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AGREEMENT AND
PLAN OF MERGER




            THIS
AGREEMENT AND PLAN OF MERGER, made this 17th day of July, 2003, by
and between F. RAY WEEMS ("R. Weems") and JANET WEEMS ("J. Weems")  (R. Weems
and J. Weems are sometimes hereinafter referred to together as "Securityholders"),
SOUTHERN MARYLAND CABLE, INC., a Maryland close corporation (the "Company"),
PUROFLOW INCORPORATED, a Delaware corporation (the "Parent"), and PFLW/SMC
ACQUISITION CORPORATION ("Subsidiary"), a Delaware corporation and a 100%
subsidiary of Parent.


INTRODUCTORY
STATEMENT


            A.        Securityholders
collectively own fifty(50)shares of capital stock of the
Company, which shares constitute all of the issued and outstanding capital
stock (the "Stock") of the Company.


            B.         The
Company provides inside premise wiring services to the federal government and
underground and aerial construction services and splicing to major
telecommunications and utilities customers.


            C.        Parent
has agreed with the Securityholders for Parent to acquire the Company by means
of a merger of the Company with and into Subsidiary, upon the terms and subject
to the conditions set forth herein.


            D.        In
furtherance of such acquisition, the Boards of Directors of Parent, Subsidiary
and the Company have each approved the plan of merger to merge the Company with
and into Subsidiary (the "Merger") in accordance with the applicable provisions
of the Delaware General Corporation Law (the "DGCL") and the Maryland General
Corporation Law ("MGCL"), and upon the terms and subject to the conditions set forth
here in.


 






 


            E.         Pursuant
to the Merger, the record holders of each outstanding share of the Company's
common stock, without par value, shall be entitled to receive the Merger
Consideration (as defined in Section 2.1) so that upon receipt of the Merger
Consideration, such share of the Stock shall be cancelled, all upon the terms
and subject to the conditions set forth herein.


            NOW,
THEREFORE, for and in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties do agree as follows:


DEFINITIONS


            The
following terms when used in this AGREEMENT AND PLAN OF MERGER shall have the
following meanings:


            "2002
Value of the Company" shall mean the value of the Company equal to the
product of three (3) times the December 2002 12 Month Adjusted Cash Flow.


            "Accounts
Receivable" means accounts receivable, notes due from all sources of the
Company, and credits for returned or damaged merchandise.


            "Act"
shall mean the Securities Act of 1933, as the same has been and shall be
amended from time to time.


 


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            "Adverse
Consequences" means all material actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs
and attorneys' fees and expenses, net of all tax savings and insurance proceeds
actually received by an Indemnitee with respect to any of the foregoing.


            "Agreement"
means this AGREEMENT AND PLAN OF MERGER.


            "Certificate
of Merger" has the meaning set forth n Section 1.2 below.


            "Closing"
means the transfer of the Stock to Subsidiary and the payment of the Purchase
Price to Securityholders pursuant to this Agreement.


            "Closing
Balance Sheet" shall mean the audited balance sheet and profit and loss
statement of the Company for the period ending as of the Closing Date, as
adjusted to present them on an accrual basis for a C corporation, prepared by
the Company's Regular CPA, and accepted by the accounting firm of Ernst &
Young. 


            "Closing
Date" means the date of Closing, established under Section 3 of this
Agreement.


            "Code"
means the United States Internal Revenue Code of 1986, as amended.


            "Company"
means Southern Maryland Cable, Inc., and all of its subsidiaries and affiliates
(unless the context clearly indicates otherwise), for all references prior to
the Merger, and the Subsidiary, which will conduct the business of Southern
Maryland Cable, Inc., after the Merger.


            "Company's
Regular CPA" means the accounting firm of Sturn Wagner Lombardo & Co.,
LLC, the Company's regular independent certified public accountant


            "DGCL"
has the meaning set forth in the introductory statement.


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            "December
2002 Audit" shall mean the audit of the Company for the twelve (12) month
period ending December 31, 2002, prepared in accordance with GAAP by the
Company's Regular CPA, and acceptable to the accounting firm of Ernst
& Young.


            "December
2002 12 Month Adjusted Cash Flow" shall mean that value determined in
accordance with GAAP and based on the December 2002 Audit, equal to the
difference between (a) that number equal to the twelve (12) month net income of
the Company as of December 31, 2002, adjusted by adding back (i) all deductions
taken in determining such number, if any, for interest, depreciation,
amortization and income taxes and (ii) the total compensation paid or earned by
Senior Management during such period, and (b) the total annualized compensation
agreed to by Senior Management for the twelve month period ending on the first
anniversary of the Closing Date. 


            "Employment
Agreements" means the Employment Agreements to be executed by the Company,
R. Weems, Maclin, Graybill, and the other key employees pursuant to Section 6.6
hereof.


            "Environmental,
Health, and Safety Laws" means the United States federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, and judicial decisions thereunder of federal, state, local,
and foreign governments and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of Hazardous Materials into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials.


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            "Escrow
Agreement" shall mean the Escrow Agreement executed by the Securityholders,
Company and Parent pursuant to Sections 6.5 and 2.2(b) hereof.


            "Escrowed
Purchase Price" shall mean that sum equal to $260,000.00 and placed in
escrow pursuant to Section 2.2(b) hereof.


            "Escrow
Release Date" shall have the meaning set forth in Section 2.2(b) hereof.


            "Extremely
Hazardous Substance" has the meaning set forth in Section 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.


            "Filing
Date" shall have the meaning set forth in Section 1.2 hereof.


            "Financial
Statements" means collectively (i) the December 2002 Audit, (ii) the
audited consolidated financial statements of the Company for the Company's
fiscal year ending December 31, 2001, (iii) the internally generated
consolidated financial statements of the Company for the twelve (12) month
periods ending as of the last day of each month in calendar year 2003 from and
including January through the month immediately preceding the month in which
the Closing Date occurs, as reviewedby the Company's Regular CPA, and
(iv) the Closing Balance Sheet, including in all cases the notes thereto,
prepared by the Company's Regular CPA, and accepted by the accounting firm of
Ernst & Young.  The Financial Statements shall be presented after making
all appropriate adjustments required to present them on an accrual basis for a
C corporation.


            "Fiscal
Year 2004 Audit" shall have the meaning set forth in Section 2.2(b) hereof.
       


            "GAAP"
shall mean in accordance with generally accepted accounting principles,
consistently applied.


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            "Graybill"
shall mean Lori Graybill, an officer of the Company.


            "Gross
Margin" shall mean the gross margin of the Company, based on the December
2002 Audit, determined by deducting from the revenues of the Company all direct
material and labor costs and all other direct operating costs of the Company,
including, but not limited to, all depreciation of the tangible assets used by
the Company in generating such revenues.


            "Hazardous
Materials" shall include, without limitation, any pollutants or other toxic
or hazardous substances or any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste (including materials to be recycled, reconditioned or reclaimed), oil or
petroleum flammable materials, explosives, radioactive materials, hazardous
waste, hazardous or toxic substances, or related materials, asbestos requiring
treatment as a matter of law, or any other substance or materials defined as
hazardous or harmful, or requiring special treatment or special handling by any
federal, state or local environmental law, ordinance, rule or regulation
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Section 1801, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901 et seq.), the Occupational Safety and Health Act of
1970 and the regulations adopted and publications promulgated pursuant thereto.


            "Initial
Payment" shall mean the consideration paid at Closing, which is the amount
equal to the difference between the 2002 Value of the Company and the Escrowed
Purchase Price.


            "MGCL"
has the meaning set forth in the introductory statement above.


            "Maclin"
shall mean Brenda Maclin, an officer of the Company.


            "Main
Facility Lease" shall have the meaning set forth in Section 4.9(b) hereof. 


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            "Material
Adverse Effect" shall mean any fact, circumstance or occurrence that has or
could have, solely or together with any other previous or simultaneous fact,
circumstance or occurrence, an adverse effect in excess of $75,000.


            "Merger"
means the merger of the Company into Subsidiary.


            "Merger
Consideration" means the aggregate consideration set forth in Section 2
hereof.


            "Net
Worth" shall mean the total assets of the Company, reduced by any value
placed on the intangible assets of the Company, including, but not limited to,
goodwill, less the total liabilities of the Company as those terms are shown on
the Financial Statements.


            "Puroflow"
shall mean the Parent, Puroflow Incorporated, a Delaware corporation, with its
principal offices located at One Church Street, Suite 302, Rockville, Maryland
20850, and its successors and assigns.


            "Senior
Management" shall mean, for all references prior to the Merger, R. Weems,
Maclin and Graybill, and, for all references after the Merger, those
individuals or the persons who have the same duties or hold the same offices as
those individuals.  


            "Stock"
shall mean all of the authorized issued and outstanding capital stock of the
Company, including all warrants, options, convertible securities or right
(contingent or otherwise) to purchase or acquire stock of the Company.


            "Surviving
Corporation" has the meaning set forth in Section 1.1 below.


            "Subsidiary"
has the meaning set forth in the preface above.


            "R.
Weems" shall mean F. Ray Weems, a stockholder, officer and director of the
Company and a signatory to this Agreement.


            "J.
Weems" shall mean Janet Weems, a stockholder, officer and director of the
Company and a signatory to this Agreement.  




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SECTION 1


THE MERGER


            1.1       Effective
Time.  On the Closing Date (as defined in Section 3), and subject to and
upon the fulfillment or waiver of the terms and conditions of this Agreement,
the DGCL and the MGCL, Parent shall, effective as of June 30, 2003 for internal
accounting and reporting purposes, acquire the Company by means of the Company
being merged with and into Subsidiary, whereby the separate corporate existence
of the Company shall cease, and Subsidiary shall continue as the surviving
corporation. Subsidiary as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."


            1.2       Certificate
of Merger.  On the Closing Date, assuming satisfaction or waiver of the
conditions set forth in Section 6, the parties hereto shall cause the Merger to
be consummated by filing Certificates of Merger as contemplated bythe
DGCL and the MGCL (the "Certificates of Merger"), together with any required
related certificates, with the Secretary of State of the State of Delaware, and
the Secretary of State of the State of Maryland, respectively, in such form as
required by, and executed in accordance with the relevant provisions of, the
DGCL and the MGCL.  The dateof filing of the respective Certificates of
Merger shall be deemed the Filing Date.


            1.3       Effect
of the Merger.  Upon the consummation of the Merger, the effect of the
Merger shall be as provided in this Agreement, the Certificates of Merger and
the applicable provisions of the DGCL and the MGCL.  Without limiting the
generality of the foregoing, and subject thereto, upon the consummation of the
Merger all the property, rights, privileges, powers and franchises of the
Company and Subsidiary shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Subsidiary shall become the debts,
liabilities and duties of the Surviving Corporation.


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            1.4       Certificate
of Incorporation, By-Laws.


                        (i)         Certificate
of Incorporation.  Unless otherwise determined by Parent prior to the
Closing Date, upon the consummation of the Merger the Certificate of
Incorporation of Subsidiary, as in effect immediately prior to the consummation
of the Merger, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with the DGCL and such
Certificate of Incorporation.


                        (ii)       
By-Laws.  Unless otherwise determined by Parent prior to the
consummation of the Merger, the By-Laws of Subsidiary, as in effect immediately
prior to the Closing Date, shall be the By-Laws of the Surviving Corporation
until thereafter amended in accordance with the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.


            1.5       Officers. 
The officers of Subsidiary immediately prior to the consummation of the Merger,
with the addition of R. Weems initially as Senior Operating Executive, shall be
the initial officers of the Surviving Corporation, in each case until their
respective successor are duly elected or appointed and qualified.




SECTION 2


MERGER
CONSIDERATION


            2.1       Shares
of Company.  As of the Filing Date, each share of Stock issued and
outstanding as of the Closing Date, shall by virtue of the merger and without
any action on the part of the holder thereof, be converted into the right to
receive an amount per share in cash ("Merger Consideration"), without interest,
determined in accordance with Sections 2.2 and 2.3.


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            2.2       Merger
Consideration.  Subject to Section 2.3 below, the total Merger
Consideration to be paid by Parent to each Securityholder shall be an amount
equal to the 2002 Value of the Company; and each share of Stock shall be
entitled to receive a sum equal to the 2002 Value of the Company divided by the
total number of shares of the Stock. 


            The
Merger Consideration shall be paid to the Securityholders as follows:


                        (a)        At
Closing, the Securityholders shall receive their pro rata share of the sum
equal to the Initial Payment in cash, wire transfer, or certified funds as set
forth on Exhibit 2.2(a).


                        (b)        At
Closing, Parent shall deposit the Escrowed Purchase Price in an Escrow Account
to be held and/or released pursuant to the terms and conditions of the Escrow
Agreement attached as Exhibit 6.5.  Such Escrow Agreement shall provide for a
release of all or part of the Escrowed Purchase Price on the date that
is thirty (30) days following the date that the audit of the Company for the
twelve (12) month period ending January 31, 2004, prepared in accordance with
GAAP by the accounting firm of Ernst & Young (the "Fiscal Year
2004 Audit"), is delivered to the Parent (such date, the "Escrow Release
Date").  


            2.3       Adjustment
to Merger Consideration.  The Net Worth of the Company as of the Closing
Date shall be the Net Worth of the Company as set forth on the Closing Balance
Sheet.  In the event the Net Worth of the Company as of the Closing Date is
less than $950,000, such deficiency shall reduce, dollar for dollar, the Merger
Consideration paid to Securityholders pursuant to Section 2.2 hereof.  To
enable all parties to determine the Net Worth of the Company as of the Closing
Date, the Securityholders shall cause the Closing Balance Sheet to be delivered
to the Parent within thirty (30) days of Closing.  Upon the determination of
the adjustment to the Merger Consideration pursuant to this Section 2.3, the
amount by which the Merger Consideration has been reduced, if any, shall be
released from escrow to Parent, and the balance of the Escrowed Purchase Price
shall continue to be held in escrow, all in accordance with the terms and
conditions of the Escrow Agreement.


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            2.4       Company
Cars.  Notwithstanding anything to the contrary contained in this
Agreement, at Closing R. Weems and J. Weems shall be entitled to retain, or to
be transferred, as the case may be, ownership of the cars identified on 
Schedule 2.4.




SECTION 3


CLOSING


            The
Closing of the Merger shall occur at the offices of the Parent, One Church
Street, Suite 302, Rockville, Maryland 20850, at 2:00 p.m. on the 17th day of
July, 2003, or at such other time, date and place as Parent and Securityholders
may agree (the "Closing Date"). At the Closing:


            3.1       Cancellation.


                        (a)        Upon
filing of the Certificates of Merger, each share of the Stock shall be canceled
and shall thereafter evidence only the right to receive a pro rata share of the
Merger Consideration.


                        (b)        Upon
filing of the Certificates of Merger, each share of the Stock held in the
treasury of the Company and each share of Stock owned directly or indirectly by
any wholly owned subsidiary of the Company immediately prior to the
consummation of the Merger shall, by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding, be canceled
and retired without payment of any consideration therefor and cease to exist.


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            3.2       Delivery
of Cash and Certificates.


                        (a)        Exchange
Procedures.  As of the Filing Date, upon surrender of the certificates representing
shares of the Stock (the "Certificates") for cancellation to Parent together
with such other customary documents as may be required to transfer the Stock,
subject to the provisions of Sections 2.2 and 2.3 above and the Escrow
Agreement, the holders of such Certificates shall be entitled to receive in
exchange therefor their pro rata share of the Merger Consideration, and the
Certificates so surrendered shall forthwith be canceled.  Each outstanding
Certificate that, prior to the Closing Date, represented shares of the Stock
will be deemed from and after the Closing Date, for all corporate purposes, to
evidence the right to receive a pro rata share of the Merger Consideration into
which such shares of the Stock shall have been so converted.


                        (b)        No
Liability.  Neither Parent, Subsidiary, nor the Company shall be liable to
any holder of the Stock for any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.


SECTION 4


REPRESENTATIONS, WARRANTIES AND
CERTAIN

COVENANTS OF SECURITYHOLDERS AND THE COMPANY


            As
a material inducement to induce Parent and Subsidiary to consummate the Merger
under this Agreement, each Securityholder and Company represent and warrant
that each of the matters set forth in this Section 4 are true and correct as of
the date hereof, and acknowledge that Parent and Subsidiary's entry into this
Agreement and the performance of their obligations hereunder are made in
reliance upon the completeness and accuracy of each of the matters set forth
herein.  The representations and warranties being made by the Company shall
survive up and until the Closing Date.  The representations and warranties
being made by the Securityholders shall survive as set forth in Section 12.11,
herein.


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            4.1       Organization,
Qualifications and Corporate Power.


                        (a)        The
Company is a close corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland.  Attached as Schedule 4.1(a)
is a list of all states in which the Company is qualified to do business.  The
Company is duly qualified as a foreign corporation in each other jurisdiction
in which the failure to be qualified would have a Material Adverse Effect upon
the Company.  The Company has the corporate power and authority to own and hold
its properties and to conduct its businesses as currently conducted and as
proposed to be conducted, and to execute, deliver and perform this Agreement
and all other agreements and instruments related hereto or contemplated hereby
to which the Company is a signatory.


                        (b)        Except
as listed on Schedule 4.1(b), the Company does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture, limited
liability company, or other non-corporate business enterprise.


                        (c)        The
Company has duly elected status, and qualifies as of the date of this Agreement,
as an S corporation pursuant to applicable provisions of the Code


            4.2       Authorization
of Agreement.


                        (a)        The
execution, delivery and performance by the Company of this Agreement to which
it is a signatory hereunder have been duly authorized by all requisite
corporate action and will not (i) violate any applicable provision of law, any
order of any court or other agency of government, the Articles or Certificate
of Incorporation or Bylaws of the Company, or any provision of any indenture,
agreement or other instrument by which the Company, or any of its properties or
assets is bound or affected, or (ii) conflict with, result in a material breach
of or constitute (with due notice or lapse of time or both) a


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default under any
such indenture, agreement or other instrument, or result in being declared
void, voidable or without further binding effect any license,
governmental permit or certification, employee plan, note, bond, mortgage,
indenture, deed of trust, franchise, lease, contract, agreement, or other instrument
or commitment or obligation to which Company is a party, or by which Company,
or any of its assets, may be bound, subject or affected, (iii) violate any
order, writ, injunction, decree, judgment, or ruling of any court or
governmental authority applicable to Company or any of its assets, or (iv)
except as otherwise provided in this Agreement, result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever not
arising in the ordinary course of business upon any of the properties or assets
of the Company except as to conflicts, breaches and violations that will not
have a Material Adverse Effect on the business, property or assets of the
Company.


            4.3       Capital
Stock.  The authorized capital stock of the Company and the holders of the
issued and outstanding shares of such capital stock are set forth in Schedule
4.3 hereto. Except as disclosed in Schedule 4.3, there is no (i) subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of any class of capital stock of the Company,
which is authorized or outstanding, (ii) the Company has no commitments to
issue any shares, warrants, options or other such rights or to distribute to
holders of any class of its capital stock any evidence of indebtedness or
assets, (iii) the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution
in respect thereof, and (iv) the Company has no obligation or commitment to
register under the Act any securities issued or to be issued by it.  All of the
issued and outstanding shares of the capital stock of the Company has been
validly issued in compliance with all federal and state securities laws and are
fully paid and non-assessable.  


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            4.4       Financial
Statements.  The Company has delivered to Parent the Financial Statements,
exclusive of the Closing Balance Sheet, which will be delivered to Parent
within thirty (30) days following the Closing.  Such  Financial Statements are,
and the Closing Balance Sheet will be, complete and correct, have been, and in
the case of the Closing Balance Sheet will be, prepared in accordance with GAAP
and fairly present the consolidated financial position of the Company as of
such respective dates after making all appropriate adjustments required to
present such Financial Statements and the Closing Balance Sheet on an accrual
basis for a C corporation, and the results of operations for the respective
periods then ended.  Except as set forth in such Financial Statements and the
Closing Balance Sheet or incurred in the ordinary course of business, to the
knowledge of Securityholders and the Company, the Company has no material
obligation or liability, absolute, accrued or contingent, except obligations
and liabilities which do not adversely affect the business, property or assets
of the Company.


            4.5       Absence
of Changes.  Except as listed in Schedule 4.5 and since the time period
covered by the Financial Statements, the Company has not:


                        (a)        Transferred,
assigned, conveyed or liquidated any of its assets or entered into any
transaction or incurred any liability or obligation which affects the assets or
the conduct of its business, other than in the ordinary course of business;


                       
(b)        Incurred any change in its
business, operations, or financial condition which may have a Material Adverse
Effect on its assets or its business, or become aware of any event which may
result in any such adverse change;


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                        (c)        Suffered
any material destruction, damage or loss relating to its assets or the conduct
of its business whether or not covered by insurance;


                        (d)        Suffered,
permitted or incurred other than in the ordinary course of business the
imposition of any lien, charge, encumbrance (which as used herein includes,
without limitation, any mortgage, deed of trust, conveyance to secure debt or
security interest) whether or not contingent in nature, or claim upon any of
its assets, except for any current year lien with respect to personal or real
property taxes not yet due and payable:


                        (e)        Committed,
suffered, permitted or incurred any default in any liability or obligation
which, in the aggregate, have had or will have a Material Adverse Effect upon
its assets or the conduct of its business;


                        (f)         Made
or agreed to any change in the terms of any contract or instrument to which it
is a party which has a Material Adverse Effect on its assets or the conduct of
its business;


                        (g)        Knowingly
waived, canceled, sold or otherwise disposed of, other than in the ordinary
course of business, for less than the face amount thereof, any claim or right
relating to its assets or the conduct of its business, which it has against
others;


                        (h)        Declared,
promised or made any distribution from its assets or other payment from the
assets to its shareholders (other than reasonable compensation for services
actually rendered) or issued any additional shares or rights, options or calls
with respect to its shares of capital stock, or redeemed, purchased or
otherwise acquired any of its shares, or made any change whatsoever in its
capital structure;


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                        (i)         Paid,
agreed to pay or incurred any obligation for any payment for, any contribution
or other amount to, or with respect to, any employee benefit plan, or paid or
agreed to pay any bonus or salary increase to its executive officers or
directors, or made any increase in the pension, retirement or other benefits of
its directors or executive officers other than in the ordinary course of
business;


                        (j)         Committed,
suffered, permitted, incurred or entered into any transaction or event other
than in the normal course of business which would increase its liability for
any prior taxable year;


                        (k)        Incurred
any other liability or obligation or entered into any transaction other than in
the ordinary course of business which would have a Material Adverse Effect on
its condition (financial or otherwise); or


                        (l)         Received
any notices of, or has reason to believe, that any of its customers or clients
have taken or contemplate any steps which could disrupt its business
relationship with said customer or client or could result in the diminution in
the value of the business of the Company as a going concern.


            4.6       Actions
Pending.  Except as listed on Schedule 4.6, there is no action, suit,
investigation, or proceeding pending or, to the knowledge of the Company or
Securityholders, threatened against or affecting the Securityholders, the
Company, or any of its properties or rights, before any court or by or before
any governmental body or arbitration board or tribunal and no basis exists for
any such action, suit, investigation or proceeding which will result in any
material liability or affirmative or negative injunction being imposed on the
Company or Securityholders.  The foregoing includes, without limiting its
generality, actions pending or threatened (or any basis therefor known to the
Company or Securityholders) involving the prior employment of any employees or
prospective employees of the Company, or its use, in connection with its
businesses, of any information or techniques which might be alleged to be
proprietary to its former employer(s).


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            4.7       Business
Property Rights.  To the best of the Company's or each Securityholders' knowledge,
no person or entity has made or threatened to make (or has any valid reason to
threaten) any claims that the operation of the businesses of the Company is or
will be in violation of or infringe on any technology, patents, copyrights,
trademarks, trade names, service marks (and any application for any of the
foregoing) licenses, proprietary information, know-how, or trade secrets (the
"Business Property Rights").  To the best of the Company's or each
Securityholders' knowledge no third party is infringing upon or violating any
of the Company's Business Property Rights and the Company has the exclusive
right to use the same.  None of the employees, directors, or stockholders of
the Company has any valid claim whatsoever (whether direct, indirect or contingent)
of right, title or interest in or to any of the Company's Business Property
Rights.


            4.8       Liabilities. 
Except as listed in Schedule 4.8, to the knowledge of Securityholders and the
Company, the Company has no liabilities or obligations, whether accrued,
absolute, contingent or otherwise (individually or in the aggregate), which are
of a nature required to be reflected in financial statements prepared in
accordance with GAAP, including without limitation, any liability which might
result from an audit of its tax returns by any appropriate authority except (i)
the liabilities and obligations set forth in the Financial Statements or
Closing Balance Sheet delivered in accordance with Section 4.4 and (ii)
liabilities and obligations incurred for the purpose of enabling the Company to
conduct their normal business (in each case in normal amounts and incurred only
in the ordinary course of business) except such liabilities and obligations
that do not have a Material Adverse Effect on the business, property and assets
of the Company.  Except as disclosed in the Financial Statements or Closing
Balance Sheet, to the knowledge of Securityholders and the Company, the Company
is in not in default with respect to any liabilities or obligations and all
such liabilities or obligations shown and reflected in the Financial Statements
and Closing Balance Sheet, and such liabilities incurred or accrued subsequent
to the Company's incorporation, have been, or are being, paid or discharged as
they become due, and all such liabilities and obligations were incurred in the
ordinary course of business except with respect to defaults that do not have a
Material Adverse Effect on the business, property and assets of the Company.


18






 


            4.9       Ownership
of Assets and Leases.  


                        (a)        Attached
hereto as Schedule 4.9(a) is a complete and correct list and brief description,
as of the date of this Agreement, of all real property and material items of
personal property owned by the Company and all of the leases and other
agreements relating to any real, personal or intangible property owned, used,
licensed or leased by the Company.  The Company has good and marketable title
to all of its assets, including those listed on Schedule 4.9(a), and any income
or revenue generated therefrom, in each case free and clear of any liens,
claims, charges, options, rights of tenants or other encumbrances except (i) as
disclosed and reserved against in the Financial Statements (to the extent and
in the amounts so disclosed and reserved against), (ii) for liens arising from
current taxes not yet due and payable, and (iii) as separately set forth on
Schedule 4.9(a). Each of the leases and agreements of the Company is in full
force and effect and constitutes a legal, valid and binding obligation of the
Company and the other respective parties thereto, enforceable in accordance
with its terms, except as enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally, and there is not under any of such leases or agreements existing any
default of the Company or to the best of the Company's or eachSecurityholders'
knowledge of any other parties thereto (or event or condition which, with
notice or lapse of time, or both, would constitute a default).  The Company has
not received any notice of violation of any applicable regulation, ordinance or
other law with respect to its operations or assets, and, to the best of the
Company's knowledge, there is not any such violation or grounds therefor which
could adversely affect its assets or the conduct of its business.  The Company
is not a party to any contract or obligation whereby an absolute or contingent
right to purchase, obtain or acquire any rights in any of the assets has been
granted to anyone.  There does not exist and will not exist by virtue of the
transactions contemplated by this Agreement any claim or right of third persons
which may be legally asserted against any asset of the Company.


19






 


                        (b)        The
Company's main facility, located at 5932 Solomons Island Road, Tracy's Landing,
Maryland 20779 (the "Main Facility"), is leased by the Company pursuant to that
certain Lease dated January 1, 2001 by and between J. Weems, as landlord, and
the Company, as tenant, a true, correct and complete copy of which lease, and
all amendments and modifications thereof, is attached hereto as Exhibit 4.9(b)
(the "Main Facility Lease").  


                        (c)        The
Main Facility, and the use thereof, is in full compliance with all applicable
zoning laws, rules, regulations and ordinances, and all structures thereon are
in compliance with applicable building codes,  rules and regulations.  Attached
hereto as Exhibit 4.9(c) is a full and complete copy of the permanent
certificate of occupancy for the Main Facility, duly issued to the Company by
the applicable governmental authority.


20






 


            4.10     Taxes. 
The Company has paid all taxes due, assessed and owed by it as reflected on its
consolidated tax returns and has timely filed all federal, state, local and
other tax returns which were required to be filed and which were due prior to
the Closing Date, except for those taxes set forth on Schedule 4.10(a).  All
federal, state, local, and other taxes of the Company accruable since the
filing of such returns have been properly accrued.  No federal income tax
returns for the Company have ever been audited by the Internal Revenue Service
or any state or local taxing authority, except as described in Schedule
4.10(b).  No other proceedings or other actions which are still pending or open
have been taken for the assessment or collection of additional taxes of
any kind from the Company for any period for which returns have been filed, and
to the Company's knowledge, no other examination by the Internal Revenue
Service or any other taxing authority affecting the Company is now pending. 
Except for those taxes set forth on Schedule 4.10(a), taxes which the Company
was required by law to withhold or collect subsequent to the incorporation of
the Company have been withheld or collected and have been paid over to the
proper governmental authorities or are properly held by the Company for such
payment and are so withheld, collected and paid over as of the date hereof.  No
waivers of statutes of limitations with respect to any tax returns of the
Company, nor extensions of time for the assessment of any tax, have been given
by any current employees of the Company.  There is not and there will not be
any liabilities for federal, state and local income, sales, use, excise or
other taxes arising out of, or attributable to, or affecting the assets or the
conduct of the business of the Company through the close of business
on the Closing Date, or attributable to the conduct of the operations of
the Company at any time for which Parent or the Surviving Corporation will have
any liability for payment or otherwise, including, but not limited to, any tax
assessed or imposed as a result of any conversion by the Company from a S to a
C corporation.  After the Closing, there does not and will not exist by virtue
of the transactions contemplated by this Agreement any liability for taxes
which may be asserted by any taxing authority against the assets of the
Company, or the operation of any of its businesses, and no lien or other
encumbrance for taxes will attach to such assets or the operation of its
businesses.  


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            4.11     Contracts,
Other Agreements.  Attached hereto as Schedule 4.11 is a true and complete
list of each material contract, agreement and other instrument to which the
Company is a party, including, but not limited to, all bank and financing
documents. At Parent's request, the Company shall deliver to Parent a true and
complete copy of any such contract, agreement or instrument (and Parent hereby
makes such request as to any and all contracts between the Company and General
Dynamics Corporation, or any subsidiary or affiliate thereof).  All of the
contracts, agreements, and instruments described in Schedule 4.11 hereto are
valid and binding upon the Company and the other parties thereto and are in
full force and effect, and neither the Company, nor to the best of the
Company's or each Securityholders' knowledge, any other party to any such
contract, commitment or arrangement has breached any provision of, or is in
default in any respect under, the material terms thereof. No contract,
agreement or other instrument to which the Company is a party will be
materially breached or violated or result as a result of the transaction
contemplated hereunder, nor will consummation of such transactions result in a
default thereunder or give any party thereto the right to terminate such
contract, commitment or arrangement or any provision thereof.  Notwithstanding
anything to the contrary contained in this Agreement, it is understood and
agreed that the Disposal Systems Contractor's license issued by Anne Arundel
County, Maryland, a copy of which is attached hereto as Exhibit 4.11, and any
renewals thereof (the "DSC License"), shall not be considered an asset of the
Company, and nothing contained in this Agreement shall require R. Weems or the
Company to assign the DSC License to the Parent or the Subsidiary, and no
activities undertaken by R. Weems pursuant to or licensed by the DSC License
shall be deemed to be in violation of the restrictions set forth in Section 8
below.


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            4.12     Governmental
Approvals.  


                        (a) 
No registration or filing with, or consent or approval of, or other action by,
any federal, state or other governmental agency or instrumentality is or will
be necessary for the valid execution, delivery and performance of this
Agreement by the Company, including, but not limited to, any approval of the
United States Small Business Administration required to assign any obligation
of the Company to the Surviving Corporation.


                        (b)        (i) 
The Company maintains a
facility security clearance from the United States Department of Defense, as
evidenced by the clearance certificate attached hereto as Exhibit 4.12(b)(i)
(the "Facility Security Clearance").


                                    (ii)  The Facility
Security Clearance enables the Company to bid on, contract for, and perform work under said contracts for, the
projects listed on Schedule 4.12(b)(ii), which projects require Company
personnel to have security clearance commensurate with the highest level of
classified data to be accessed.  


                                    (iii)  Set forth on
Schedule 4.12(iii) is a list of all Company personnel that have a security
clearance from the United States Government, together with each such person's
clearance level, i.e. Confidential, Secret and Top Secret.  


23






 


            4.13     Lack of
Defaults.  The Company and Securityholders know of no default in
performance of any obligation, covenant or condition contained in any note,
debenture, mortgage or other contract or agreement of any nature or kind to
which either is a party, nor of any default with respect to any order, writ,
injunction or decree of any court, governmental authority or arbitration board
or tribunal to which either is a party, which would have a Material Adverse
Effect on the assets or businesses of the Company. The Company and
Securityholders know of no violation of any law, ordinance, governmental rule
or regulation to which either is subject, nor has either failed to obtain any
licenses, permits, franchises or other governmental authorizations necessary
for the ownership of their properties or to the conduct of their business where
any such violation or failure would likely result in a Material Adverse Effect
upon the businesses of the Company. The Company has conducted and will conduct
its businesses and operations in substantial compliance with all federal,
state, county and municipal laws, statutes, ordinances and regulations and is
in substantial compliance with all applicable requirements of all federal,
state, county and municipal regulatory authorities.


            4.14     Employees
and Employee Benefit Plans.


                        (a)        Attached
hereto as Schedule 4.14(a) is a list of each pension, retirement,
profit-sharing, deferred compensation, bonus or other incentive plan, or
program, arrangement, agreement or other understanding, or medical, vision,
dental or other health plan, or life insurance or disability plan, or any other
employee benefit plan, including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended


24






 


 ("ERISA"), to which the Company contributes or is a party
or is bound or under which it may have liability and under which employees or
former employees of the Company (or their beneficiaries), are eligible to participate
or derive a benefit (the foregoing herein referred to as the "Employee Benefit
Plans").  The Company has delivered to Parent true, correct and complete copies
of all Employee Benefit Plans, and the Company has complied in all material
aspects with any and all obligations required of it under the terms of any plan
listed on Schedule 4.14(a).


                        (b)        Attached
hereto as Schedule 4.14(b) are the names, social security numbers, citizenship,
immigration status (with respect to any non-U.S. citizen), and current rate of
compensation of all salaried and hourly paid employees employed by the Company
as of the date hereof, with all key employees being so designated, and at
Closing the Company will provide an updated list of all such employees as of
the date of closing, such updated list to be initialed by both parties at
Closing.


            4.15     Insurance. 
Attached hereto as Schedule 4.15 is a complete and correct list and description
of all of the policies of liability, property, workers' compensation and other
forms of insurance or bonds carried by the Company for the benefit of or in
connection with its assets and businesses.  All of such policies are in full
force and effect and there are no overdue premiums or other payments on such
policies and the Company has not received any notice of cancellation or
termination of any of these policies.  Neither the Securityholders nor the
Company have knowledge of any change or proposed change to any of the rates set
forth in the policies listed on Schedule 4.15 other than as set out in the
Policies.


            4.16     Labor
Matters.  Except as set forth on Schedule 4.16, none of the employees of
the Company are covered by a collective bargaining agreement, and no collective
bargaining efforts with respect to any of the employees of the Company are
pending or, to the knowledge of the Company or the Securityholders,
threatened.  No labor dispute, strike, work stoppage, employee collective
action or labor relations problem of any kind which has materially adversely
affected or may so affect the Company or any of its businesses or operations,
is pending or, to the knowledge of the Company or the Securityholders, is
threatened.  The Company has complied in all material respects with the
reporting and withholding provisions of the Code and the Federal Insurance
Contribution Act and all similar state and local laws, and with the federal,
state, and local laws, ordinances, rules and regulations with respect to
employment and employment practices, terms and conditions of employment and of
the workplace, wages and hours and equal employment opportunity.


25






 


            4.17     Brokers
and Finders.  Except for the fees listed on Schedule 4.17, neither the
Securityholders nor the Company has incurred or become liable for any
commission, fee or other similar payment to any broker, finder, agent or other
intermediary in connection with the negotiation or execution of this Agreement
or the consummation of the transactions contemplated hereby.  Securityholders
agree to be responsible for paying all broker fees, commissions or other
compensation incurred by the Company as a result of this transaction.


            4.18     Accounts
Receivable.


                        (a)        All
accounts receivable of the Company shown on the Financial Statements reflect
(and, in the case of the Closing Balance Sheet, will reflect) actual
transactions, have (or will have as of the Closing Date) arisen in the ordinary
course of business and have been collected or are now (or will be as of the
Closing Date) in the process of collection without recourse to any judicial
proceedings in the ordinary course of business in the aggregate recorded
amounts thereof, less the applicable allowances reflected on the Financial
Statements.


                        (b)        Except
as set forth on Schedule 4.18(b), the Company has no knowledge as to any of the
accounts receivable of the Company being subject to any lien or claim of
offset, set off or counterclaim not provided for by the Company's allowance for
doubtful accounts as of the date of execution hereof.


26






 


            4.19
    Conflicts of Interests.  Except as described in Schedule 4.19(a), no
officer, director or stockholder of the Company was or is, directly or
indirectly, a joint investor or co-venturer with, or owner, lessor, lessee,
licensor or licensee of any real or personal property, tangible or intangible,
owned or used by, or a lender to or debtor of, the Company and the Company has
no commitments or obligations as a result of any such transactions prior to the
date hereof.  Except as described in Schedule 4.19(b), and except for directly
or indirectly holding less than five percent (5%) of the outstanding shares of
stock in a company which is publicly traded, none of such officers,
stockholders, or directors own or have owned, directly or indirectly,
individually or collectively, an interest in any entity which is a competitor,
customer or supplier of (or has any existing contractual relationship with) the
Company.


            4.20     Environmental
Compliance.  Schedule 4.20(a) sets forth all government agencies which
substantially regulate the business of the Company under Environmental, Health
and Safety laws.  Except as listed on Schedule 4.20(b), the Company has
complied in all material respects with all applicable federal, state and local
Environmental Health and Safety Laws with respect to its premises and its
operations and have kept its premises free and clear of any liens and charges
imposed pursuant to such laws.  The Company has not received any notice that
any facts or conditions exist which would give rise to any violation, claim,
charge, penalty or liability relating to any applicable Environmental Health
and Safety Laws of any governmental body or agency having jurisdiction over the
premises.  Attached hereto as Exhibit 4.20 are true and complete copies of all
environmental reports prepared by third parties with respect to the Main Facility
within the five (5) years preceding the date of this Agreement, and neither the
Company nor either of the Securityholders has any knowledge of any facts,
circumstances or occurrences that would have a Material Adverse Effect on the
findings of any such reports.  


27






 


            4.21     Ownership
of the Stock.  The Securityholders own all of the Stock beneficially and of
record, free and clear of all liens, restrictions, encumbrances, charges, and
adverse claims and the Stock to be purchased hereunder constitutes one hundred
percent (100%) of issued and outstanding stock of the Company.


            4.22     Absence
of Sensitive Payments.  Neither the Securityholders nor, to the knowledge
of the Securityholders and Company, any of the directors, officers, or
stockholders of the Company:


                        (a)        has
made or has agreed to make any contributions, payments or gifts of funds or
property to any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift was or is illegal
under the laws of the United States, any state thereof, or any other
jurisdiction (foreign or domestic);


                        (b)
has established or maintained any unrecorded fund or asset for any purpose, or
has made any false or artificial entries on any of its books or records for any
reason; or 


                        (c)
has made or has agreed to make any contribution or expenditure, or has
reimbursed any political gift or contribution or expenditure made by any other
person, to candidates for public office, whether federal, state or local
foreign or domestic where such contributions were or would be a violation of
applicable law.


            4.23     Approval
of Merger; Related Matters.  Each of the Securityholders represents and
warrants that such Securityholders, in his or her capacity as a shareholder of
the Company, (i) approves of and consents to the Merger as set forth in this
Agreement, (ii) waives any notice of a shareholder's meeting or similar
corporate formality in connection with the approval of the transactions
described herein, including, without limitation, the Merger, (iii) waives any
rights to protest or object to the Merger or to the exercise of any statutory
remedy of appraisal as to the Stock owned by such Securityholders as provided
in the MGCL, (iv) has received a copy of resolutions approving the Merger in
accordance with the MGCL, and (v) to the extent such Securityholders owe any
amounts to the Company pursuant to any promissory note issued by such
Securityholders to the Company, consents to the use of a portion of the Merger
Consideration payable to such Securityholders to pay off each such promissory
note.


28






 


            4.24     Withholding. 
Neither Company nor any of the Securityholders are foreign persons or entities,
or have other status, such that Parent would be required to deduct and withhold
from the Merger Consideration otherwise payable pursuant to this Agreement to
any holder of the Stock any amounts under the Code, or any provision of state,
local or foreign tax law. 


            4.25     Amounts
Due From Securityholders.  All amounts due from the Securityholders, or either
of them, or from MSWW, Inc., a Maryland corporation wholly-owned by
Securityholders ("MSWW"), to the Company have been paid in full.




SECTION 5


REPRESENTATIONS, WARRANTIES AND
CERTAIN

COVENANTS OF
PARENT AND SUBSIDIARY


            As
a material inducement to induce Securityholders to consummate the Merger under
this Agreement, Parent and Subsidiary represent and warrant that each of the
matters set forth in this Section 5 are true and correct as of the date hereof,
and acknowledge that Securityholders' entry into this Agreement and the
performance of their obligations hereunder are made in reliance upon the
completeness and accuracy of each of the matters set forth herein. The
representations and warranties being made by the Parent and Subsidiary shall
survive as set forth in Section 12.11 herein.


29






 


            5.1       Organization,
Standing, etc.  Parent and Subsidiary are duly organized, validly existing
and in good standing under the laws of its jurisdiction of their organization.


            5.2       Authorization,
etc.  The execution and delivery of this Agreement and any other
instruments or documents required to be executed and delivered hereby, and the
purchase of the Stock contemplated hereby, have been authorized by such
authorities or by such court of competent jurisdiction, if any, as may be
required by applicable law and constitute a valid and binding obligations of
Parent and of Subsidiary, enforceable against them in accordance with the terms
of this Agreement.


            5.3       No
Breach or Defaults Caused by Agreement.  The making and execution, delivery,
and performance by Parent and Subsidiary of this Agreement does and will not
breach or constitute (with due notice or lapse of time or both) any default in
any articles, by-laws, agreements, or instruments of any kind or character to
which Parent or Subsidiary are a signatory or a party, or by which they may be
bound, subject to, or affected, now or in the future.


            5.4       Governmental
Approvals.  No registration or filing with, or consent or approval of, or
other action by, any federal, state, or other governmental agency or
instrumentality, which has not been made or obtained prior to the execution of
this Agreement by Parent or Subsidiary, is or will be necessary for the valid
execution, delivery, and performance of this Agreement by Parent and Subsidiary.


            5.5       Brokers
Fees.  Parent and Subsidiary represent that there are no brokers involved
in this transaction on their behalf. 


            5.6       [Intentionally
omitted.]


            5.7       [Intentionally
omitted.]


            5.8       [Intentionally
omitted.]


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            5.9       No
Section 338 Election.  Neither Parent nor Subsidiary shall make any
election under Section 338 of the Code, with respect to any part of the
transaction contemplated hereunder without the express written consent of all
of the Securityholders.




SECTION 6


CONDITIONS TO
CLOSING


            Parent's
obligation to consummate the Merger under this Agreement shall be subject to
fulfillment of all of the following conditions on or prior to the Closing, any
of which may be waived in writing by Parent.


            6.1       Performance
of Agreements.  The Company shall have performed all agreements contained
herein and required to be performed by it prior to or at the Closing and all of
the representations and warranties made by it and Securityholders in this
Agreement shall be true and correct as of the Closing Date.


            6.2       Lack
of Material Liabilities.  The Company shall not have incurred any material
liability, direct or contingent (as that term is ordinarily used), other than
in the ordinary course of its business, not reflected on the most recent
internally generated consolidated financial statements of the Company for the
twelve (12) month period ending as of the last day of the month immediately
preceding the month in which the Closing Date occurs; including, but not
limited to, any tax liability resulting from the transaction contemplated
hereby, or by the Company's compliance with any of the terms and conditions
hereof.


            6.3       Financial
Statements.  Parent shall have received the Financial Statements other than
the Closing Balance Sheet.


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            6.4       Lack
of Defaults.  No Event of Default (as defined in Section 10 hereof) and no
event or condition which, with notice or the lapse of time, or both, would
constitute an Event of Default, shall exist.


            6.5       Escrow
Agreement.  Securityholders, Company, Parent, Subsidiary, and all other
parties thereto shall have executed the Escrow Agreement, a copy of which is
attached hereto as Exhibit 6.5.


            6.6       Employment
Agreements.  R. Weems, Maclin, Graybill, and those employees designated as
key employees on Schedule 4.14(b) (including without limitation Steve Murray,
the current general manager of the Company), and the Company shall have
executed the Employment Agreements, copies of which are attached hereto as
Exhibits 6.6(a) through 6.6(d).


            6.7       Opinion
of Counsel.  Parent shall have received an opinion of counsel from the
attorneys for the Company, dated as of the Closing Date, in form and substance
substantially similar to that attached hereto as Exhibit 6.7.


            6.8       Compliance
Certificate.  The Company shall have delivered to Parent the certificate,
attached hereto as Exhibit 6.8, executed by its President, dated as of the
Closing Date, certifying the fulfillment of the conditions specified in this
Section 6 and the accuracy of the representations and warranties contained in
Section 4 hereof.


            6.9       [Intentionally
omitted.] 


            6.10     [Intentionally
omitted.]


            6.11     Employee
Stock Options.  Parent resolves to take any and all actions necessary, 
including soliciting the approval of its shareholders, to grant up to 20,000
qualified or unqualified stock options to the employees listed, and in the
amounts designated, in Schedule 6.11.


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            6.12     Release
from Securityholders; Payment of Amounts Owed by Securityholders. 
Securityholders and MSWW shall execute and deliver to the Parent, in a form
satisfactory to Parent's counsel, a release of any claim that they, or any of
them, may have against the Company for the repayment of any loan, claim for
unpaid compensation, claim for indemnification, claim for management fee, or
otherwise.  All amounts due to the Company from Securityholders, or either of
them, or from MSWW, shall have been paid in full.  


            6.13     Corporate
Documents.  Parent shall have received copies of the following documents:


                        (a)        a
certificate of the President of the Company dated the Closing Date and certifying
(i) that attached thereto is a true and complete copy of the Articles or
Certificate of Incorporation and Bylaws of the Company as in effect on the date
of such certification; and (ii) that attached thereto are true and complete
copies of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement, and that
all such resolutions are still in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement; and


                        (b)        such
additional supporting documents and other information with respect to the
operations and affairs of the Company as Parent may reasonably request.


            All
such documents described in (a) and (b) shall be satisfactory in form and
substance to Parent and its counsel.


            6.14     Corporate
Filings.  All relevant incorporation and merger documents shall be filed
with the appropriate governmental agencies and shall be attached hereto as
Exhibit 6.14.


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            6.15     Trustee
of Profit Sharing Plan.  The Surviving Corporation shall at Closing cause a
successor trustee, if necessary, for the Company's 401(k) and profit sharing
plans to be appointed.


            6.16    
Net Worth.  The Company shall have as of the Closing Date, as shown on
the Closing Balance Sheet, a Net Worth greater than or equal to Nine Hundred
Fifty Thousand Dollars ($950,000), adjusted for deferred taxes and other
decreases due to expenses made in the ordinary course of business.  To enable
all parties to determine the Net Worth of the Company, the Securityholders
shall cause the Closing Balance Sheet to be delivered to the Parent within
thirty (30) days of Closing.


            6.17     [Intentionally
omitted.]


            6.18     Release
of Buy-Sell Rights.  Securityholders shall deliver to Parent a waiver
and/or release of any rights that they may have under any and all stockholders
or other agreements by and among the Securityholders and the Company which
would in any way affect the transaction.  True and complete copies of all such
agreements are attached hereto as Exhibit 6.18.


            6.19     Assignment
and Amendment of Main Facility Lease.  J. Weems, as landlord, the Company,
as tenant, and the Subsidiary, as assignee, shall enter into that certain
Assignment and Amendment of Lease, a copy of which is attached hereto as
Exhibit 6.19, pursuant to which all of the Company's right, title and interest
in and to the Main Facility Lease shall be assigned to and assumed by the
Subsidiary, and the Main Facility Lease shall be amended, as set forth therein.




34






 




SECTION 7


TRANSACTIONS
PRIOR TO CLOSING


            Between
the date of this Contract and the Closing, the executive officers and Board of
Directors of the Company shall retain full control of the management and
business of the Company. To enable Parent to prepare for settlement at the
Closing, Parent, Securityholders and the Company agree that between the date
hereof and Closing:


            7.1       Taxes. 
The Company will promptly pay and discharge, or cause to be paid and
discharged, all federal, state and other governmental taxes, assessments, fees
and charges imposed upon it or on any of its property or assets and timely file
any returns and reports in connection with the foregoing; provided, however,
nothing herein shall require the Company to pay or cause to be paid any tax,
assessment, fee or charge so long as the validity thereof shall be contested in
good faith by appropriate procedures and the Company has set aside on its books
and maintains adequate reserves with respect thereto or for which disclosure to
Parent has been made pursuant to Exhibits 4.10(a) and (b).


            7.2       Books
of Record and Account; Inspection.  The Company will maintain at all times
proper books of record and account in accordance with GAAP, and will permit any
of Parent's officers or any of its authorized representatives or accountants to
visit and inspect the offices and properties of the Company, examine the
Company's books of account and other records, and discuss the Company's
affairs, finances and accounts with Parent's appropriate officers and managers,
legal counsel, accountants and auditors, all at normal business hours and as
often as Parent may request, provided any such discussions with accountants
will not cause the Company to incur any material cost with respect to such
accountants and legal counsel.


            7.3       Financial
Reports.  The Company shall furnish to Parent, within 20 days after the end
of each month (and within 45 days after the end of the last month of the
Company's fiscal year), an unaudited financial report of the Company, which
report shall include profit and loss statement, a consolidated balance sheet, a
cash flow analysis, and such other financial information that Parent may
reasonably request.


35






 


            7.4       Insurance.


                        (a)
       The Company will maintain in effect liability insurance, property
insurance, worker's compensation insurance, and extended coverage insurance on
its personal property referenced in Section 4.15 above, with responsible
insurance companies, against such risks as are customarily insured against by
similar businesses operating in the same vicinity, and in amounts not less than
those (i) recommended by major insurance companies for similar businesses or
(ii) required by governmental authorities having jurisdiction over all or part
of the Company's operations.


            7.5       Notification. 
The Company will, within two (2) business days, advise Parent in writing of the
following:


                        (a)
       The occurrence of an Event of Default (as defined in Section 11.1); 


                        (b)
       The filing of any suit, action, other proceeding by or against the
Company  or any investigation which the Company learns is pending or threatened
against it, if the amount involved or at risk by nature of such suit, action,
other proceeding or investigation exceeds Seventy-Five Thousand Dollars
($75,000);


                        (c)        The
filing, recording or assessment of a federal, state or local tax lien against
the Company or any of its assets other than in the ordinary course of business;


                        (d)        The
occurrence of any reportable event with respect to any employee benefit plan of
the Company or any plan which is subject to the provisions of ERISA, including
a statement setting forth details as to the reportable event and the action
proposed to be taken with respect thereto, together with a copy, if available,
of the notice of such reportable event given to the Pension Benefit Guaranty
Corporation; and


36






 


                        (e)        Any
other condition, act or event which the Company in its good faith judgment
believes will adversely affect Parent's rights under this Agreement.


            7.6       Corporate
Existence.  The Company shall at all times cause to be done every act
necessary to maintain and preserve its and its subsidiaries' and affiliates'
existence, rights, franchises, and certifications in the jurisdictions of their
incorporation and to remain qualified as foreign corporations in every
jurisdiction in which qualification is required.


            7.7       Maintenance
of Properties.  The Company shall maintain or cause to be maintained in
good repair, working order and condition all tangible properties required for
its or its subsidiaries' or affiliates' business and from time to time make or
cause to be made all appropriate repairs and replacements thereof.


            7.8       Trade
Secrets.  The Company will use its best efforts to maintain the
confidentiality of any Business Property Rights of the Company and will seek to
restrict the ability of any employee having knowledge of such proprietary
information or trade secrets from competing with the Company through employment
and non-competition agreements and similar arrangements.


            7.9       Mergers
and Other Transfers.  The Company will not (i) merge or consolidate with
any person, firm, association, corporation or other entity, (ii) transfer,
sell, assign, lease or otherwise abandon or dispose of (whether in one
transaction or a series of transactions) any material part of its assets except
in the normal course of business if such transaction would reduce the Net Worth
of the Company below $950,000 (as adjusted for deferred taxes and other
decreases due to expenses made in the ordinary course of business), (iii)
change the nature of its business, (iv) create any subsidiaries, or (v)
liquidate, dissolve or cease active business operations.


37






 


            7.10     Certificate
of Incorporation and Bylaws.  The Company will not amend its Articles or
Certificate of Incorporation or Bylaws if the result of any such amendment will
have an adverse effect on Parent's rights under this Agreement.


            7.11     Judgments
and Liens.  Neither the Securityholders nor the Company shall create,
incur, assume or permit to exist any mortgage, lien, security interest, charge
or encumbrance on any property or assets now owned or hereafter acquired by the
Company except:


                        (a)        Liens
arising out of judgments or awards (i) which have been in force less than the
applicable appeal period so long as execution is not levied thereunder, or (ii)
in respect of which the Company shall in good faith be prosecuting an appeal or
proceedings for review and in respect of which the Company shall have secured a
subsisting stay of execution pending such appeal or proceedings for review;


                        (b)        Liens
for taxes, assessments or governmental charges or levies, provided payment
thereof shall not at the time be required;


                        (c)        Deposits,
liens, bonds or pledges to secure payment of worker's compensation,
unemployment insurance, pensions or other social obligations, surety, stay or
appeal bonds, or other similar obligations arising in the ordinary course of
business;


                        (d)        Mechanic's,
worker's, repairmen's, warehousemen's, vendor's, or carrier's liens, or other
similar liens arising in the ordinary course of business and securing sums
which are not past due, or deposits or pledges to obtain the release of any
such liens:


38






 


                        (e)        Liens
arising by operation of law under lease agreements made in the ordinary course
of business and confined to the property rented (other than liens arising as a
result of any default thereunder);


                        (f)         Liens
on property securing the purchase price of property acquired after the date
hereof provided that each of such lien (i) is given solely to secure
indebtedness not exceeding one hundred percent (100%) of the lesser of the cost
or fair market value of such property, (ii) does not extend to any other
property, and (iii) is given at the time of acquisition of the property;


                        (g)        Presently
outstanding liens; and


                        (h)        Extension,
renewal or refunding of indebtedness secured by liens permitted by this Section
7.11, provided that the then outstanding amount of such indebtedness is not
increased and such liens do not extend to property not then encumbered thereby.


            7.12     Issuances
of Capital Stock.  The Company will not issue any of its capital stock to
any person or entity or grant any person or entity an option, warrant,
convertible security or any other right or agreement to acquire any shares of
its capital stock, without the prior written consent of Parent.


            7.13     Purchase
of Securities or Assets.  The Company will not purchase the outstanding
equity securities of any other person, firm, association, corporation or other
business enterprise, except obligations issued or guaranteed by the United
States government or any state or political subdivision thereof or other
short-term instruments normally marketed by banks and nationally recognized
brokerage firms, provided nothing herein shall restrict the Company from
maintaining accounts with federally insured banking institutions or money
market funds.


39






 


            7.14     Declaration
of Dividends, etc.  The Company will not (i) make, pay or declare any
distributions or dividends of cash or property with respect to its issued
shares of common stock; (ii) directly or indirectly redeem, repurchase or
otherwise reacquire any shares of its common stock; (iii) increase the salary
or pay any bonuses to any management employees, officers or directors of the
Company, if such action decreases the Net Worth of the Company below $950,000,
as adjusted for deferred taxes and other decreases due to expenses made in the
ordinary course of business.  


            Except
as set forth on Schedule 7.14, the Company is further prohibited from declaring
or distributing, without the prior written approval of Parent in its sole
discretion, any executive bonus or other form of additional compensation.


            7.15     Payments
to Officers.  Except as described on Schedule 7.15, the Company shall not
loan or advance any amount to, or sell, transfer or lease any properties or
assets (real, personal or mixed, tangible or intangible), to, or enter into any
agreement or arrangement with, any of the Company's officers or directors,
except for compensation to officers pursuant to existing agreements, copies of
which have been delivered to Parent, and reimbursement of expenses incurred by
employees of the Company in connection with their employment.


            7.16     Indebtedness. 
The Company shall not incur any indebtedness for borrowed money, including
pension fund loans, or purchase money indebtedness or guarantee any such
indebtedness or issue or sell any debt securities of the Company or guarantee
in any manner (including, without limitation, by agreeing to maintain the
financial condition of another person) any debt securities of others, provided,
however, that the Company shall have the right to incur indebtedness in the
ordinary course of business for office furniture, equipment, trade payables,
machinery and vehicles.


40






 


            7.17     Expenditures. 
The Company shall not make any capital investments or capital expenditures in
excess of an aggregate of Seventy-Five Thousand Dollars ($75,000) which are
outside of the ordinary course of the Company's business, without the consent
of Parent.


            7.18     Employee
Benefit Plans.  The Company shall not adopt any new Employee Benefit Plans,
but may expand existing benefits subject to the approval of the Board of
Directors of the Subsidiary.


            7.19     Material
Contracts.  Except as described on Schedule 7.19, the Company shall not
enter into, assume, renew or permit to be renewed (including by not giving a
permitted notice of termination) any contract, lease or obligation outside the
ordinary course of business. Except as expressly set forth therein, the Company
shall not modify, amend, terminate, waive or release any benefit or right under
any employment agreement, or any other material agreement to which the Company
is a party, without the prior written consent of Parent.


            7.20     Non-business
Assets.  The Company shall not apply any corporate funds toward the payment
of any principal or interest due or owing for the purchase of any non-corporate
assets.




SECTION 8


COVENANTS NOT
TO COMPETE


            8.1       Covenant
Not to Compete.  Except as authorized by Subsidiary and Parent or by the
terms of this Agreement, no Securityholder shall, directly or indirectly, alone
or with others, enter into any business related to providing inside premise
wiring services and underground and aerial construction services and splicing
to government, telecommunications and utilities customers within the States of New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia,  West
Virginia and North Carolina and the District of Columbia for a period of five
(5) years from the date of Closing. Further, no Securityholder shall, during
such period, disclose, divulge, communicate, use to the detriment of the
Company or Parent or for the benefit of any other person or persons, or use in
any way, any confidential or proprietary information or trade secrets of the
Company, including without limitation customer lists, personnel information,
Business Property Rights, and other similar data. In addition, no
Securityholder shall, during such period, directly or indirectly, (i) hire or
attempt to hire any employee of the Company, or (ii) interfere with any contract
or other relationship of the Company and any of its customers or suppliers.
Securityholders agree that Parent shall be entitled to injunctive relief in the
event of any breach of the covenants set forth in this paragraph together with
reasonable attorney's fees and damages. Damages shall only be collectible from
the party breaching this provision.




41






 




SECTION 9


INDEMNIFICATION
BY SECURITYHOLDERS AND THE COMPANY


            Securityholders
and the Company shall indemnify, defend (with counsel acceptable to the indemnified
party) and hold harmless Parent, Subsidiary and Surviving Corporation from and
against and in respect to the following (in addition to any losses otherwise
specifically indemnified against in this Agreement):


            9.1       Indemnification
by the Securityholders and the Company.


                        (a)       
Breach.  Subject to the provisions of this Section 9.1 and except as
otherwise more specifically set forth herein, the Securityholders and the
Company (each in his or her capacity as an indemnifying party, an "Indemnifying
Party") each hereby covenants and agrees to jointly and severally indemnify,
defend, protect, and hold harmless each of Parent, Subsidiary, the Surviving
Corporation and each of their respective subsidiaries and affiliates (each in
its capacity as an indemnified party, an "Indemnitee") at all times from and
after the date of this Agreement from and against all Adverse Consequences
incurred by such Indemnitee as a result of or incident to (i) any breach of any
representation or warranty of the Company or the Securityholders set forth in
Section 4 of this Agreement, (ii) any material breach or nonfulfillment by the
Company or the Securityholders of, or any noncompliance by the Company or the
Securityholders with, any covenant, agreement, or obligation contained herein
or in any certificate or other document delivered in connection herewith, (iii)
all damage or deficiency resulting directly from the material inaccuracy of any
list, certificate or other instrument delivered by or on behalf of
Securityholders or the Company in connection herewith, whether made as of the
date hereof, or as of the Closing Date hereunder or otherwise, or resulting
from the non-fulfillment of any agreement on the part of Securityholders or the
Company contained in this Agreement or made in connection with the transactions
contemplated hereby, including, but not limited to all losses, liabilities,
damages, costs and expenses (including reasonable attorneys' fees), incurred by
Parent if this Agreement is terminated pursuant to Section 10 hereof.


42






 


                        (b)        Environmental
Indemnification.  The Company and Securityholders each hereby covenants and
agrees to jointly and severally indemnify and defend each Indemnitee and hold
each Indemnitee harmless from and against any and all damages, losses,
liabilities, costs and expenses of removal, relocation, elimination,
remediation or encapsulation of any Hazardous Materials (as defined in Section
4.20), obligations, penalties, fines, impositions, fees, levies, lien removal
or bonding costs, claims, actions, causes of action, injuries, administrative
orders, consent agreements and orders, litigation, demands, defenses,
judgments, suits, proceedings, disbursements or expenses (including without
limitation, attorney's and experts' reasonable fees and disbursements) of any
kind and nature whatsoever resulting from the operation of the Company's
business as of the Closing Date: (i) which (x) is imposed upon, or incurred by,
Parent by reason of, relating to or arising out of the violation by the Company
prior to the Closing of any environmental laws, rules or regulations of any
governmental body or agency having jurisdiction over the Main Facility and any
temporary facilities used by the Company for storage of equipment or otherwise
(such as fenced-in yards), or (y) arises out of the discharge, dispersal,
release, storage, treatment, generation, disposal or escape of any Hazardous
Materials, on or from the Main Facility or such temporary facilities as of the
Closing Date, or (z) arises out of the use, specification, or inclusion of any
product, material or process containing Hazardous Materials, or the failure to
detect the existence or proportion of Hazardous Materials in the soil, air,
surface water or groundwater, or the performance or failure to perform the
abatement of any Hazardous Materials source as of the Closing Date or the
replacement or removal of any soil, water, surface water, or groundwater
containing Hazardous Materials; and/or (ii) is imposed upon, or incurred by,
Parent by reason of or relating to any material breach, act, omission or
misrepresentation contained in Section 4.20.


43






 


                        (c)        Tax
Matters.  Company and Securityholders shall jointly and severally
indemnify, defend and hold harmless each Indemnitee from and against all
Adverse Consequences incurred by any Indemnitee as a result of or incident to
any Income Taxes or other Taxes imposed on the Surviving Corporation, the
Company or any of their subsidiaries or for which the Surviving Corporation,
Company or any of its subsidiaries may otherwise be liable by law or regulation
(including, without limitation, the provisions of Treasury Regulation Section
1.1502-6) or contract, for any taxable year or period that ends on or before
Closing or resulting in any way from this transaction, including, but not limited
to, any taxes imposed as a result of the disqualification of this transaction
as a tax free reorganization under the Code.


                                    (i)         The
Company shall furnish to Parent copies of the federal, state, and local tax
returns of the Company for the period ending on the Closing Date and shall
obtain the consent of Parent before filing such returns, which consent shall
not be unreasonably withheld.


                                    (ii)        Except
as otherwise provided in this Agreement, Parent shall have the sole right to
represent the interests of any Indemnitee in any tax audit or administrative or
court proceeding relating to any taxable period, including without limitation
taxable periods ending on or before Closing, and to compromise, settle, or
contest any tax claims in connection therewith in its sole discretion, provided
that Parent shall provide Securityholders with written notice of its intent to
exercise its rights hereunder. Securityholders shall have the right, at their
expense, to join Parent in any such defense.


44






 


                        (d)        Broker
Fee.  Each Indemnifying Party jointly and severally indemnifies each
Indemnitee from any claim made by a broker, finder, agent or other intermediary
against the Company after Closing in connection with the negotiation or
execution of this Agreement or the consummation of the transactions
contemplated hereby except for those claims made against Parent or Subsidiary
pursuant to Section 5.5 hereof.


                        (e)       
Set-Off.  Except as otherwise provided in this Agreement, Parent shall
be entitled to set-off the Securityholders' or the Company's liability to
Parent for indemnification under this Section 9, or under any other paragraph
of this Agreement, after any dispute regarding such liability has been resolved
by the parties or otherwise, by crediting the amount of liability  against the
monies being held in escrow pursuant to Section 2.2(b) of this Agreement.  In
the event that Parent desires to exercise its rights pursuant to this
paragraph, the amount of any liability alleged by the Parent which is disputed
in writing by the Company or Securityholders shall remain in escrow until such
dispute has been resolved.  If such dispute is resolved in favor of
Securityholders, Parent shall pay interest at the Prime Rate as published in
the Money Rates section of The Wall Street Journal on the business day
immediately preceding the Escrow Release Date on any amount improperly held
commencing from the Escrow Release Date.


45






 


                        (f)         Costs
and Expenses.  Except as otherwise provided in this Agreement, all amounts
indemnified pursuant to this Section 9 shall include all costs and expenses of
the Indemnitee, including, but not limited to, the costs of any actions,
reasonable attorneys fees, and other expenses necessary to enforce the rights
granted hereunder.


                        (g)        Termination
of Company's Obligation. Company's obligation to indemnify Parent, or to
contribute to any party indemnifying Parent, pursuant to this Section 9 shall
expire as of the Filing Date.


                        (h)        Termination
of Securityholders' Obligation. Securityholders' obligation to indemnify
any Indemnitee, or to contribute to any party indemnifying any Indemnitee,
pursuant to this Section 9, shall, except in the event of actual fraud or
intentional non-disclosure, expire three (3) years from the Closing Date,
except as to those involving tax matters, which obligation shall expire six (6)
years from the Closing Date.


            9.2       Limits
of Indemnification.  For the purposes of this Section 9, the Indemnifying
Parties Indemnification shall be limited to those Adverse Consequences which
exceed in the aggregate Seventy-five Thousand Dollars ($75,000).


            9.3       No
Circular Recovery.  Securityholders hereby agree that they will not make
any claim for indemnification against either Parent or Subsidiary by reason of
the fact that said Securityholder was a director, officer, employee agent or
other representative of the Company or any of its subsidiaries (whether such
claim is for Adverse Consequences of any kind or otherwise and whether such
claim is pursuant to any statute, charter, by-law, contractual obligation or otherwise)
with respect to any claim for indemnification brought by Parent, the Surviving
Corporation, or their respective subsidiaries and affiliates, against the
Securityholders.




46






 




SECTION 10


TERMINATION


            10.1     Termination
by Parent.  This Agreement may be terminated by Parent, on or before the
Closing Date, upon the occurrence of the following:


                        (a)        If
any of the material conditions specified in Section 6 shall not have been met
prior to the Closing Date.


                        (b)        If
an Event of Default, as defined in Section 11, has occurred, and has not been
cured during any applicable cure period.


            10.2     Termination
by Securityholders.  This Agreement may be terminated by Securityholders,
on or before the Closing Date, if any of the conditions specified in Section 5
shall not have been met prior to Closing.




SECTION 11


DEFAULT


            11.1     Events
of Default.  It shall be considered an Event of Default if any one or more
of the following events shall occur:


47






 


                        (a)        If
any statement, certificate, report, representation or warranty of a material
nature made or furnished by the Company under this Agreement shall prove to
have been false or erroneous in any material respect.


                        (b)        The
occurrence of any event of default under any contract, financing agreement,
note, lease, mortgage, security agreement, factoring agreement or any other
obligation of the Company the result of which will have a Material Adverse
Effect on the Company, unless any such event of default shall be timely cured
under any applicable cure provision or waived by the person to whom or to which
the Company is obligated or indebted.


            11.2     Waiver
by Parent.  Any failure by Parent to insist upon strict performance by the
Securityholders or the Company of any of the terms and provisions of this
Agreement shall not be deemed to be a waiver of any of the terms and conditions
hereof and Parent shall have the right thereafter to insist upon strict
performance thereof by the Securityholders or the Company.             


SECTION 12


MISCELLANEOUS


            12.1     Costs. 
Except for expenses relating to the preparation of the December 2002 Audit,
which will be paid by the Parent, each party shall pay its own expenses
incident to the transaction contemplated hereby, including fees and expenses of
their attorneys, accountants, appraisers or consultants, whether or not those
transactions, are consummated at Closing, subject to the indemnification and
termination provisions hereof.


            12.2     Attorneys
Fees.  If any party
initiates any litigation against any other party involving this Agreement, the
prevailing party in such action shall be entitled to receive reimbursement from
the other party for all reasonable attorneys' fees and other costs and expenses
incurred by the prevailing party in respect of that litigation, including any
appeal, and such reimbursement may be included in the judgment or final order
issued in that proceeding.


48






 


            12.3     Relationships
to Other Agreements.  In the event of a conflict between any of the
provisions of this Agreement and any other agreement relating to this
transaction between the Securityholders, Company and Parent, the provisions of
this Agreement shall control.


            12.4     Titles
and Captions.  All articles or section titles or captions in this Agreement
are for convenience of reference and are not part of this Agreement and shall
in no way define, limit, extend or describe the scope or intent of provisions
herein.


            12.5     Exhibits. 
The Exhibits and Schedules referred to herein are hereby made a part hereof.


           12.6     Applicable
Law.  This Agreement is to be governed by, and construed, interpreted, and
enforced in accordance with, the laws of the State of Delaware.


            12.7     Binding
Effect and Assignment.  This Agreement shall be binding to the benefit of
the successors and assigns of the parties.  Notwithstanding the foregoing,
neither the Company nor Parent shall have any right to assign any of its rights
or obligations under this Agreement without the prior written consent of the
other parties hereto.


            12.8     Notices. 
All notices, requests, instructions, or other documents required hereunder
shall be deemed to have been given or made when delivered by registered or
certified mail, return receipt requested, postage prepaid or by messenger or
overnight delivery service to:



  	

If Company then:   


      	

Southern
Maryland Cable, Inc.


      
	

   


      	

5928
Solomons Island Road


      
	

   


      	

Tracy's
Landing, Maryland 20779


      
	

   




      	

Attention:
Mr. F. Ray Weems




      
	 	 
	



If Securityholder R. Weems then:   


      	



Mr.
F. Ray Weems


      
	

   


      	

5928
Solomons Island Road


      
	

   




      	

Tracy's
Landing, Maryland 20779




      





49






 





  	



If Securityholder J. Weems then:   


      	



Ms.
Janet Weems


      
	

   


      	

5928
Solomons Island Road


      
	

   




      	

Tracy's
Landing, Maryland 20779




      
	   	 
	



Counsel for Company, R. Weems and J. Weems:   


      	



George
S. Lantzas, Esq.


      
	

   


      	

791
Aquahart Road, Suite 122


      
	

   




      	

Glen
Burnie, Maryland 21061




      
	  	 
	



If Parent then:   


      	



Puroflow
Incorporated


      
	

   


      	

One
Church Street, Suite 302


      
	

   


      	

Rockville,
Maryland  20850


      
	

   




      	

Attn: 
Haywood Miller




      
	  	 
	



If Subsidiary then:   


      	



PFLW/SMC
Acquisition Corporation


      
	

   


      	

c/o
Puroflow Incorporated


      
	

   


      	

One
Church Street, Suite 302


      
	

   


      	

Rockville,
Maryland  20850


      
	

   




      	

Attn: 
Haywood Miller




      
	  	 
	



Counsel for Parent and Subsidiary:   


      	



David
B. Law


      
	

   


      	

Curtin
Law Roberson Dunigan


      
	

   


      	

  & Salans, PC


      
	

   


      	

1900
M Street, N.W.


      
	

   


      	

Suite
600


      
	

   




      	

Washington,
D.C.  20036




      







            Any
party may from time to time give the others written notice of a change in the
address to which notices are to be sent and of any successors in interest.


            12.9     Severability. 
Inapplicability or unenforceability of any provision of this Agreement shall
not impair the operation or validity of any other provision hereof. If any
provision shall be declared inapplicable or unenforceable, there shall be added
automatically as part of this Agreement a provision as similar in terms to such
inapplicable or unenforceable provision as may be possible and be legal, valid
and enforceable.


            12.10   Acceptance
or Approval.  By accepting all or approving anything required to be
observed, performed, or fulfilled, or to be given to Parent pursuant to this
Agreement, including, but not limited to, any certificate, balance sheet,
statement of profit or loss or other financial statement, or insurance policy,
Parent shall not be deemed to have accepted or approved the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision,
or condition thereof as to third parties.


50






 


            12.11   Survival. 
All covenants, representations, and warranties made by the Securityholders and
Parent in this Agreement shall survive the Closing hereunder for a period of
three (3) years, except as otherwise specifically provided in this Agreement
and except as to those involving tax matters, which shall survive the Closing
for a period of six (6) years.


            12.12   Entire
Agreement.  This Agreement, including all Exhibits and Schedules,
constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof, and supersedes all prior agreements and understandings
pertaining thereto. No covenant, representation, or condition not expressed in
this Agreement shall affect or be deemed to interpret, change or restrict the
express provisions hereof and no amendments hereto shall be valid unless made
in writing and signed by all parties hereto.


            12.13   Counterparts. 
This Agreement may be executed in any number of counterparts, all of which
together shall constitute one instrument.


            12.14   Security
Matters.  By executing this Agreement, Parent acknowledges that: (i) Parent
has been advised that the Stock has not been and will not have been registered
under the Act or the applicable securities laws of any state, that the
Securityholders in transferring such shares to the Parent will be relying, if
applicable, upon the exemption from such registration requirements contained in
Section 4(1) or 4(2) of the Act as a transaction by a person other than as
issuer, underwriter or dealer and the applicable state exemption; (ii) the
Stock may be "restricted" as that term is used in Rule 144 under the Act as a
consequence of which Parent may not be able to sell the shares unless such
shares are first registered under the Act and any applicable state securities
laws or unless an exemption from such registration is, in the opinion of
counsel, available; (iii) the Stock will be acquired by Parent for purposes
other than "distribution" as that term is used in Section 2(11) of the Act, and
(iv) Parent will execute, if Securityholders so request, an appropriate letter
affirming that its intention with respect to the proposed acquisition of the
Stock is that such acquisition be for investment purposes only and not with a
view toward resale or distribution thereof.


51






 


            12.15   Preparation
and Filing of SEC Documents.  If and whenever, as a result of the
transaction contemplated hereunder, the Parent is under an obligation to
provide financial information to, or prepare a filing of any kind with, the
United States Securities and Exchange Commission ("SEC"), Securityholders shall
assist the Parent in preparing any audited financial statements required by the
SEC for this purpose. The cost of preparing any such financial statements shall
be borne by the Parent.


            12.16   Further Assurances.   From time to time at or after the Closing, upon request, the parties each will
execute and deliver such other instruments of conveyance, assignment, transfer
and delivery and take such actions as the other party reasonably may request in
order to consummate, complete and carry out the purposes of the transactions
contemplated hereby, including the execution and delivery of such instruments
and agreements as may be reasonably necessary or advisable to fully effect the
merger of the Company into the Subsidiary.






[Signatures on
following pages]


52







            IN WITNESS WHEREOF, the parties
hereto have executed this Agreement on the day and year first above written.





  	



ATTEST:   






      	 	



PUROFLOW INCORPORATED






      
	 	 	 
	





   


      	 	





By:


      	 
	





   


      	 	





Title: 


      	 
	 	 	 
	





ATTEST:   


      	 	





SOUTHERN MARYLAND


      
	

   






      	 	

CABLE, INC.






      
	 	 	 
	





   


      	 	





By:


      	 
	

   




      	 	

F. Ray Weems, President




      
	 	 	 
	



WITNESS:   






      	 	



  






      
	 	 	 
	





   


      	 	





   


      
	

   




      	 	

F. RAY WEEMS




      
	 	 	 
	



WITNESS:   






      	 	



  






      
	 	 	 
	





   


      	 	





   


      
	

   






      	 	

JANET WEEMS






      
	 	 	 
	





ATTEST:   






      	 	





PFLW/SMC ACQUISITION 

     CORPORATION






      
	 	 	
      	 
	





   


      	 	





By:


      	 
	





   


      	 	





Title: 


      	 
	 	 	 
	 	 	 
	

   














      	 	 

















 














53





 

List of Exhibits and Schedules


  	 	1.   	  Exhibit 2.2 (a) - Merger Consideration.	   
	 	2.   	  Schedule 2.4 - Vehicle titles.	   
	 	3.   	  Schedule 4.1(a) - States in which Company is
      qualified to do business.	   
	 	4.   	  Schedule 4.1(b) - Company ownership of other
      corporations.	   
	 	5.   	  Schedule 4.3 - Authorized stock and holders of
      stock.	   
	 	6.   	  Schedule 4.5 - Absence of changes.	   
	 	7.   	  Schedule 4.6 - Actions pending.	   
	 	8.   	  Schedule 4.8 - Liabilities.	   
	 	9.   	  Schedule 4.9(a) - Ownership of assets and leases.	   
	 	10.   	  Schedule 4.9(b) - Main facility lease, assignments
      and amendments.
	 	11.   	  Schedule 4.9(c) - Certificate of occupancy for main
      facility.
	 	12.   	  Schedule 4.10(a) - Taxes.
	 	13.   	  Schedule 4.10(b) - Taxes.
	 	14.   	  Schedule 4.11 - Contracts and agreements.
	 	15.   	  Exhibit 4.11 - Disposal Systems Contractor License.
	 	16.   	  Schedule 4.12(b)(i) - Governmental approvals.
	 	17.   	  Schedule 4.12(b)(ii) - Government projects with
      clearance.
	 	18.   	  Schedule 4.12(b)(iii) - Personnel with clearance.
	 	19.   	  Schedule 4.14(a) - Benefit plans.
	 	20.   	  Schedule 4.14(b) - Employee list.
	 	21.   	  Schedule 4.15 - Insurance.
	 	22.   	  Schedule 4.16 - Labor matters.
	 	23.   	  Schedule 4.17 - Brokers and finders.
	 	24.   	  Schedule 4.18(b) - Accounts receivable.
	 	25.   	  Schedule 4.19(a) - Conflicts of interest.
	 	26.   	  Schedule 4.19(b) - Conflicts of interest.
	 	27.   	  Schedule 4.20(a) - Environmental compliance.
	 	28.   	  Schedule 4.20(b) - Environmental compliance.
	 	29.   	  Exhibit 4.20 - Environmental reports.
	 	30.   	  Exhibit 6.5 - Escrow agreement.
	 	31.   	  Exhibit 6.6(a) - Weems employment agreement.
	 	32.   	  Exhibit 6.6(b) - Graybill employment agreement.
	 	33.   	  Exhibit 6.6(c) - Maclin employment agreement.
	 	34.   	  Exhibit 6.6(d) - Murray employment agreement.
	 	35.   	  Exhibit 6.7 - Opinion of counsel.
	 	36.   	  Exhibit 6.8 - Compliance Certificate.
	 	37.   	  Schedule 6.11 - Stock options.
	 	38.   	  Schedule 6.14 - Corporate filings.
	 	39.   	  Exhibit 6.18 - Release of buy-sell rights.
	 	40.   	  Exhibit 6.19 - Assignment and amendment of main
      facility release.