Substances by or on behalf of DCG, or (iv) any
Environmental Liabilities attributed to DCG.
  (c)           Except
as set forth on Schedule 4.19, there are no Environmental Liabilities that have
had, or could reasonably be expected to have individually, or in the aggregate,
a material adverse effect with respect to DCG.
  (d)           Except
as set forth on Schedule 4.19, to the knowledge of DCG, no state of facts exists
as to environmental matters or Hazardous Substances that involves the reasonable
likelihood of a material capital expenditure by DCG or a material fine or
penalty imposed on or attributable to DCG, or that may otherwise have a material
adverse effect with respect to DCG or does or could interfere with or prevent
compliance with any Environmental Laws or give rise to any common law or other
legal liability.
  (e)           No
Hazardous Substances have been manufactured, treated, stored, transported or
disposed of by DCG, or otherwise deposited by DCG, in or on or are present
beneath properties currently or formerly owned, leased or used by DCG in
violation of, or which may be required to be investigated or remediated under,
any applicable Environmental Laws.
  (f)           There
has been no disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substance as a result of the
actions or omissions of DCG (i) on, from or affecting any properties owned,
leased or used by DCG, or (ii) for which DCG is, is alleged or may be held to
be, responsible as a result of conduct occurring or conditions existing at or
before Closing.
  4.20           No
Undisclosed Liabilities or Obligations.  To DCG’s knowledge, DCG has
no material liability or obligation, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, and due or to
become due (and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit or proceeding,
hearing, charge, complaint, claim or demand against DCG giving rise to any such
liability), except:
  (a)           for
liabilities or obligations accrued for or reserved against on the DCG Financial
Statements;
  (b)           for
liabilities or obligations of the same type incurred in the ordinary course of
business of DCG since the date of the most recent balance sheet included in the
DCG Financial Statements; and
  (c)           as
may be disclosed in Schedule 4.20(c).
  4.21           Receivables.  Schedule
4.21 sets forth a true and complete list of all Receivables and the aging
thereof.  All Receivables represent sales actually made or services
actually performed in the ordinary course of business with no additional
services required to entitle DCG to collect such Receivables, and have been
fully collected or are fully collectible as of the Closing Date or are fully
reserved against in the Balance Sheet.
  22
  4.22           Related
Party Transactions.
  (a)           Except
as set forth on Schedule 4.22, there have been no transactions or contractual
relationships during the two (2) fiscal years ended December 31, 2002 or between
December 31, 2002 and the date hereof, and no agreement or understanding to
enter into or consummate any transactions or contractual relationships between
DCG on the one hand and (a) any of DCG’s officers, directors, employees,
representatives, or agents or (b) any family member (by blood or marriage) or
Affiliate of any of the foregoing, directly or indirectly, on the other
hand.  All such transactions have been on terms and conditions no less
favorable to DCG than could have been obtained from any independent party after
arms-length negotiations.  Schedule 4.22 sets forth the relationship
between any such Person and DCG.
  (b)           Except
as otherwise disclosed herein, there are no obligations of DCG to pay any
amounts to any DCG Shareholder and there are no obligations of any DCG
Shareholder to pay any amounts to DCG.  There are no receivables or
payables to or from DCG Shareholders.
  4.23           Vote
Required.  The affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of DCG
capital stock necessary to approve this Agreement, the Merger and the
transactions contemplated hereby.
  4.24           Brokers.  No
Person other than Evergreen Capital, LLC will have, as a result of the
transactions contemplated by this Agreement, any valid right to, interest in or
claim upon Parent or the Surviving Corporation for any commission, fee or other
compensation as a finder or broker because or any act or omission by DCG or the
DCG Shareholders.  All amounts due to Evergreen Capital, LLC will be
paid at Closing.
  4.25           Disclosure.  No
representation or warranty by DCG contained in this Agreement, and no statement
contained in any document, list (including, without limitation, the Schedules),
certificate or other communication furnished or to be furnished by or on behalf
of DCG to Parent or any of its representatives in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements herein or therein not misleading.
  4.26           Revolving
Credit Agreements. The combined total amounts outstanding under the Sunwest
Credit Agreement and the Textron Credit Agreement is equal to or less
than  $436,630 in the aggregate.
  4.27           Reorganization.
  (a)           The
ratio for the exchange of Shares of DCG for Parent Stock in the Merger was
negotiated through arm’s length bargaining.  Accordingly, the fair
market value of the Parent Stock to be received by DCG Shareholders in the
Merger will be approximately equal to the fair market value of the Shares
surrendered by such DCG Shareholders in exchange therefor.
  (b)           DCG
is not aware of any transfers of Shares by any holders thereof prior to the
Closing Date which were made in contemplation of the Merger.
  (c)           As
a result of the Merger, DCG will transfer to Merger Sub at least ninety percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets of DCG held by it immediately
prior to the Merger.  DCG has not redeemed any of the Shares, made any
distribution with respect to any of the Shares, or disposed of any of its assets
in anticipation of or as a part of a plan for the acquisition of DCG by Merger
Sub.
  23
  (d)           The
assumption by Merger Sub of the liabilities of DCG pursuant to the Merger is for
a bona fide business purpose and the principal purpose of such assumption is not
the avoidance of federal income tax on the transfer of assets of DCG to Merger
Sub pursuant to the Merger.
  (e)           The
liabilities of DCG assumed by Merger Sub and the liabilities to which the
transferred assets of DCG are subject were incurred by DCG in the ordinary
course of its business.  No liabilities of any person other than DCG
will be assumed by Merger Sub or Parent in the Merger, and none of the DCG
Shares to be surrendered in exchange for Parent Stock in the Merger will be
subject to any liabilities.
  (f)           DCG
will pay its expenses, if any, incurred in connection with the
Merger.  None of Parent, Merger Sub, and DCG will pay any of the
expenses of the DCG Shareholders incurred in connection with the
Merger.
  (g)           There
is no intercorporate indebtedness existing between Parent and DCG or between
Merger Sub and DCG that was issued, acquired, or will be settled at a
discount.
  (h)           DCG
is not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
  (i)           DCG
is not under the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
  (j)           None
of the compensation received by any stockholder-employee of DCG pursuant to any
employment, consulting or similar arrangement is or will be separate
consideration for or allocable to, any DCG Shares.  None of the Parent
stock received by any stockholder-employee of DCG pursuant to the Merger is or
will be separate consideration for, or allocable to, any such employment,
consulting or similar arrangement.  The compensation paid to any
stockholder-employee of DCG pursuant to any such employment, consulting or
similar arrangement is or will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm’s length for
similar services.
  ARTICLE
V.  REPRESENTATIONS AND WARRANTIES OF
 THE
MAJORITY DCG SHAREHOLDER
  As a
material inducement for Parent and Merger Sub to enter into this Agreement and
to consummate the transactions contemplated hereby, the Majority DCG Shareholder
hereby makes the following representations and warranties as of the date hereof,
each of which is relied upon by Parent and Merger Sub regardless of any
investigation made or information obtained by or on behalf of
Parent:
  5.1           Shareholder
Power and Authority; Ownership.
  (a)           The
Majority DCG Shareholder is an adult individual with full power and authority to
own his or her properties, to manage his or her fiscal affairs and to enter into
this Agreement and each of the Related Agreements to which he or she is a party
and to agree to the transactions contemplated hereby and thereby and to perform
all of his obligations hereunder and thereunder.  The Majority
Shareholder is not subject to any legal disability which would prevent him or
her from performing under this Agreement or any Related Agreement, and no order
has been entered appointing a receiver for the Majority DCG Shareholder or his
assets.  There is no claim, action, suit or proceeding (including,
without limitation, current investigations by governmental agencies) pending
against the Majority DCG Shareholder seeking to enjoin the execution and
delivery of this Agreement, the Related Agreements or consummation of the
transactions contemplated hereby or thereby.
  (b)           This
Agreement and each of the Related Agreements to which the Majority DCG
Shareholder is a party constitutes the legal, valid and binding obligations of
the Majority DCG Shareholder, enforceable against the Majority DCG Shareholder
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
  24
  (c)           The
Majority DCG Shareholder owns that number of Shares set forth in Schedule
5.1(c).  The Majority DCG Shareholder has good and marketable title to
all of the Shares set forth on Schedule 5.1(c), free and clear of all
Encumbrances and restrictions, legal or equitable, of every kind. The Majority
DCG Shareholder has full and unrestricted legal right, power, and authority to
sell, assign, and transfer the Shares without obtaining the consent or approval
of any other person, entity, or governmental authority and the delivery of the
Shares to Parent pursuant to this Agreement will transfer valid title thereto,
free and clear of all Encumbrances, claims, and restrictions of every kind,
except for restrictions on transferability imposed by federal and state
securities laws.  The Majority DCG Shareholder hereby waives, as of
the Closing Date, all rights that exist pursuant to all shareholder agreements
and other contractual rights or charter document provisions relating to the
transferability of their respective Shares, as and to the extent necessary to
permit the consummation of the transactions provided for herein.
  5.2           Securities
Matters.  The Majority DCG Shareholder understands that none of the
shares of Parent Stock included in the Merger Consideration has been registered
under the Securities Act, on the grounds that the issuance thereof to the DCG
Shareholders in connection with the Merger is exempt from registration pursuant
to Section 4(2) of the Securities Act and/or Regulation D promulgated under the
Securities Act (“Regulation D”), and that the reliance of Parent on such
exemptions is predicated in part on the representations, warranties, covenants
and acknowledgements set forth in this Section 5.2.
  (a)           The
Parent Stock will be acquired by the Majority DCG Shareholder for his own
account, not as a nominee or agent, for investment and without a view to resale
or other distribution within the meaning of the Securities Act, and the Majority
DCG Shareholder will not distribute or transfer any of the Parent Stock in
violation of the Securities Act.
  (b)           The
Majority DCG Shareholder:  (i) acknowledges that the Parent Stock to
be issued to the Majority DCG Shareholder is not registered under the Securities
Act and must be held indefinitely by the Majority DCG Shareholder unless the
Parent Stock is subsequently registered under the Securities Act or an exemption
from registration is available, (ii) is aware that any routine sales of the
Parent Stock made under Rule 144 of the Securities and Exchange Commission under
the Securities Act may be made only in limited amounts and in accordance with
the terms and conditions of that Rule and that in such cases where the Rule is
not applicable, registration or compliance with some other registration
exemption will be required, (iii) is aware that Rule 144 is not now and for a
period of at least one year following the Closing Date hereof will not be,
available for use by the Majority DCG Shareholder for resale of the Parent
Stock, and (iv) is aware that Parent is not obligated to register any sale,
transfer or other disposition of the Parent Stock.
  (c)           The
Majority DCG Shareholder has such knowledge and experience in financial and
business matters that the Majority DCG Shareholder is fully capable of
evaluating the risks and merits of such Shareholder’s investment in the Parent
Stock.
  (d)           The
Majority DCG Shareholder acknowledges and agrees that the certificates
representing the Parent Stock issuable to the Majority DCG Shareholder will
contain a restrictive legend noting the restrictions on transfer described in
this Section and under federal and applicable state securities laws, and that
appropriate “stop-transfer” instructions will be given to Parent’s stock
transfer agent.
  ARTICLE
VI.  REPRESENTATIONS AND WARRANTIES
 OF PARENT
AND MERGER SUB.
  As a
material inducement for DCG to enter into this Agreement and to consummate the
transactions contemplated hereby, Parent and Merger Sub hereby jointly and
severally make the following representations and warranties as of the date
hereof, each of which is relied upon by DCG regardless of any investigation made
or information obtained by DCG:
  6.1           Organization,
Existence and Capital Stock.
  (a)           Each
of Parent and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all necessary
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as presently conducted.
  25
  (b)           The
authorized capital stock of Parent consists of preferred stock, $.001 par value
per share, 10,000,000 shares of which are validly authorized and none of which
is issued or outstanding and of common stock, $.001 par value per share,
50,000,000 shares of which are validly authorized.  As of October 31,
2003, 28,026,965 shares were validly issued, outstanding, fully paid and
non-assessable.  The Parent’s common stock has been duly and validly
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) which registration is in full force and
effect.  Merger Sub’s authorized capital consists of One Thousand
(1,000) shares of common stock, par value $1.00 per share (the “Merger Sub
Common Stock”), all of which shares are issued and registered in the name of
Parent.  All of the Merger Sub Common Stock is validly issued and
outstanding, fully paid and non-assessable, free and clear of all liens and
encumbrances. Parent has the corporate power to vote such shares of Merger Sub
Common Stock pursuant to this Agreement.  Parent has, or will by the
Effective Time have, taken all such actions as may be required in its capacity
as the sole stockholder of Merger Sub to approve the Merger.
  (c)           None
of the outstanding shares of Parent’s capital stock has been issued in violation
of any preemptive rights of the current or past stockholders of Parent, or any
agreement to which Parent was or is a party or bound.  All of the
shares of Parent Stock issued in connection with the Merger will be, when issued
in accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable, and free of all preemptive rights.  The shares of
Parent Stock issued in connection with the Merger will be issued in the name of
the shareholders of DCG, as recorded in the Books and Records of DCG, with such
shareholder as record holder of such shares and such shareholder shall have good
and marketable title to such shares of Parent Stock, free of any liens, other
than those created by or through such shareholder of DCG pursuant to the Lock Up
Agreements or otherwise.
  (d)           As
of September, except for 5,259,278 options to purchase shares of Parent stock,
there are no issued or outstanding options, warrants, rights to subscribe for,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of
Parent, or contracts, commitments, understandings or arrangements by which
Parent is or may be obligated to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock.
  6.2           Power
and Authority.  Subject to the satisfaction of the conditions
precedent set forth herein, each of Parent and Merger Sub has the corporate
power to execute, deliver and perform this Agreement and the Related Agreements
and to consummate the transactions contemplated hereby, and, subject to the
satisfaction of the conditions precedent set forth herein, has taken all action
required by law, its certificate of incorporation, its by- laws or otherwise, to
authorize the execution and delivery of this Agreement and such related
documents.  The execution and delivery of this Agreement does not, and
the consummation of the Merger contemplated hereby will not, violate any
provisions of the certificate of incorporation or by-laws of Parent or Merger
Sub or any mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which Parent or Merger Sub is a party or by which
it or its properties is bound, any legal or other restrictions of any kind to
which Parent or Merger Sub is subject, or result in the creation of any lien,
charge or encumbrance upon any of the property or assets of Parent or Merger
Sub.  The execution and delivery of this Agreement and the Related
Agreements, and the consummation of the Merger contemplated hereby, have been
approved by the Board of Directors of Merger Sub and the stockholder of Merger
Sub and no other corporate proceedings on the part of Parent or Merger Sub and
the stockholder of Merger Sub are necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.  This Agreement is a valid obligation of Parent and Merger Sub
and is legally binding on each in accordance with its terms.
  6.3           No
Violations of Laws or Agreements, Consents or Defaults.
  (a)           The
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement and the Related Agreements will not result in any breach or
violation of any of the terms or provisions of, or constitute a default under,
(i) the certificate of incorporation or by- laws of Parent or Merger Sub or (ii)
any statute, order, decree, proceeding, rule, or regulation of any court or
governmental agency or body, United States or foreign, having jurisdiction over
Parent or Merger Sub or any assets of Parent or Merger Sub.
  26
  (b)           Except
as set forth in Schedule 6.3(b) the delivery of this Agreement, the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby will not result in a breach or violation of the term of, or constitute a
default under, any agreement, instrument, or commitment to which Parent is
party, by which it is bound, or to which any of Parent’s property is subject,
and no consent or approval is required from any third party for the
Merger.
  (c)           Parent
is not in default under, or in violation of any provision of, its certificate of
incorporation, by-laws, or any promissory note, indenture or any evidence of
indebtedness or security thereto, lease, purchase contract or other commitment
or any other agreement which is material to Parent.
  6.4           SEC
Filings.
  (a)           Parent
has provided or made available to DCG and the DCG Shareholders copies of each of
the periodic reports and other documents filed by Parent with the Securities and
Exchange Commission (“SEC”).  Parent has filed all reports, documents
and other information required of it to be filed with the SEC (the “Parent SEC
Reports”).  The Parent SEC Reports were prepared in accordance with
the requirements of the Securities Act of 1933, as amended (the “Securities
Act”), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Parent SEC Reports.  None of
Parent’s subsidiaries is required to file any form, reports or other documents
with the SEC.
  (b)           Each
of the consolidated financial statements (including, in each case, any related
notes thereto) contained in the Parent SEC Reports (the “Parent Financials”) (x)
complies as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (y) was prepared in accordance with
GAAP and (z) fairly presented the consolidated financial position of Parent and
its subsidiaries as at the respective dates thereof and the consolidated results
of its operations and cash flows for the periods indicated.
  6.5           Subsidiaries.  Merger
Sub does not own stock in and does not control, directly or indirectly, any
other corporation, association or business organization. Merger Sub is not a
party to any joint venture or partnership.
  6.6           No
Contracts or Liabilities.  Other than the obligations created under
this Agreement, Merger Sub has no obligations or liabilities (contingent or
otherwise) under any contracts, claims, leases, loans or otherwise.
  6.7           Related
Party Transactions.  Except as disclosed in the Parent SEC Reports, no
director, officer or employee of Parent is indebted to Parent, nor is Parent
indebted (or committed to make loans or extend or guarantee credit) to any such
person, nor is any such person a party to any transaction (other than as an
employee) with Parent providing for the furnishing of services by, or rental of
real or personal property from, or otherwise requiring cash payments to, any
such person.
  6.8           Brokers.  No
Person other than Bayme Capital Group will have, as a result of the transactions
contemplated by this Agreement, any valid right to, interest in or claim upon
the DCG Shareholders or the Surviving Corporation for any commission, fee or
other compensation as a finder or broker because or any act or omission by
Parent or its Affiliates.
  6.9           Reorganization.
  (a)           There
is no plan or intention to reacquire any of the Parent Stock issued in the
transaction.
  (b)           There
is no plan or intention to sell or otherwise dispose of any of the assets of DCG
acquired in the transaction, except for dispositions made in the ordinary course
of business.
  27
  (c)           Following
the Closing Date, Merger Sub will continue the historic business of DCG or use a
significant portion of DCG’s historic business assets in a
business.
  (d)           Prior
to and following the Merger, Parent will be in control of Merger Sub within the
meaning of Section 368(c)(1) of the Code.
  (e)           Parent
has no plan or intention to liquidate Merger Sub; to merge Merger Sub with and
into another corporation; or to sell or otherwise dispose of the stock of Merger
Sub.
  (f)           The
ratio for the exchange of Shares of DCG for Parent Stock in the Merger was
negotiated through arm’s length bargaining.  Accordingly, the fair
market value of the Parent Stock to be received by DCG Shareholders in the
Merger will be approximately equal to the fair market value of the Shares
surrendered by such DCG Shareholders in exchange therefore.
  (g)           The
assumption by Merger Sub of the liabilities of DCG pursuant to the Merger is for
a bona fide business purpose and the principal purpose of such assumption is not
the avoidance of federal income tax on the transfer of assets of DCG to Merger
Sub pursuant to the Merger.
  (h)           No
liabilities of any person other than DCG will be assumed by Merger Sub or Parent
in the Merger, and none of the DCG Shares to be surrendered in exchange for
Parent Stock in the Merger will be subject to any liabilities.
  (i)           Parent
and Merger Sub will pay their respective expenses, if any, incurred in
connection with the Merger.
  (j)           There
is no intercorporate indebtedness existing between Parent and DCG or between
Merger Sub and DCG that was issued, acquired, or will be settled at a
discount.
  (k)           Neither
Parent or Merger Sub is an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
  (l)           Neither
Parent or Merger Sub is under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the
Code.
  (m)           No
stock of Merger Sub will be issued in the Merger.
  (n)           None
of the compensation received by any stockholder-employee of DCG pursuant to any
employment, consulting or similar arrangement is or will be separate
consideration for or allocable to, any DCG Shares.  None of the Parent
stock received by any stockholder-employee of DCG pursuant to the Merger is or
will be separate consideration for, or allocable to, any such employment,
consulting or similar arrangement.  The compensation paid to any
stockholder-employee of DCG pursuant to any such employment, consulting or
similar arrangement is or will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm’s length for
similar services.
  ARTICLE
VII.  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
  7.1           Survival
of Representations.  All representations and warranties made by any
party to this Agreement or pursuant hereto, as modified by any Schedule,
exhibit, certificate or other document executed and delivered pursuant hereto
shall survive the Closing and any investigation made by or on behalf of any
party hereto for a period of eighteen months following the Closing Date;
provided, however, that the representations and warranties contained in Sections
4.1 and 6.1 (Organization; Qualification and Capital Stock; Corporate Records),
Section 5.1(c) (Shareholder Power and Authorization; Ownership), Section 4.8
(Tax Matters) and 4.11 (Employee Matters; Benefit Plans; ERISA) shall survive
the Closing and any investigations made by or on behalf of the relevant party
until expiration of the applicable statute of limitations.  All
statements contained herein or in any schedule, exhibit, certificate or other
document executed and delivered pursuant hereto shall be deemed representations
and warranties for purposes of Sections 7.1, 9.2(a), and
9.3(a).  Notwithstanding the foregoing, the covenants and agreements
of the Parent and the DCG Shareholders made herein shall survive the Closing and
shall continue in full force and effect indefinitely.  The right to
indemnification or other remedy based upon such representations and warranties
shall not be affected by any investigation conducted with respect to, or any
knowledge acquired at any time, whether before or after execution and delivery
of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of any such representation or warranty.  Each of Parent,
DCG and the Majority DCG Shareholder shall notify the other parties in writing
of the discovery any inaccuracy in any representation or warranty of any party
hereto.
  28
  7.2           Indemnification.
  (a)           Subject
to the terms and conditions of this Article VII, the DCG Shareholders jointly
and severally shall indemnify, defend and hold harmless Parent and the Surviving
Corporation (and their respective officers, directors, employees, Affiliates,
successors or assigns other than the DCG Shareholders) (collectively, the
“Parent Indemnified Parties”), from and against all Claims, assessments, losses,
damages, liabilities, deficiencies, judgments, settlements, costs and expenses,
including interest, penalties and reasonable attorneys’ fees and expenses
incurred in enforcing this indemnification or in any litigation between the
parties or with third parties (collectively, “Damages”) asserted against,
resulting to, imposed upon, suffered or incurred by a Parent Indemnified Party,
directly or indirectly, by reason of or resulting from: (i) any failure of DCG
to duly perform or observe any term, provision, instrument, covenant or
agreement to be performed or observed by it, prior to the Closing, pursuant to
this Agreement or any Related Agreement, (ii) a breach of any representation,
warranty, covenant or agreement of DCG or any DCG Shareholder contained in or
made pursuant to this Agreement or any of the Related Agreements, and/or (iii)
any claim by Evergreen Capital, LLC for any broker fees due as a result of this
Agreement or the transactions contemplated hereby.
  (b)           Subject
to the terms and conditions of this Article VII, Parent shall indemnify, defend
and hold harmless the DCG Shareholders (and their respective heirs,
representatives and assigns) (collectively, the “DCG Indemnified Parties”) at
any time after consummation of the Closing, from and against all Damages
asserted against, resulting to, imposed upon or incurred by the DCG Indemnified
Parties, directly or indirectly, by reason of or resulting from: (i) the
assertion against DCG Shareholders of any claim for payment or performance of
any obligation, debt, or liability in connection with Parent or Merger-Sub’s
ownership or operation of the Business from and after the Closing, (ii) any
failure of Parent or Merger Sub to duly perform or observe any term, provision,
instrument, covenant or agreement to be performed or observed by it, prior to
the Closing, pursuant to this Agreement or any Related Agreement, (iii) a breach
of any representation, warranty, covenant or agreement of Parent or Merger Sub
contained in or made pursuant to this Agreement, (iii) any claim by Bayme
Capital Group for any broker fees due as a result of this Agreement or the
transactions contemplated hereby, and/or (iv) any failure of Parent to duly
perform its obligations under Section 8.7.
  (c)           The
DCG Shareholders’ collective maximum liability to the Parent Indemnified Parties
for Damages under Section 7.2(a) shall not exceed the aggregate Merger
Consideration received by the DCG Shareholders hereunder (the “Maximum DCG
Indemnification Amount”).
  (d)           Parents’
maximum liability to the DCG Indemnified Parties for Damages under this Section
7.2(b) shall not exceed the aggregate Merger Consideration received by
the  DCG Shareholders hereunder.
  (e)           The
DCG Shareholders shall not be liable to the Parent Indemnified Parties, and
Parent shall not be liable to the DCG Indemnified Parties, unless the aggregate
Damages for which a party is responsible for under Section 7.2 shall exceed
$50,000, after which such responsible party is liable only for the excess amount
of such Damages (the “Basket Amount”).
  (f)           The
Maximum DCG Indemnification Amount and the Basket Amount shall not apply in
respect of any Damages with respect to the breach by DCG of any representation
or warranty made by DCG or the DCG Shareholders in Sections 3.6(g), 4.8, 4.11 or
8.12 (with respect to claims relating to the subject matter addressed in the
foregoing excluded representations and warranties).
  29
  7.3           Conditions
of Indemnification.  The obligations and liabilities of Parent, on the
one hand, and the DCG Shareholders, on the other hand, as indemnifying parties
(each, an “Indemnifying Party”) to indemnify the DCG Indemnified Parties or the
Parent Indemnified Parties, as applicable (each, an “Indemnified Party”), under
Section 7.2 with respect to Claims made by third parties shall be subject to the
following terms and conditions:
  The
Indemnified Party shall give written notice to the Indemnifying Party of any
Damages with respect to which it seeks indemnification promptly after the
discovery by such party of any matters giving rise to such Claim for
indemnification; provided, however, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under Section 7.2 unless it shall have been prejudiced by the
omission to provide such notice.  In case any Claim is brought against
an Indemnified Party, the Indemnifying Party shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Indemnifying Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to the Indemnified
Party under Section 7.2 for any legal or other expense subsequently incurred by
the Indemnified Party in connection with the defense thereof; provided, however,
that (i) if the Indemnifying Party shall elect not to assume the defense of such
claim or action or (ii) if the Indemnified Party reasonably determines that
there may be a conflict between the positions of the Indemnifying Party and the
Indemnified Party in defending such Claim, then separate counsel shall be
entitled to participate in and conduct such defense, and the Indemnifying Party
shall be liable for any reasonable legal or other expenses incurred by the
Indemnified Party in connection with such defense (but not more than one
counsel).  The Indemnifying Party shall not be liable for any
settlement of any Claim effected without its written consent, which consent
shall not be unreasonably withheld.  The Indemnifying Party shall not,
without the Indemnified Party’s prior written consent, which consent shall not
be unreasonably withheld, settle or compromise any Claim to which the
Indemnified Party is a party or consent to entry of any judgment in respect
thereof.  The Indemnifying Party further agrees that it will not,
without the Indemnified Party’s prior written consent, settle or compromise any
claim or consent to entry of any judgment in respect thereof in any pending or
threatened Claim in respect of which indemnification may be sought hereunder
(whether or not the Indemnified Party is an actual or potential party to such
Claim) unless such settlement or compromise includes an unconditional release of
the Indemnified Party from all liability arising out of such Claim.
  7.4           Remedies
Cumulative.  Except as expressly provided in this Agreement, the
remedies provided herein shall be cumulative and shall not preclude assertion by
any party hereto of any other rights or the seeking of any other remedies
against any other party hereto.
  ARTICLE
VIII.  COVENANTS.
  8.1           Public
Disclosures.  Parent and DCG will consult with each other before
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation
except as may be required by applicable law or requirements of
NASDAQ.  The parties shall issue a joint press release, mutually
acceptable to DCG and Parent, promptly upon execution and delivery of this
Agreement.
  8.2           Confidentiality.  Parent,
DCG, the Surviving Corporation and the DCG Shareholders and shall hold, and
shall use their best efforts to cause their respective auditors, attorneys,
financial advisors, bankers and other consultants and advisors to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all documents and information concerning the
other party furnished to it by the other party or its representatives in
connection with the transactions contemplated by this Agreement, including,
without limitation, the terms and conditions of the Agreement (except to the
extent that such information shall be shown to have been (a) already known by
the party to which it was furnished, (b) in the public domain through no fault
of such party or (c) later lawfully acquired from other sources by the party to
which it was furnished) (“Confidential Information”), and each party shall not
release or disclose such Confidential Information to any other Person, except
its auditors, attorneys, financial advisors, bankers and other consultants and
advisors in connection with the transactions contemplated by this
Agreement.
  8.3           Hiring
of Accountant.  Within 10 days after the Closing Date, the Surviving
Corporation will hire a qualified accountant, who must be first approved by
Parent, capable of maintaining the Surviving Corporation’s accounting books and
records and preparing monthly, quarterly and annual financial statements in
compliance with GAAP in a timely manner (the “Surviving Corporation
Accountant”).  Parent shall have the right to interview any Surviving
Corporation Accountant candidate to verify that he or she is qualified for the
job.
  30
  8.4           Determination
of Actual EBITDA After Closing.  As promptly as practicable after the
Closing Date, Deloitte & Touche LLP shall be engaged by Parent to prepare
and deliver to Parent and the Surviving Corporation audited balance sheets as of
December 31, 2002 and November 30, 2003, and related statements of income,
statements of changes in shareholders’ equity and statements of cash flows for
such periods, each prepared in accordance with GAAP (the “D&T Financial
Statements”).  Upon receipt of the D&T Financial Statements,
Parent shall determine in good faith the actual EBITDA of DCG for the trailing
twelve months ended November 30, 2003 (the “Actual EBITDA”).
  8.5           Creation
of DCG Stock Option Plan.
  (a)           At
the Effective Time, Parent shall reserve options to purchase a number shares of
Parent Stock equal to the product of the Actual EBITDA and 0.2 (each, a “Parent
Option”) for employees of the Surviving Corporation.
  (b)           The
number of Parent Options reserved for employees of the Surviving Corporation
shall be increased by 0.2 Parent Options for each $1.00 that the EBITDA
generated by the Surviving Corporation during the first Performance Period
exceeds $400,000, such increase to become effective within 30 days of the
delivery of the Annual Financial Statements pursuant to Section 8.8
hereof.
  (c)           If
the EBITDA of the Surviving Corporation in the second Performance Period is
greater than both (i) $400,000 and (ii) the EBITDA from the first Performance
Period, the number of Parent Options reserved for employees of the Surviving
Corporation shall be increased by 0.2 Parent Options for each $1.00 that the
EBITDA generated by the Surviving Corporation during the second Performance
exceeds the greater of (a) the EBITDA from the first Performance Period or (b)
$400,000, such increase to become effective within 30 days of the delivery of
the Annual Financial Statements pursuant to Section 8.8 hereof.
  (d)           If
the EBITDA of the Surviving Corporation in the third Performance Period is
greater than all of (i) $400,000, (ii) the EBITDA from the first Performance
Period, and (iii) the EBITDA from the second Performance Period, the number of
Parent Options reserved for employees of the Surviving Corporation shall be
increased by 0.2 Parent Options for each $1.00 that the EBITDA generated by the
Surviving Corporation during the third Performance exceeds the greater of (a)
the EBITDA from the first Performance Period, (b) the EBITDA from the second
Performance Period or (c) $400,000, such increase to become effective within 30
days of the delivery of the Annual Financial Statements pursuant to Section 8.8
hereof.
  (e)           All
material terms and conditions of the Parent Options, including the expiration
dates and vesting schedules, shall be determined by the Management Committee,
subject to ratification by the Board of Directors of Parent.
  (f)           The
Management Committee shall review on an annual basis the number of Parent
Options available for grant to the Surviving Corporation’s employees and reserve
additional Parent Options for grant to the Surviving Corporation’s employees if
the Executive Committee shall determine, in its sole discretion, that
reservation of additional Parent Options is appropriate.
  8.6           Howard
Norton  to be Appointed to Management Committee.  Promptly
after the Closing, Parent will cause Howard Norton to become a member of the
Management Committee.
  8.7           Release
of Howard Norton from DCG Guarantees.  Immediately after the Closing,
Parent will cause the Surviving Corporation to release Howard Norton from his
personal guarantees to pay the Debts of DCG.
  8.8           Annual
Financial Statements.  Within 60 days after the end of each fiscal
Performance Period of the Surviving Corporation, Parent shall deliver to
Surviving Corporation and the DCG Shareholders an income statement for such
Performance Period and a balance sheet as of the end of such Performance
Period.  These annual financial statements (the “Annual Financial
Statements”) shall (a) be prepared from monthly financial statements prepared by
the Surviving Corporation in accordance with GAAP and (b) set forth the EBITDA
of the Surviving Corporation for such Performance Period (including the figures
used and calculations made to determine the EBITDA.
  31
  8.9           Accounting
Disputes.  Notwithstanding anything to the contrary in this Agreement,
if the DCG Shareholders or Parent have any dispute relating to the amount of
EBITDA reported on any Annual Financial Statement, then the DCG Shareholders or
Parent, as applicable, will notify the other, in writing, of each disputed
amount (collectively, the “Disputed Amounts”), specifying the grounds for such
dispute, within 15 Business Days after delivery of such Annual Financial
Statements.  If Parent and the DCG Shareholders cannot resolve any
such dispute within 10 Business Days after delivery of such notice, then such
dispute will be resolved by an independent accounting firm reasonably acceptable
to Parent and the DCG Shareholders (the “Independent Accounting
Firm”).  If Parent and the DCG Shareholders do not agree upon a
mutually acceptable Independent Accounting Firm within the 10 Business Day
period after delivery of the notice, Parent and the DCG Shareholders will each
select an independent accounting firm, and the Independent Accounting Firm will
be selected by the firms chosen by Parent and the DCG
Shareholders.  The determination of the Independent Accounting Firm
(i) will be made as promptly as practicable; (ii) will be prepared in accordance
with GAAP and this Agreement; and (iii) will be final and binding on the
parties, absent manifest error, which error may only be corrected by such
Independent Accounting Firm.  Any expenses relating to the engagement
of the Independent Accounting Firm will be allocated evenly between Parent and
the DCG Shareholders, provided, however, that if the determination of the
Independent Accounting Firm results in a restatement of more or less than 10% of
the EBITDA or cash deposited into the Parent Account claimed by the party
raising the Disputed Amounts, then the other party shall pay all expenses
related to the engagement of the Independent Accounting Firm.
  8.10           Audit;
Cooperation.  Following the Closing, the DCG Shareholders jointly and
severally shall cooperate with Parent and the Surviving Corporation in
connection with Parent’s preparation of financial statements, and, if necessary,
an audit (the “Audit”) of the financial performance of the Surviving
Corporation, for all periods required in connection with Parent’s reporting
obligations under the United States securities laws.  Such cooperation
shall include, but not be limited to, providing full access to the Books and
Records, any work papers generated in connection therewith, Surviving
Corporation personnel, Surviving Corporation’s outside auditors and assisting
Parent in obtaining any required consent of such outside auditors in connection
with Parent’s reporting obligations under the United Stated securities
laws.
  8.11           Key
Man Life Insurance.  Within 30 days of Closing, the Majority DCG
Shareholder shall deliver to Parent the $2,000,000 key-man life insurance policy
on the life of Howard Norton. Until November 30, 2007, the Majority DCG
Shareholder shall be responsible for payment of all premiums applicable to this
policy with Parent being the owner and beneficiary of this policy.
  8.12           Operating
Cash Shortfall.  Each time, if any, within the first 180 days after
the Closing Date, that the Surviving Corporation does not have enough available
cash to satisfy its obligations in the ordinary course, the Majority DCG
Shareholder shall promptly remit to the Surviving Corporation an amount of cash
sufficient to cover such cash deficit.  The remittance shall take the
form of a permanent contribution and not as a loan.
  32
  ARTICLE
IX.  MISCELLANEOUS.
  9.1           Notices.  Any
communications required or desired to be given hereunder shall be deemed to have
been properly given if sent by hand delivery or by facsimile and overnight
courier or overnight courier to the parties hereto at the following addresses,
or at such other address as either party may advise the other in writing from
time to time:
    If to Parent or
      Merger Sub:
              with a copy
      to:Zanett,
      Inc.
              Drinker, Biddle
      & Reath, LLP135 East 57th
      Street
              One Logan
      Square15th
      Floor
              18th and Cherry
      StreetsNew York,
      NY  10022
              Philadelphia,
      PA  19103Attention:  Pierre-Georges
      Roy, Chief Legal
      Officer
              Attention:  Stephen
      BurdumyIf to DCG or the DCG
      Shareholders:
              with a copy
      to:Delta Communications
      Group
              Saul Ewing,
      LLP65 Enterprise, Suite
      150
              100 South Charles
      StreetAliso Viejo, CA
      92656
              Suite
  1500Baltimore,
      Maryland  21201Attention:  Eric
      G. Orlinsky
 
 All such
communications shall be deemed to have been delivered on the date of hand
delivery or facsimile or on the next Business Day following the deposit of such
communications with the overnight courier.
  9.2           Further
Assurances.  Each party hereby agrees to perform any further acts and
to execute and deliver any documents which may be reasonably necessary to carry
out the provisions of this Agreement.
  9.3           Governing
Law.  This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of Delaware, applied without giving effect
to any conflicts of law principles.
  9.4           Right
of Setoff.  Notwithstanding any provision hereof to the contrary,
Parent shall be entitled to set-off (i) any amounts due to Parent from the DCG
Shareholders (or any one or more of them) hereunder, whether by reason of
overpayment of the Merger Consideration or, indemnification under Article VII,
or otherwise, against (ii) amounts due from Parent to the DCG Shareholders (or
any one or more of them) hereunder.  Any set-off shall be applied
against amounts payable to the DCG Shareholders in the chronological order all
amounts of every kind payable to the DCG Shareholders are due until the set-off
is complete. Notwithstanding any provision hereof to the contrary, after the end
of the second Performance Period, upon the occurrence of any event or existence
of any condition which Parent reasonably believes will result in a claim for
indemnification under Article VII, Parent may withhold from amounts otherwise
due hereunder an amount equal to Parent’s reasonable estimate of the amount of
such claim until such time as the actual amount of Parent’s indemnification
claim, and right of set-off hereunder, is determined. Claims for indemnification
for which Parent exercises its right of set-off hereunder shall be promptly
submitted to binding arbitration in New York in accordance with the rules and
regulations of the American Arbitration Association. The arbitrators will be
selected by the American Arbitration Association. The determination of the
arbitrator(s) will be conclusive and binding upon the parties, and any
determination by the arbitrator(s) of any award may be filed with the clerk of a
court of competent jurisdiction as a final adjudication of the claim involved,
or application may be made to such court for judicial acceptance of the award
and an order of enforcement. Each party will bear its own expenses with respect
to such arbitration. Any amount withheld by Parent pursuant to the set-off right
under this Section 10.4 that the arbitrator(s) determine was in excess of the
amount that the DCG Shareholders were liable under the indemnification claim
brought to such arbitration shall be returned forthwith to the DCG
Shareholders.  The arbitrator may award reasonable attorneys’ fees and
costs  to the prevailing party.
  9.5           Consent
to Jurisdiction. Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a Federal court sitting in the State of Delaware.
  9.6           Integration
of Exhibits and Schedules.  All Exhibits and Schedules to this
Agreement are integral parts of this Agreement as if fully set forth
herein.
  33
  9.7           Entire
Agreement.  This Agreement, the Related Agreements, including all
Exhibits and Schedules attached hereto and thereto contain the entire agreement
of the parties and supersede any and all prior or contemporaneous agreements
between the parties, written or oral, with respect to the transactions
contemplated hereby.  Such agreement may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.
  9.8           Expenses.  Except
as expressly provided otherwise, each party hereto will bear its own costs and
expenses (including fees and expenses of auditors, attorneys, financial
advisors, bankers, brokers and other consultants and advisors) incurred in
connection with this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby.
  9.9           Counterparts.  This
Agreement may be executed in several counterparts, each of which, when so
executed, shall be deemed to be an original, and such counterparts shall
together constitute and be one and the same instrument.
  9.10           Binding
Effect.  This Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto, and their respective successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement.  No party may assign any right or obligation hereunder
without the prior written consent of the other parties.
  (SIGNATURE
PAGE FOLLOWS)
  34
  IN
WITNESS WHEREOF, Parent, Merger Sub, DCG and the Majority DCG Shareholder have
caused this Agreement and Plan of Merger to be executed by their respective duly
authorized officers, all as of the day and year first above
written.
  ZANETT,
      INC.
                
                ZANETT
      MERGER SUB DCG, INC.By:
                /s/
      David McCarthy
                
                By:
                /s/
      Pierre-Georges RoyName:
                David
      McCarthy
                
                Name:
                Pierre-Georges
      RoyTitle:
                Chief
      Executive Officer
                
                Title:
                PresidentDELTADATA,
      INC.By:
                /s/
      Howard NortonName:
                Howard
      NortonTitle:
                Chief
      Executive Officer & PresidentMAJORITY
      DCG SHAREHOLDER/s/ Howard
      NortonHOWARD
      A NORTON
  35