Document:

ASTRALIS LTD

                          CONSULTANT AGREEMENT BETWEEN
              ASTRALIS, LTD AND Gar-1 Business Advisory Services -
                       MADE AS OF Friday, October 6, 2006

      Agreement made as of the 6th day of October 2006 by and between ASTRALIS
LTD having its principal address at 75 Passaic Ave. Fairfield, N.J., 07004 and
Gar-1 Business Advisory Services (CONSULTANT), having its principal address at 4
Hawser Way, Randolph, NJ 07869.

      ASTRALIS LTD and CONSULTANT desire to enter into an agreement whereby the
CONSULTANT will perform certain professional services as an independent
contractor.

      In consideration of the mutual promises in this agreement, the CONSULTANT
agrees to perform the professional services set forth in paragraph 1 with the
standard of professional care and skill customarily provided in the performance
of such services, and ASTRALIS LTD agrees to pay the CONSULTANT such amounts as
are specified herein, all upon the following conditions:

1.    You are hereby retained by ASTRALIS LTD as a CONSULTANT who is an
      independent contractor and shall perform the services set forth on
      Schedule I attached hereto. CONSULTANT is being retained on a
      non-exclusive basis.

2.    CONSULTANT shall be paid for the services actually performed in the manner
      and amounts set forth on Schedule I. ASTRALIS LTD shall not be liable for
      any other costs or expenses of any nature in connection with CONSULTANT's
      work with the exception of personal automobile utilization, wire line and
      wireless telephone service used by the consultant to perform the duties
      set forth in schedule 1. Personal automobile usage will be reimbursed at
      the current rate specified in the IRS code. Telecommunications costs will
      be reimbursed at cost. The parties also agree that CONSULTANT may request
      ASTRALIS LTD permission to incur other additional expenses in connection
      with the services set forth in paragraph 1 above. Upon prior written
      approval of said expenses by the project director set forth in paragraph 5
      below, ASTRALIS LTD shall, upon submission of supporting documentation,
      reimburse CONSULTANT for said expenses. Any additional services beyond
      those set forth in paragraph 1 above shall be performed by the CONSULTANT
      only after an agreement in writing between CONSULTANT and ASTRALIS LTD.

3.    Payment for compensation earned in accordance with Schedule I and
      reimbursable out-of-pocket expenses in accordance with paragraph 2 above
      will be made by ASTRALIS LTD to the CONSULTANT coincident with the
      completion of the sale transaction(s) on the day the transaction(s)
      closes.

<PAGE>

4.    This Agreement shall commence as of the date first written above and
      continue six [6] months until April 6, 2007, unless terminated earlier by
      either party in accordance with this Agreement.

5.    ASTRALIS LTD designates Samuel Barnett, Director and Chairman of the Audit
      Committee as project director to whom CONSULTANT shall from time to time
      provide written and verbal reports setting forth the progress of
      CONSULTANT's work.

6.    CONSULTANT is not, and shall not be considered, an employee of ASTRALIS
      LTD. CONSULTANT acknowledges full responsibility for compliance with all
      Federal, State, and City tax regulations regarding taxes that may accrue
      on the fee paid as a result of services rendered ASTRALIS LTD. Further,
      ASTRALIS LTD will not provide workers compensation or any other benefits
      whatsoever to CONSULTANT except for compensation identified in paragraph 2
      above.

7.    ASTRALIS LTD agrees to hold CONSULTANT and/or its, family, sources of
      funding and its operation staff harmless, and to defend and indemnify them
      against all claims, actions, liability, damage, loss and expenses,
      including but not limited to, by reason of injury, illness or death to any
      person or damaged property arising or alleged to have arisen out of
      CONSULTANT's activities in connection with this Agreement, save for any
      claims, actions, liability, damage, loss and expenses arising as a result
      of CONSULTANT's willful negligence in performing the duties hereunder.
      ASTRALIS LTD will assure that CONSULTANT is an insured party of the
      current Directors & Officers Liability Insurance policy and that ASTRALIS
      LTD will assume any deductible costs that may be incurred by CONSULTANT as
      a result of a future claim or legal action resulting from, the performance
      of his duties as interim CFO.

8.    CONSULTANT may terminate this Agreement early without cause by giving the
      other party ten (10) calendar days' written notice of its election to
      terminate. Either party may terminate this Agreement early with cause upon
      ten (10) calendar days' written notice.

9.    CONSULTANT represents that as of the date of this Agreement he has no
      existing arrangements or agreements that could conflict with his
      responsibilities under this Agreement.

10.   CONSULTANT shall personally perform the services covered by this
      Agreement. CONSULTANT shall not assign any interest in this Agreement be
      assigned without prior written approval of ASTRALIS LTD.

11a.  CONSULTANT recognizes that all records, information and materials
      (including but not limited to patentable subject matter and potential
      trade secrets and know-how) that are received by CONSULTANT from ASTRALIS
      LTD before or during the term of this Agreement and all copies made by
      CONSULTANT of these records, information and materials are and shall
      remain the property of ASTRALIS LTD, shall be held in strict confidence by
      CONSULTANT during the term of this Agreement and for five (5) years
      thereafter, shall be used by CONSULTANT solely for the purpose of
      performing his obligations hereunder, and shall be returned at the
      termination of this agreement or earlier at the specific request of
      ASTRALIS LTD. CONSULTANT shall disclose promptly to ASTRALIS LTD all
      inventions, discoveries, formulas, processes, computer programs,

                                       2
<PAGE>

      algorithms, designs, trade secrets, works of authorship related to or
      directly relevant to ASTRALIS LTD Intellectual Property or research
      results, whether or not fixed in a tangible medium of expression and other
      information and know-how (collectively hereinafter "TECHNOLOGY") made,
      discovered or developed by CONSULTANT either alone or in conjunction with
      any other person or entity during the term of this Agreement. CONSULTANT
      agrees that all TECHNOLOGY made, discovered, developed, authored, prepared
      or conceived by CONSULTANT during the term of this Agreement in connection
      with the furtherance of this Agreement whether alone or in combination
      with another, whether or not on ASTRALIS LTD premises, shall belong
      exclusively to ASTRALIS LTD. CONSULTANT acknowledges that no rights
      whatsoever in the TECHNOLOGY are retained by CONSULTANT including the
      right to prepare derivative works and that work of authorship shall be
      deemed a work made for hire.

11b.  CONSULTANT agrees to and hereby does assign all right, title and interest
      in and to any TECHNOLOGY to ASTRALIS LTD. ASTRALIS LTD shall have the
      right to apply for, prosecute, obtain, retain and transfer any and all
      copyrights, trademarks, registrations, patents or any such similar right
      or property interest arising from or in connection with the TECHNOLOGY.
      CONSULTANT agrees to cooperate with and provide all reasonable assistance
      to ASTRALIS LTD, its designees, assignees or licensees in connection with
      the foregoing.

12.   This Agreement constitutes the entire understanding between ASTRALIS LTD
      and CONSULTANT. Both parties represent that they have the capacity to
      enter into this Agreement and perform the obligations hereunder. This
      Agreement or any amendment shall not be binding unless executed in writing
      by ASTRALIS LTD and CONSULTANT.

13.   This Agreement shall be construed in accordance with the laws of the State
      of New Jersey, without regard to its conflict of laws provisions.

14.   CONSULTANT has no actual authority, nor shall the CONSULTANT give the
      impression of having apparent authority, to bind ASTRALIS LTD with regard
      to any third parties.

15.   If any provision of this Agreement shall be determined to be void,
      invalid, unenforceable or illegal for any reason, it shall be ineffective
      only to the extent of such prohibition and the validity and enforceability
      of all the remaining provisions shall not be affected thereby. The failure
      of either party to exercise any of its rights under this Agreement for a
      breach thereof shall not be deemed to be a waiver of such rights, nor
      shall the same be deemed to be a waiver of any subsequent breach, either
      of the same provision or otherwise.

16.   This agreement may be executed in one or more counterparts or duplicate
      originals, all of which shall be considered one and the same agreement.

                                       3
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day set
forth above.

ASTRALIS  LTD

By: /s/ Samuel T. Barnett                   By: /s/ Michael R. Garone
    ---------------------                       ---------------------
Samuel T. Barnett                           Michael R. Garone
Chairman of the Audit Committee of          For Gar-1 Business Advisory Services
the Board of Directors of Astralis, Ltd.    EIN: 16-1713299

October 6, 2006                             October 6, 2006
Date                                        Date

                                       4
<PAGE>

                                   SCHEDULE I

                          CONSULTANT AGREEMENT BETWEEN
   ASTRALIS, LTD AND Gar-1 Business Advisory Services - MADE AS OF Wednesday,
                                 October 6, 2006

Compensation:

Upon request by ASTRALIS LTD project director or his designee, CONSULTANT shall
provide consulting services to ASTRALIS LTD. As compensation for services
performed CONSULTANT shall receive an amount or amounts equal to:

            (i)   10% of: any new funds invested in or paid to the COMPANY;

            (ii)  10% of the total proceed received by the Company for the sale
                  of its assets or any other sale of the COMPANY (inclusive of
                  any indebtedness or other obligations assumed by any
                  acquirer);

            (iii) 10% of the value received by the Stockholders of the Company
                  or of the cash invested in connection with the sale of the
                  corporate shell or any part of the COMPANY.

            (for the avoidance of doubt, no amounts arising out of i, ii or iii
            above shall be double counted).

The CONSULTANT will not be paid in connection with the cancellation of any
outstanding debt including notes payable or any interest or penalty payments
(associated with that debt) cancelled or for any other non-cash settlement of
any other claims against the COMPANY with the exception of settlement of trade
receivables.

Additionally, and notwithstanding any other limits or provisions provided for
herein, the CONSULTANT will be paid an amount equal to 10% of the amount of any
trade receivable reduction (not to exceed $50,000 in the aggregate), if any,
agreed upon by creditors through the efforts of CONSULTANT. CONSULTANT will be
paid by the purchaser immediately upon closing of any sale(s) or investment
transactions or agreement to reduce trade receivables.

The total amount paid to the CONSULTANT for services rendered under this
agreement will be based on the terms described in the previous paragraph, but
limited to the greater of $50,000 per transaction ((i), (ii) or (iii) above) or
$1,000 per day for services rendered beginning August 24. If the daily rate
applies, the CONSULTANT will be paid not more than $20,000 per month.

If this contract is terminated by the COMPANY prior to raising any new financing
or the sale of the COMPANY or its assets or its corporate shell or any part of
the COMPANY; and the COMPANY completes a transaction that results in the COMPANY
raising any new financing; or the sale of the COMPANY or its assets or its
corporate shell or any part of the COMPANY, the CONSULTANT shall receive $1,000
per day, not more than $20,000 per month for work performed between August 24
and the date of termination of the agreement. CONSULTANT will be paid upon the
closing of any sale(s) or investment transactions.

                                       5
<PAGE>

Services:

a)    Prepare and market ASTRALIS LTD for sale or additional investment.
      ASTRALIS LTD may be sold in whole or parts (that is, the assets and
      corporate shell may be sold separately) or a part of the COMPANY may be
      sold to a new investor or new financing may be secured by the COMPANY.

b)    Minimize through negotiation, where possible, the accounts payable and
      other liabilities of ASTRALIS LTD.

ASTRALIS LTD agrees to cooperate with Consultant in the performance of the
foregoing services: Consultant shall keep in frequent contact with ASTRALIS LTD
project director or his designee, and shall file periodic written reports at
ASTRALIS LTD request. Consultant has a fiduciary duty to ASTRALIS LTD, and does
not now, and will not in the future represent, or accept compensation from, or
enter into conflicting arrangements with any other person relating to the agreed
Services without ASTRALIS LTD prior written consent.

ASTRALIS, LTD

By: /s/ Samuel T. Barnett                   By: /s/ Michael R. Garone
    -------------------------                   -------------------------
Samuel T. Barnett                           Michael R. Garone
Chairman of the Audit Committee of          For Gar-1 Business Advisory Services
the Board of Directors of Astralis, Ltd.    - Consultant

October 6, 2006                             October 6, 2006
Date                                        Date

                                       6Untitled Document

Exhibit
  10.1

STOCK
  AND WARRANT PURCHASE AGREEMENT

by and between

HEALTHAXIS
  INC.

and

TAK INVESTMENTS,
  INC.

February
  23, 2005

 

TABLE
  OF CONTENTS

	 	Page	 
	 	 	 	 
	ARTICLE
      I DEFINITIONS	 	1	 
	 	 	 	 	 	 	 
	 	1.1	 	DEFINITIONS	 	1	 
	 	 	 	 
	ARTICLE
      II PURCHASE AND SALE OF SECURITIES	 	6	 
	 	 	 	 	 	 	 
	 	2.1	 	PURCHASE
      AND SALE OF COMMON STOCK	 	6	 
	 
	 	2.2	 	ISSUANCE
      OF WARRANTS	 	6	 
	 
	 	2.3	 	CLOSING	 	6	 

	ARTICLE
      III REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	7	 
	 	 	 	 	 	 	 
	 	3.1	 	CORPORATE
      EXISTENCE AND POWER	 	7	 
	 
	 	3.2	 	AUTHORIZATION;
      NO CONTRAVENTION	 	7	 
	 
	 	3.3	 	BINDING
      EFFECT	 	7	 
	 
	 	3.4	 	GOVERNMENTAL
      AUTHORIZATION	 	8	 
	 
	 	3.5	 	CAPITALIZATION	 	8	 
	 
	 	3.6	 	AUTHORIZATION,
      VALIDITY AND ISSUANCE OF SECURITIES	 	9	 
	 
	 	3.7	 	LITIGATION	 	10	 
	 
	 	3.8	 	COMPLIANCE
      WITH LAWS	 	10	 
	 
	 	3.9	 	NO DEFAULT
      OR BREACH; CONTRACTUAL OBLIGATIONS	 	10	 
	 
	 	3.10	 	TITLE
      TO PROPERTIES AND ASSETS	 	11	 
	 
	 	3.11	 	REPORTS;
      FINANCIAL STATEMENTS; INTERNAL CONTROLS	 	11	 
	 
	 	3.12	 	TAXES	 	12	 
	 
	 	3.13	 	NO MATERIAL
      ADVERSE CHANGE; ORDINARY COURSE OF BUSINESS	 	12	 
	 
	 	3.14	 	PRIVATE
      OFFERING	 	13	 
	 
	 	3.15	 	ANTI-TAKEOVER
      DEVICES	 	13	 
	 
	 	3.16	 	LABOR
      RELATIONS	 	14	 
	 
	 	3.17	 	EMPLOYEE
      BENEFIT PLANS	 	14	 
	 
	 	3.18	 	LIABILITIES	 	15	 
	 
	 	3.19	 	INTELLECTUAL
      PROPERTY	 	15	 
	 
	 	3.20	 	INSURANCE	 	16	 
	 
	 	3.21	 	NETWORK
      REDUNDANCY AND COMPUTER BACK-UP	 	17	 
	 
	 	3.22	 	PRIVACY
      OF CUSTOMER INFORMATION	 	17	 

 

 

	 	3.23	 	POTENTIAL
      CONFLICTS OF INTEREST	 	17	 
	 
	 	3.24	 	TRADE
      RELATIONS	 	17	 
	 
	 	3.25	 	BROKER’S,
      FINDER’S OR SIMILAR FEES	 	17	 
	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
      OF THE PURCHASER	 	17	 
	 
	 	4.1	 	POWER	 	17	 
	 
	 	4.2	 	AUTHORIZATION;
      NO CONTRAVENTION	 	17	 
	 
	 	4.3	 	GOVERNMENTAL
      AUTHORIZATION; THIRD PARTY CONSENTS	 	18	 
	 
	 	4.4	 	BINDING
      EFFECT	 	18	 
	 
	 	4.5	 	PURCHASE
      FOR OWN ACCOUNT	 	18	 
	 
	 	4.6	 	RESTRICTED
      SECURITIES	 	19	 
	 
	 	4.7	 	BROKER’S,
      FINDER’S OR SIMILAR FEES	 	19	 
	 
	 	4.8	 	ACCREDITED
      INVESTOR	 	19	 
	 
	 	4.9	 	RESIDENCY	 	19	 
	 
	ARTICLE V COVENANTS	 	19	 
	 
	 	5.1	 	PREPARATION
      OF PROXY STATEMENT	 	19	 
	 
	 	5.2	 	SPECIAL
      MEETING	 	20	 
	 
	 	5.3	 	FURNISHING
      OF INFORMATION	 	20	 
	 
	 	5.4	 	LISTING
      AND RESERVATION OF PURCHASED SHARES AND WARRANT SHARES	 	20	 
	 
	 	5.5	 	NO INTEGRATED
      OFFERINGS	 	21	 
	 
	 	5.6	 	NOTICE
      OF BREACHES	 	21	 
	 
	 	5.7	 	FORM
      D	 	21	 
	 
	 	5.8	 	TRANSFER
      AGENT INSTRUCTIONS	 	21	 
	 
	 	5.9	 	PRESS
      RELEASE; FILING OF FORM 8-K	 	22	 
	 
	 	5.10	 	BEST
      EFFORTS	 	22	 
	 
	 	5.11	 	CONFIDENTIALITY	 	22	 
	 
	ARTICLE VI CONDITIONS TO THE OBLIGATION
      OF THE PURCHASER TO CLOSE	 	22	 
	 
	 	6.1	 	REPRESENTATIONS
      AND WARRANTIES	 	23	 
	 
	 	6.2	 	COMPLIANCE
      WITH THIS AGREEMENT	 	23	 
	 
	 	6.3	 	OFFICER’S
      CERTIFICATE	 	23	 
	 
	 	6.4	 	SECRETARY’S
      CERTIFICATE	 	23	 

 

 

	 	6.5	 	CHIEF
      FINANCIAL OFFICER’S CERTIFICATE	 	23	 
	 
	 	6.6	 	PURCHASED
      SECURITIES	 	24	 
	 
	 	6.7	 	INVESTOR
      RIGHTS AGREEMENT	 	24	 
	 
	 	6.8	 	REGISTRATION
      RIGHTS AGREEMENT	 	24	 
	 
	 	6.9	 	SERVICES
      AGREEMENT	 	24	 
	 
	 	6.10	 	AMENDMENTS
      TO THE EMPLOYMENT AGREEMENTS	 	24	 
	 
	 	6.11	 	OPINION
      OF COUNSEL	 	24	 
	 
	 	6.12	 	BOARD
      OF DIRECTORS	 	24	 
	 
	 	6.13	 	NASD	 	24	 
	 
	 	6.14	 	STATUS
      UPDATE	 	24	 
	 
	 	6.15	 	PREFERRED
      RIGHTS	 	24	 
	 
	 	6.16	 	NO INJUNCTION	 	24	 
	 
	 	6.17	 	COMMON
      SHAREHOLDERS’ APPROVAL	 	25	 
	 
	ARTICLE
      VII CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE	 	25	 
	 
	 	7.1	 	PAYMENT
      OF PURCHASE PRICE	 	25	 
	 
	 	7.2	 	INVESTOR
      RIGHTS AGREEMENT	 	25	 
	 
	 	7.3	 	REGISTRATION
      RIGHTS AGREEMENT	 	25	 
	 
	 	7.4	 	SERVICES
      AGREEMENT	 	25	 
	 
	 	7.5	 	AMENDMENTS
      TO THE EMPLOYMENT AGREEMENTS	 	25	 
	 
	 	7.6	 	REPRESENTATIONS
      AND WARRANTIES	 	25	 
	 
	 	7.7	 	COMPLIANCE
      WITH THIS AGREEMENT	 	25	 
	 
	 	7.8	 	BANK
      LETTER	 	25	 
	 
	 	7.9	 	NO INJUNCTION	 	26	 
	 
	 	7.10	 	COMMON
      SHAREHOLDERS’ APPROVAL	 	26	 
	 
	 	7.11	 	OBSERVER
      AGREEMENTS	 	26	 
	 
	ARTICLE
      VIII INDEMNIFICATION	 	26	 
	 
	 	8.1	 	INDEMNIFICATION	 	26	 
	 
	 	8.2	 	NOTIFICATION	 	26	 
	 
	 	8.3	 	CONTRIBUTION	 	27	 
	 
	ARTICLE
      IX TERMINATION OF AGREEMENT	 	27	 
	 
	 	9.1	 	TERMINATION	 	28	 

 

 

	 	9.2	 	SURVIVAL	 	28	 
	 
	ARTICLE
      X MISCELLANEOUS	 	29	 
	 
	 	10.1	 	SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES	 	29	 
	 
	 	10.2	 	NOTICES	 	29	 
	 
	 	10.3	 	SUCCESSORS
      AND ASSIGNS; THIRD PARTY BENEFICIARIES	 	30	 
	 
	 	10.4	 	AMENDMENT
      AND WAIVER	 	30	 
	 
	 	10.5	 	COUNTERPARTS	 	30	 
	 
	 	10.6	 	HEADINGS	 	31	 
	 
	 	10.7	 	GOVERNING
      LAW	 	31	 
	 
	 	10.8	 	DISPUTES	 	31	 
	 
	 	10.9	 	SEVERABILITY	 	31	 
	 
	 	10.10	 	RULES
      OF CONSTRUCTION	 	32	 
	 
	 	10.11	 	ENTIRE
      AGREEMENT	 	32	 
	 
	 	10.12	 	FEES
      AND EXPENSES	 	32	 
	 
	 	10.13	 	PUBLIC
      ANNOUNCEMENTS	 	32	 
	 
	 	10.14	 	FURTHER
      ASSURANCES	 	32	 

 

 

STOCK
  AND WARRANT PURCHASE AGREEMENT

     THIS
  STOCK AND WARRANT PURCHASE AGREEMENT is dated as of February 23, 2005 (this
  “Agreement”), by and between Healthaxis Inc., a Pennsylvania corporation
  (the “Company”) and Tak Investments, Inc., a Delaware corporation
  (the “Purchaser”).

  

     WHEREAS,
  upon the terms and conditions set forth in this Agreement, the Company proposes
  to issue and sell to the Purchaser (a) 2,222,222 shares (“Purchased Shares”)
  of common stock of the Company, par value $0.10 per share (the “Common
  Stock”), (b) a warrant in the form attached hereto as Exhibit A
  (the “First Warrant”) with put and call features to purchase up to
  3,333,333 shares of Common Stock, (c) a warrant in the form attached hereto
  as Exhibit B (the “Second Warrant”) to purchase up to 1,388,889
  shares of Common Stock, and (d) a warrant in the form attached hereto as Exhibit
  C (the “Third Warrant”) to purchase up to 1,388,889 shares of
  Common Stock pursuant to Sections 2.1 and 2.2 of this Agreement.

  

     NOW,
  THEREFORE, in consideration of the mutual covenants and agreements set forth
  herein and for good and valuable consideration, the receipt and adequacy of
  which are hereby acknowledged, the parties hereto agree as follows:

  

ARTICLE
  I

DEFINITIONS

     1.1
  DEFINITIONS. As used in this Agreement, and unless the context requires a different
  meaning, the following terms have the meanings indicated:

  

     “Affiliate”
  shall mean any Person who is an “affiliate” as defined in Rule 12b-2
  of the General Rules and Regulations under the Exchange Act.

  

     “Agreement”
  means this Agreement as the same may be amended, supplemented or modified in
  accordance with the terms hereof.

  

     “Amendments
  to the Employment Agreements” means the amendments to the Change in Control
  Employment Agreements of James McLane, John Carradine, J. Brent Webb and Jimmy
  Taylor.

  

     “Application”
  has the meaning set forth in Section 5.4 of this Agreement.

  

     “Articles
  of Incorporation” means the Amended and Restated Articles of Incorporation,
  as amended, of the Company, as in effect on the date hereof.

  

     “Assets”
  has the meaning set forth in Section 3.10 of this Agreement.

  

     “Audited
  2003 Financial Statements” has the meaning set forth in Section 3.11 of
  this Agreement.

  

     “BCL”
  means the Pennsylvania Business Corporation Law.

  

 

     “Board
  of Directors” means the Board of Directors of the Company.

  

     “Business
  Day” means any day other than a Saturday, Sunday or other day on which
  commercial banks in the State of Texas are authorized or required by law or
  executive order to close.

  

     “Bylaws”
  means the Second Amended and Restated Bylaws of the Company as in effect on
  the date hereof.

  

     “Claims”
  has the meaning set forth in Section 3.7 of this Agreement.

  

     “Closing”
  has the meaning set forth in Section 2.3 of this Agreement.

  

     “Closing
  Date” has the meaning set forth in Section 2.3 of this Agreement.

  

     “Code”
  means the Internal Revenue Code of 1986, as amended, or any successor statute
  thereto.

  

     “Commission”
  means the United States Securities and Exchange Commission or any similar agency
  then having jurisdiction to enforce the Securities Act.

  

     “Common
  Stock” has the meaning set forth in the recitals to this Agreement.

  

     “Commonly
  Controlled Entity” means any entity which is under common control with
  the Company within the meaning of Code Section 414(b), (c), (m), (o) or (t).

  

     “Company”
  has the meaning set forth in the preamble to this Agreement.

  

     “Company
  Plans” means each Plan that the Company and each of its Subsidiaries maintains
  or to which the Company and each of its Subsidiaries contributes.

  

     “Condition
  of the Company” means the assets, business, properties, operations or financial
  condition of the Company and its Subsidiaries, taken as a whole.

  

     “Confidential
  Information” has the meaning set forth in Section 5.11 of this Agreement.

  

     “Contractual
  Obligations” means, as to any Person, any provision of any security issued
  by such Person or of any agreement, undertaking, contract, indenture, mortgage,
  deed of trust or other instrument to which such Person is a party or by which
  it or any of its property is bound.

  

     “Copyrights”
  means any foreign or United States copyright registrations and applications
  for registration thereof, and any non-registered copyrights.

  

     “Environmental
  Laws” means federal, state, local and foreign laws, principles of common
  laws, civil laws, regulations, and codes, as well as orders, decrees, judgments
  or injunctions, issued, promulgated, approved or entered thereunder relating
  to pollution, protection of the environment or public health and safety.

  

     “ERISA”
  means the Employee Retirement Income Security Act of 1974, as amended.

  

2

 

     “Exchange
  Act” means the Securities Exchange Act of 1934, as amended, and the rules
  and regulations of the Commission thereunder.

  

     “First
  Warrant” has the meaning set forth in the recitals to this Agreement.

  

     “Fundamental
  Transaction” means a merger, consolidation, share exchange, sale of all
  or substantially all of the Company’s assets or voluntary dissolution of
  the Company.

  

     “GAAP”
  means United States generally accepted accounting principles in effect from
  time to time.

  

     “Governmental
  Authority” means the government of any nation, state, city, locality or
  other political subdivision thereof, any entity, including, without limitation,
  Nasdaq, exercising executive, legislative, judicial, regulatory or administrative
  functions of or pertaining to government or securities markets, and any corporation
  or other entity owned or controlled, through stock or capital ownership or otherwise,
  by any of the foregoing.

  

     “Indemnified
  Party” has the meaning set forth in Section 8.1 of this Agreement.

  

     “Initial
  Financial Statements” has the meaning set forth in Section 3.11 of this
  Agreement.

  

     “Intellectual
  Property” has the meaning set forth in Section 3.19 of this Agreement.

  

     “Internet
  Assets” means any Internet domain names, Internet and world wide web URLs
  or addresses, and other computer user identifiers and any rights in and to sites
  on the worldwide web, including rights in and to any text, graphics, audio and
  video files and html or other code incorporated in such sites.

  

     “Investor
  Rights Agreement” means the Investor Rights Agreement substantially in
  the form attached hereto as Exhibit D.

  

     “Irrevocable
  Transfer Agent Instructions” has the meaning set forth in Section 5.8 of
  this Agreement.

  

     “Liabilities”
  has the meaning set forth in Section 3.18 of this Agreement.

  

     “Lien”
  means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance,
  lien (statutory or other) or preference, preemptive right, priority, right or
  other security interest or preferential arrangement of any kind or nature whatsoever
  (excluding preferred stock and equity related preferences).

  

     “Losses”
  has the meaning set forth in Section 8.1 of this Agreement.

  

     “Material
  Adverse Effect” means a material adverse effect on the Condition of the
  Company.

  

3

 

     “Material
  Contractual Obligations” has the meaning set forth in Section 3.9 of this
  Agreement.

  

     “Nasdaq”
  means the Nasdaq SmallCap Market.

  

     “Orders”
  has the meaning set forth in Section 3.2 of this Agreement.

  

     “Patents”
  means any foreign or United States patents and patent applications, including
  any divisions, continuations, continuations-in-part, substitutions or reissues
  thereof, whether or not patents are issued on such applications and whether
  or not such applications are modified, withdrawn or resubmitted.

  

     “Permits”
  has the meaning set forth in Section 3.8 of this Agreement.

  

     “Person”
  means any individual, firm, corporation, partnership, trust, incorporated or
  unincorporated association, joint venture, joint stock company, limited liability
  company, Governmental Authority or other entity of any kind, and shall include
  any successor (by merger or otherwise) of such entity.

  

     “Plan”
  means any employee benefit plan, arrangement, policy, program, agreement or
  commitment (whether or not an employee plan within the meaning of section 3(3)
  of ERISA), including, without limitation, any employment, consulting or deferred
  compensation agreement, executive compensation, bonus, incentive, pension, profit-sharing,
  savings, retirement, stock option, stock purchase or severance pay plan, any
  life, health, disability or accident insurance plan, whether oral or written,
  whether or not subject to ERISA, as to which the Company or any Commonly Controlled
  Entity has or in the future could have any direct or indirect, actual or contingent
  liability. 

  

     “Proposal”
  has the meaning set forth in Section 5.1 of this Agreement.

  

     “Proxy
  Statement” has the meaning set forth in Section 5.1 of this Agreement.

  

     “Purchased
  Securities” has the meaning set forth in Section 2.2 of this Agreement.

  

     “Purchased
  Shares” has the meaning set forth in the recitals of this Agreement.

  

     “Purchased
  Warrants” has the meaning set forth in Section 2.2 of this Agreement.

  

     “Purchaser”
  has the meaning set forth in the preamble to this Agreement.

  

     “Registration
  Rights Agreement” means the Registration Rights Agreement substantially
  in the form attached hereto as Exhibit E.

  

     “Requirement
  of Law” means, as to any Person, any law, Environmental Law, statute, treaty,
  rule, regulation, right, privilege, qualification, license or franchise or determination
  of an arbitrator or a court or other Governmental Authority or stock exchange,
  in each case applicable or binding upon such Person or any of its property or
  to which such Person or any of its property is subject or pertaining to any
  or all of the transactions contemplated or referred to herein.

  

4

 

     “SEC
  Reports” has the meaning set forth in Section 3.11 of this Agreement.

  

     “Second
  Warrant” has the meaning set forth in the recitals to this Agreement.

  

     “Securities
  Act” means the Securities Act of 1933, as amended, and the rules and regulations
  of the Commission thereunder.

  

     “Secretary”
  has the meaning set forth in the Company’s Bylaws.

  

     “Services
  Agreement” means an agreement between the Company (or a Subsidiary of the
  Company) and an entity affiliated with the Purchaser relating to data capture,
  data center operations and certain related services, substantially in the form
  attached hereto as Exhibit F.

  

     “Software”
  means any computer software programs, source code, object code, data and documentation,
  including, without limitation, any computer software programs that incorporate
  and run the Company’s pricing models, formulae and algorithms.

  

     “Special
  Meeting” has the meaning set forth in Section 2.3 of this Agreement.

  

     “Stock
  Equivalents” means any security or obligation which is by its terms convertible
  into or exchangeable or exercisable for shares of Common Stock or other capital
  stock of the Company, and any option, warrant or other subscription or purchase
  right with respect to common stock or such other capital stock.

  

     “Subsidiary”
  means, as of the relevant date of determination, with respect to any Person,
  a corporation or other Person of which 50% or more of the voting power of the
  outstanding voting equity securities or 50% or more of the outstanding economic
  equity interest is held, directly or indirectly, by such Person. Unless otherwise
  qualified, or the context otherwise requires, all references to a “Subsidiary”
  or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
  or Subsidiaries of the Company.

  

     “Taxes”
  means any federal, state, provincial, county, local, foreign and other taxes
  (including, without limitation, income, profits, windfall profits, alternative,
  minimum, accumulated earnings, personal holding company, capital stock, premium,
  estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
  severance, capital levy, production, transfer, withholding, employment, unemployment
  compensation, payroll and property taxes, import duties and other governmental
  charges and assessments), whether or not measured in whole or in part by net
  income, and including deficiencies, interest, additions to tax or interest,
  and penalties with respect thereto.

  

     “Third
  Warrant” has the meaning set forth in the recitals to this Agreement.

  

     “Trade
  Secrets” means any confidential and proprietary information including,
  but not limited to, research records, processes, procedures, manufacturing formulae,
  technical know-how, technology, blue prints, designs, plans, inventions (whether
  patentable and whether reduced to practice), invention disclosures and improvements
  thereto not generally known in the industry.

  

5

 

     “Trademarks”
  means any foreign or United States trademarks, service marks, trade dress, trade
  names, brand names, designs and logos, corporate names, product or service identifiers,
  whether registered or unregistered, and all registrations and applications for
  registration thereof.

  

     “Transaction
  Documents” means, collectively, this Agreement, the Warrants, the Investor
  Rights Agreement, the Registration Rights Agreement and the Services Agreement.

  

     “Unaudited
  2004 Financial Statements” has the meaning set forth in Section 3.11 of
  this Agreement.

  

     “Warrant
  Shares” means the shares of Common Stock issuable upon the exercise of
  any of the Purchased Warrants.

  

ARTICLE
  II

PURCHASE
  AND SALE OF SECURITIES

     2.1
  PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions herein
  set forth, the Company agrees to issue and sell to the Purchaser, and the Purchaser
  agrees to purchase from the Company, on the Closing Date, the Purchased Shares
  for $2.25 per share, for an aggregate purchase price of Five Million Dollars
  ($5,000,000).

  

     2.2
  ISSUANCE OF WARRANTS. Subject to the terms and conditions herein set forth,
  the Company agrees to issue to the Purchaser, and the Purchaser agrees to accept
  from the Company, on the Closing Date and for no additional consideration, the
  First Warrant, the Second Warrant and the Third Warrant (the Warrants being
  purchased pursuant to this Section 2.2 being referred to herein as the “Purchased
  Warrants”; and together with the Purchased Shares, the “Purchased
  Securities”).

  

     2.3
  CLOSING. Unless this Agreement shall have been terminated pursuant to Article
  IX, and subject to the satisfaction or waiver of the conditions set forth in
  Articles VI and VII, the closing of the sale and purchase of the Purchased Securities
  (the “Closing”) shall take place at the offices of Locke Liddell &
  Sapp LLP, Dallas, Texas, at 10:00 a.m., local time, within two (2) Business
  Days of the date of the Special Meeting of the Company’s shareholders (or
  any postponements or adjournments thereof, the “Special Meeting”),
  at which the transactions contemplated by this Agreement are considered for
  approval, or at such other time, place and date that the Company and the Purchaser
  may agree in writing (the “Closing Date”). On the Closing Date, the
  Company shall deliver to the Purchaser (a) a certificate or certificates in
  definitive form and registered in the name of the Purchaser, representing the
  Purchased Shares, (b) the First Warrant, (c) the Second Warrant and (d) the
  Third Warrant, against delivery by the Purchaser to the Company of Five Million
  Dollars ($5,000,000) by wire transfer of immediately available funds.

  

6

 

ARTICLE
  III

REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

     The
  Company represents and warrants to the Purchaser on and as of the date hereof
  and on and as of the Closing Date as follows:

  

     3.1
  CORPORATE EXISTENCE AND POWER. The Company is a corporation duly incorporated,
  validly existing and in good standing under the laws of the Commonwealth of
  Pennsylvania, with the requisite corporate power and authority to own and use
  its properties and assets and to carry on its business as currently conducted.
  Except as set forth on Schedule 3.1, the Company has no Subsidiaries.
  Each of the Company’s Subsidiaries is a corporation, limited liability
  company or limited partnership duly formed, validly existing and in good standing
  under the laws of its jurisdiction of its incorporation or formation (as applicable),
  with the full requisite power and authority to own and use its properties and
  assets and to carry on its business as currently conducted. Each of the Company
  and its Subsidiaries is duly qualified as a foreign entity to do business and
  is in good standing as a foreign entity in each jurisdiction in which the nature
  of the business conducted or property owned by it makes such qualification necessary,
  except where the failure to be so qualified or in good standing, as the case
  may be, would not, individually or in the aggregate have or result in a Material
  Adverse Effect. The Company has the requisite corporate power and authority
  to enter into and to consummate the transactions contemplated by this Agreement
  and each of the other Transaction Documents, and otherwise to carry out its
  obligations hereunder and thereunder.

  

     3.2
  AUTHORIZATION; NO CONTRAVENTION. Except for the shareholder approval contemplated
  to be sought at the Special Meeting, the execution, delivery and performance
  by the Company of this Agreement and each of the other Transaction Documents
  and the transactions contemplated hereby and thereby (a) have been duly authorized
  by all necessary corporate action of the Company, including all actions, consents
  and approvals, if any, required by the Company’s Board of Directors and/or
  shareholders; (b) do not contravene the terms of the Articles of Incorporation
  or the Bylaws or the organizational documents of any of the Subsidiaries; (c)
  do not violate, conflict with or result in any breach, default or contravention
  of (or with due notice or lapse of time or both would result in any breach,
  default or contravention of), or the creation of any Lien under, any Contractual
  Obligation of the Company or any of its Subsidiaries or any Requirement of Law
  applicable to the Company or any of its Subsidiaries; and (d) do not violate
  any judgment, injunction, writ, award, decree or order of any nature (collectively,
  “Orders”) of any Governmental Authority against, or binding upon,
  the Company or any of its Subsidiaries, except where a waiver has been obtained
  for any such conflict or violation, the period of time following the delivery
  of notices necessary to avoid any such conflict or violation has elapsed, or
  any such conflict, violation, breach, default or contravention has not resulted
  or would not reasonably be expected to result, individually or in the aggregate,
  in a Material Adverse Effect. The Board of Directors of the Company approved
  the Transaction Documents and the transactions contemplated hereby and thereby.

  

     3.3
  BINDING EFFECT. This Agreement has been duly executed and delivered by the Company,
  and upon execution and delivery at the Closing of the other Transaction Documents,
  all such agreements will constitute the legal, valid and binding obligations
  of the Company, enforceable against the Company in

  

7

 

accordance
  with their terms, except as enforceability may be limited by applicable bankruptcy,
  insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
  similar laws affecting the enforcement of creditors’ rights generally and
  by general principles of equity relating to enforceability (regardless of whether
  considered in a proceeding at law or in equity), and except that rights to indemnification
  and contribution may be limited by federal or state securities laws or public
  policy relating thereto.

  

     3.4
  GOVERNMENTAL AUTHORIZATION. Except as set forth on a Schedule 3.4, neither
  the Company nor any Subsidiary is required to obtain any consent, waiver, authorization
  or order of, give any notice to, or make any filing or registration with, any
  Governmental Authority in connection with the Company’s execution, delivery
  and performance of the Transaction Documents, other than: (i) the filing of
  a preliminary proxy statement and a definitive proxy statement with the Commission
  (and such other disclosure filings with the Commission as shall be necessary
  or advisable), (ii) the Application(s) or any letter(s) acceptable to Nasdaq
  for the listing or quoting of the Purchased Shares and Warrant Shares with Nasdaq
  (and with any other national securities exchange or market on which the Common
  Stock is then traded, listed or quoted), (iii) the filing of a Form D with the
  Commission and any filings, notices or registrations under applicable state
  securities laws and (iv) the filing of one or more registration statements
  with the Commission, which are required to be filed in accordance with the time
  periods set forth in the Registration Rights Agreement.

  

     3.5
  CAPITALIZATION. (a) As of the date hereof, the authorized and issued capital
  stock of the Company and each of its Subsidiaries, and the Company’s ownership
  interest in each Subsidiary, is as set forth in Schedule 3.5(a). All
  of such outstanding shares of capital stock have been, or upon issuance will
  be, duly authorized and validly issued, fully paid and nonassessable and were
  issued in accordance with the registration or qualification provisions of the
  Securities Act, or pursuant to valid exemptions therefrom. Except as disclosed
  in Schedule 3.5(a), in the Articles of Incorporation or in the Transaction
  Documents: (i) no shares of the Company’s capital stock are subject to
  preemptive rights or any other similar rights or any liens, claims or encumbrances
  suffered or permitted by the Company, nor is any holder of the Company’s
  capital stock entitled to preemptive, right of first refusal or similar rights
  arising out of any agreement or understanding with the Company, (ii) as of the
  date of this Agreement, there are no outstanding options, warrants, scrip rights
  to subscribe to, calls or commitments of any character whatsoever relating to,
  or securities or rights convertible into or exchangeable or exercisable for,
  or giving any Person any right to subscribe for or acquire, any shares of capital
  stock of the Company or any of its Subsidiaries, or contracts, commitments,
  understandings or arrangements by which the Company or any of its Subsidiaries
  is or may become bound to issue additional shares of capital stock of any of
  the Company or its Subsidiaries or options, warrants, scrip rights to subscribe
  to, calls or commitments of any character whatsoever relating to, or securities
  or rights convertible into or exchangeable for, any shares of capital stock
  of the Company (provided, that the Company may grant additional options to its
  employees or directors in the ordinary course of business between the date hereof
  and the Closing Date pursuant to a plan in existence on the date of this Agreement),
  (iii) there are no outstanding debt securities, or other form of material debt
  of the Company or any of its Subsidiaries, (iv) there are no contracts, commitments,
  understandings, agreements or arrangements under which the Company or any of
  its Subsidiaries is required to register the sale of any of their securities
  under the Securities Act, (v) there are no outstanding securities of the Company
  or any of its Subsidiaries which contain any redemption or similar

  

8

 

provisions,
  and there are no contracts, commitments, understandings, agreements or arrangements
  by which the Company or any of its Subsidiaries is or may become bound to redeem
  a security of the Company or any of its Subsidiaries, (vi) there are no securities
  or instruments containing anti-dilution or similar provisions that will be triggered
  by the issuance of the Purchased Warrants or the Warrant Shares, (vii) the Company
  does not have any stock appreciation rights or “phantom stock” plans
  or agreements, or any similar plan or agreement and (viii) as of the date of
  this Agreement, except as set forth in filings made with the Commission, to
  the Company’s and each of its Subsidiaries’ knowledge, no Person (as
  defined below) or group of related Persons beneficially owns (as determined
  pursuant to Rule 13d-3 promulgated under the Exchange Act) or has the right
  to acquire by agreement with or by obligation binding upon the Company, beneficial
  ownership of in excess of 5% of the Common Stock. Any Person with any right
  to purchase securities of the Company that would be triggered as a result of
  the transactions contemplated hereby or by any of the other Transaction Documents
  has waived such rights or the time for the exercise of such rights has passed,
  except where failure of the Company to receive such waiver would not have a
  Material Adverse Effect. Except as set forth on Schedule 3.5, there are no options,
  warrants or other outstanding securities of the Company (including, without
  limitation, any equity securities issued pursuant to any Company Plan) the vesting
  of which will be accelerated by the transactions contemplated hereby or by any
  of the other Transaction Documents. Except as set forth in Schedule 3.5(a) and
  in the Amendments to the Employment Agreements, none of the transactions contemplated
  by this Agreement or by any of the other Transaction Documents shall cause,
  directly or indirectly, the acceleration of vesting of any options issued pursuant
  to the Company’s 2000 Stock Option Plan.

  

          (b)Schedule
  3.5(b) sets forth, as of the Closing Date, a true and complete list of (x)
  each of the Subsidiaries of the Company and (y) the aggregate number of authorized
  and issued shares of capital stock or other unit of equity of such Subsidiary.
  The Company directly or indirectly owns all of the issued and outstanding capital
  stock or other units of equity of the Subsidiaries, free and clear of all Liens.
  All of such shares of capital stock or other units of equity are duly authorized,
  validly issued, fully paid and non-assessable, and were issued in compliance
  with the registration and qualification requirements of all applicable federal,
  state and foreign securities laws. There are no options, warrants, conversion
  privileges, subscription or purchase rights or other rights currently outstanding
  to purchase or otherwise acquire any authorized but unissued, unauthorized or
  treasury shares of capital stock or other securities of, or any proprietary
  interest in, any of the Subsidiaries, and there is no outstanding security of
  any kind convertible into or exchangeable for such shares or proprietary interest.

  

     3.6
  AUTHORIZATION, VALIDITY AND ISSUANCE OF SECURITIES. The Purchased Securities
  are duly authorized, and when issued and sold to the Purchaser after payment
  therefor, will be validly issued, fully paid and non-assessable, will be issued
  in compliance with the registration and qualification requirements of all applicable
  federal, state and foreign securities laws and will be free and clear of all
  other Liens other than those created by the Transaction Documents. The Warrant
  Shares have been duly reserved for issuance upon exercise of the respective
  Warrants and, when issued in compliance with the provisions of the respective
  Warrants, will be validly issued, fully paid and non-assessable and not subject
  to any preemptive rights or similar rights and will be free and clear of all
  other Liens other than those created by the Transaction Documents.

  

9

 

     3.7
  LITIGATION. Except as set forth on Schedule 3.7, there are no actions,
  suits, proceedings, claims (including, without limitation, claims involving
  the prior employment of any of the Company’s or any of its Subsidiaries’
  employees, their use in connection with the Company’s or any of its Subsidiaries’
  business of any information or techniques allegedly proprietary to any of their
  former employers or their obligations under any agreements with prior employers),
  complaints, disputes, arbitrations or investigations (collectively, “Claims”)
  pending or, to the knowledge of the Company, threatened, at law, in equity,
  in arbitration or before any Governmental Authority against the Company or any
  of its Subsidiaries that could reasonably be expected to have a Material Adverse
  Effect nor is the Company or any of its Subsidiaries aware that there is any
  basis for any of the foregoing that could reasonably be expected to have a Material
  Adverse Effect. No Order has been issued by any court or other Governmental
  Authority against the Company or any of its Subsidiaries purporting to enjoin
  or restrain the execution, delivery or performance of this Agreement or any
  of the other Transaction Documents.

  

     3.8
  COMPLIANCE WITH LAWS. (a) The Company and each of its Subsidiaries is in compliance
  with all Requirements of Law and all Orders issued by any court or Governmental
  Authority against the Company and each of its Subsidiaries, except where the
  failure to be in such compliance would not reasonably be expected to result
  in a Material Adverse Effect.

  

          (b)
  The Company and each of its Subsidiaries have all material licenses, permits
  and approvals of any Governmental Authority (collectively, “Permits”)
  that are necessary for the conduct of the business of the Company and each of
  its Subsidiaries, except where the failure to have any such Permit would not
  reasonably be expected to result in a Material Adverse Effect. Such Permits
  are in full force and effect, and no violations are or have been recorded in
  respect of any Permit, except where the failure of such Permit to be in full
  force and effect would not reasonably be expected to result in a Material Adverse
  Effect, and except where any violation in respect of any Permit would not reasonably
  be expected to result in a Material Adverse Effect.

  

          (c)
  Since January 1, 2004, no delisting proceedings have been initiated or threatened
  against the Company with respect to the listing of shares of Common Stock on
  Nasdaq, and the Company has no knowledge of any reason that any such proceedings
  could reasonably be commenced against the Company.

  

     3.9
  NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS. Except as set forth on Schedule
  3.9, the Company and each of its Subsidiaries has paid in full or accrued
  all amounts due under all of the Contractual Obligations filed as exhibits or
  described in the SEC Reports or which are otherwise material to the Condition
  of the Company (collectively, the “Material Contractual Obligations”)
  and has satisfied in full or provided for all of its liabilities and obligations
  thereunder. Neither the Company nor any of its Subsidiaries has received notice
  of a default or is in default under, or with respect to, any Material Contractual
  Obligation nor does any condition exist that with notice or lapse of time or
  both would constitute a default thereunder, except for such defaults that would
  not have a Material Adverse Effect. To the Company’s knowledge, no other
  party to any such Material Contractual Obligation is in default thereunder,
  nor to the Company’s knowledge does any condition exist that with notice
  or lapse of time or both would constitute a default by such other party thereunder,
  except for such defaults that would

  

10

 

not have a
  Material Adverse Effect. All agreements to which the Company or any of its Subsidiaries
  is a party or by which the property or any assets of the Company or any Subsidiary
  is bound which are required to be filed as exhibits to the SEC Reports have
  been filed as exhibits to the relevant SEC Reports as required and neither the
  Company nor any Subsidiary is in breach of any such agreement, except for such
  breaches that would not have a Material Adverse Effect.

  

     3.10
  TITLE TO PROPERTIES AND ASSETS. Except as set forth in Schedule 3.10,
  the Company and each of its Subsidiaries holds interests as lessee under leases
  in full force and effect in, all real property used in connection with its business
  or otherwise owned or leased by it. The Company and each of its Subsidiaries
  owns and has good, valid, and marketable title to all of the material properties
  and assets currently used in its business and reflected as owned on the Initial
  Financial Statements or so described in any Schedule hereto (collectively, the
  “Assets”), in each case free and clear of all Liens, except for Liens
  specifically described on the notes to the Initial Financial Statements.

  

     3.11
  REPORTS; FINANCIAL STATEMENTS; INTERNAL CONTROLS. (a) The Common Stock is registered
  pursuant to Section 12(g) of the Exchange Act. Since January 1, 2003, the Company
  has filed all reports, schedules, forms, statements and other documents required
  to be filed by it with the Commission pursuant to the reporting requirements
  of the Exchange Act, including pursuant to Sections 13, 14 or 15(d) thereof
  (the foregoing materials and all exhibits included therein and financial statements
  and schedules thereto and documents (other than exhibits to such documents)
  incorporated by reference therein being collectively referred to herein as the
  “SEC Reports”), on a timely basis or has received a valid extension
  of such time of filing and has filed any such SEC Reports prior to the expiration
  of any such extension. All of the SEC Reports, other than the Company’s
  annual reports to shareholders, are available on the SEC’s website at www.sec.gov.
  As of their respective dates, the SEC Reports complied in all material respects
  with the requirements of the Securities Act and the Exchange Act and the rules
  and regulations of the Commission promulgated thereunder (except that the Company’s
  Form 10-K for the year ended December 31, 2003 identifies as exhibits more “Material
  Contracts” than are required to be so identified in accordance with the
  applicable provisions of the Exchange Act), and none of the SEC Reports, when
  filed, contained any untrue statement of a material fact or omitted to state
  a material fact required to be stated therein or necessary in order to make
  the statements therein, in light of the circumstances under which they were
  made, not misleading.

  

          (b)
  The audited consolidated financial statements of the Company and its Subsidiaries
  (balance sheet and statements of operations, cash flow and shareholders’
  equity, together with the notes thereto) for the fiscal year ended December
  31, 2003 set forth in the SEC Reports which contains the unqualified report
  of Ernst & Young LLP (the “Audited 2003 Financial Statements”)
  and the unaudited consolidated financial statements of the Company and its Subsidiaries
  (balance sheet and statements of operations) for the fiscal quarter ended September
  30, 2004 set forth in the SEC Reports, the eleven-month period ended November
  30, 2004 (the “Unaudited 2004 Financial Statements” and, together
  with the Audited 2003 Financial Statements, the “Initial Financial Statements”)
  are complete and correct in all material respects and have been prepared in
  accordance with GAAP applied on a consistent basis throughout the periods indicated
  and with each other, except that the Unaudited 2004 Financial Statements do
  not in all cases contain

  

11

 

footnotes
  or normal year-end adjustments. Except as may be otherwise specified in the
  Initial Financial Statements or the notes thereto, the Initial Financial Statements
  fairly present in all material respects the financial condition, operating results
  and cash flows of the Company and its Subsidiaries as of the respective dates
  and for the respective periods indicated in accordance with GAAP, except that
  the Unaudited 2004 Financial Statements do not contain footnotes or normal year-end
  adjustments.

  

          (c)
  The accounts, books and records of the Company have recorded therein in all
  material respects the results of operations and the assets and liabilities of
  the Company and each of its Subsidiaries, required to be reflected under GAAP.
  The Company maintains a system of accounting and internal controls sufficient
  in all material respects to provide reasonable assurances that (i) transactions
  are executed with management’s authorization; (ii) transactions are recorded
  as necessary to permit preparation of the financial statements of the Company
  and to maintain accountability for the Company’s assets; (iii) access to
  the Company’s assets is permitted only in accordance with management’s
  authorization; (iv) the reporting of the Company’s assets is compared with
  existing assets at regular internals and appropriate action is taken with respect
  to any differences; and (v) accounts, notes and other receivables and inventory
  are recorded accurately, and proper and adequate procedures are implemented
  to effect the collection thereof on a current and timely basis. There are no
  significant deficiencies or material weaknesses in the design or operation of
  internal controls over financial reporting that would reasonably be expected
  to adversely affect the Company’s ability to record, process, summarize
  and report financial information, and there is no fraud, whether or not material,
  that involves management or, to the knowledge of the Company, other employees
  who have a significant role in the Company’s internal controls and the
  Company has provided to the Purchaser copies of any written materials relating
  to the foregoing.

  

     3.12
  TAXES. Except as set forth in Schedule 3.12, (a) The Company and each
  of its Subsidiaries has paid all material Taxes which have come due and are
  required to be paid by it through the date hereof (taking into account all applicable
  extensions), and all deficiencies or other additions to Tax, interest and penalties
  owed by it in connection with any such Taxes, other than Taxes being disputed
  by the Company and each of its Subsidiaries in good faith for which adequate
  reserves have been made in accordance with GAAP; (b) the Company and each of
  its Subsidiaries has timely filed or caused to be filed all returns for Taxes
  that it is required to file on and through the date hereof (taking into account
  all applicable extensions), and all such Tax returns are accurate and complete
  in all material respects; (c) with respect to all Tax returns of the Company
  and each of its Subsidiaries, (i) to the knowledge of the Company, there is
  no unassessed Tax deficiency proposed or, to the knowledge of the Company or
  any of its Subsidiaries, threatened against the Company or any of its Subsidiaries
  and (ii) no audit is in progress with respect to any return for Taxes, no extension
  of time is in force with respect to any date on which any return for Taxes was
  or is to be filed and no waiver or agreement is in force for the extension of
  time for the assessment or payment of any Tax; (d) all provisions for Tax liabilities
  of the Company and each of its Subsidiaries with respect to the Audited 2003
  Financial Statements have been made in accordance with GAAP consistently applied;
  and (e) there are no Liens for Taxes on the assets of either the Company or
  any of its Subsidiaries.

  

     3.13
  NO MATERIAL ADVERSE CHANGE; ORDINARY COURSE OF BUSINESS. Except as set forth
  in the SEC Reports filed prior to the date hereof or as contemplated by the
  Transaction Documents or as set forth in the Initial Financial

  

12

 

Statements
  or the schedules hereto, (a) there has not been any material adverse change
  in the Condition of the Company that is inconsistent with the Company’s
  forecasted 2004 and 2005 operating results as previously provided to Purchaser,
  (b) since December 31, 2003, the Company and each of its Subsidiaries has not
  participated in any transaction material to the Condition of the Company which
  is outside the ordinary course of business, (c) since December 31, 2003, the
  Company and each of its Subsidiaries has not increased the compensation of any
  of its officers or the rate of pay of any of its employees, except as part of
  regular compensation increases in the ordinary course of business, (d) since
  December 31, 2003, the Company and each of its Subsidiaries has not created
  or assumed any Lien on a material asset of the Company or any of its Subsidiaries,
  and (e) since December 31, 2003, there has not occurred a material change in
  the Company’s or any of its Subsidiaries’ accounting principles or
  practice except as required by reason of a change in GAAP.

  

     3.14
  PRIVATE OFFERING. Except as contemplated by the Transaction Documents, the Company
  and, to the knowledge of the Company, all Persons acting on its behalf have
  not (i) made, directly or indirectly, and will not make, offers or sales of
  any securities or solicited, and will not solicit, any offers to buy any security
  under circumstances that would require registration of the Purchased Shares,
  the Warrants or the Warrant Shares, (ii) distributed any offering materials
  in connection with the offering and sale of the Purchased Shares or the Warrants,
  other than the SEC Reports referenced below, notices regarding this transaction
  to Persons with contractual rights of first offer, and the Transaction Documents
  (including all exhibits and schedules thereto), or (iii) solicited any offer
  to buy or sell the Purchased Shares or the Warrants by means of any form of
  general solicitation or advertising (as those terms are used in Rule 502(c)
  of Regulation D under the Exchange Act) in a manner which would require registration
  under the Securities Act. The offer, issuance and sale of the Purchased Shares,
  the Warrants and the Warrant Shares to the Purchaser will not be integrated
  with any other offer, sale and issuance of the Company’s securities (past
  or current) in violation of the Securities Act or any regulations of any exchange
  or automated quotation system on which any of the securities of the Company
  are listed, quoted or designated or for purposes of any shareholder approval
  provision applicable to the Company or its securities. Subject to the accuracy
  and completeness of the representations and warranties of the Purchaser contained
  in Article IV hereof, the Company’s offer, issuance and sale to the Purchaser
  of the Purchased Stock, the Warrants and the Warrant Shares is exempt from the
  registration requirements of the Securities Act.

  

     3.15
  ANTI-TAKEOVER DEVICES. Neither the Company nor any of its Subsidiaries has any
  outstanding shareholder rights plan or “poison pill” or any similar
  arrangement. There are no provisions of any anti-takeover or business combination
  statute applicable to corporations organized under the BCL, the Articles of
  Incorporation and the Bylaws which would preclude the issuance and sale of the
  Purchased Shares and Warrants, the reservation for issuance of the Warrant Shares
  and the consummation of the other transactions contemplated by this Agreement
  or any of the other Transaction Documents. Any future transactions unrelated
  to the issue and sale of the Purchased Shares and Warrants or other transactions
  contemplated by this Agreement or any of the other Transaction Documents, in
  which the Purchaser would (i) vote on a Fundamental Transaction, (ii) transfer
  their shares of Purchased Shares or the Warrant Shares to a third party or (iii) participate
  as a party to a Fundamental Transaction, would not cause the Purchaser, purchasers
  of shares from the Purchaser or parties to such a Fundamental Transaction to
  be subject

  

13

 

to the Control
  Transactions provisions (Subchapter E of Chapter 25 of the BCL), Control-Share
  Acquisitions provisions (Subchapter G of Chapter 25 of the BCL), the Disgorgement
  provisions (Subchapter H of Chapter 25 of the BCL), the Severance Compensation
  provisions (Subchapter I of Chapter 25 of the BCL) or the Business Combination
  Transaction - Labor Contracts provisions (Subchapter J of Chapter 25 of the
  BCL) of the BCL. The Purchaser would be permitted to vote under Section 2538(a)
  of the BCL on a future Fundamental Change unless at least a majority of the
  incumbent directors (as defined in the last sentence of Article 10 of the Company’s
  Articles of Incorporation) shall determine that Section 2538(a) of the BCL shall
  be inapplicable to the Company by virtue of Section 2538(b) of the BCL. In addition,
  the Company shall not at any time in the future be prohibited from engaging
  in a business combination (as such term is defined in Section 2554 of the BCL)
  with the Purchaser or the Purchaser’s Affiliates, provided, that
  (1) on the Closing Date the Purchaser is not an interested shareholder (as such
  term is defined in Section 2553 of the BCL) by virtue of its being the beneficial
  owner (as such term is defined in Section 2552 of the BCL) of any securities
  of the Company other than the Purchased Shares, Warrants and/or the Warrant
  Shares, and (2) on the Purchaser’s share acquisition date (as such term
  is defined in Section 2552 the BCL) the Purchaser is not or was not the beneficial
  owner (as such term is defined in Section 2552 of the BCL) of any securities
  of the Company other than the Purchased Shares, Warrants and/or the Warrant
  Shares. The foregoing representation assumes that Chapter 25 of the BCL is not
  amended in any fashion, after the date hereof, applicable to the transactions
  contemplated by this Agreement or any of the other Transaction Documents.

  

     3.16
  LABOR RELATIONS. Except as could not reasonably be expected to have a Material
  Adverse Effect, (a) neither the Company nor any of its Subsidiaries is engaged
  in any unfair labor practice; (b) there is no strike, labor dispute, slowdown
  or stoppage pending or, to the knowledge of the Company, threatened against
  the Company or any of its Subsidiaries; and (c) neither the Company nor any
  of its Subsidiaries is a party to any collective bargaining agreement or contract.

  

     3.17
  EMPLOYEE BENEFIT PLANS. (a) Schedule 3.17 sets forth a complete list
  of all Company Plans. The SEC Reports disclose or describe each Company Plan
  that is required to be disclosed or described in such SEC Reports pursuant to
  the Exchange Act and the Securities Act. The Company and each of its Subsidiaries
  has no liability under any Plans other than the Company Plans. Except as disclosed
  in the SEC Reports, neither the Company, its Subsidiaries nor any Commonly Controlled
  Entity maintains or contributes to, or has within the preceding six years maintained
  or contributed to, or may have any liability with respect to any Plan subject
  to Title IV of ERISA or Section 412 of the Code or any “multiple employer
  plan” within the meaning of the Code or ERISA. Each Company Plan (and related
  trust, insurance contract or fund) has been established and administered in
  all material respects in accordance with its terms, and complies in form and
  in operation in all material respects with the applicable requirements of ERISA
  and the Code and other applicable Requirements of Law.

  

          (b)
  No Claim with respect to the administration or the investment of the assets
  of any Company Plan (other than routine claims for benefits) is pending.

  

          (c)
  Each Company Plan that is intended to be qualified under Section 401(a) of the
  Code is so qualified and has been so qualified during the period since its adoption;
  and each trust created under any such Plan is exempt from tax under Section
  501(a) of the Code and has been so exempt since its creation.

  

14

 

          (d)
  Except as set forth on Schedule 3.17, the consummation of the transactions contemplated
  by this Agreement will not accelerate the time of the payment or vesting of,
  or increase the amount of, compensation due to any employee or former employee
  whether or not such payment would constitute an “excess parachute payment”
  under Section 280G of the Code.

  

          (e)
  All material unfunded obligations under any Company Plan which are required
  to be reflected on the Initial Financial Statements in accordance with GAAP
  have been reflected on the Initial Financial Statements.

  

     3.18
  LIABILITIES. Each direct or indirect obligation or liability of the Company
  and its Subsidiaries (the “Liabilities”) required by GAAP to be reflected
  or reserved against on the Initial Financial Statements is fully and adequately
  presented therein. The Company and each of its Subsidiaries have not incurred
  any Liabilities since November 30, 2004, except in the ordinary course of business
  or where such Liability would not reasonably be expected to result in a Material
  Adverse Effect.

  

     3.19
  INTELLECTUAL PROPERTY. (a) (i) Except as set forth in Schedule 3.19,
  the Company and each of its Subsidiaries is the owner of all, or has a license
  under all of, the material Copyrights, Patents, Trade Secrets, Trademarks, Internet
  Assets, Software and other proprietary rights (collectively, “Intellectual
  Property”) that are used in connection with its business as presently conducted,
  free and clear of all Liens.

  

               (ii)
  None of the Intellectual Property owned by the Company or any of its Subsidiaries
  is subject to any outstanding Order, and no action, suit, proceeding, hearing,
  investigation, charge, complaint, claim or demand is pending or, to the knowledge
  of the Company, threatened, which challenges the validity, enforceability, use
  or ownership of the item.

  

               (iii)
  The Company and each of its Subsidiaries has substantially performed all material
  obligations imposed upon it under any material license, material sublicenses,
  material distribution agreement or other material agreement relating to any
  Intellectual Property not owned by the Company or any of its Subsidiaries, and
  is not, nor to the knowledge of the Company, is any other party thereto, in
  material breach of any material terms or default of any material terms thereunder
  in any respect, nor is there any event which with notice or lapse of time or
  both would constitute a default thereunder. All such Intellectual Property licenses
  are valid, enforceable and in full force and effect, and will continue to be
  so on identical terms immediately following the Closing except as enforceability
  may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
  conveyance or transfer, moratorium or similar laws affecting the enforcement
  of creditors’ rights generally and by general principles of equity relating
  to enforceability (regardless of whether considered in a proceeding at law or
  in equity).

  

               (iv)
  Except as set forth in Schedule 3.19 and except as disclosed in the SEC
  Reports, to the knowledge of the Company, none of the Intellectual

  

15

 

Property currently
  sold or licensed by the Company or any of its Subsidiaries to any Person, or,
  to the knowledge of the Company, used by or licensed to the Company or any of
  its Subsidiaries by any Person, infringes in any material respect upon or otherwise
  violates in any material respect any Intellectual Property rights of others,
  and the Company has no reason to believe otherwise.

  

               (v)
  Except as disclosed in the SEC Reports, no litigation is pending and, to the
  knowledge of the Company, no Claim has been made against the Company or any
  of its Subsidiaries or, to the knowledge of the Company, is threatened, contesting
  the right of the Company or any of its Subsidiaries to sell or license to any
  Person or use the Intellectual Property presently sold or licensed to such Person
  or used by the Company or any of its Subsidiaries.

  

          (b)
  Except as disclosed in the SEC Reports, to the knowledge of the Company, no
  Person is infringing upon or otherwise violating the Intellectual Property rights
  of the Company or any of its Subsidiaries.

  

          (c)
  No former employer of any employee of the Company or any of its Subsidiaries,
  and no client of any consultant of the Company or any of its Subsidiaries, has
  made a claim against the Company or any of its Subsidiaries or, to the knowledge
  of the Company, against any other Person, that such employee or such consultant
  is utilizing Intellectual Property of such former employer or client.

  

          (d)
  To the knowledge of the Company, no employee of the Company or any of its Subsidiaries
  is in violation of any employment agreement, confidentiality agreement, patent
  assignment or invention disclosure agreement or other contract or agreement
  setting forth the terms of employment of such employee with the Company or any
  of its Subsidiaries or any prior employer.

  

          (e)
  To the knowledge of the Company, none of the material Trade Secrets of the Company,
  wherever located, the value of which is contingent upon maintenance of confidentiality
  thereof, has been disclosed to any Person other than employees, representatives
  and agents of the Company or any of its Subsidiaries or to other Persons who
  have executed appropriate nondisclosure agreements, except as required pursuant
  to the filing of a patent application by the Company or any of its Subsidiaries.

  

          (f)
  All present key employees of the Company and each of its Subsidiaries have executed
  and delivered invention agreements with the Company and each of its Subsidiaries,
  and are obligated under the terms thereof to assign all inventions made by them
  during the course of employment to the Company and each of its Subsidiaries.
  No such employee or present consultant of the Company or any of its Subsidiaries
  has excluded works or inventions used by the Company but made prior to his employment
  with, or work for, the Company or any of its Subsidiaries from his assignment
  of inventions pursuant to such proprietary invention agreements.

  

     3.20
  INSURANCE. Schedule 3.20 sets forth a complete and correct list of all insurance
  coverage carried by the Company and each of its Subsidiaries, including for
  each policy the type and scope of coverage, the carrier and the amount of coverage.

  

16

 

     3.21
  NETWORK REDUNDANCY AND COMPUTER BACK-UP. Except as could not reasonably be expected
  to have a Material Adverse Effect, the Company and each of its Subsidiaries
  has made back-ups of all material computer Software and databases utilized by
  it and maintain such Software and databases at a secure off-site location.

  

     3.22
  PRIVACY OF CUSTOMER INFORMATION. Neither the Company nor any of its Subsidiaries
  uses any of the customer information it receives through its website or otherwise
  in a manner violative in any material respect of the Company’s or any of
  its Subsidiaries’ privacy policy or the privacy rights of its customers
  under applicable law.

  

     3.23
  POTENTIAL CONFLICTS OF INTEREST. Except as disclosed in the SEC Reports or as
  set forth on Schedule 3.23, to the knowledge of the Company, no officer or director
  of the Company, no shareholder beneficially owning in excess of five percent
  of the outstanding Common Stock, and no spouse of any such officer or director
  (a) owns, directly or indirectly, any interest in (excepting less than one percent
  (1%) stock holdings for investment purposes in securities of publicly held and
  traded companies), or is an officer, director, employee or consultant of, any
  Person which is, or is engaged in business as, a competitor, lessor, lessee,
  supplier, distributor, sales agent or customer of, or lender to or borrower
  from, the Company or any of its Subsidiaries; or (b) owns, directly or indirectly,
  in whole or in part, any tangible or intangible property material to the conduct
  of the business of the Company or its Subsidiaries.

  

     3.24
  TRADE RELATIONS. Except as set forth in Schedule 3.24, there exists no
  actual or, to the knowledge of the Company or any of its Subsidiaries, threatened
  termination, cancellation or limitation of, or any adverse change in, the business
  relationship of the Company or any of its Subsidiaries with any customer or
  supplier or any group of customers or suppliers whose purchases or inventories
  provided to the Company’s and each of its Subsidiaries’ business are
  individually or in the aggregate material to the Condition of the Company.

  

     3.25
  BROKER’S, FINDER’S OR SIMILAR FEES. Except as set forth on Schedule
  3.25, there are no brokerage commissions, finder’s fees or similar fees
  or commissions payable by the Company or any of its Subsidiaries in connection
  with the transactions contemplated hereby based on any agreement, arrangement
  or understanding with the Company or any of its Subsidiaries or any action taken
  by any such Person.

  

ARTICLE
  IV

REPRESENTATIONS
  AND WARRANTIES OF THE PURCHASER

     The
  Purchaser hereby represents and warrants to the Company on and as of the date
  hereof and on and as of the Closing Date as follows:

  

     4.1
  POWER. The Purchaser has the requisite authority to execute, deliver and perform
  the Purchaser’s obligations under this Agreement and each of the other
  Transaction Documents.

  

     4.2
  AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by
  the Purchaser of this Agreement and each of the other Transaction Documents
  and the transactions contemplated hereby and thereby,

  

17

 

(a) do not
  violate, conflict with or result in any breach or contravention of, or the creation
  of any Lien under, any Contractual Obligation of the Purchaser or any Requirement
  of Law applicable to the Purchaser and (b) do not violate any Orders of any
  Governmental Authority against, or binding upon, the Purchaser.

  

     4.3
  GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except as set forth on Schedule
  4.3, no approval, consent, compliance, exemption, authorization or other action
  by, or notice to, or filing with, any Governmental Authority or any other Person,
  and no lapse of a waiting period under any Requirement of Law, is necessary
  or required in connection with the execution, delivery or performance (including,
  without limitation, the purchase of the Purchased Shares) by, or enforcement
  against, the Purchaser of this Agreement and each of the other Transaction Documents
  to which it is a party or the transactions contemplated hereby and thereby.

  

     4.4
  BINDING EFFECT. This Agreement has been duly executed and delivered by the Purchaser
  and upon execution and delivery at the Closing of the other Transaction Documents,
  all such agreements will constitute the legal, valid and binding obligations
  of the Purchaser, enforceable against it in accordance with its terms, except
  as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
  fraudulent conveyance or transfer, moratorium or similar laws affecting the
  enforcement of creditors’ rights generally or by equitable principles relating
  to enforceability (regardless of whether considered in a proceeding at law or
  in equity), and except that rights to indemnification and contribution may be
  limited by federal or state securities laws or public policy relating thereto.

  

     4.5
  PURCHASE FOR OWN ACCOUNT. The Purchased Securities to be acquired by the Purchaser
  pursuant to this Agreement are being, and the Warrant Shares to be acquired
  upon exercise of the Warrants will be, acquired for its own account for investment
  only, and not with a view to, or for sale in connection with, any distribution
  of such Purchased Securities or any part thereof in any transaction that would
  be in violation of the securities laws of the United States of America, any
  state of the United States or any foreign jurisdiction. The Purchaser understands
  and agrees that such Purchased Securities have not been, and the Warrant Shares
  will not be, registered under the Securities Act and are “restricted securities”
  within the meaning of Rule 144 under the Securities Act; and that the Purchased
  Securities and the Warrant Shares cannot be sold, transferred or otherwise disposed
  of except in compliance with the Securities Act and applicable state and foreign
  securities laws, as then in effect. The Purchaser agrees to the imprinting of
  a legend on certificates representing all of its Purchased Securities to the
  following effect:

  

     THE
  SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
  SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES
  LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES
  MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
  REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
  TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

  

18

 

     4.6
  RESTRICTED SECURITIES. The Purchaser understands that the Purchased Securities
  and the Warrant Shares will not be registered at the time of their issuance
  under the Securities Act for the reason that the sale provided for in this Agreement
  is exempt pursuant to Section 4(2) of the Securities Act and that the reliance
  of the Company on such exemption is predicated in part on the Purchaser’s
  representations set forth herein.

  

     4.7
  BROKER’S, FINDER’S OR SIMILAR FEES. Except as set forth on Schedule
  4.7, there are no brokerage commissions, finder’s fees or similar fees
  or commissions payable by the Purchaser in connection with the transactions
  contemplated hereby based on any agreement, arrangement or understanding with
  the Purchaser or any action taken by the Purchaser.

  

     4.8
  ACCREDITED INVESTOR. The Purchaser is an “Accredited Investor” within
  the meaning of Rule 501 of Regulation D under the Securities Act, as presently
  in effect.

  

     4.9
  RESIDENCY. Purchaser is a corporation duly incorporated, validly existing and
  in good standing under the laws of the State of Delaware. The principal place
  of business of the Purchaser is within the State of Maryland.

  

ARTICLE
  V

COVENANTS

     5.1
  PREPARATION OF PROXY STATEMENT. As promptly as practicable after the date of
  this Agreement, the Company shall prepare a proxy statement (the “Proxy
  Statement”), reasonably satisfactory to the Purchaser and its special counsel,
  soliciting the approval of the Company’s common shareholders of the Transaction
  Documents (other than the Services Agreement) and the transactions contemplated
  thereby (the “Proposal”). The draft of such preliminary Proxy Statement
  shall be provided to the Purchaser and special counsel to the Purchaser for
  their review no later than ten (10) Business Days following the date hereof
  and prior to the filing of the preliminary Proxy Statement with the Commission.
  The Purchaser or the Purchaser’s special counsel shall provide any comments
  in writing to counsel to the Company, Locke Liddell & Sapp LLP, no later
  than four (4) Business Days after receipt of such draft of the preliminary Proxy
  Statement (all comments to the Proxy Statement provided by the Purchaser or
  the Purchaser’s special counsel shall be in the form of word for word proposed
  revisions and not general suggestions). The Company shall file with the Commission
  the preliminary Proxy Statement no later than five (5) Business Days following
  the date of the Company’s receipt of Purchaser’s or Purchaser’s
  special counsel’s comments thereto. The Company shall cause the Proxy Statement
  to comply with the rules and regulations promulgated by the Commission, and
  shall use its best efforts to respond promptly to any comments of the Commission
  or its staff, such responses to be reasonably satisfactory to the Purchaser
  and its special counsel. Prior to responding to any comments of the Commission
  on such proxy materials, the Company shall furnish to the Purchaser and special
  counsel to the Purchaser a copy of any correspondence from the Commission relating
  to the proxy statement and the proposed response to the Commission’s comments
  and provide the Purchaser and special counsel to the Purchaser with the opportunity
  to review and comment on such proposed response to the Commission. The Company
  will use diligent efforts to cause the definitive Proxy Statement to be mailed
  to its shareholders as promptly as practicable after filing with the Commission.

  

19

 

     5.2
  SPECIAL MEETING. The Company will hold the Special Meeting, at which the Company’s
  common shareholders shall consider the Proposal for approval, as promptly as
  reasonably possible following the mailing of the Proxy Statement. Subject to
  its fiduciary duties, the Board shall recommend to the Company’s common
  shareholders (and not revoke or amend such recommendation) that the common shareholders
  vote in favor of the approval of the Proposal and shall cause the Company to
  take all commercially reasonable action to solicit the approval of the common
  shareholders for the approval of the Proposal. Whether or not the Company’s
  Board determines at any time after the date hereof that, due to its fiduciary
  duties, it must revoke or amend its recommendation to the Company’s common
  shareholders, the Company shall be required to, and will take, in accordance
  with applicable law and its Articles of Incorporation and Bylaws, all action
  necessary to convene the Special Meeting as promptly as practicable, to consider
  and vote upon the approval of the Proposal.

  

     5.3
  FURNISHING OF INFORMATION. As long as the Purchaser owns the Purchased Shares,
  the Warrants or the Warrant Shares, the Company will timely file (or obtain
  extensions in respect thereof and file within the applicable grace period) all
  reports required to be filed by the Company after the Closing Date pursuant
  to Section 13, 14 or 15(d) of the Exchange Act. As long as the Purchaser owns
  the Purchased Shares, the Warrants or the Warrant Shares, if the Company is
  not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
  Act, it will prepare and furnish to the Purchaser and make publicly available
  in accordance with Rule 144(c) promulgated under the Securities Act, annual
  and quarterly financial statements, together with a discussion and analysis
  of such financial statements in form and substance substantially similar to
  those that would otherwise be required to be included in reports required by
  Section 13(a) or 15(d) of the Exchange Act, as well as any other information
  required thereby, in the time period that such filings would have been required
  to have been made under the Exchange Act. The Company also agrees that prior
  to and during the Effectiveness Period (as defined in the Registration Rights
  Agreement) it will make available or give to the Purchaser all notices and other
  information made available or given to the common shareholders and preferred
  shareholders of the Company generally, contemporaneously with the making available
  or giving thereof to the common shareholders and the preferred shareholders.
  Subject to the terms of the Transaction Documents, the Company further covenants
  that it will take such further action as the Purchaser may reasonably request,
  all to the extent required from time to time to enable the Purchaser to sell
  the Purchased Shares, the Warrants or the Warrant Shares without registration
  under the Securities Act within the limitation of the exemptions provided by
  Rule 144 promulgated under the Securities Act. Upon the request of the
  Purchaser, the Company shall deliver to the Purchaser a written certification
  of a duly authorized officer as to whether it has complied with such requirements.

  

     5.4
  LISTING AND RESERVATION OF PURCHASED SHARES AND WARRANT SHARES.

  

          (a)
  The Company shall (i) not later than ten (10) business days after the Closing
  Date prepare and file with Nasdaq (as well as any other national securities
  exchange or market on which the Common Stock is then listed) a Notification
  Form: Listing of Additional Shares or such other listing applications or letters
  acceptable to Nasdaq covering a number of shares of Common Stock equal to the
  number of Purchased Shares plus the maximum number of Warrant Shares (the “Application”),
  (ii) take all steps necessary to cause the Application to be accepted by Nasdaq
  (as well as on any other national

  

20

 

securities
  exchange or market on which the Common Stock is then listed) as soon as possible
  thereafter, (iii) so long as any shares of Common Stock shall be so listed,
  shall not revoke the Application, and (iv) upon request, provide to the Purchaser
  evidence of the Application as accepted by Nasdaq. Prior to the effectiveness
  of any registration statement filed to register the resale of the Purchased
  Shares and the Warrant Shares, at the request of the Purchaser, the Company
  shall promptly provide to the Purchaser copies of any notices it receives from
  Nasdaq regarding the continued eligibility of the Common Stock for listing on
  such automated quotation system. The Company shall pay all fees and expenses
  in connection with satisfying its obligations under this Section 5.4(a).

  

          (b)
  The Company at all times shall reserve a sufficient number of shares of its
  authorized but unissued Common Stock to provide for the maximum number of Warrant
  Shares. If at any time the number of shares of Common Stock authorized and reserved
  for issuance is insufficient to cover all of the Warrant Shares issued and issuable
  upon exercise of the Warrants, the Company will promptly take all corporate
  action necessary to authorize and reserve all such shares, including, without
  limitation, calling a special meeting to authorize additional shares to meet
  the Company’s obligations under this Section 5.4(b), in the case of an
  insufficient number of authorized shares, and using best efforts to obtain shareholder
  approval of an increase in such authorized number of shares and taking actions
  pursuant to Section 3(b) of the Registration Rights Agreement.

  

     5.5
  NO INTEGRATED OFFERINGS. The Company shall not make any offers or sales of any
  security (other than the Purchased Shares, the Warrants and the Warrant Shares
  being offered or sold hereunder) under circumstances that would require registration
  of the Purchased Shares, the Warrants and the Warrant Shares being offered or
  sold hereunder under the Securities Act. 

  

     5.6
  NOTICE OF BREACHES. The Company and the Purchaser shall give prompt written
  notice to the other of any breach by it of any representation, warranty or other
  agreement contained in the Transaction Documents, as well as any events or occurrences
  arising after the date hereof and prior to the Closing Date, which would reasonably
  be likely to cause any representation or warranty or other agreement of such
  party, as the case may be, contained herein to be incorrect or breached as of
  the Closing Date. However, no disclosure by either party pursuant to this Section
  5.6 shall be deemed to cure any breach of any representation, warranty or other
  agreement contained in the Transaction Documents.

  

     5.7
  FORM D. The Company agrees to file a Form D with respect to the Purchased Securities
  as required by Rule 506 under Regulation D and to provide a copy thereof
  to the Purchaser promptly after such filing.

  

     5.8
  TRANSFER AGENT INSTRUCTIONS. On the Closing Date the Company shall issue irrevocable
  instructions to its transfer agent (and shall issue to any subsequent transfer
  agent as required), to issue certificates, registered in the name of the Purchaser
  or its nominee(s), for the Purchased Shares and the Warrant Shares in such amounts
  as specified from time to time by the Purchaser to the Company in a form acceptable
  to the Purchaser (the “Irrevocable Transfer Agent Instructions”).
  The Company warrants that no instruction other than the Irrevocable Transfer
  Agent Instructions referred to in this Section 5.8, prior to registration of
  the Purchased Shares and the Warrant Shares under the Securities Act, will be
  given by the Company to its transfer agent, unless the transfer agent requires
  additional instructions to carry out the purposes of the Irrevocable Transfer
  Agent Instructions, and that the

  

21

 

Purchased
  Shares and the Warrant Shares shall otherwise be freely transferable on the
  books and records of the Company as and to the extent provided in the Transaction
  Documents. The Company acknowledges that a breach by it of its obligations hereunder
  will cause irreparable harm to the Purchaser by violating the intent and purpose
  of the transactions contemplated hereby. Accordingly, the Company acknowledges
  that the remedy at law for a breach of its obligations under this Section 5.8
  will be inadequate and agrees, in the event of a breach or threatened breach
  by the Company of the provisions of this Section 5.8, that the Purchaser shall
  be entitled, in addition to all other available remedies, to an order and/or
  injunction restraining any breach and requiring immediate issuance and transfer
  without the necessity of showing economic loss and without any bond or other
  security being required.

  

     5.9
  PRESS RELEASE; FILING OF FORM 8-K. Subject to the provisions of Section 5.11
  hereof, prior to the opening of Nasdaq on the first Business Day following the
  date of this Agreement, the Company shall issue a press release disclosing the
  transaction contemplated hereby in form and substance acceptable to the Purchaser.
  On or before the fourth Business Day following the date of execution of this
  Agreement, the Company shall file a Current Report on Form 8-K with the Commission
  describing the terms of the transactions contemplated by the Transaction Documents
  in the form provided by the Exchange Act.

  

     5.10
  BEST EFFORTS. Each of the parties hereto shall use its best efforts to satisfy
  each of the conditions to be satisfied by it as provided in Articles VI and
  VII of this Agreement.

  

     5.11
  CONFIDENTIALITY. Each party agrees that it will not disclose and it will cause
  its officers, directors, employees, representatives, agents, and advisers not
  to disclose, any Confidential Information (as hereinafter defined) with respect
  to the other party furnished, at any time or in any manner, provided that (i)
  any disclosure of such information may be made to which the Company and Purchaser
  consent in writing; and (ii) such information may be disclosed if so required
  by law or regulatory authority. “Confidential Information” means information
  or knowledge obtained in any due diligence or other investigation relating to
  the negotiation and execution of this Agreement, information relating to the
  terms of the transactions contemplated hereby and any information identified
  as confidential in writing from one party to the other; provided, however, that
  “Confidential Information” shall not include information or knowledge
  that (a) becomes generally available to the public absent any breach of this
  Section 5.11, (b) was available on a non-confidential basis to a party prior
  to its disclosure pursuant to this Agreement, or (c) becomes available on a
  non-confidential basis from a third party who is not bound to keep such information
  confidential. In the event of the termination of this Agreement, each party
  will promptly return all documents, contracts, records, or properties to the
  other party and destroy all copies of such Confidential Information.

  

ARTICLE
  VI

CONDITIONS
  TO THE OBLIGATION OF THE PURCHASER TO CLOSE

     The
  obligation of the Purchaser to purchase the Purchased Securities, to pay the
  purchase price therefor at the Closing and to perform any

  

22

 

obligations
  hereunder shall be subject to the satisfaction as determined by, or waiver by,
  the Purchaser of the following conditions on or before the Closing Date.

  

     6.1
  REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company
  contained in Article III hereof shall be true and correct in all respects, at
  and on the Closing Date as if made at and on such date, except where any inaccuracy
  in such representations and warranties would not have a Material Adverse Effect,
  provided, however, that representations and warranties of the Company contained
  in Article III hereof and made with respect to the Initial Financial Statements
  shall be made with respect to the Closing Financial Statements (as defined in
  Section 6.5 below) at and on the Closing Date.

  

     6.2
  COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed and complied
  in all material respects with all of its agreements set forth herein that are
  required to be performed by the Company on or before the Closing Date.

  

     6.3
  OFFICER’S CERTIFICATE. The Purchaser shall have received a certificate
  from the Company, in form and substance satisfactory to the Purchaser, dated
  the Closing Date, and signed by the Chief Executive Officer and Chief Financial
  Officer of the Company, certifying as to the matters set forth in Section 6.1
  and 6.2.

  

     6.4
  SECRETARY’S CERTIFICATE. The Purchaser shall have received a certificate
  from the Company, in form and substance satisfactory to the Purchaser, dated
  the Closing Date and signed by the Secretary of the Company, certifying (a)
  that the Company is in good standing in the Commonwealth of Pennsylvania, (b)
  that the attached copies of the Articles of Incorporation, the Bylaws, resolutions
  of the Board of Directors approving this Agreement and each of the other Transaction
  Documents and the transactions contemplated hereby and thereby, are all true,
  complete and correct and remain unamended and in full force and effect and (c)
  as to the incumbency and specimen signature of each officer of the Company executing
  this Agreement, each other Transaction Document and any other document delivered
  in connection herewith on behalf of the Company.

  

     6.5
  CHIEF FINANCIAL OFFICER’S CERTIFICATE. The Purchaser shall have received
  a certificate from the Company, in form and substance satisfactory to the Purchaser,
  dated the Closing Date and signed by the Chief Financial Officer of the Company,
  certifying that (a) the audited consolidated financial statements of the Company
  and its Subsidiaries (balance sheet and statements of operations, cash flow
  and shareholders’ equity, together with the notes thereto) for the fiscal
  year ended December 31, 2004 set forth in the SEC Reports which contains the
  unqualified report of the Company’s independent certified public accountants
  (the “Audited 2004 Financial Statements”) and the unaudited consolidated
  financial statements of the Company and its Subsidiaries (balance sheet and
  statements of operations) for the most recently completed monthly portion of
  calendar year 2005 for which financial statements are available (the “Unaudited
  2005 Financial Statements” and together with the Audited 2004 Financial
  Statements, the “Closing Financial Statements”) are complete and correct
  in all material respects and have been prepared in accordance with GAAP applied
  on a consistent basis throughout the periods indicated and with each other,
  except that the Unaudited 2005 Financial Statements do not contain footnotes
  or normal year-end adjustments, and (b) the Closing Financial Statements fairly
  present in all material respects the financial condition, operating results
  and cash flows of the

  

23

 

Company and
  its Subsidiaries as of the respective dates and for the respective periods indicated
  in accordance with GAAP, except that the Unaudited 2005 Financial Statements
  do not contain footnotes or normal year-end adjustments.

  

     6.6
  PURCHASED SECURITIES. The Company shall have delivered to the Purchaser (i)
  certificates in definitive form representing the Purchased Shares, registered
  in the name of the Purchaser and (ii) each of the Warrants, duly executed by
  the Company.

  

     6.7
  INVESTOR RIGHTS AGREEMENT. The Company shall have duly executed and delivered
  the Investor Rights Agreement.

  

     6.8
  REGISTRATION RIGHTS AGREEMENT. The Company shall have duly executed and delivered
  the Registration Rights Agreement.

  

     6.9
  SERVICES AGREEMENT. The Company shall have duly executed and delivered the Services
  Agreement.

  

     6.10
  AMENDMENTS TO THE EMPLOYMENT AGREEMENTS. The Company and each officer who is
  a party to a Change in Control Employment Agreement shall have duly executed
  and delivered the Amendments to the Employment Agreements; provided, however,
  that if any of Messrs. McLane, Carradine, Webb or Taylor are not employed by
  the Company at the Closing Date, such person shall not execute an amendment
  to his Change in Control Employment Agreement.

  

     6.11
  OPINION OF COUNSEL. The Purchaser shall have received an opinion of Locke Liddell
  & Sapp LLP, dated the Closing Date, relating to the transactions contemplated
  by or referred to herein, substantially in the form attached hereto as Exhibit
  G.

  

     6.12
  BOARD OF DIRECTORS. The Board of Directors shall have appointed two individuals
  designated by the Purchaser to the Board of Directors of the Company, as contemplated
  by the Investor Rights Agreement.

  

     6.13
  NASD. The Purchased Shares and Warrant Shares shall not have been rejected for
  quotation on the Nasdaq SmallCap Market.

  

     6.14
  STATUS UPDATE. The Company shall have provided the Purchaser a written status
  update relating to any potential acquisitions contemplated by the Board of Directors

  

     6.15
  PREFERRED RIGHTS. The rights of the preferred shareholders of the Company with
  respect to their right of first refusal relating to the transactions contemplated
  by this Agreement and the other Transaction Documents shall have been waived
  in writing or the time to exercise such rights shall have elapsed.

  

     6.16
  NO INJUNCTION. No Order shall have been enacted, entered, promulgated or endorsed
  by any court or Governmental Authority of competent jurisdiction which prohibits
  the consummation of any of the transactions contemplated by the Transaction
  Documents.

  

24

 

     6.17
  COMMON SHAREHOLDERS’ APPROVAL. The Proposal shall have been approved by
  the Company’s common shareholders.

  

ARTICLE
  VII

CONDITIONS
  TO THE OBLIGATION OF THE COMPANY TO CLOSE

     The
  obligation of the Company to issue and sell the Purchased Securities and the
  obligations of the Company to perform its other obligations hereunder shall
  be subject to the satisfaction as determined by, or waiver by, the Company of
  the following conditions on or before the Closing Date:

  

     7.1
  PAYMENT OF PURCHASE PRICE. The Purchaser shall have paid, by wire transfer,
  the aggregate purchase price for the Purchased Securities to be purchased by
  the Purchaser.

  

     7.2
  INVESTOR RIGHTS AGREEMENT. The Purchaser shall have duly executed and delivered
  the Investor Rights Agreement.

  

     7.3
  REGISTRATION RIGHTS AGREEMENT. The Purchaser shall have duly executed and delivered
  the Registration Rights Agreement.

  

     7.4
  SERVICES AGREEMENT. The Purchaser shall have duly executed and delivered the
  Services Agreement.

  

     7.5
  AMENDMENTS TO THE EMPLOYMENT AGREEMENTS. The Company and each officer who is
  a party to a Change in Control Employment Agreement shall have duly executed
  and delivered the Amendments to the Employment Agreements; provided, however,
  that if any of Messrs. McLane, Carradine, Webb or Taylor are not employed by
  the Company at the Closing Date, such person shall not execute an amendment
  to his Change in Control Employment Agreement.

  

     7.6
  REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Purchaser
  contained in Article IV hereof shall be true and correct at and on the Closing
  Date as if made at and on such date, except where any inaccuracy in such representations
  and warranties would not have a Material Adverse Effect.

  

     7.7
  COMPLIANCE WITH THIS AGREEMENT. The Purchaser shall have performed and complied
  in all material respects with all of its agreements set forth herein that are
  required to be performed by the Purchaser on or before the Closing Date.

  

     7.8
  BANK LETTER. The Purchaser shall have delivered to the Company a “comfort”
  letter from a financial institution, in a form reasonably acceptable to the
  Company, which states, in relevant part, that the sole stockholder of the Purchaser
  has on deposit with such financial institution funds sufficient to pay the applicable
  Exercise Price (as defined in the First Warrant) on behalf of the Purchaser.

  

25

 

     7.9
  NO INJUNCTION. No Order shall have been enacted, entered, promulgated or endorsed
  by any court or Governmental Authority of competent jurisdiction which prohibits
  the consummation of any of the transactions contemplated by the Transaction
  Documents.

  

     7.10
  COMMON SHAREHOLDERS’ APPROVAL. The Proposal shall have been approved by
  the Company’s common shareholders.

  

     7.11
  OBSERVER AGREEMENTS. The person serving as the observer as provided in the Investor
  Rights Agreement shall have executed a confidentiality agreement in a form acceptable
  to the Company and agreed in writing to comply with the Company’s Insider
  Trading Policy and Code of Conduct.

  

ARTICLE
  VIII

INDEMNIFICATION

     8.1
  INDEMNIFICATION. The Company agrees to indemnify, defend and hold harmless the
  Purchaser and the Purchaser’s Affiliates and their respective officers,
  managers, directors, agents, employees, subsidiaries, partners, members and
  controlling persons (each, an “Indemnified Party”) to the fullest
  extent permitted by law from and against any and all losses, Claims (including,
  without limitation, any Claim by a third party), damages, expenses (including
  reasonable fees, disbursements and other charges of counsel incurred by the
  Indemnified Party in any action between the Company and the Indemnified Party
  or between the Indemnified Party and any third party (other than a third party
  who is an Affiliate of such Indemnified Party) or otherwise in the manner described
  in Section 8.2 below) or other liabilities (collectively, “Losses”)
  resulting from or arising out of any breach of any representation or warranty,
  covenant or agreement by the Company in this Agreement (subject to the expiration
  of the survival of such representations and warranties, as provided in Section
  10.1). In connection with the obligation of the Company to indemnify for expenses
  as set forth above, the Company shall, upon presentation of appropriate invoices
  containing reasonable detail, reimburse each Indemnified Party for all such
  expenses (including reasonable fees, disbursements and other charges of counsel
  incurred by the Indemnified Party in any action between the Company and the
  Indemnified Party or between the Indemnified Party and any third party (other
  than a third party who is an Affiliate of such Indemnified Party) as they are
  incurred by such Indemnified Party and to the extent so provided in Section
  8.2 below; provided, however, that if an Indemnified Party is reimbursed under
  this Article VIII for any expenses, such reimbursement of expenses shall be
  refunded to the extent it is finally judicially determined that the Indemnified
  Party is not entitled to indemnification hereunder.

  

     8.2
  NOTIFICATION. Each Indemnified Party under this Article VIII shall, promptly
  after the receipt of notice of the commencement of any Claim against such Indemnified
  Party in respect of which indemnity may be sought from the Company under this
  Article VIII, notify the Company in writing of the commencement thereof. The
  omission of any Indemnified Party to so notify the Company of any such action
  shall not relieve the Company from any liability which the Company may have
  to such Indemnified Party under this Article VIII unless, and only to the extent
  that, such omission results in the Company’s forfeiture of substantive
  rights or defenses. In case any such Claim shall be brought against any Indemnified
  Party, and it shall notify the Company of the

  

26

 

commencement
  thereof, the Company shall be entitled to assume the defense thereof at their
  own expense, with counsel satisfactory to such Indemnified Party in its reasonable
  judgment; provided that any Indemnified Party may, at its own expense, retain
  separate counsel to participate in such defense at its own expense. Notwithstanding
  the foregoing, in any Claim in which both the Company, on the one hand, and
  an Indemnified Party, on the other hand, are, or are reasonably likely to become,
  a party, such Indemnified Party shall have the right to employ separate counsel
  and to control its own defense of such Claim if, in the reasonable opinion of
  counsel to such Indemnified Party, either (x) one or more defenses are available
  to the Indemnified Party that are not available to the Company or (y) a conflict
  or potential conflict exists between the Company, on the one hand, and such
  Indemnified Party, on the other hand, that would make such separate representation
  advisable; provided, however, that the Company (i) shall not be liable for the
  fees and expenses of more than one counsel to all Indemnified Parties and (ii)
  shall reimburse the Indemnified Parties for all of such fees and expenses of
  such counsel, as such fees and expenses are incurred. The Company agrees that
  it will not, without the prior written consent of the Indemnified Party, settle,
  compromise or consent to the entry of any judgment in any pending or threatened
  Claim relating to the matters contemplated hereby (if any Indemnified Party
  is a party thereto or has been actually threatened to be made a party thereto)
  unless such settlement, compromise or consent includes an unconditional release
  of each Indemnified Party from all liability arising or that may arise out of
  such Claim. The Company shall not be liable for any settlement of any Claim
  effected against an Indemnified Party without its written consent, which consent
  shall not be unreasonably withheld. The rights accorded to an Indemnified Party
  hereunder shall be in addition to any rights that any Indemnified Party may
  have at common law, by separate agreement or otherwise; provided, however, that
  notwithstanding the foregoing or anything to the contrary contained in this
  Agreement, nothing in this Article VIII shall restrict or limit any rights that
  any Indemnified Party may have to seek equitable relief.

  

     8.3
  CONTRIBUTION. If the indemnification provided for in this Article VIII from
  the Company is unavailable to an Indemnified Party hereunder in respect of any
  Losses for which the Company would otherwise be required to indemnify the Indemnified
  Party under this Article VIII, then the Company, in lieu of indemnifying such
  Indemnified Party, shall contribute to the amount paid or payable by such Indemnified
  Party as a result of such Losses in such proportion as is appropriate to reflect
  the relative fault of the Company and Indemnified Party in connection with the
  actions which resulted in such Losses, as well as any other relevant equitable
  considerations. The relative faults of the Company and Indemnified Party shall
  be determined by reference to, among other things, whether any action in question,
  including any untrue or alleged untrue statement of a material fact or omission
  or alleged omission to state a material fact, has been made by, or relates to
  information supplied by, the Company or Indemnified Party, and the parties’
  relative intent, knowledge, access to information and opportunity to correct
  or prevent such action. The amount paid or payable by a party as a result of
  the Losses referred to above shall be deemed to include any legal or other fees,
  charges or expenses reasonably incurred by such party in connection with any
  investigation or proceeding.

  

ARTICLE
  IX

TERMINATION
  OF AGREEMENT

27

 

     9.1
  TERMINATION. This Agreement may be terminated by written notice prior to the
  Closing as follows:

  

          (a)
  at any time on or prior to the Closing Date, by mutual written consent of the
  Company and the Purchaser;

  

          (b)
  at the election of either party by written notice to the other party after 5:00
  p.m., Eastern Time, on June 30, 2005, if the Closing shall not have occurred,
  unless such date is extended by the mutual written consent of the Company and
  the Purchaser; provided, however, that the right to terminate this Agreement
  under this Section 9.1(b) shall not be available to a party if that party’s
  breach of any representation, warranty, covenant or agreement under this Agreement
  has been the cause of, or resulted in, the failure of the Closing to occur on
  or before such date;

  

          (c)
  at the election of the Purchaser, if there has been a material breach of any
  representation, warranty, covenant or agreement on the part of the Company contained
  in this Agreement, which breach has not been cured within fifteen (15) days
  of written notice to the Company of such breach;

  

          (d)
  at the election of the Company, if there has been a material breach of any representation,
  warranty, covenant or agreement on the part of the Purchaser contained in this
  Agreement, which breach has not been cured within fifteen (15) days of written
  notice to the Purchaser of such breach; or

  

          (e)
  at the election of either party, if the Company’s common shareholders do
  not approve the Proposal at the Special Meeting (or any postponements or adjournments
  thereof).

  

     If
  this Agreement so terminates, it shall become null and void and have no further
  force or effect, except as provided in Section 9.2.

  

     9.2
  SURVIVAL. If this Agreement is terminated and the transactions contemplated
  hereby are not consummated as described above, this Agreement shall become void
  and of no further force and effect, except for the provisions of Section 5.11,
  Article VIII, this Section 9.2 and Section 10.12; provided, however, that (i)
  none of the parties hereto shall have any liability in respect of a termination
  of this Agreement pursuant to Section 9.1(a), (b) or (e) (except as provided
  in Section 10.12), (ii) nothing shall relieve the Company from liability for
  actual damages resulting from a termination of this Agreement pursuant to Section
  9.1(c), (iii) nothing shall relieve the Company from liability to pay amounts
  due under Section 10.12 resulting from a termination of this Agreement pursuant
  to Sections 9.1(b), 9.1(c) or 9.1(e) and (iv) nothing shall relieve the Purchaser
  from liability for actual damages resulting from a termination of this Agreement
  pursuant to Section 9.1(d); and provided, further, that none of the parties
  hereto shall have any liability for speculative, indirect, unforeseeable or
  consequential damages or lost profits resulting from any legal action relating
  to any termination of this Agreement.

  

28

 

ARTICLE
  X

MISCELLANEOUS

     10.1
  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties
  made herein shall survive the execution and delivery of this Agreement until
  the date that is ninety (90) days after the receipt by the Purchaser of audited
  consolidated financial statements of the Company and its Subsidiaries for the
  fiscal year ending December 31, 2005 (or, if such fiscal year changes and no
  such audited consolidated financial statements are available, then the next
  closest fiscal year), except for (a) Sections 3.1, 3.2, 3.3, 3.5 and 3.14, which
  representations and warranties shall survive indefinitely and (b) Section 3.12,
  which shall survive until the later to occur of (i) the lapse of the statute
  of limitations with respect to the assessment of any Tax to which such representation
  and warranty relates (including any extensions or waivers thereof) and (ii)
  sixty (60) days after the final administrative or judicial determination of
  the Taxes to which such representation and warranty relates, and no claim with
  respect to Section 3.12 may be asserted thereafter with the exception of claims
  arising out of any fact, circumstance, action or proceeding to which the party
  asserting such claim shall have given notice to the other parties to this Agreement
  prior to the termination of such period of reasonable belief that a tax liability
  will subsequently arise therefrom.

  

     10.2
  NOTICES. All notices, demands and other communications provided for or permitted
  hereunder shall be made in writing and shall be by registered or certified first-class
  mail, return receipt requested, telecopier, courier service or personal delivery:

  

	 	if
      to the Company:	 	Healthaxis Inc. 

      5215 N. O’Connor Boulevard 

      800 Central Tower 

      Irving, Texas 75039 

      Attention: J. Brent Webb, Esq. 

      Telecopy: (972) 458-8050 
	 	 	 	 
	 	with
      a copy to:	 	Locke Liddell &
      Sapp LLP 

      2200 Ross Avenue 

      Suite 2200 

      Dallas, Texas 75201 

      Attention: John B. McKnight, Esq. 

      Telecopy: (214) 756-8675;
	 	 	 	 
	 	if to
      Purchaser:	 	Tak Investments, Inc.
      

      400 Professional Drive, Suite 420 

      Gaithersburg, Maryland 20879 

      Attention: Sharad Tak
	 	 	 	 
	 	with
      a copy to:	 	Shaw Pittman LLP 

      1650 Tysons Boulevard 

      Suite 1400 

      McLean, Virginia 22102 

      Attention: Steven L. Meltzer, Esq. 

      Telecopy: (703) 770-7901;

29

 

     All
  such notices, demands and other communications shall be deemed to have been
  duly given (i) when delivered by hand, if personally delivered; (ii) one Business
  Day after being sent, if sent via a reputable nationwide overnight courier service
  guaranteeing next business day delivery; (iii) five (5) Business Days after
  being sent, if sent by registered or certified mail, return receipt requested,
  postage prepaid; and (iv) when receipt is mechanically acknowledged, if telecopied.
  Any party may by notice given in accordance with this Section 10.2 designate
  another address or Person for receipt of notices hereunder. Any party may give
  any notice, request, consent or other communication under this Agreement using
  any other means (including, without limitation, personal delivery, messenger
  service, first class mail or electronic mail), but no such notice, request,
  consent or other communication shall be deemed to have been duly given unless
  and until it is actually received by the party to whom it is given.

  

     10.3
  SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This Agreement shall inure
  to the benefit of and be binding upon the successors and permitted assigns of
  the parties hereto. Subject to the Company’s prior consent not to be unreasonably
  withheld or delayed and applicable securities laws and the terms and conditions
  thereof, the Purchaser may assign any of its rights under this Agreement to
  any of the Purchaser’s Affiliates. The Company may not assign any of its
  rights under this Agreement without the written consent of the Purchaser. Except
  as provided in Article VIII, no Person other than the parties hereto and their
  successors and permitted assigns is intended to be a beneficiary of this Agreement.

  

     10.4
  AMENDMENT AND WAIVER. (a) No failure or delay on the part of the Company or
  the Purchaser in exercising any right, power or remedy hereunder shall operate
  as a waiver thereof, nor shall any single or partial exercise of any such right,
  power or remedy preclude any other or further exercise thereof or the exercise
  of any other right, power or remedy.

  

          (b)
  Any amendment, supplement or modification of or to any provision of this Agreement,
  any waiver of any provision of this Agreement, and any consent to any departure
  by the Company or the Purchaser from the terms of any provision of this Agreement,
  shall be effective (i) only if it is made or given in writing and signed by
  the Company and the Purchaser purchasing a majority of the Purchased Shares,
  and (ii) only in the specific instance and for the specific purpose for which
  made or given. Except where notice is specifically required by this Agreement,
  no notice to or demand on the Company in any case shall entitle the Company
  to any other or further notice or demand in similar or other circumstances.

  

     10.5
  COUNTERPARTS. This Agreement may be executed in any number of counterparts and
  by the parties hereto in separate counterparts, each of which when so executed
  shall be deemed to be an original and all of which taken together shall constitute
  one and the same agreement.

  

30

 

     10.6
  HEADINGS. The headings in this Agreement are for convenience of reference only
  and shall not limit or otherwise affect the meaning hereof.

  

     10.7
  GOVERNING LAW. This Agreement shall be governed by and construed in accordance
  with the laws of the State of Texas without regard to the principles thereof
  relating to conflicts of law or choice of law.

  

     10.8
  DISPUTES.

  

          (a)
  Except as provided in Article VIII of this Agreement, any dispute, difference
  controversy or claim arising in connection with or related or incidental to,
  or question occurring under, this Agreement or the subject matter hereof shall
  be finally settled under the Commercial Arbitration Rules (the “Rules”)
  of the American Arbitration Association (“AAA”), unless otherwise
  agreed, by an arbitral tribunal composed of three (3) arbitrators, at least
  one (1) of whom shall be an attorney experienced in corporate transactions,
  appointed by agreement of the Company and the Purchaser in accordance with said
  Rules. In the event the parties fail to agree upon a panel of arbitrators from
  the first list of potential arbitrators proposed by the AAA, the AAA will submit
  a second list in accordance with said Rules. In the event the parties shall
  have failed to agree upon a full panel of arbitrators from said second list,
  any remaining arbitrators to be selected shall be appointed by the AAA in accordance
  with said Rules. All arbitrators shall be neutral arbitrators.

  

          (b)
  The arbitrators shall not have the authority to add to, detract from, or modify
  any provision hereof nor to award punitive damages to any injured party. A decision
  by a majority of the arbitrators shall be final, conclusive and binding. The
  arbitrators shall deliver a written and reasoned award with respect to the dispute
  to each of the parties, who shall promptly act in accordance therewith. Any
  arbitration proceeding shall be held in either Dallas, Texas or Washington,
  D.C., as selected by the party that does not initiate the arbitration proceedings.
  Any arbitration proceeding and the results thereof shall be subject to the confidentiality
  provisions of Section 5.11.

  

          (c)
  The parties hereby exclude any right of appeal to any court on the merits of
  the dispute. The provisions of this Section 10.8 may be enforced in any court
  having jurisdiction over the award or either of the parties or any of their
  respective assets, and judgment on the award (including without limitation equitable
  remedies) granted in any arbitration hereunder may be entered in any such court.
  Nothing contained in this Section 10.8 shall prevent any party from seeking
  injunctive or other equitable relief from any court of competent jurisdiction,
  without the need to resort to arbitration.

  

     10.9
  SEVERABILITY. If any one or more of the provisions contained herein, or the
  application thereof in any circumstance, is held invalid, illegal or unenforceable
  in any respect for any reason by a court of competent jurisdiction, the validity,
  legality and enforceability of any such provision in every other respect and
  of the remaining provisions hereof shall not be in any way impaired, unless
  the provisions held invalid, illegal or unenforceable shall substantially impair
  the benefits of the remaining provisions hereof.

  

31

 

     10.10
  RULES OF CONSTRUCTION. Unless the context otherwise requires, references to
  sections or subsections refer to sections or subsections of this Agreement.

  

     10.11
  ENTIRE AGREEMENT. This Agreement, together with the exhibits and schedules hereto,
  and the other Transaction Documents are intended by the parties as a final expression
  of their agreement and intended to be a complete and exclusive statement of
  the agreement and understanding of the parties hereto in respect of the subject
  matter contained herein and therein. There are no restrictions, promises, representations,
  warranties or undertakings, other than those set forth or referred to herein
  or therein. This Agreement, together with the exhibits and schedules hereto,
  and the other Transaction Documents supersede all prior agreements and understandings
  between the parties with respect to such subject matter.

  

     10.12
  FEES AND EXPENSES. Each party hereto shall be solely responsible for the fees
  and expenses incurred by such party in connection with the negotiation and consummation
  of the Transaction Documents and the transactions contemplated thereby; provided,
  however, that at the Closing, the Company shall pay to the Purchaser
  an amount in cash equal to One Hundred Fifty Thousand Dollars ($150,000). In
  the event of the termination of this Agreement by the Purchaser pursuant to
  Section 9.1(b), 9.1(c) or 9.1(e) hereof, the Company shall pay to the Purchaser
  an amount in cash equal to One Hundred Fifty Thousand Dollars ($150,000) within
  two (2) business days of such termination.

  

     10.13
  PUBLIC ANNOUNCEMENTS. After the execution hereof, the Company shall be permitted
  to issue a press release relating to the Transaction Documents and the transactions
  contemplated thereby. The Purchaser shall have the opportunity to review and
  comment on such press release prior to its issuance, which review and comment
  shall be provided as expeditiously as reasonably possible so that such press
  release may be issued in accordance with Section 5.9, and such press release
  shall be in form and substance reasonably satisfactory to the Purchaser. Except
  as set forth in the previous sentence, neither the Company nor the Purchaser
  will issue any press release or make any public statements with respect to this
  Agreement or the transactions contemplated hereby without the prior written
  consent of the other parties hereto, except to the extent such party reasonably
  believes such press release or public statement is required by applicable law
  or stock market regulations, including pursuant to the rules and regulations
  of the Commission; provided, however, that the Company and the Purchaser may
  make reasonable public statements consistent with prior public statements otherwise
  permitted under this Section 10.13. Notwithstanding the foregoing, the
  Company will not use or refer to the name of the Purchaser in any public statement
  or disclosure, without the consent of the Purchaser except to the extent that
  such party reasonably believes such statement or disclosure is required by applicable
  law or stock market regulations, including pursuant to the rules and regulations
  of the Commission.

  

     10.14
  FURTHER ASSURANCES. Each of the parties shall execute such documents and perform
  such further acts (including, without limitation, obtaining any consents, exemptions,
  authorizations or other actions by, or giving any notices to, or making any
  filings with, any Governmental Authority or any other Person) as may be reasonably
  required or desirable to carry out or to perform the provisions of this Agreement.

  

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  of page intentionally left blank]

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     IN
  WITNESS WHEREOF, the undersigned have executed, or have caused to be executed,
  this Stock and Warrant Purchase Agreement on the date first written above.

  

	 	COMPANY:
	 	 
	 	HEALTHAXIS INC.
	 	 
	 	By: /s/ James W. McLane
	 	Name: James W.
      McLane
	 	Title: CEO
	 	 
	 	 
	 	 
	 	PURCHASER:
	 	 
	 	TAK INVESTMENTS, INC.
	 	 
	 	By: /s/ Sharad Tak
	 	Name: Sharad Tak
	 	Title: President

33

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