Document:

Exhibit 10.46

 

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

among

TIER TECHNOLOGIES, INC.

BAKER ACQUISITION CORPORATION,

EPOS CORPORATION, 

THE INDIVIDUALS NAMED HEREIN

 

and

 

MICHAEL A. LAWLER,

 

as Shareholder Representative

 

 

Effective as of June 1, 2004

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  MERGER,
  CLOSING, CONVERSION OF SHARES AND PAYMENT FOR SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Effective Time

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Effects of Merger;
  Effective Date

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Charter and
  Bylaws; Directors and Officers

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Merger
  Consideration

  	
   

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Conversion
  of Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Receipt
  of Consideration; Escrow Fund and Exchange Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Lost, Stolen or
  Destroyed Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Withholding
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Shares of Dissenting
  Shareholders

  	
   

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  Adjustment to Merger
  Consideration

  	
   

  
	
   

  	
   

  	
   

  
	
  2.13

  	
  Shareholder
  Representative

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization
  and Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Capitalization
  of the Company and the Company Subsidiary

  	
   

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Consents
  and Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Investments
  in Others

  	
   

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Compliance
  with Laws and Other Instruments

  	
   

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Financial
  Statements, Accounting Records and Internal Controls

  	
   

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  Absence of
  Undisclosed Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  Absence of
  Certain Changes and Events

  	
   

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  Title to
  Property

  	
   

  
	
   

  	
   

  	
   

  
	
  3.11

  	
  Certain
  Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  3.12

  	
  Intellectual
  Property.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.13

  	
  Litigation and Other
  Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  3.14

  	
  Contracts

  	
   

  

 

i

 

	
  3.15

  	
  Insurance and Banking
  Facilities

  	
   

  
	
   

  	
   

  	
   

  
	
  3.16

  	
  Employees;
  Employee Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  3.17

  	
  Compliance
  with ERISA

  	
   

  
	
   

  	
   

  	
   

  
	
  3.18

  	
  Labor Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  3.19

  	
  Hazardous
  Materials

  	
   

  
	
   

  	
   

  	
   

  
	
  3.20

  	
  Inventories

  	
   

  
	
   

  	
   

  	
   

  
	
  3.21

  	
  Receivables

  	
   

  
	
   

  	
   

  	
   

  
	
  3.22

  	
  Accredited
  Investors

  	
   

  
	
   

  	
   

  	
   

  
	
  3.23

  	
  Brokers
  and Finders

  	
   

  
	
   

  	
   

  	
   

  
	
  3.24

  	
  No Omissions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  REPRESENTATIONS AND WARRANTIES OF PARENT
  AND PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Authorization

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Organization

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capitalization of Parent

  	
   

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  No Conflict of Transaction
  with Obligations and Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Availability of Merger
  Consideration; Valid Issuance of Parent Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Brokers, Finders or
  Financial Advisors

  	
   

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  SEC Filings

  	
   

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Interim Operations of
  Purchaser

  	
   

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  
	
  4.10

  	
  Nasdaq Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  4.11

  	
  Absence of Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  4.12

  	
  No Omissions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  COVENANTS OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conduct of Business by the
  Company Pending the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  No Solicitation

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Access to Information

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Commercially Reasonable
  Efforts

  	
   

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Company Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Fees and Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Company 401(k) Plan

  	
   

  

 

ii

 

	
  5.9

  	
  Voting Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Notification of Certain
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  CONDITIONS TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions to Each Party’s
  Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Conditions to Obligations of
  Parent and Purchaser

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Conditions to Obligations of
  the Company and the Stockholders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  POST-CLOSING COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Non-Competition and
  Non-Solicitation by Stockholders

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Employee Seniority

  	
   

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Rule 144

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  SURVIVAL AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Survival of Representations
  and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Recourse to Escrow Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Indemnification by Parent

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Procedure

  	
   

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Treatment of Indemnity
  Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  No Contribution from the
  Surviving Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Indemnity not Affected by
  Knowledge

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  TERMINATION, AMENDMENT AND WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Dispute Resolution;
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Attorneys’ Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Binding Effect; Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  No Third Party
  Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Counterparts

  	
   

  

 

iii

 

	
  10.10

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  Severability

  	
   

  

 

	
  Exhibits:

  	
   

  
	
   

  	
   

  
	
  Exhibit A
  – Form of Articles of Merger

  	
   

  
	
  Exhibit B
  – Form of Employment Agreement

  	
   

  
	
  Exhibit C
  – Form of Escrow Agreement

  	
   

  
	
  Exhibit D
  – Form of Letter of Transmittal

  	
   

  
	
  Exhibit E
  – Opinion of Bradley, Arant Rose & White LLP, Counsel to the Company

  	
   

  
	
  Exhibit F
  – Opinion of Farella Braun + Martel LLP, Counsel to Parent and Purchaser

  	
   

  
	
  Exhibit G
  – Form of Investor Representations Letter

  	
   

  
	
  Exhibit
  H – Form of Warrant Redemption Agreement

  	
   

  
	
  Schedule 1
  – Company Disclosure Schedule

  	
   

  
	
  Schedule 2
  – Parent Disclosure Schedule

  	
   

  

 

iv

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of the 28th day of May, 2004 (the “Execution
Date”), among Tier Technologies, Inc., a California corporation (“Parent”), Baker Acquisition Corporation, an
Alabama corporation and a wholly owned subsidiary of Parent (“Purchaser”), EPOS Corporation, an Alabama
corporation (the  “Company”),
each of the Stockholders (as defined below) and Michael A Lawler, as
Shareholder Representative.

 

RECITALS

 

WHEREAS, the Company is engaged, among other things, in the business of
supplying interactive communications hardware and software to enable efficient
and intelligent management of customer relationships (the “Business”);

 

WHEREAS, the Stockholders, who are also the Company’s principal
managers, own, on a fully diluted basis, approximately 94% of the Company’s
common stock, par value $0.01 per share (the “Company
Common Stock”);

 

WHEREAS, subject to the terms and conditions set forth in this
Agreement, the parties to this Agreement desire that Purchaser be merged with
and into the Company (the “Merger”),
that the Company be the surviving corporation in the Merger (the “Surviving Corporation”), and that each
share of the Company Common Stock and each warrant to acquire shares of Company
Common Stock that is outstanding immediately prior to the Effective Time of the
Merger be converted into the right to receive a portion of the Merger
Consideration in the manner contemplated by this Agreement;

 

WHEREAS, the boards of directors of Parent, Purchaser and the Company
have approved the Merger in accordance with the provisions of the Alabama Business
Corporation Act (the “ABCA”) and
other applicable state law, and have determined that the Merger and the other
transactions contemplated by this Agreement (the “Transactions”), subject to the terms of this Agreement, are in
the best interest of Parent, Purchaser and the Company, respectively, and each
company’s respective shareholders;

 

WHEREAS, James F. Byrd, Edward R. Graf, Timothy A. Johnson and Michael
A. Lawler (collectively, the “Stockholders”)
have executed employment agreements with Purchaser that will become effective
immediately after the Effective Time;

 

NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:

 

1

 

ARTICLE 1

DEFINITIONS

 

1.1                                                    Definitions.  The terms defined in this Article 1, whenever used in this
Agreement, shall have the following meanings for all purposes of this
Agreement:

 

“AAA”
has the meaning provided in Section 10.2.

 

“ABCA”
has the meaning provided in the Preamble.

 

“A2D
Parties” has the meaning provided in Section 8.2.

 

“Acquisition
Proposal” has the meaning provided in Section 5.2.

 

“Action” has the meaning
provided in Section 3.13.

 

“Adverse
Proposal” has the meaning provided in Section 5.9.

 

“Affiliate” means, with
respect to any Person, any Person directly or indirectly controlling,
controlled by, or under common control with, such other Person.  For purposes of this definition, “control”
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

“Aggregate
Cash Payout” means $428,693.

 

“Agreement” has the
meaning provided in the Preamble.

 

“Articles of Merger” means
the Articles of Merger substantially in the form attached hereto as Exhibit A.

 

“Audited
Financial Statements” has the meaning provided in Section 3.6.

 

“Business”
has the meaning provided in the Recitals.

 

“Cash Consideration” means
$7,256,432 in cash, subject to adjustment as set forth in Section 2.12.

 

“Cash
Payout” means an amount of cash equal to $3.7278.

 

“Certificates” has the
meaning provided in Section 2.8.

 

“Closing” has the meaning
provided in Section 2.2.

 

“Closing Balance Sheet”
has the meaning provided in Section 2.12.

 

“Closing Date” means the
date the Closing takes place.

 

2

 

“Code” means the Internal
Revenue Code of 1986, as amended.

 

“Company” has the meaning
provided in the Preamble.

 

“Company
401(k) plan” has the meaning provided in Section 5.8.

 

“Company Common Stock” has
the meaning provided in the Recitals.

 

“Company Disclosure Schedule”
has the meaning provided in Section 3.1.

 

“Company Financials” has
the meaning provided in Section 3.6.

 

“Company
Intellectual Property” has the meaning provided in
Section 3.12.

 

“Company Properties” has
the meaning provided in Section 3.19.

 

“Company Shareholders”
means the holders of any shares of the Company Common Stock immediately prior
to the Effective Time.

 

“Company
Subsidiary” has the meaning provided in Section 3.1.

 

“Company
Transaction Costs” has the meaning provided in Section 2.8.

 

“Competitive Business” has
the meaning provided in Section 7.1.

 

“Dispute”
has the meaning provided in Section 10.2.

 

“Dissenting Shares” has
the meaning provided in Section 2.11.

 

“Effective
Date” has the meaning provided in Section 2.4.

 

“Effective Time” has the
meaning provided in Section 2.3.

 

“Employee Manuals” has the
meaning provided in Section 3.16.

 

“Employee Plans” has the
meaning provided in Section 3.16.

 

“Employment Agreement” has
the meaning provided in Section 6.2.

 

“Encumbrances” means any
liens, security interests, hypothecations, assessments, mortgages, pledges,
agreements, easements, encroachments, claims, charges, options, restrictions or
encumbrances of any nature whatsoever.

 

“Environment” means the
land, soils, subsurface soils, surface or subsurface strata, geological
formations, groundwater, surface waters, steam sediments, ambient air of the
Earth, and any other environmental medium.

 

“Environmental Requirements”
means all federal, state, local, foreign and other applicable laws, statutes,
ordinances, rules, regulations, codes, licenses, orders, interpretations,

 

3

 

guidance documents, decisions, decrees, notices, permits, approvals,
plans, authorizations, concessions, franchises, common or decisional law
(including, without limitation, principles of tort, negligence, trespass, nuisance,
strict liability, contribution and indemnification) and similar items of all
governmental authorities, relating in any way to the protection, investigation,
remediation or restoration of the Environment (including, without limitation,
natural resources) or human health or safety, as the same may be amended from
time to time.

 

“Equity Price” means (a)
$2.2005 in cash and (b) 0.1463 shares of Parent Class B Stock.

 

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

 

“Escrow
Agent” means U.S. Bank, National Association, as escrow agent.

 

“Escrow
Agreement” has the meaning provided in Section 2.8.

 

“Escrow
Fund” has the meaning provided in Section 2.8.

 

“Exchange
Act” has the meaning provided in Section 3.1.

 

“Exchange
Agent” has the meaning provided in Section 2.8.

 

“Exchange
Fund” has the meaning provided in Section 2.8.

 

“Execution
Date” has the meaning provided in the Recitals.

 

“Fee
Letter” has the meaning provided in Section 3.23.

 

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

 

“Governmental
Entity” means any Federal, state or local government or any court,
administrative agency, commission or other governmental authority or agency,
domestic or foreign.

 

“Gross
Margin” shall mean a percentage, determined by dividing (a) the
Profit earned on an applicable agreement or contract by (b) the actual
professional services revenue recognized on such agreement or contract
determined in accordance with GAAP.

 

“Hazardous Material” means
any hazardous or toxic substance, material or waste which is regulated under,
or defined as a “hazardous substance,” “pollutant,” “contaminant,” “toxic
chemical,” “hazardous material,” “toxic substance” or “hazardous chemical”
under (a) the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA); (b) the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (c) the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; (d) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.;
(e) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
(f) the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq.; (g) regulations promulgated under any of the
above statutes; or (h) any applicable state or local statute, ordinance,
rule, or regulation that has a scope or purpose

 

4

 

similar to those statutes identified above.  Hazardous Material includes petroleum and petroleum-related
compounds, asbestos, lead and lead-based paint, radon, PCBs and urea
formaldehyde foam insulation.

 

“Indemnified
Party” has the meaning provided in Section 8.4.

 

“Intellectual Property”
has the meaning provided in Section 3.12.

 

“Knowledge of the Company”
or “Company’s Knowledge” means the
actual knowledge of James F. Byrd, Edward R. Graf, Timothy A.
Johnson, Michael A. Lawler, Michael Lightfoot and Benjamin Mitchell and
the knowledge that such persons would have obtained after reasonable inquiry
and investigation.

 

“Leased
Real Property” has the meaning provided in
Section 3.10.

 

“Losses”
has the meaning provided in Section 8.2.

 

“Material Adverse Effect”
or “Material Adverse Change”
means, when used with respect to the Company or Parent, as the case may be, any
change, event, occurrence, state of facts or effect that is or could reasonably
be expected to be, individually or in the aggregate, materially adverse to the
business, results of operations, assets (whether tangible or intangible), or
financial condition of the Company or Parent, as the case may be; provided,
however, that none of the following shall be taken into account in
determining whether there has been a Material Adverse Effect: (i) the failure
of the Company or the Company Subsidiary (as hereinafter defined), taken alone
and without reference to the preceding sentence, to meet internal projections
or forecasts, (ii) any adverse change, effect, event or occurrence directly
resulting from the execution of this Agreement or the announcement or
consummation of the Transactions (including, without limitation, any loss of
customers, cancellations of or delays in customer orders, any reduction in
sales, any disruption in supplier, partner, distributor or similar relationships,
any loss of employees or any litigation relating to the Merger, or any decrease
in the trading price of Parent Class B Stock); (iii) any adverse change,
effect, event or occurrence relating to the economy of the United States in
general or conditions in the industry in which the Company or Parent, as the
case may be, operates in general, and not specifically relating to the Company
or Parent or their respective subsidiaries; or (iv) any adverse change, event,
occurrence, state of facts or effect required or directly resulting from any
change in GAAP, any FASB pronouncement or any change in applicable laws, rules
or regulations.

 

“Merger” has the meaning
provided in the Recitals.

 

“Merger Consideration” has
the meaning provided in Section 2.6.

 

“Non-Accredited
Investors” means Jack N. Figh and Keith N. Davis.

 

“Owned
Real Property” has the meaning provided in Section 3.10.

 

“Parent” has the meaning
provided in the Preamble.

 

“Parent
Class A Stock” has the meaning provided in Section 4.3.

 

5

 

“Parent
Class B Stock” has the meaning provided in Section 2.6.

 

“Parent Disclosure Schedule”
has the meaning set forth in Section 4.1.

 

“Parent
Indemnified Parties” has the meaning provided in Section 8.2.

 

“Parent
Losses” has the meaning provided in Section 8.2.

 

“Parent
Preferred Stock” has the meaning provided in Section 4.3.

 

“Parent SEC Reports” means
all reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) required to be filed
or furnished with the Securities and Exchange Commission since
December 31, 2002.

 

“Parent
Shares” has the meaning provided in Section 2.6.

 

“Parent’s or Purchaser’s Knowledge”
means the actual knowledge of James Weaver, Jeffrey McCandless, and Laura
DePole and the knowledge that such persons would have obtained after reasonable
inquiry and investigation.

 

“Permitted Liens” means
(a) liens (other than environmental liens and any lien imposed under
ERISA) for taxes, assessments or charges of any governmental authority or
claims not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other liens (other than any lien imposed under
ERISA) imposed by law and created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP or in
respect of which a payment or performance bond has been obtained;
(c) liens (other than any lien imposed under ERISA) incurred or deposits
made in the ordinary course of business (including, without limitation, surety
bonds and appeal bonds) in connection with workers’ compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than the repayment of
indebtedness), statutory obligations and other similar obligations or arising
as a result of progress payments under contracts; (d) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and other restrictions, charges or encumbrances (whether or not
recorded), which do not interfere materially with the ordinary conduct of the
business of such party or its subsidiaries; and (e) building restrictions,
zoning laws and other statutes, laws, rules, regulations, ordinances and
restrictions, and any amendments thereto, now or at any time hereafter adopted
by any governmental authority having jurisdiction.

 

“Person” means an
individual, corporation, company, association, partnership, joint venture,
limited liability company, trust, estate, unincorporated organization,
governmental authority or other entity.

 

“Plan” has the meaning
provided in Section 3.17.

 

6

 

“Plan Administrator” has
the meaning provided in Section 3.17.

 

“Profit”
means the actual professional services revenue recognized on an applicable
agreement or contract determined in accordance with GAAP minus the
actual professional services direct project costs incurred on such agreement or
contract.  For the avoidance of doubt, direct project costs do not include
a general overhead burden.

 

“PTO” has the meaning
provided in Section 3.12.

 

“Purchaser” has the
meaning provided in the Preamble.

 

“Return” means any return,
report, information return, estimated tax return or report, schedule, form,
certificate, statement, declaration, claim for refund or other document
(including any schedule, attachment or amendment thereto, any extension to file
thereof and any related or supporting information) filed or required to be
filed with any federal, state, local or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.

 

“Rule
144” has the meaning provided in Section 7.4.

 

“Rules”
has the meaning provided in Section 10.2.

 

“SEC” means the United
States Securities and Exchange Commission.

 

“Securities
Act” has the meaning provided in Section 4.7

 

“Shareholder
Indemnified Parties” has the meaning provided in Section 8.3.

 

“Shareholder
Losses” has the meaning provided in Section 8.3.

 

“Shareholder
Representative” has the meaning provided in Section 2.13.

 

“Stockholders” has the
meaning provided in the Recitals.

 

“Straddle Periods” has the
meaning provided in Section 3.8.

 

“Subsidiary” means, with
respect to any entity, any corporation or other organization, whether
incorporated or unincorporated, of which at least a majority of the securities
or interests having by their terms ordinary voting power to elect a majority of
the board of directors or others performing similar functions is owned,
directly or indirectly, by such entity.

 

“Subsidiary
Common Stock” has the meaning provided in Section 3.2.

 

“SunTrust Warrant” means
the warrant issued to SunTrust Banks, Inc. pursuant to the Subordinated Note
and Warrant Purchase Agreement, dated December 3, 1999, by and among the
Company, the Company Subsidiary and SunTrust Banks, Inc. and assigned to
SunTrust Equity Funding, LLC pursuant to an assignment executed by SunTrust
Banks, Inc. on February 5, 2003.

 

7

 

“Surviving Corporation”
has the meaning provided in the Recitals.

 

“Tax Affiliate” means any
Affiliate of the Company that has been or is currently included in a
consolidated, unitary or combined Return with the Company for any taxable
period during which the Company was required to be included in such
consolidated, unitary or combined Return.

 

“Taxes” means all taxes,
charges, fees, levies or other assessments imposed by any federal, state,
local, or foreign taxing authority, including, without limitation, income,
alternative or add-on minimum, value added, excise, real and personal property,
sales, use, occupation, service, service use, transfer, payroll, withholding,
franchise, environmental, customs, duty, stamp, employment, unemployment,
social security (or similar), disability, severance, gross receipts, license,
capital stock, intangible property and occupation taxes (whether payable
directly or by withholding and whether or not requiring the filing of a Return)
and any claim or assessment by the Internal Revenue Service, the Department of
Labor or other governmental agency arising from or relating to the failure to
timely file any Return (including any interest, penalties or additions
attributable to or imposed on or with respect to any such claim or assessment).

 

“Technology
Park Lease” has the meaning provided in Section 3.10.

 

“Third
Party Debt” has the meaning provided in Section 5.6.

 

“Transaction Documents”
means this Agreement, the Escrow Agreement, the Articles of Merger and the
Employment Agreements and any schedule or attachment to any of the
foregoing.

 

“Transactions” has the
meaning provided in the Recitals.

 

“Transmittal
Letter” has the meaning provided in Section 2.8.

 

“Unaudited
Financial Statements” has the meaning provided in Section 3.6.

 

“Warrant
Payout” means an amount of cash equal to $273,847.

 

“Warrant
Redemption Agreement” has the meaning provided in Section 2.7.

 

ARTICLE 2

MERGER, CLOSING, CONVERSION OF SHARES AND PAYMENT FOR SHARES

 

2.1                                                    Merger. 
Subject to the provisions of this Agreement, and in accordance with
Section 10-2B-11.01 of the ABCA, Purchaser shall be merged with and into
the Company at the Effective Time.  Upon
consummation of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall be the Surviving Corporation and shall continue its
corporate existence under the ABCA.

 

8

 

2.2                                                    Closing. 
Subject to the terms and conditions set forth herein, the Closing of the
Transactions (the “Closing”) shall
take place at the offices of Farella, Braun & Martel LLP, 235
Montgomery Street, Russ Building, San Francisco, California 94104 at 10:00 a.m.
California time on June 1, 2004, or if earlier, three (3) business days
after all of the conditions to closing set forth in Article 6 have been
satisfied or waived, or at such other place, date or time as Parent and the
Company may agree upon in writing. 
Simultaneously with the Closing, the Company and Purchaser shall file
the Articles of Merger with the Secretary of State of the State of Alabama.

 

2.3                                                    Effective Time.  The Merger shall become effective at the Effective Time.  When used in this Agreement, the term “Effective Time” shall mean the date and
time at which the Articles of Merger, which have been executed in accordance
with the relevant provisions of the ABCA and filed with the Secretary of State
of the State of Alabama, are accepted for recording or such later time
established by the Articles of Merger.

 

2.4                                                    Effects of Merger; Effective Date.

 

(a)                        The
Merger shall have the effects set forth in this Agreement and in the applicable
provisions of the ABCA.  Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all property, rights, powers, privileges and franchises of the Company
shall vest in Purchaser as the Surviving Corporation, and all debts,
liabilities and duties of the Company shall become the debts, liabilities and
duties of the Surviving Corporation. 
The Surviving Corporation may, at any time after the Effective Time,
take any action (including executing and delivering any document) in the name
and on behalf of either the Company or Purchaser in order to carry out and
effectuate the Transactions.

 

(b)                       If
the Closing actually occurs, and the Closing Date is later than June 1,
2004 (the “Effective Date”), Parent shall be deemed to (i) have assumed
effective managerial and operational control of the Company and the Company
Subsidiary on the Effective Date and (ii) receive credit and responsibility for
all operations of, and events relating to, the Company accruing, occurring or
arising on and after the Effective Date including, without limitation, the
various items of income and expense of the Company and the Company Subsidiary.

 

2.5                                                    Charter and Bylaws; Directors and Officers.  At or as of the Effective Time (i) the
Articles of Incorporation of the Surviving Corporation shall be amended as set
forth in the Articles of Merger to be the same as those of Purchaser
immediately prior to the Effective Time (except the name of the Surviving
Corporation shall be EPOS Corporation) until further amended in accordance with
applicable law, and (ii) the Bylaws of Purchaser immediately prior to the
Effective Time shall become the Bylaws of the Surviving Corporation.  At or as of the Effective Time, the
directors and officers of Purchaser immediately prior to the Effective Time
shall become the directors and officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.

 

2.6                                                    Merger Consideration.  The total consideration to be paid by Parent
in the Merger (the “Merger Consideration”)
is (a) the Cash Consideration and (b) 402,422 shares (the “Parent Shares”) of Parent’s Class B
Common Stock, no par value (the “Parent
Class B Stock”).

 

9

 

2.7                                                    Conversion of Securities.  As of the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Purchaser, the Company,
the Stockholders or the holders of any securities of Parent, Purchaser or the
Company:

 

(a)                        Each
issued and outstanding share of Company Common Stock held by the Non-Accredited
Investors shall be converted into the right to receive the Cash Payout, upon surrender of the Certificate
formerly representing such outstanding share of Company Common Stock in the
manner set forth in Section 2.8, and as of the Effective Time, each such
outstanding share of Company Common Stock shall no longer be issued and
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each such holder of a Certificate shall cease to have any rights
with respect thereto, except the right to receive the Cash Payout for each such
share of Company Common Stock represented by such Certificate as hereinabove
set forth without interest (or, if applicable, to be treated as a Dissenting
Share);

 

(b)                       Each
issued and outstanding share of Company Common Stock (other than those shares
of Company Common Stock held by the Non-Accredited Investors) shall be
converted into the right to receive the Equity Price, upon surrender of the Certificate formerly representing such
outstanding share of Company Common Stock in the manner set forth in
Section 2.8, and as of the Effective Time, each such outstanding share of
Company Common Stock shall no longer be issued and outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each such
holder of a Certificate shall cease to have any rights with respect thereto,
except the right to receive the Equity Price for each such share of Company
Common Stock represented by such Certificate as hereinabove set forth without
interest (or, if applicable, to be treated as a Dissenting Share); and

 

(c)                        The
SunTrust Warrant shall be redeemed by the Surviving Corporation
contemporaneously with the Closing pursuant to and in accordance with that
certain Warrant Redemption Agreement between the Company and SunTrust Equity
Funding, LLC, dated as of May 28, 2004 (the “Warrant Redemption Agreement”),
substantially in the form attached hereto as Exhibit H, and Parent
shall cause the Surviving Corporation to, upon surrender of the documents
formerly representing such SunTrust Warrant, pay to SunTrust Equity Funding,
LLC an amount equal to the Warrant Payout, and as of the Effective Time and in
accordance with the Warrant Redemption Agreement, the SunTrust Warrant shall no
longer be issued and outstanding and shall automatically be cancelled and
retired and shall cease to exist, and the holder of the SunTrust Warrant (the “Warrant
Holder”) shall cease to have any rights with respect thereto, except
the right to receive the Warrant Payout.

 

2.8                                                    Receipt of
Consideration; Escrow Fund and Exchange Fund.

 

(a)                        At
the Closing, the Merger Consideration shall first be paid or applied as
follows: (i) Parent shall cause the Surviving Corporation to pay in cash
an amount sufficient to cover all of the Company’s transaction costs that have
been incurred by the Company or the Company Subsidiary in connection with the
Transactions then unpaid (the “Company
Transaction Costs”); (ii) Parent shall withhold amounts in
accordance with Section 2.10; and (iii) Parent shall deliver to the Escrow
Agent (A) cash equal to $300,000 and (B) 95,815 shares of Parent Class B Stock
(collectively, the “Escrow Fund”),
which will be deposited with the Escrow Agent (as such term is defined in the
Escrow Agreement attached hereto as Exhibit C

 

10

 

(the “Escrow Agreement”))
and will be governed by the terms set forth in the Escrow Agreement.  The Escrow Fund shall terminate eighteen
(18) months after the Effective Time (except for any portion to cover any
timely made claims of any Parent Indemnified Party pursuant to Article 8
which remain unsatisfied at such time). 
The provisions of the Escrow Agreement shall govern in the event of any
conflict between the Escrow Agreement and this Section 2.8(a).

 

(b)                       Prior
to the Effective Time, Parent will designate a Person reasonably acceptable to
the Company to act as agent (the “Exchange Agent”) for the Company
Shareholders to receive the funds necessary to make payments to such holders
pursuant to this Section 2.8.  On
the Closing Date, Parent shall deliver to the Exchange Agent, in trust for the
benefit of the Company Shareholders, (i) the Parent Shares less the stock
portion of the Escrow Fund and (ii) a wire transfer in an amount equal to the
Cash Consideration less (x) the Company Transaction Costs and (y) the
cash portion of the Escrow Fund (the “Exchange Fund”).

 

(c)                        Any
Company Shareholder and the Warrant Holder that has complied with the following
requirements, as applicable, but only to the extent all of the conditions in
Article 6 have been satisfied or waived, shall be entitled to receive,
upon or as soon as practicable following the Effective Time, (i) in the case of
the Stockholders, the Equity Price for each share of Company Common Stock held
by such Stockholders, (ii) in the case of the Non-Accredited Investors, the
Cash Payout for each share of Company Common Stock held by such Non-Accredited
Investors, and (iii) in the case of the Warrant Holder, the Warrant Payout:

 

(i)                                     For
holders of shares of Company Common Stock, the Company Shareholder has
delivered to the Exchange Agent its stock certificate or certificates with
respect to such share or shares (the “Certificates”)
and a fully executed transmittal letter substantially in form and substance as
set forth in Exhibit D (the “Transmittal
Letter”); and

 

(ii)                                  For
the Warrant Holder, such Warrant Holder has delivered to the Company at or
prior to the Effective Time the documents representing such SunTrust Warrant and
complied with the terms of the Warrant Redemption Agreement.

 

(d)                       Such
payments to be made to the Company Shareholders and the Warrant Holder
hereunder shall be made by wire transfer to the account of each such Company
Shareholder or the Warrant Holder, or by certified check, cashier’s check or
other immediately available funds sent to each such Company Shareholder or the
Warrant Holder, as designated by such Company Shareholder in its executed
Transmittal Letter or by the Warrant Holder pursuant to the Warrant Redemption
Agreement.

 

(e)                        With
respect to any holder of shares of Company Common Stock that has not complied
with the requirements of Section 2.8(c), as soon as practicable after the
Effective Time (but in no event later than five (5) business days thereafter),
the Surviving Corporation shall cause the Exchange Agent to send a notice and
Transmittal Letter, to each such holder of shares of Company Common Stock
advising such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent Certificates and Transmittal Letters, in
exchange for (i) in the case of the Stockholders, the Equity Price payable to
such Stockholders for each share of Company Common Stock held by such
Stockholder and (ii) in the case of the

 

11

 

Non-Accredited
Investors, the Cash Payout payable to such Non-Accredited Investor for each
share of Company Common Stock held by such Non-Accredited Investor.

 

(f)                          All
consideration paid in accordance with the terms of this Section 2.8 shall
be deemed to have been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock represented by the Certificates and the
SunTrust Warrant; subject, however, to the escrow arrangements set forth in
Section 2.8(a) (with respect to the Stockholders only) and the withholding
provisions of Section 2.10.

 

(g)                       Any
portion of the Exchange Fund (including the proceeds of any investments
thereof) that remains unclaimed by any holder of shares of Company Common Stock
twelve (12) months after the Effective Time shall be delivered to the Surviving
Corporation.  Any holder of shares of
Company Common Stock who has not theretofore complied with this
Section within twelve (12) months of the Effective Time shall thereafter
have no rights with respect to the Exchange Fund, and thereafter may make
requests for the payment of (i) with respect to the Stockholders, the Equity
Price for each share of Company Common Stock held by such Stockholder or (ii)
with respect to the Non-Accredited Investors, the Cash Payout for each share of
Company Common Stock held by such Non-Accredited Investor, without any interest
thereon, only to the Surviving Corporation, which shall have the sole
obligation thereafter to make such payments in response to such requests,
subject to compliance by such holders of shares of Company Common Stock with
the terms and conditions of this Section 2.8.  None of the Company, Parent, Purchaser, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
holder of shares of Company Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.

 

2.9                                                    Lost, Stolen or Destroyed Certificates.  In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may require as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent or the Surviving Corporation, as applicable, will pay to
such Person, in exchange for such lost, stolen or destroyed Certificate, the
Cash Payout or Equity Price, as applicable, for each share of Company Common
Stock to which the holder thereof is entitled pursuant to Section 2.7.

 

2.10                                              Withholding Rights.  The Surviving Corporation shall be entitled
to deduct, and withhold from the Cash Payout or Equity Price, as applicable,
otherwise payable hereunder to any holder of shares of Company Common Stock, or
to deduct, and withhold from the Warrant Payout otherwise payable to the Warrant
Holder, such amounts as the Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign Tax law. 
To the extent that amounts are so withheld by the Surviving Corporation,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of such shares of Company Common Stock or the
Warrant Holder in respect of which such deduction and withholding was made by
the Surviving Corporation.

 

12

 

2.11                                              Shares of Dissenting Shareholders.

 

(a)                        Notwithstanding anything in this
Agreement to the contrary, any shares of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time and that are held by a
holder who has properly exercised and perfected his or her dissenters’ rights
under Article 13 of the ABCA (“Dissenting
Shares”) shall not be converted into or exchangeable for the right
to receive the Cash Payout or Equity Price, as applicable, but shall entitle
the holder thereof to receive payment of the fair value of such Dissenting
Shares in accordance with the provisions of Article 13 of the ABCA.

 

(b)                       At the Effective Time, the
Dissenting Shares shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of Dissenting Shares shall
cease to have any rights with respect thereto, except the right to receive the
fair value of such Dissenting Shares in accordance with Article 13 of the
ABCA.  If such holder shall have failed
to perfect or shall have effectively withdrawn or lost his or her right to
receive payment under Article 13 of the ABCA, each share of Company Common
Stock of such holder shall no longer be a Dissenting Share and thereupon shall
be deemed to have been converted into and to have become exchangeable for, as
of the Effective Time, the right to receive the Cash Payout or Equity Price, as
applicable, without any interest thereon in accordance with Section 2.8.

 

(c)                        The Company shall give Parent
(i) prompt notice of any written demands for appraisal of any shares of
Company Common Stock, withdrawals of such demands, and any other instruments
served pursuant to the ABCA (including instruments concerning appraisal or
dissenters’ rights) and received by the Company, together with a copy of any
such demand and (ii) the opportunity to participate in all negotiations
and proceedings with respect to such demands. 
The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for the appraisal of
any shares of Company Common Stock or offer to settle or settle any such
demands unless such payment or settlement will not result in any obligation of
Parent or the Surviving Corporation following the Effective Time.

 

(d)                       In the event that any holder of
shares of Company Common Stock asserts any dissenters’ rights, this Agreement
shall be deemed to have been amended and restated to reduce the aggregate
payments (including the Cash Consideration, the Parent Shares and Escrow Fund)
contemplated to be made to the Company Shareholders hereunder so as to cause
each such holder (other than any such holder with Dissenting Shares) to receive
the consideration that such holder would have received in connection with the
Merger had there been no Dissenting Shares.

 

2.12                                              Adjustment to Merger Consideration.  At least three (3) business days prior to
the Closing Date, the Company shall deliver to Parent the Company’s
consolidated balance sheet as of the close of business on April 30, 2004
(the “Closing Balance Sheet”).  If the total liabilities reflected on the
Closing Balance Sheet exceed the total assets reflected on the Closing Balance
Sheet by more than $1,300,000, then the amount of the Cash Consideration paid
by Parent at Closing pursuant to Section 2.8 shall be reduced by an amount
equal to the amount that such difference exceeds $1,300,000.

 

13

 

2.13                                              Shareholder Representative.  Effective automatically upon the approval of
the Merger and the other Transactions by the Company Shareholders, and without
further act of any Company Shareholder, each Company Shareholder shall be
deemed to have appointed Michael A. Lawler (the “Shareholder Representative”) as the attorney-in-fact of such
Company Shareholder (except such Company Shareholders, if any, that have
perfected their dissenters’ rights under Alabama law), with full power and
authority, including power of substitution, acting in the name of and for and
on behalf of such Company Shareholder and to, in his sole discretion:
(a) enter into and amend or waive any provision of this Agreement;
(b) terminate this Agreement pursuant to the provisions of Article 9;
(c) do all other things and take all other action under or related to this
Agreement which he may consider necessary or proper to effectuate the Merger
and the other Transactions; (d) resolve any dispute with Parent, Purchaser
or the Surviving Corporation over any aspect of this Agreement or any
instrument or document delivered hereunder; (e) execute and take any
actions under the Escrow Agreement; (f) give and receive notices and
communications; (g) authorize delivery to Parent of cash from the Escrow
Fund in satisfaction of claims by Parent and the Escrow Agent; (h) object
to such deliveries; (i) agree to, negotiate, enter into settlements and
compromises of, and demand litigation or arbitration and comply with orders and
awards of courts and arbitrators in respect of such claims; (j) on behalf
of such Company Shareholder to enter into any agreement to effectuate any of
the foregoing items (a)–(i) which shall have the effect of binding such Company
Shareholder as if such Company Shareholder had personally entered into such
agreement(s), taken such actions or refrained from taking such actions
described in Sections (a)-(i) above; and (k) take all other actions
necessary or appropriate in the judgment of the Shareholder Representative for
the accomplishment of the foregoing. 
Notwithstanding the foregoing, all actions taken or decisions made by
the Shareholder Representative on behalf of the Company Shareholders shall be
taken or made in a manner which is ratable and equitable among all Company
Shareholders.  This appointment and
power of attorney shall be deemed an agency coupled with an interest and all
authority conferred hereby shall be irrevocable and shall not be subject to
termination by operation of law, whether by the death or incapacity or
liquidation or dissolution of any Company Shareholder or the occurrence of any
other event or events and any action taken by the Shareholder Representative
pursuant to this Section 2.13 shall be as valid as if any such death,
incapacity, liquidation, dissolution or other event had not occurred,
regardless or whether or not the Shareholder Representative, the Company,
Parent or Purchaser shall have received notice of any such death, incapacity,
liquidation, dissolution or other event. 
The Shareholder Representative may not terminate this power of attorney
with respect to any Company Shareholder or such successors or assigns without
the consent of Parent.  Effective
automatically upon approval of the Merger and the other Transactions by the
Company Shareholders, and without further act of any Company Shareholders, each
Company Shareholder agrees to hold the Shareholder Representative harmless and
indemnify the Shareholder Representative, severally (and not jointly) in
accordance with the amount of Merger Consideration received by such
indemnifying Company Shareholder, with respect to any and all loss, damage or
liability and expenses (including legal fees) which such Company Shareholder
may sustain as a result of any action taken in good faith by the Shareholder
Representative.  In the event of the
death, physical or mental incapacity or resignation of the initial Shareholder
Representative or any successor, the Company Shareholders shall, by a vote of
the Company Shareholders who held at least a majority of the outstanding shares
of Company Common Stock on the Execution Date, promptly appoint a substitute
and shall in writing advise Parent thereof.

 

14

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF

THE COMPANY AND THE STOCKHOLDERS

 

Except as described in the Company Disclosure Schedule attached
hereto, the Company and each of the Stockholders hereby jointly and severally
represent and warrant to Parent and Purchaser, as of the Execution Date:

 

3.1                                                    Organization
and Authority.

 

(a)                        The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and the Transaction Documents to which the Company is a party
and to perform its obligations hereunder and thereunder.  The execution and delivery by the Company of
this Agreement and the Transaction Documents to which the Company is a party,
the performance by it of its obligations hereunder and thereunder, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action on the part of the
Company and the Company Shareholders. 
This Agreement, and the Transaction Documents to which the Company is a
party, constitute valid and binding obligations of the Company, and, assuming
the valid execution and delivery of this Agreement by Parent, Purchaser and the
Shareholder Representative, are enforceable against the Company in accordance
with their respective terms, except, in each such case, as such enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, or other similar laws of general application relating to, affecting
or limiting creditors’ rights and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding at law or in
equity.  The Company owns 100% of the
equity interests of Computer Communications Specialists, Inc., a Georgia
corporation (the “Company Subsidiary”),
and the Company Subsidiary is the only Subsidiary of the Company.

 

(b)                       The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of Alabama, with full corporate power to execute and
deliver this Agreement and to carry out the Transactions.  The Company is qualified to conduct business
as a foreign corporation in the jurisdictions indicated on Section 3.1(b)
of the Company Disclosure Schedule attached as Schedule 1 to
this Agreement (the “Company Disclosure
Schedule”). 
Section 3.1(b) of the Company Disclosure Schedule lists all
states in which the Company or the Company Subsidiary owns or leases property
or has resident employees.  Neither the
Company nor the Company Subsidiary has received any written claim or written
notice, whether formal or otherwise, (i) from any jurisdiction other than those
listed on Section 3.1(b) of the Company Disclosure Schedule to the
effect that it is or was required to qualify to conduct business or (ii) from
any jurisdiction listed on Section 3.1(b) of the Company Disclosure
Schedule that such jurisdiction may withdraw the Company’s or the Company
Subsidiary’s authorization to conduct business therein.  True, correct and complete copies of the
articles of incorporation, bylaws or other charter documents of the Company and
the Company Subsidiary as in effect on the Execution Date have been delivered
to Parent or its representatives. 
Neither the Company nor the Company Subsidiary is in violation of any of
the provisions of its articles of incorporation, bylaws or other charter
documents.

 

15

 

(c)                        Neither
the Company nor the Company Subsidiary is a registered or reporting company
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)

 

3.2                                                    Capitalization
of the Company and the Company Subsidiary.

 

(a)                        The
authorized capital stock of the Company consists of 5,000,000 shares of Company
Common Stock.  As of the Execution Date,
2,865,000 shares of Company Common Stock are issued and outstanding and
1,949,000 shares of Company Common Stock are held by the Company in its
treasury.  The authorized capital stock
of the Company Subsidiary consists of 100,000 shares of common stock, par value
$1.00 per share (the “Subsidiary Common Stock”).  As of the Execution Date, 100 shares of
Subsidiary Common Stock were issued and outstanding and all of such shares were
held by the Company.  All issued and
outstanding shares of the Company and the Company Subsidiary are validly
issued, fully paid and nonassessable and, to the Company’s Knowledge, are owned
free and clear of all Encumbrances.  To
the Company’s Knowledge, the names, addresses and states of residency of the
record holders of the issued and outstanding shares of Company Common Stock are
as set forth on Section 3.2(a) of the Company Disclosure Schedule.

 

(b)                       Except
for the SunTrust Warrant (which will be redeemed by the Surviving Corporation
at the Effective Time in accordance with the terms of the Warrant Redemption
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 for, shares of the
capital stock of the Company or the Company Subsidiary or rights to obtain any
of the foregoing.

 

3.3                                                    Consents and Approvals.  No consent, waiver, authorization or
approval of any foreign, domestic, federal, territorial, state or local
governmental authority, quasi-governmental authority, instrumentality, court,
government or self-regulatory organization, commission, tribunal or organization
or any regulatory body, and no declaration to or filing with any governmental
authority, is required in connection with the execution and delivery of this
Agreement or any of the Transaction Documents by the Company or the
Stockholders, or the performance of their respective obligations hereunder or
thereunder, except (i) such consents, waivers, authorizations, approvals,
declarations and filings as may be required under applicable securities laws,
(ii) the filing of the Articles of Merger with the Secretary of State of the
State of Alabama, (iii) the approval of this Agreement and the Transactions by
the Company Shareholders, and (iv) such consents, waivers, authorizations,
approvals, declarations and filings, the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect on the Company.

 

3.4                                                    Investments in Others.  The Company does not have any investment in
or advance or loan to or guarantee of, or any commitment to make any investment
in, advance or loan to or guarantee of, any Person other than the Company
Subsidiary.

 

16

 

3.5                                                    Compliance
with Laws and Other Instruments.

 

(a)                        The
Company and the Company Subsidiary hold all licenses, permits and
authorizations necessary for the lawful conduct of their business as now being
conducted pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all governmental bodies, agencies and other authorities having
jurisdiction over them or any part of its respective operations, except for
such licenses, permits and authorizations the failure of which to obtain have
not had and could not reasonably be expected to have a Material Adverse Effect
on the Company.  There are no violations
or, to the Company’s Knowledge, claimed violations by the Company or the
Company Subsidiary of any such license, permit or authorization or any such
statute, law, ordinance, rule or regulation, except for such violations or
claimed violations that have not had and could not reasonably be expected to
have a Material Adverse Effect on the Company.

 

(b)                       Neither
the execution and delivery of this Agreement or any of the Transaction
Documents by the Company nor the performance by the Company of any of its
obligations hereunder or thereunder, will (i) violate any provision of any
United States federal, state or local statute, law, ordinance, rule or
regulation or any decree or order of any governmental entity thereof, (ii)
conflict with, result in the breach of any of the terms or conditions of,
constitute a default under, permit any party to accelerate any right under or
terminate, constitute a waiver of any material right under, require consent of
any party under, or result in the creation of any Encumbrance upon any of the
properties, assets or capital stock of the Company or the Company Subsidiary
pursuant to any material agreement, indenture, mortgage, lease, franchise,
license, permit, authorization or other similar instrument of any kind to which
the Company or the Company Subsidiary is a party or by which any of the
Company’s properties or assets is bound or (iii) conflict with, result in the
breach of any of the terms or conditions of, or constitute a default under any
provision of any charter document of the Company or the Company Subsidiary,
except, in the case of clauses (i) and (ii) only, such violations, conflicts,
breaches, defaults, waivers, consents and Encumbrances that could not
reasonably be expected to have a Material Adverse Effect on the Company.

 

3.6                                                    Financial
Statements, Accounting Records and Internal Controls.

 

(a)                        Audited
Financial Statements.  The Company
has delivered to Parent (i) copies of the Company’s audited consolidated
balance sheet as of August 31, 2001, 2002, 2003, and the related
consolidated statements of operations, stockholders’ equity and cash flows
(together with the auditors’ report thereon) for the periods then ended,
together with notes to such financial statements (the “Audited Financial Statements”).  The Audited Financial Statements are in
accordance with the books and records of the Company and the Company Subsidiary
and have been prepared in accordance with GAAP consistently applied throughout
the periods covered thereby and present fairly in all material respects, as of
their respective dates, the financial condition, cash flows and results of
operations of the Company and the Company Subsidiary as of their respective
dates.  The Company has made available
to Parent copies of each management letter or other letter delivered to the
Company in connection with such financial statements or relating to any review
by auditors of the internal controls of the Company during the five-year period
ended August 31, 2003 or thereafter, and has made available for inspection
all reports and working papers produced or developed by auditors or management
in

 

17

 

connection with
their examination of such financial statements, as well as all such reports and
working papers for prior periods for which any Tax liability of Company has not
been finally determined or barred by applicable statutes of limitation.  Since August 31, 1998, there has been
no change in any of the significant accounting policies, practices or
procedures of the Company or the Company Subsidiary other than those changes
specifically required by GAAP.

 

(b)                       Unaudited
Interim Financial Statements.  The
Company has delivered to Parent consolidated balance sheets for the Company for
each month since August 31, 2003, and the related consolidated statements of
operations, stockholder’s equity and cash flows for the one month period then
ended (the “Unaudited Financial Statements” and, together with the Audited
Financial Statements, the “Company Financials”).  The Unaudited Financial Statements are in
accordance with the books and records of the Company and have been prepared in
conformity with GAAP applied on a consistent basis, except that the Unaudited
Financial Statements do not have notes thereto and may be subject to ordinary
period end adjustments.  The statements
of operations and cash flows present fairly in all material respects the
consolidated results of operations and cash flows of Company for the respective
periods covered, and the balance sheets present fairly in all material respects
the financial condition of Company as of their respective dates.

 

(c)                        Change
in Auditor.  The Company changed its
auditor during the fiscal year ended August 31, 2002.  The reasons for the change in auditor are
described in Section 3.6(c) of the Company Disclosure Schedule.  Other than the change in auditor described
in Section 3.6 of the Company Disclosure Schedule, there has been no
change in the Company’s auditor.

 

(d)                       Accounting
Records.  The Company and the
Company Subsidiary have records that accurately and validly reflect its
respective transactions and accounting controls sufficient to ensure that such
transactions are (i) executed in accordance with management’s general or
specific authorization and (ii) recorded in conformity with GAAP so as to
maintain accountability for assets. 
Such records are stored safely and securely pursuant to procedures and
techniques utilized by companies of comparable size in similar lines of
business.  The data processing
equipment, data transmission equipment, related peripheral equipment and
software used by the Company or the Company Subsidiary in the operation of the
Business (including any disaster recovery facility) to generate and retrieve
such records are comparable in performance, condition and capacity with those
utilized by companies of comparable size in similar lines of business.

 

3.7                                                    Absence of Undisclosed Liabilities.  To the Company’s Knowledge, neither the
Company nor the Company Subsidiary has any indebtedness or any other liability
(absolute, contingent, asserted or unasserted), which is not reflected on or
provided for in full on the balance sheets in the Company Financials which is
required by GAAP to be provided or reserved on such Company Financials.

 

3.8                                                    Taxes.

 

(a)                        Tax
Returns.  The Company has timely
filed or caused to be timely filed with the appropriate taxing authorities all
Returns that are required to be filed by, or with respect to, the Company and
such Returns are correct and complete in all material respects.  None of

 

18

 

such Returns
contains a disclosure statement under Section 6662 of the Code or any
similar provision of state, local or foreign tax law.  For purposes of this Section 3.8, references to the Company
shall be deemed to include a reference to the Company, its Tax Affiliates and
the Company Subsidiary.

 

(b)                       Payment
of Taxes.  All Taxes and Tax
liabilities of the Company (whether or not disclosed on any Return) for all
taxable years or periods that end on or before the Effective Time and, with
respect to any taxable year or period beginning before and ending after the
Effective Time (“Straddle Periods”),
the portion of such taxable year or period ending on and including the
Effective Time have been paid or adequate reserves therefor accrued, or will be
paid or so accrued prior to the date of the Closing Balance Sheet, as a
liability on the Company Financials (and such reserves are adequate in
accordance with GAAP).  For purposes of
this representation, all Taxes and Tax liabilities with respect to the income,
property or operations of the Company that relate to a Straddle Period shall be
apportioned between the pre-Effective Time period and the post-Effective Time
period as follows: (i) in the case of Taxes other than income Taxes and
sales and use Taxes, on a per diem basis, and (ii) in the case of income
Taxes and sales and use Taxes, as determined from the books and records of the
Company, to the portion of such period ending on the Effective Time as though
the taxable year of the Company terminated at the close of business on the
Effective Time, and based on accounting methods, elections and conventions that
do not have the effect of distorting income and expenses.

 

(c)                        Other
Tax Matters.

 

(i)                                     Section 3.8(c)
of the Company Disclosure Schedule sets forth (A) for each of the
past five taxable years, each federal and state jurisdiction in which the
Company or the Company Subsidiary paid, or was obligated to pay, any Taxes,
(B) each taxable year or other taxable period of the Company for which an
audit or other examination of Taxes by the appropriate tax authorities of any
nation, state or locality is currently in progress (or scheduled as of the
Execution Date to be conducted) together with the names of the respective tax
authorities conducting (or scheduled to conduct) such audits or examinations
and a description of the subject matter of such audits or examinations,
(C) the most recent taxable year or other taxable period for which an
audit or other examination relating to Taxes of the Company has been finally
completed and the disposition of such audits or examinations, (D) the
taxable years or other taxable periods of the Company which will not be subject
to the normally applicable statute of limitations by reason of the existence of
circumstances that would cause any such statute of limitations for applicable
Taxes to be extended, (E) the amount of any proposed adjustments (and the
principal reason therefor) relating to any Returns for Tax liability of the
Company which have been proposed or assessed by any taxing authority and not
satisfied as of the Execution Date and (F) a list of all notices received
by the Company from any taxing authority relating to any issue which could
affect the Tax liability of the Company, which issue has not been finally
determined and which, if determined adversely to the Company, would reasonably
be expected to result in a Tax liability.

 

(ii)                                  Other
than with respect to the Company itself and the Company Subsidiary, the Company
has not been included in any “consolidated,” “unitary” or “combined” Return
provided for under the law of the United States, any foreign jurisdiction or
any state or locality with respect to Taxes for any taxable period for which
the statute of limitations has not

 

19

 

expired.  The Company does not have any liability for
the Taxes of any Person (other than the Company itself and the Company
Subsidiary) as defined in Section 7701(a)(1) of the Code under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.

 

(iii)                               All
Taxes which the Company is (or was) required by law to pay, withhold or collect
have been duly paid, withheld or collected, and with respect to amounts which
the Company is (or was) required to withhold or collect, such amounts have been
timely paid over to the proper authorities to the extent due and payable.

 

(iv)                              There
are no tax sharing, allocation, indemnification or similar agreements or
arrangements in effect as between the Company and any other party (including
any predecessor or Affiliate thereof) under which Parent or the Company could
be liable for any Taxes or other claims of any party and any such agreements or
arrangements that do exist shall be terminated prior to the Effective Time.

 

(v)                                 The
Company is not a party to any agreement, contract, arrangement or plan that
would result in the payment by the Company of any “excess parachute payment”
within the meaning of Section 280G of the Code.

 

(vi)                              Neither
the Company nor the Company Subsidiary were acquired in a “qualified stock
purchase” under Section 338(d)(3) of the Code and neither the Company nor
the Company Subsidiary are subject to any constructive elections under Section 338
of the Code or the regulations thereunder.

 

(vii)                           The
Company is not required to include in income any adjustment pursuant to
Section 481(a) of the Code (or similar provisions of other law or
regulations) by reason of a change in accounting method.

 

(viii)                        None
of the assets of the Company is property that is required to be treated as
owned by any other Person pursuant to the “safe harbor lease” provisions of
former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended,
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
none of the assets of the Company is “tax exempt use property” within the
meaning of Section 168(h) of the Code and none of the assets of the
Company secures any debt the interest on which is tax exempt under
Section 103 of the Code.

 

(ix)                                No
indebtedness of the Company consists of “corporate acquisition indebtedness”
within the meaning of Section 279 of the Code.

 

(x)                                   The
Company is not a “United States real property holding company” within the meaning
of Section 897 of the Code.

 

(xi)                                There
currently are no excess loss accounts, deferred intercompany gains or losses or
other like items pertaining to the Company that could result in any Tax
liability for the Company.

 

20

 

(xii)                             The
Company is not engaged in business in any tax jurisdiction in which it does not
file Returns for sales and use, income or other Taxes.

 

3.9                                                    Absence of Certain Changes and Events.  Except as set forth on Section 3.9 of
the Company Disclosure Schedule, since August 31, 2003, there has not
been:

 

(a)                        Any
event or occurrence that has had or could reasonably be expected to have a
Material Adverse Effect on the Company;

 

(b)                       Any
damage, destruction or loss, of or to any material asset of the Company or the
Company Subsidiary, whether or not covered by insurance, except for ordinary
wear and tear in the normal course of business;

 

(c)                        Any
waiver or compromise by the Company or the Company Subsidiary of a valuable
right or of a material debt owed to it;

 

(d)                       Any
satisfaction or discharge of any Encumbrance or payment of any obligation by
the Company or the Company Subsidiary in any amount in excess of $50,000 in any
one case, or $100,000 in the aggregate, other than payments, discharges or
satisfactions made or given in the ordinary course of business consistent with
past practices;

 

(e)                        Any
change to a material contract or agreement by which the Company, the Company
Subsidiary or any of their assets is bound or subject, other than changes made
in the ordinary course of business consistent with past practices;

 

(f)                          Any
material change in any compensation arrangement or agreement (including,
without limitation, the entry into, or modification of, any employment,
severance or termination agreement) with any employee, officer, director or
shareholder of the Company or the Company Subsidiary;

 

(g)                       Other
than in the ordinary course of business consistent with past practices, any
sale, assignment or transfer of any Intellectual Property or other intangible
assets of the Company or the Company Subsidiary;

 

(h)                       Other
than in the ordinary course of business consistent with past practices, any
sale or other disposition of any right, title or interest in or to any assets
or properties of the Company or the Company Subsidiary or any revenues derived
therefrom;

 

(i)                           Any
creation, incurrence or assumption of any indebtedness for money borrowed by
the Company or the Company Subsidiary exceeding $50,000  in the aggregate;

 

(j)                           Any
capital expenditures by the Company or the Company Subsidiary exceeding $50,000
in the aggregate;

 

(k)                        Any
material change in any accounting principle or method or election for federal
income tax purposes used by the Company, other than as specifically required by
GAAP;

 

21

 

(l)                           Any
resignation or termination of employment of any officer or employee of the
Company or the Company Subsidiary, or any resignation or termination of
consulting services of any consultant of the Company or the Company Subsidiary;

 

(m)                     Any
mortgage, pledge, transfer of a security interest in, or Encumbrance, created
by the Company or the Company Subsidiary, with respect to any of its respective
properties or assets, except Permitted Liens;

 

(n)                       Any
loans or guarantees made by the Company or the Company Subsidiary to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

 

(o)                       Any
change in the capital stock of the Company or the Company Subsidiary or any
declaration, setting aside or payment or other distribution in respect to any
of such capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any such capital stock; or

 

(p)                       Any
authorization, approval, arrangement, agreement or commitment by the Company or
the Company Subsidiary to do any of the things described in this
Section 3.9.

 

3.10                                              Title to
Property.

 

(a)                        Each
of the Company and the Company Subsidiary have good and marketable title to all
real property owned by them (the “Owned Real
Property”), and good title to all other tangible and intangible
property owned by them.  All such
property is held free and clear of all Encumbrances (other than Permitted
Liens).  All of the leases and subleases
under which the Company or the Company Subsidiary holds a leasehold interest in
real property (the “Leased Real Property”), are in full force
and effect and are valid, binding and enforceable, and neither the Company nor
the Company Subsidiary has received any notice of any claim of any sort that
has been asserted by anyone adverse to the rights of the Company or the Company
Subsidiary under any of the leases or subleases mentioned in this Section 3.10.  To the Knowledge of the Company, there are
no adverse possession claims regarding any Owned Real Property or Leased Real
Property. Assuming exercise of the purchase option in the Lease Agreement by
and between the Industrial Development Board of the City of Auburn, Alabama and
the Company, dated as of September 1, 1998 (the “Technology Park Lease”), the Company would
obtain upon such exercise good and marketable title to the real property
described in the Technology Park Lease, free and clear of all Encumbrances
(other than Permitted Liens); provided that the preceding clause shall
be limited to the Company’s Knowledge with respect to the condition of the
title held by the Industrial Development Board of the City of Auburn, Alabama.

 

(b)                       Neither
the Company nor the Company Subsidiary has received any written notice that any
entity or Governmental Entity considers the operation, use or ownership of the
Owned Real Property or the Leased Real Property to have violated any zoning,
land use or similar laws, ordinances, rules, regulations or administrative
interpretations applicable thereto, or that any investigation has been
commenced regarding such possible violation, except in each

 

22

 

case such
violations that have not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. 
To the Knowledge of the Company, the present use and operation of the
Owned Real Property and the Leased Real Property is in compliance in all
material respects with all existing zoning, land use and similar laws,
ordinances, rules, regulations or administrative interpretations applicable
thereto.  No condemnation or eminent
domain proceeding against any part of the Owned Real Property or Leased Real
Property is pending or, to the Knowledge of the Company, threatened.  All operating facilities located on the
Owned Real Property and the Leased Real Property are supplied with utilities
and other services, assuming the operation of such utilities, in such amounts
as are reasonably necessary for the current operation of such facilities.

 

(c)                        All
of the material tangible personal property used in the operation of the
business (including, without limitation, the physical plants and equipment) of
the Company and the Company Subsidiary have been maintained in accordance with
standard industry practice or are in sufficient operating condition and repair
for the operation of the business of the Company and the Company Subsidiary as
currently conducted, except for ordinary wear and tear and such repair,
maintenance or replacement items as are set forth on Section 3.10(c) of
the Company Disclosure Schedule.  Except
as set forth on Section 3.10(c) of the Company Disclosure Schedule, all
such material tangible personal property is held free and clear of all
Encumbrances (other than Permitted Liens).

 

(d)                       The
Company is in compliance in all material respects as of the Execution Date, and
will continue to be in compliance in all material respects until the Effective
Time, with the Technology Park Lease. 
The Company has a fully vested and exercisable option to purchase the
land leased under the Technology Park Lease in accordance with the terms of the
Technology Park Lease.

 

3.11                                              Certain
Transactions.

 

(a)                        Except
as disclosed on Section 3.11(a) of the Company Disclosure Schedule:
(i) no Affiliate of the Company is presently a party to any agreement or
arrangement with the Company (A) providing for the furnishing of
materials, products or services to or by, or (B) providing for the sale or
rental of real or personal property, (including any Intellectual Property) to
or from, any such Affiliate; and (ii) to the Company’s Knowledge, no
holder of Company Common Stock nor any officer or director of the Company or
the Company Subsidiary possesses, directly or indirectly, any financial
interest in, or is a director, officer or employee of, any Person which is a
supplier, customer, lessor, lessee, licensor, developer or competitor of the
Company or the Company Subsidiary.

 

(b)                       The
Company is not bound by any agreement with, is not indebted to, and no amount
is owing to the Company by, any of the officers or directors of the Company,
any of the Stockholders or any Affiliate of any of the Stockholders.  The Company has not made or authorized any
payment to any of the Stockholders or any of their Affiliates except for
salaries and other employment compensation payable to employees of the Company
or the Company Subsidiary in the ordinary course of business consistent with
past practice and at the regular rates payable to them.

 

23

 

3.12                                              Intellectual
Property.

 

(a)                        For
all purposes of this Agreement, the following terms shall have the following
respective meanings:

 

(i)                                     “Intellectual Property” means all patents,
trademarks, trade names, service marks, copyrights, software, supplier lists,
customer lists, trade secrets, and know-how, and applications or registrations
for any of the foregoing, and all licenses and similar rights from any third
party related to any of the foregoing.

 

(ii)                                  “Company Intellectual Property”
means the Intellectual Property of the Company and the Company Subsidiary.

 

(b)                       Section 3.12(b) of the Company
Disclosure Schedule sets forth a list of all Company Intellectual
Property, including a summary description and specification of each item,
identifying, where applicable, the date registered, granted or applied for, the
expiration date and the status.

 

(c)                        Except as set forth in
Section 3.12(c) of the Company Disclosure Schedule and subject to the
further provisions of this Section 3.12(c): (i) the Company or the Company
Subsidiary owns, on an exclusive basis (other than with respect to Intellectual
Property licensed from third parties), free and clear of all Encumbrances (other
than Permitted Liens), all of the Company Intellectual Property; (ii) no
other Person has any rights in such Company Intellectual Property, (other than
with respect to Intellectual Property licensed from third parties);
(iii) such Company Intellectual Property is sufficient in all material
respects to permit the continued lawful conduct of the business in the manner
now conducted by the Company and the Company Subsidiary; (iv) the Company
and the Company Subsidiary do not pay or receive any royalty from any Person
with respect to any of the Company Intellectual Property (other than with
respect to Intellectual Property licensed from third parties) nor has the
Company or the Company Subsidiary licensed any Person to use any of the Company
Intellectual Property; (v) there are no restrictions on the transfer of
any item of Company Intellectual Property or any license or other interest
therein held by the Company or the Company Subsidiary in respect of such
Company Intellectual Property; (vi) there are no assignments or agreements
to assign the Company Intellectual Property to any Person; (vii) all
rights of the Surviving Corporation in and to the Company Intellectual Property
after the Closing will be unaffected by the Transactions and the Transaction
Documents; (viii) neither the Company nor the Company Subsidiary has given
or received any notice of any pending or overtly threatened conflict with,
misappropriation of, or infringement of the rights of others with respect to,
any of the Company Intellectual Property or with respect to any license of the
Company Intellectual Property; (ix) to the Company’s Knowledge, no Person
is infringing on or violating the Company Intellectual Property; and,
(x) no Company Intellectual Property, and no services or products sold by
the Company or the Company Subsidiary, conflict with or infringe upon any
Intellectual Property of any third party. 
Neither the Company, the Company Subsidiary or any Stockholder, nor, to
the Company’s Knowledge, any other employee, contractor or agent of the Company
or the Company Subsidiary, has intentionally misappropriated the trade secrets,
know how or other Intellectual Property of any third party.

 

24

 

(d)                       Except as set forth on
Section 3.12(d) of the Company Disclosure Schedule, each item of Company
Intellectual Property is subsisting, all necessary application, prosecution,
registration, issuance, maintenance and renewal fees in connection with the
registered Company Intellectual Property have been paid and all necessary
documents and certificates in connection with the registered Company
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining the Company Intellectual
Property.  Except as set forth on
Section 3.12(d) of the Company Disclosure Schedule, there are no actions
that must be taken by the Surviving Corporation, Parent or Purchaser within one
hundred twenty (120) days of the Effective Time, including the payment of any
registration, maintenance or renewal fees or the filing of any responses to the
U.S. Patent and Trademark Office (the “PTO”) office actions, documents,
applications or certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any registered Company Intellectual
Property.  In each case in which the
Company or the Company Subsidiary has acquired any Company Intellectual
Property from any person, the Company or the Company Subsidiary, as applicable,
has obtained an enforceable assignment, sufficient to irrevocably transfer all
such Company Intellectual Property (including the right to seek past and future
damages with respect thereto) to the Surviving Corporation.  To the maximum extent provided for, by, and
in accordance with, applicable laws and regulations, the Company or the Company
Subsidiary, as applicable, has recorded each such assignment of Company
Intellectual Property with the relevant governmental entity, including the PTO,
the U.S. Copyright Office, or their respective equivalents in any relevant
foreign jurisdiction, as the case may be.

 

(e)                        To the Company’s Knowledge, there are no facts or circumstances that
would render any of the Company Intellectual Property invalid or
unenforceable.  Without limiting the
foregoing, to the Company’s
Knowledge, there
is no information, materials, facts or circumstances, including any information
or fact that would constitute prior art, that would render any of the Company
Intellectual Property invalid or unenforceable, or would adversely affect any
pending application for any item of Company Intellectual Property, and the
Company has not  misrepresented, or failed to
disclose, and, is unaware of any misrepresentation or failure to disclose, any
fact or circumstances in any application for any item of Company Intellectual
Property that would constitute fraud or a misrepresentation with respect to
such application or that would otherwise affect the validity or enforceability
of any item of Company Intellectual Property.

 

(f)                          There was no material breach of the duty of candor to the PTO during the application and
prosecution of each patent, including, but not limited to, material
misrepresentations, misleading statements or omissions relating to the
application or prosecution of each patent, including, but not limited to,
inventorship, prior public use, citation of prior art or date of invention.

 

(g)                       No item of Company Intellectual
Property was developed by copying, modifying, reverse engineering, decompiling,
disassembling, or creating derivatives of, any technology belonging to a third
party in violation of
applicable law
or such third party’s ownership rights without having the express permission
of, and an assignment of, or license of, any and all Company Intellectual
Property relating thereto from such third party.

 

25

 

(h)                       The Company and the Company
Subsidiary have taken reasonable security measures to protect the secrecy,
confidentiality and value of their respective trade secrets, including
requiring all employees and consultants to execute and deliver biding agreement
relating to non-disclosure of confidential information and assignments of
inventions, a copy of the form of which has been delivered to Parent.  No proprietary technology has been disclosed
to any Person who is not an employee or contractor of the Company or the
Company Subsidiary.  All of the Company
Intellectual Property was developed by Persons who are or were employees or
contractors of the Company or the Company Subsidiary (except that Company
Intellectual Property which is licensed from a third party), each of whom
entered into a form of assignment of intellectual property and confidential information
agreement with the Company.  To the Company’s Knowledge, no employee or contractor of the
Company or the Company Subsidiary has executed any agreement to assign any
Company Intellectual Property to any Person other than the Company or the
Company Subsidiary.

 

(i)                           The Company has delivered to Parent
all known material documentation with respect to the
Company Intellectual Property that is
in the possession of the Company or the Company subsidiary, which documentation is accurate
and complete in all material respects and reasonably sufficient in detail and
content to explain such Company Intellectual Property to a third party.  None of the Company Intellectual Property is
subject to any export restriction by the United States government.

 

(j)                           Section 3.12(j) of the Company
Disclosure Schedule lists all licenses, grants, assignments or other
conveyances of any interest in Company Intellectual Property made by the
Company or the Company Subsidiary
licensed, granted, assigned or conveyed since September 1, 2002 for which
the Company has received or is entitled to receive consideration in excess of $50,000.

 

(k)                        Section 3.12(k) of the Company
Disclosure Schedule lists all material
readily
available off-the-shelf software programs that the Company or the Company
Subsidiary licenses from third parties.

 

3.13                                              Litigation and Other Proceedings.  Except as disclosed on Section 3.13(a)
of the Company Disclosure Schedule, none of the Company, the Company Subsidiary
or any Stockholder, or, to the Company’s Knowledge, any other officer or
director of the Company or the Company Subsidiary or any Company Shareholder is
a party to any pending or, to the Knowledge of the Company, threatened action,
suit, claim, arbitration, proceeding or investigation (“Action”) in the United States or elsewhere
relating to the Company or the Company Subsidiary or their respective
businesses, and the Company and the Company Subsidiary are not subject to any
order, writ, judgment, decree or injunction, which has had or could reasonably
be expected to have a Material Adverse Effect on the Company, or which
prevents, or could reasonably be expected to prevent, completion of the Merger
and the other Transactions. 
Section 3.13(b) of the Company Disclosure Schedule contains a
complete list of all material lawsuits brought against the Company or the
Company Subsidiary during the last five (5) years, together with a brief
statement of the nature and amount of the claim, the court and jurisdiction in
which the claim was brought, the resolution (if resolved), and the availability
of insurance to cover the claim.

 

26

 

3.14                                              Contracts.  Section 3.14 of the Company Disclosure
Schedule describes all currently effective contracts to which the Company
or the Company Subsidiary is a party or by which the Company or the Company
Subsidiary or any of their respective properties or assets are bound which
(a) involve the payment by the Company or the Company Subsidiary of more
than $100,000 over the remaining term of the contract; (b) are financing
documents, loan agreements, guaranties or promissory notes; (c) are
manufacturing representative, distributorship, sales agency or other similar
agreements that have a term of one year or more after the Effective Date and are
not terminable by the Company on thirty (30) days or less without penalty or
premium; (d) any contract or agreement providing for the indemnification of any
officer or director of the Company or the Company Subsidiary; (e) any contract
prohibiting or materially restricting the ability of the Company or the Company
Subsidiary to compete in any geographic area with any person, other than the
contracts set forth in Section 3.14(c); (f) any joint venture agreement,
partnership agreement or other similar contract involving a sharing of profits
and expenses; or (g) any contract which has a term of one year or more after
the Effective Date and is not terminable by the Company on ninety (90) days or
less without penalty or premium.  The
Company and the Company Subsidiary, and to the Knowledge of the Company, all of
the other parties to such agreements, are in compliance in all material
respects with all material provisions of all such agreements.

 

3.15                                              Insurance and Banking Facilities.  Section 3.15 of the Company Disclosure
Schedule contains a list of (i) all material contracts of insurance
and indemnity (other than indemnity provisions contained in contracts the
primary purpose of which is not indemnity) of or relating to the Company or the
Company Subsidiary (except insurance related to Employee Plans) in force at the
Execution Date (including name of insurer or indemnitor, agent, annual charge,
coverage and expiration date); (ii) the names and locations of all banks
in which the Company or the Company Subsidiary have accounts; and
(iii) the names of all Persons authorized to draw on such accounts.  All premiums and other payments due prior to
the Execution Date with respect to all contracts of insurance or indemnity in
force at the Execution Date have been or will be paid prior to the
Closing.  The Company and the Company
Subsidiary are, and at all times, during the past two (2) years have been,
insured with reputable insurers against all risks normally insured against by
companies in similar lines of business.

 

3.16                                              Employees;
Employee Plans.

 

(a)                        Section 3.16(a)
of the Company Disclosure Schedule sets forth a list of the Company’s and
the Company Subsidiary’s currently effective contracts for the employment or
engagement of any officer, employee or consultant, whether on a full-time,
part-time or consulting basis and the Company has provided copies of such
contracts to Parent.  There are no
agreements, arrangements or understandings that would restrict the ability of
the Company to terminate the employment or engagement of any of the Company’s
or the Company Subsidiary’s employees or consultants at any time, at will,
without liability.  To the Knowledge of
the Company, no employee or consultant has any plan or intention to terminate
his or her employment or consulting services with the Company or the Company
Subsidiary.

 

(b)                       Section 3.16(b)
of the Company Disclosure Schedule sets forth a: (i) list of the
directors, officers, employees, and contractors of the Company and the Company
Subsidiary (including all employees or consultants during the two (2) years
immediately preceding the

 

27

 

Execution Date that provided material services to the Company or the
Company Subsidiary); and (ii) summary description of, for each such
Person, the date of hire, termination date (if applicable), job title, the
current rate of compensation payable to such Person (including the date of the
most recent increase thereof and including the scheduled date for the next
increase), bonuses paid to such Person in each of the two (2) years ending on
the same date as the Execution Date, whether such Person is an active employee
or on leave, whether such Person is employed or engaged on a full-time,
part-time or consulting basis, whether such Person is exempt or non-exempt, the
amount of vacation pay accrued for such Person, and any severance pay, lump sum
or other payment, compensation or other remuneration that such Person is or
would be eligible to receive upon termination of employment or service or as a
result of any of the Transactions or any of the Transaction Documents.

 

(c)                        The
Company and the Company Subsidiary are in compliance in all material respects
with all applicable federal, state, local, municipal, foreign or other law,
statute, legislation, constitution, principle of common law, ordinance, code,
edict, decree, treaty, convention, rule, regulation, ruling, directive,
requirement, determination or decision of any governmental entity respecting
employment, employment practices, terms and conditions of employment and wages
and hours and are not engaged in any unfair labor practice.  No present or former employee of the Company
or the Company Subsidiary has a pending claim which has been asserted or, to
the Company’s Knowledge, threatened against the Company or the Company
Subsidiary for (i) overtime pay; (ii) wages, salaries or profit
sharing; (iii) any violation of any contract or legal requirement relating
to wages or hours of work; (iv) discrimination against employees on any
basis; (v) unlawful or wrongful employment or termination practices; or
(vi) any violation of occupational safety or health standards.  To the Knowledge of the Company, all
employees of the Company or the Company Subsidiary who are not United States
citizens hold all requisite visas and have satisfied all applicable legal
requirements in all material respects respecting their immigration status.  Neither the Company nor the Company
Subsidiary employs people resident outside of the United States.

 

(d)                       Set
forth on Section 3.16(d) of the Company Disclosure Schedule is a list
of all bonus, incentive, profit sharing, stock bonus, retirement, pension,
401(k), ESOP, benefit, welfare, medical, dental, disability, supplemental
unemployment, life insurance, vacation, stock option, stock purchase, phantom
stock, royalty, flexible spending, deferred compensation, severance and other
similar compensation or employee benefit plans, agreements, funds, trusts,
programs or arrangements, under which the Company or the Company Subsidiary has
any current or future obligation or liability or under which any employee,
consultant or former employee or consultant (or beneficiary of any of them) of
the Company or the Company Subsidiary has or may have any current or future
right to benefits (the “Employee Plans”).  An accurate and complete copy of each
Employee Plan and any trust agreement, annuity contract, insurance contract or
other funding instrument associated therewith, including summary plan
descriptions for the Employee Plans, where applicable, and all manuals,
brochures, publications, policies, procedures or similar documents of the
Company or the Company Subsidiary regarding compensation, benefits,
perquisites, affirmative action, office administration and personnel matters
(the “Employee Manuals”) has been
delivered to Parent. 
Section 3.16(d) of the Company Disclosure Schedule sets forth
a brief description of any oral Employee Plan. 
All benefits, expenses and other amounts due and payable under any Plan
(as defined below) or Employee Plan, and all employee and employer
contributions (including penalties for delinquent

 

28

 

funding), transfers or payments required to be made to any Plan or
Employee Plan as of the Effective Time have been timely paid or made, accrued
and booked.

 

3.17                                              Compliance with ERISA.  Section 3.17 of the Company Disclosure
Schedule contains a list of all “employee pension benefit plans” and all
“employee welfare benefit plans” (within the meaning of ERISA) (each, a “Plan”) of the Company or the Company
Subsidiary in which any of their respective employees participate.  Each such Plan intended to qualify under
Section 401(a) or Section 501(c)(9) of the Code has received a favorable
determination letter as to its qualification and has been administered in
compliance in all material respects with ERISA and the Code and, to the
Company’s Knowledge, no fact or circumstance exists which would preclude
continuing, good faith reliance on such determination letter or would adversely
affect the qualified status of any such Plan. 
To the Company’s Knowledge, no fact or circumstance exists, including,
without limitation, any “reportable event” (within the meaning of ERISA) or
failure to file a Return, in connection with any such Plan which is likely to
constitute grounds for: (a) termination of such Plan by the plan
administrator (the “Plan Administrator”);
(b) the appointment by a court of a trustee to administer such Plan; or
(c) the Company or the Company Subsidiary to become subject to any
liability under the terms of the Plans, ERISA, the Code or any other applicable
law.  The Company and the Company
Subsidiary have not incurred any liability to the Plan Administrator (other
than for payment of contributions and premiums which have been timely
made).  The Company and the Company
Subsidiary have complied in full with the minimum funding requirements and in
all material respects with the reporting, disclosure and fiduciary requirements
of ERISA and the Code.  No employee
welfare benefit plan (within the meaning of ERISA) maintained by the Company or
the Company Subsidiary provides benefits after termination of employment to any
employee or dependent other than as required by Section 4980B of the Code.

 

3.18                                              Labor Matters.  The Company and the Company Subsidiary are not party to or bound
by any collective bargaining agreement with any labor organization applicable
to employees of, or Persons providing services to, the Company or the Company
Subsidiary, and, to the Company’s Knowledge, there are no actual or threatened
activities or proceedings of any labor organization (or representative thereof)
to organize any unorganized employees of the Company or the Company
Subsidiary.  There is: (a) no unfair
labor practice complaint against the Company or the Company Subsidiary pending
or, to the Knowledge of the Company, threatened before the National Labor
Relations Board, Office of Federal Contract Compliance Programs, or any
comparable state, local or foreign agency; (b) no labor strike, dispute,
slowdown, lockout or stoppage actually pending, or, to the Knowledge of the
Company, threatened against or directly affecting the Company or the Company
Subsidiary; (c) no grievance or arbitration proceeding pending and, to the
Knowledge of the Company, no claims therefor exist; (d) no agreement to
which the Company or the Company Subsidiary are party that is binding on the
Company or the Company Subsidiary that restricts the Company or the Company
Subsidiary from relocating or closing any of its operations; (e) no
material work stoppage at the Company or the Company Subsidiary; (f) no
delinquency in payments to any of the employees of the Company or the Company
Subsidiary for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or amounts required to be
reimbursed to such employees; or (g) no liability to any employee of the
Company or the Company Subsidiary that is or will be due to such employee upon
termination of the employment of any of such employees before or after the
Closing Date.

 

29

 

3.19                                              Hazardous
Materials.

 

(a)                        The
Company and the Company Subsidiary have not caused any disposals or releases of
any Hazardous Material on or under any of the (i) Owned Real Property,
(ii) Leased Real Property, or (iii) property that the Company or the
Company Subsidiary retains a contractual or other legal obligation with respect
to Environmental Requirements (collectively, the  “Company Properties”).  To the Knowledge of the Company, no such
disposals or releases occurred prior to the Company having taken title to, or
possession or operation of, any the Company Properties or during its time of
title, possession or operation of the same;

 

(b)                       The
Company and the Company Subsidiary have neither (i) arranged for the
disposal or treatment of Hazardous Material in violation of any applicable
Environmental Requirements at any facility owned or operated by another Person,
or (ii) accepted any Hazardous Material for transport to disposal or
treatment facilities or other third-party sites;

 

(c)                        To
the Company’s Knowledge, no release or threatened release of any Hazardous
Material originating from a property other than the Owned Real Property or the
Leased Real Property has come to be (or may come to be) located on or under the
Company Properties;

 

(d)                       The
Company and the Company Subsidiary have never installed, used, buried or
removed any surface impoundment or underground fuel tank or vessel on the
Company Properties;

 

(e)                        There
has been no litigation, administrative proceeding or, to the Knowledge of the
Company, governmental investigations or any other actions, claims, demands,
notices of potential responsibility or requests for information brought or, to
the Knowledge of the Company, threatened against the Company or the Company
Subsidiary, or any settlement reached by the Company or the Company Subsidiary
with any Person or persons alleging the presence, disposal, release or
threatened release of any Hazardous Material on, from or under the Company
Properties or as otherwise relating to potential liabilities, including
violations of Environmental Requirements.

 

(f)                          Neither
the Company nor the Company Subsidiary is under or subject to any current
contractual obligation, order, or decree imposed by any governmental agency or
other entity to achieve or maintain compliance with any Environmental
Requirements, including site investigation or remediation.

 

(g)                       To
the Company’s Knowledge, there are no PCBs, asbestos or asbestos-containing
materials, lead or lead-based paint or urea formaldehyde foam insulation
located on or within any of the Company Properties.

 

3.20                                              Inventories.  All inventories of the Company and the Company Subsidiary are of
good and merchantable quality; provided that the value of obsolete,
damaged or excess inventory and of inventory below standard quality has been
written down on the Closing Balance Sheet, or with respect to inventories
purchased since such Closing Balance Sheet date, on the books and records of
the Company and the Company Subsidiary, to ascertainable market value, or
adequate reserves described on such Closing Balance Sheet have been provided
therefor, and

 

30

 

the value at which inventories are carried reflects the customary
inventory valuation policy of the Company and the Company Subsidiary (which
fairly reflects the value of obsolete, spoiled or excess inventory) for stating
inventory, in accordance with GAAP consistently applied.  All inventories received back from customers
for the express purpose of upgrading to new hardware that are subsequently used
for repair and maintenance of other existing customer hardware are carried at
no value on the Closing Balance Sheet in accordance with GAAP.  Notwithstanding the foregoing, fifty (50%)
percent of the amount in the following inventory accounts included in the
Company’s March 31, 2004 balance sheet shall be included in calculating
the value of the Company’s total assets for the purposes of Section 2.12:
(a) MRB Stock; (b) SVC Stock; (c) Outstanding Service Exchange; and (d) Pilots.

 

3.21                                              Receivables.  All receivables of the Company and the Company Subsidiary,
whether reflected on the Company’s consolidated balance sheet or otherwise,
represent sales actually made or services actually provided in the ordinary
course of business, and are current and, to the Company’s Knowledge, fully
collectible net of any reserves shown on the Company’s consolidated balance
sheet (which such reserves are adequate and were calculated on a basis
consistent with GAAP and past practice) within 90 days after the Closing.  The Company has delivered to Parent a
complete and accurate aging list of all receivables of the Company and the
Company Subsidiary.  All individual amounts
due from customers that are in excess of 90 days old represent fully
collectible amounts as of the Closing Date within seventeen (17) months
following the Closing Date.

 

3.22                                              Accredited Investors.  Other than the Non-Accredited Investors,
each Company Shareholder is an “Accredited Investor” as that term is defined in
Rule 501(a) of the General Rules and Regulations under the Securities Act of
1933, as amended, and has executed the investor representations letter in the
form attached hereto as Exhibit G.

 

3.23                                              Brokers and Finders.  Other than Corporate Finance Associates,
Inc., no broker, investment broker, financial advisor or other Person is
entitled to any broker’s, finder’s, financial advisor’s or other similar fee or
commission from the Company or the Company Subsidiary in connection with the
consummation of the Transactions.  The
Company has provided Parent with a copy of the engagement letter, dated as of
August 14, 2003, as amended on February 17, 2004, by and between the
Company and Corporate Finance Associates, Inc., and any amendments thereto (the
“Fee
Letter”).  The fee specified
in and calculated in accordance with the Fee Letter, including any expenses or
other charges payable thereunder, shall be included in the Company Transaction
Costs.

 

3.24                                              No Omissions.  No representation or warranty of the Company or any Stockholder
in this Agreement, in the Transaction Documents to which the Company or any
Stockholder is a party, or any statement, certificate, schedule or exhibit
hereto furnished or to be furnished by or on behalf of the Company or any of
the Stockholders pursuant to this Agreement or any Transaction Document,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.

 

31

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

 

Parent and Purchaser, jointly and severally, hereby represent and
warrant to the Company, except as set forth in the Parent SEC Reports or the
disclosure schedule attached as Schedule 2 to this Agreement
(the “Parent Disclosure Schedule”):

 

4.1                                                    Authorization.  Each of Parent and Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement
and the Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder. 
The execution and delivery of this Agreement and the Transaction
Documents to which Parent or Purchaser is a party, the performance by Parent or
Purchaser of their respective obligations hereunder and thereunder, and the
consummation by them of the Transactions, have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser.  This Agreement, and the Transaction
Documents to which Parent or Purchaser is a party, have been duly executed and
delivered by Parent and Purchaser and, assuming the valid execution and
delivery hereof and thereof by the Company, each of the Stockholders and the
Shareholder Representative, constitute valid and binding obligations of Parent
and Purchaser, are enforceable against Parent and Purchaser, as applicable, in
accordance with their respective terms, except, in each such case, as such
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws of general application
relating to, affecting or limiting creditors’ rights and by general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity.  No further
approval by the board of directors, shareholders or other security holders of
Parent or Purchaser is required for the execution, delivery and performance of
this Agreement by Parent or Purchaser, including without limitation the
consummation of the Merger and the issuance of the Parent Shares to the Company
Shareholders.

 

4.2                                                    Organization.

 

(a)                        Parent
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of California, with full corporate power to execute and
deliver this Agreement and to carry out the Transactions.

 

(b)                       Purchaser
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Alabama.

 

(c)                        True
and complete copies of the Articles of Incorporation and Bylaws of Parent, and
the Certificate of Incorporation and Bylaws of Purchaser, with all amendments
and restatements thereto through the Execution Date have been provided to the
Company prior to the Execution Date.

 

(d)                       Each
of Parent and Purchaser has the corporate power to own its properties and to
carry on its business as currently conducted and is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
failure to be so qualified or licensed would have a Material Adverse Effect on
Parent.

 

32

 

4.3                                                    Capitalization of Parent.  The authorized capital stock of Parent
consists of (a) 4,579,407 shares of preferred stock, no par value (the “Parent Preferred Stock”), (b) 880,000
shares of Class A Common Stock, no par value (the “Parent Class A Stock”), and (c)
42,600,000 shares of Parent Class B Stock.  As of May 26, 2004, no shares of Parent Preferred Stock, 880,000
shares of Parent Class A Stock and 18,921,733 shares of Parent
Class B Stock were issued and outstanding.  As of May 26, 2004, no shares of Parent Preferred Stock, Parent
Class A Stock or Parent Class B Stock were held by Parent in its
treasury.  All of the issued and
outstanding shares of Parent Class A Stock and Parent Class B Stock
are, and the Parent Shares when issued will be, validly issued, fully paid and
nonassessable and are owed free and clear of all Encumbrances.

 

4.4                                                    No Conflict
of Transaction with Obligations and Laws.

 

(a)                        The
execution, delivery and performance of this Agreement and the Transaction
Documents to which Parent or Purchaser is a party by Parent and Purchaser, and
the consummation of the Transactions do not and will not (a) contravene
the articles of incorporation, bylaws or other charter or organizational documents
of Parent or Purchaser, (b) conflict with or violate any applicable law,
or (c) conflict with or result in a breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or the creation
of any Encumbrance on any of the property or assets of Parent or Purchaser
pursuant to any contract, judgment, decree, order or ruling to which Parent or
Purchaser is a party or by which they or any of their assets or properties is
bound or affected, except for such contraventions, violations, conflicts,
breaches, defaults, rights creation or lien creation which have not had and
could not reasonably be expected to have a Material Adverse Effect on Parent.

 

(b)                       No
approval, authorization, consent, order, filing, registration or notification
is required to be obtained by Parent or Purchaser from, or made or given by
Parent or Purchaser to, any governmental authority or other Person in
connection with the execution, delivery and performance of this Agreement by
Parent or Purchaser and the consummation of the Transactions, except for such
approvals, authorizations, orders, filings, registrations or notifications of
which the failure to obtain could not reasonably be expected to have a Material
Adverse Effect on Parent.

 

4.5                                                    Availability of Merger Consideration; Valid Issuance
of Parent Shares.

 

(a)                        At
the Effective Time, Parent will have the funds available for the payment of the
Cash Consideration.

 

(b)                       At
the Effective Time, the Parent Shares will be duly authorized, validly issued,
fully paid and nonassessable shares of Class B Common Stock, free and clear of
Encumbrances, other than Encumbrances imposed by this Agreement or the Escrow
Agreement.  Except as provided in this
Agreement or the Escrow Agreement, none of the issuance, sale or delivery of
the Parent Shares to the Company Shareholders is subject to any preemptive
right of stockholders of Parent or to any right of first refusal or other right
in favor of any Person which has not been observed or waived.

 

33

 

(c)                        Assuming
that the representations and warranties of the Company and the Stockholders set
forth in Section 3.22 (Accredited Investors) are true as of the Effective
Time, the issuance of the Parent Shares to the Company Shareholders at the
Effective Time in accordance with this Agreement and the Escrow Agreement will
be exempt from registration under applicable federal and state securities laws.

 

4.6                                                    Brokers, Finders or Financial Advisors.  Other than Adams, Harkness & Hill, no
broker, investment broker, financial advisor or other Person is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission from
Parent or Purchaser in connection with the consummation of the Transactions.

 

4.7                                                    SEC Filings.  Parent has filed with the SEC and made
available to the Company or its representatives the Parent SEC Reports.  The Parent SEC Reports (i) at the time filed
(or as amended, superceded or subsequently modified in the Parent SEC Reports
filed prior to the Execution Date), complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, (the “Securities
Act”), and the Exchange Act, as amended by the Sarbanes-Oxley Act of
2002, as the case may be, and (ii) did not at the time they were filed (or
if amended, superseded or modified by a filing prior to the Execution Date, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Parent SEC Reports
or necessary in order to make the statements in such Parent SEC Reports, taken
as a whole, in the light of the circumstances under which they were made, not
misleading, except in the case of clause (i) or (ii) of this Section 4.7
where (X) such non-compliance has not had and could not reasonably be expected
to have a Material Adverse Effect on Parent or (Y) where the trading price of
the Parent’s Class B Stock at the first time when Stockholders would be
entitled to sell such shares pursuant to Section 7.4 (Rule 144) is equal
or greater than the average closing trading price of Parent’s Class B Stock on
the Nasdaq NMS during the 60 calendar days prior to the Execution Date.

 

4.8                                                    Interim
Operations of Purchaser. 
Purchaser is a wholly owned subsidiary of Parent that was formed by
Parent solely for the purpose of engaging in the Merger and the other Transactions.  As of the Execution Date and the Effective
Time, Purchaser (i) has engaged in no other business activities, (ii) has
conducted its operations only as contemplated by this Agreement, and (iii) has
no liabilities and is not a party to any agreement other than this Agreement.

 

4.9                                                    Intellectual
Property. 
Parent has full title and ownership of, or is duly licensed under or
otherwise authorized to use, all Intellectual Property necessary to enable it
to carry on its business as now conducted, without any conflict with or
infringement upon the rights of others, except where such failure has
not had and could not reasonably be expected to have a Material Adverse Effect
on Parent or where such non-compliance has not had a material adverse effect on
the trading price of the Parent’s Class B Common Stock at a time when
Stockholders would have a right to sell such shares pursuant to
Section 7.4 (Rule 144).  Parent has not received any communications alleging that Parent
(or any of its employees or consultants) has violated or infringed or, by
conducting its business as currently conducted, would violate or infringe, any
Intellectual Property of any other person or entity that would require Company
to disclose such communication pursuant to the requirements of the Exchange
Act.

 

34

 

4.10                                              Nasdaq
Compliance.  Parent is in
compliance in all material respects with the rules, regulations and policies of
the Nasdaq National Market applicable to Parent, including, without limitation,
its corporate governance standards.

 

4.11                                              Absence of
Changes.  From
December 31, 2003, neither Parent nor Purchaser has suffered any change
that has resulted, or could reasonably be expected to result, in a Material
Adverse Effect.

 

4.12                                              No Omissions.  No representation or warranty of Parent or Purchaser in this
Agreement, in the Transaction Documents to which Parent or Purchaser is a
party, or in any schedule or exhibit hereto furnished or to be furnished
to the Company or the Stockholders by or on behalf of Parent or Purchaser
pursuant to this Agreement or any Transaction Document, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact required to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.

 

ARTICLE 5

COVENANTS OF THE PARTIES

 

5.1                                                    Conduct of Business by the Company Pending the Merger.  Except as expressly permitted in this
Article 5, during the period from the Execution Date through the Effective
Time, the Company shall, and it shall cause the Company Subsidiary to, carry on
its business in the ordinary course of business as currently conducted and, to
the extent consistent therewith, use commercially reasonable efforts consistent
with past practices to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall be unimpaired
at the Effective Time.  Without limiting
the generality of the foregoing, and except as otherwise expressly contemplated
by this Agreement, the Company shall not, and it shall cause the Company
Subsidiary not to, without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed):

 

(a)                        (i) declare,
set aside or pay any dividends on, or make any other actual, constructive or
deemed distributions in respect of, any of its capital stock, or otherwise make
any payments to its shareholders in their capacity as such, (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise
acquire any shares of its capital stock or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;

 

(b)                       Issue,
deliver, sell, pledge, dispose of or otherwise encumber any shares of its
capital stock, any other voting securities or equity equivalents or any
securities convertible into, or any rights, warrants or options to acquire any
such shares, voting securities, equity equivalents or convertible securities;

 

(c)                        Amend
its articles of incorporation, bylaws or other charter documents;

 

35

 

(d)                       Acquire
or agree to acquire by merging or consolidating with, or by purchasing a
portion of the assets of or equity in, or by any other manner, any business or
any corporation, limited liability company, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets;

 

(e)                        Sell,
lease, or otherwise dispose of, or agree to sell, lease or otherwise dispose
of, any of its assets (including any Intellectual Property) other than sales,
leases, or other dispositions in the ordinary course of business consistent
with past practice;

 

(f)                          Incur
any indebtedness for borrowed money, guarantee any such indebtedness or make
any loans, advances or capital contributions to, or other investments in, any
other Person;

 

(g)                       Alter
(through merger, liquidation, reorganization, restructuring or in any other
fashion) the corporate structure or ownership of the Company or the Company
Subsidiary;

 

(h)                       Enter
into or adopt any, or amend any existing, severance plan, agreement or
arrangement or enter into or amend any Plan or Employee Plan or employment or
consulting agreement;

 

(i)                           Increase
the compensation payable or to become payable to its directors, officers or
employees or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or employee of
the Company or the Company Subsidiary, or establish, adopt, enter into, or,
except as may be required to comply with applicable law, amend in any material
respect or take action to enhance in any material respect or accelerate any rights
or benefits under, any labor, collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;

 

(j)                           Knowingly
violate or knowingly fail to perform any obligation or duty imposed upon it by
any applicable federal, state, local or foreign law, rule, regulation,
guideline or ordinance;

 

(k)                        Make
any change to accounting policies or procedures (other than actions required to
be taken by GAAP);

 

(l)                           Prepare
or file any Return inconsistent with past practice or, on any such Return, take
any position, make any election, or adopt any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing similar
Returns in prior periods;

 

(m)                     Make
or rescind any express or deemed tax election related to Taxes or change any of
its methods of reporting income or deductions for Tax purposes;

 

(n)                       Commence
any litigation or proceeding with respect to any material Tax liability or
settle or compromise any material Tax liability or commence any other
litigation or proceedings or settle or compromise any other material claims or
litigation;

 

36

 

(o)                       Except
in the ordinary course of business consistent with past practices, enter into
or amend any agreement or contract with any customer, supplier, sales
representative or agent: (i) having a term in excess of 12 months and
which is not terminable by the Company without penalty or premium by notice of
30 days or less or (ii) which involves or is expected to involve
payments of $100,000 or more during the term thereof; (iii) enter into or amend
any other agreement or contract material to the Company; or (iv) purchase or
lease any real property; or make or agree to make any new capital expenditure
or expenditures which in the aggregate are in excess of $50,000;

 

(p)                       Except
in the ordinary course of business consistent with past practice, enter into or
amend any agreement or contract with any other person pursuant to which the
Company is the licensor or licensee of any Intellectual Property;

 

(q)                       Pay,
accelerate, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Audited Financial
Statements or incurred in the ordinary course of business consistent with past
practice; or

 

(r)                          Authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.

 

5.2                                                    No Solicitation.  During the period between the Execution Date and the Closing
Date, the Company shall not, and the Company shall require the Company
Subsidiary and each of their respective officers, directors, employees,
representatives and agents not to, directly or indirectly, (a) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than Parent or Purchaser) concerning any
merger, reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material
assets, tender offer or similar business transaction involving the Company (an
“Acquisition Proposal”),
(b) engage in discussions or negotiations with any Person (other than
Parent) concerning any such Acquisition Proposal, or (c) following receipt
of an Acquisition Proposal, withhold, withdraw, modify or change in a manner
adverse to Parent, or fail to make, a recommendation that the Company
Shareholders vote in favor of the Transactions or approve, endorse or recommend
such Acquisition Proposal.

 

5.3                                                    Access to Information.  The Company shall, and shall cause the
Company Subsidiary to, use commercially reasonable efforts to facilitate and
assist Parent’s ongoing due diligence investigation of the Company, the Company
Subsidiary and their business.  In
furtherance thereof, and without limiting the generality of the foregoing, the
Company shall afford to the accountants, counsel, financial advisors and other
representatives of Parent reasonable access to, and permit them to make such
inspections as they may reasonably require of, during the period from the
Execution Date through the Effective Time, all of their respective properties,
books, contracts, commitments and records (including Returns and the work
papers of independent accountants), subject to restrictions on disclosure
imposed by contract or applicable

 

37

 

law.  No investigation pursuant
to this Section 5.3 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the
parties hereto.

 

5.4                                                    Public Announcements.  From the Execution Date until the earlier of
the Effective Time or the termination of this Agreement, no party hereto will
issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the Transactions without the
prior consent of Parent (in the case of the Company or any Stockholder) or the
Company (in the case of Parent or Purchaser), which consent shall not be
unreasonably withheld; provided, however,
that:  (a) nothing herein will
prohibit either party from issuing or causing publication of any such press
release or public announcement to the extent that such party’s counsel in
writing reasonably determines such action to be required by applicable law or
governmental regulations, in which case the party making such determination
will, to the greatest extent practicable in light of the circumstances, use
best efforts to allow the other party reasonable time to comment on such
release or announcement in advance of its issuance; and (b) Parent and the
Company may disclose this Agreement and the Transactions to (i) their
respective directors, officers, employees, financial advisors, potential and
actual financing sources and their advisors, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a
need-to-know basis (to the extent such parties are under non-disclosure
obligations) and (ii) third parties in connection with securing consents
of such third parties to the extent necessary to consummate the Transactions or
to prevent a default in connection with consummation of the Transactions and in
connection with any permits, approvals, filings or consents required by law to
be obtained.  Prior to the Closing, all
press releases or other announcements or notices regarding the Transactions
shall be made jointly by Parent and the Company.

 

5.5                                                    Commercially
Reasonable Efforts.

 

(a)                        Upon
the terms and subject to the conditions set forth in this Agreement, each of
the parties shall use all commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions, including:  (i) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from all governmental
entities and the making of all necessary registrations and filings (including
filings with any governmental entity) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any governmental entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, including, but not limited
to, consents from the Company’s employees related to their transition from the
Company Benefit Plans to Parent’s employee benefit plans, and (iii) the
execution and delivery of any additional instruments necessary to consummate
the Transactions.

 

(b)                       No
party shall take any action, or enter into any transaction, which would cause
any of its representations or warranties contained in this Agreement to be
untrue or result in a breach of any covenant made by it in this Agreement.

 

5.6                                                    Company Indebtedness.  At the Closing, Parent shall, at its option,
either (a) repay in full the outstanding principal balance of, and any accrued
and unpaid interest, fees and

 

38

 

other amounts (including any prepayment penalties) payable by Company
or the Company Subsidiary in respect of, any indebtedness for borrowed money
(including bank overdrafts) to any bank or other financial institution or other
unaffiliated lender (including the lessor on all capital leases) as of the
Effective Time (the “Third Party Debt”)
or (b) cause the Surviving Corporation to assume any of such Third Party Debt
and cause the personal guarantees of the Stockholders (and all collateral of
the Stockholders pledged to secure such guarantees) of any of such Third Party
Debt to be unconditionally released by the applicable lenders; provided that the aggregate amount of such
Third Party Debt shall not exceed $7,500,000. 
At the Closing, Parent shall, or it shall cause the Surviving
Corporation to, at its option either (x) replace and cause to be cancelled the
$500,000 letter of credit issued to secure a performance bond issued in
connection with the Company’s contract with the Virginia Employment Commission
(the “LOC”),
(y) cause the issuer of the LOC to unconditionally release the personal
guarantees of the Stockholders (and all collateral of the Stockholders pledged
to secure such guarantees), or (z) make such other arrangements as are acceptable
to the Stockholders in their sole discretion.

 

5.7                                                    Fees and Expenses.  Except as otherwise expressly provided in
this Agreement, each party hereto will pay its own expenses incurred in
connection with the negotiation of this Agreement, the performance of their
respective obligations hereunder and the consummation of the Transactions,
whether or not consummated.  All
transfer, documentary, sales, use, stamp, registration and other such Taxes and
fees (including any penalties and interest) incurred in connection with this
Agreement and the Transactions, other than any taxes relating to the issuance
of the Parent Shares to the Company Shareholders, shall be the responsibility
of the Company and be deemed part of Company Transaction Costs.  The Company will, at its own expense, file
all necessary Returns and other documentation with respect to all such Taxes
and fees, and, if required by law, Parent will join in the execution of any
such Returns and other documentation.

 

5.8                                                    Company 401(k) Plan.  Prior to the Effective Time, the Company’s
Board of Directors shall have authorized and directed the termination of the
EPOS Corporation 401(k) Plan (the “Company
401(k) Plan”).

 

5.9                                                    Voting
Agreement.  Provided that
Parent is in compliance in all material respects with its obligations under
this Agreement, at any meeting of the Company Shareholders, called to consider
and vote upon the adoption of this Agreement (and at any and all postponements
and adjournments thereof), and in connection with any action to be taken in
respect of the adoption of this Agreement by written consent of Company
Shareholders, each of the Stockholders hereby agrees that he will vote or cause
to be voted (including by written consent, if applicable) all of such
Stockholder’s shares of Company Common Stock which he has the right to vote in
favor of the adoption of this Agreement and in favor of any other matter
necessary or appropriate for the consummation of the Merger and the other
Transactions that is considered and voted upon at any such meeting or made the
subject of any such written consent, as applicable.  At any meeting of the Company Shareholders, called to consider
and vote upon any Adverse Proposal (and at any and all postponements and adjournments
thereof), and in connection with any action to be taken in respect of any
Adverse Proposal by written consent of the Company Shareholders, each
Stockholder hereby agrees to vote or cause to be voted (including by written
consent, if applicable) all of such Stockholder’s shares of Company Common
Stock which he has the right to vote against the adoption of such Adverse
Proposal.

 

39

 

For purposes of this Agreement, the term “Adverse Proposal” means (a) any proposal or action that
would reasonably be expected to result in a breach of any covenant, agreement,
representation or warranty of the Company set forth in this Agreement, or
(b) the following actions (other than the Merger and the other
Transactions):  (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or the Company Subsidiary;
(ii) a sale, lease or transfer of a material amount of assets of the
Company or the Company Subsidiary, or a reorganization, recapitalization,
dissolution or liquidation of the Company or the Company Subsidiary; and
(iii) (A) any change in a majority of the persons who constitute the
board of directors of the Company or the Company Subsidiary as of the Execution
Date; (B) any change in the present capitalization of the Company or any
amendment of the Company’s or the Company Subsidiary’s articles of
incorporation or bylaws, as amended as of the Execution Date; (C) any
other material change in the Company’s or the Company Subsidiary’s corporate
structure or business; or (D) any other action that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the Merger or the other Transactions or increase the
likelihood that such Transactions will not be consummated.

 

5.10                                              Notification
of Certain Matters.  The
Company and each of the Stockholders shall give prompt notice to Parent of: (i)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty of the Company or
any such Stockholder, as applicable, contained in this Agreement to be untrue
or inaccurate in any material respect at or prior to the Effective Time; and
(ii) any failure of the Company or any such Stockholder to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant
to this Section 5.10 shall not constitute an acknowledgment or admission
of a breach of this Agreement.  No
disclosure by the Company or any Stockholder pursuant to this Section 5.10
shall be deemed to have cured any breach of any representation or warranty made
in this Agreement for purposes of determining whether or not the conditions set
forth in Article 6 have been satisfied, but will be deemed to have cured
any such breach of representation or warranty in this Agreement and to have
been disclosed as of the Execution Date for purposes of Article 8 hereof.

 

ARTICLE 6

CONDITIONS TO CLOSING

 

6.1                                                    Conditions to Each Party’s Obligations.  The respective obligations of each party to
consummate the transactions contemplated hereby at the Closing are subject to
the fulfillment to each party’s reasonable satisfaction on or prior to the
Effective Time of each of the following conditions:

 

(a)                        HSR
Act.  Any waiting period (and any
extension thereof) applicable to the Merger under the HSR Act and any
applicable foreign antitrust and competition laws shall have been terminated or
shall have expired.

 

(b)                       No
Injunctions or Restraints.  No
temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any Governmental Entity, court of

 

40

 

competent jurisdiction or other statute, law, rule, legal restraint or
prohibition shall be in effect preventing the consummation of the transactions
contemplated hereby.

 

(c)                        Escrow
Agreement.  Parent and the Company
shall have each executed and delivered the Escrow Agreement, and Parent shall
have deposited the Escrow Fund with the Escrow Agent.

 

(d)                       Stockholder
Approval.  This Agreement shall have
been approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the Company Shareholders entitled to
vote on such matters.

 

(e)                        Company
Budget, Plan and Financing.  The
Company shall have prepared a monthly operating budget for the period from the
Closing Date through September 30, 2004 and the ensuing twelve months
ended September 30, 2005 that is reasonably acceptable to Parent.

 

6.2                                                    Conditions to Obligations of Parent and Purchaser.  The obligation of Parent and Purchaser to
consummate the Merger at the Closing is subject to the fulfillment to the
Parent’s and Purchaser’s reasonable satisfaction on or prior to the Effective
Time of each of the following conditions:

 

(a)                        Representations
and Warranties.  Each representation
and warranty of the Company and the Stockholders contained in this Agreement
shall be true and correct in all material respects (unless any such
representation or warranty is qualified by materiality and in such case shall
be true and correct in all respects as so qualified) as of the Execution Date
and as of the Effective Time as though made as of the Effective Time, except as
described in the Company Disclosure Schedule, and except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date.  Parent
and Purchaser shall have received a certificate signed by a duly authorized
officer of the Company to such effect.

 

(b)                       Performance.  All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company and
the Stockholders at or prior to the Effective Time shall have been performed or
complied with by the Company and the Stockholders in all material
respects.  Parent and Purchaser shall
have received a certificate signed by a duly authorized officer of the Company
to such effect.

 

(c)                        Consents.  Schedule 6.2(c) of the Company
Disclosure Schedule sets forth a list of all consents, approvals,
authorizations, whether governmental or otherwise, the absence of which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company, and the Company shall have obtained each of such consents.

 

(d)                       Due
Diligence.  Parent and its advisors
shall have completed the financial, business, technology and legal due
diligence investigations of the technology, financial condition, operating
results, business and prospects of the Company and the Company Subsidiary, the
results of which investigations shall be satisfactory to Parent in its sole
discretion.

 

(e)                        Employment
Agreements and Arrangements.  As of
the Closing Date, each of the Stockholders shall have executed and delivered to
Parent an Employment Agreement in

 

41

 

substantially the form of Exhibit B hereto (each, an “Employment Agreement”) and Parent or the
Company shall have entered into employment arrangements on terms reasonably
satisfactory to Parent with such additional key employees of the Company, as
determined by Parent in its sole discretion.

 

(f)                          No
Material Adverse Effect.  No fact or
development shall have occurred since the Execution Date and be continuing
which, individually or in the aggregate, has had or would have a Material
Adverse Effect on the Company.  Parent
shall have received a certificate signed by a duly authorized officer of the
Company to such effect.

 

(g)                       Legal
Opinion.  Parent shall have received
an opinion of Bradley Arant Rose & White LLP, the Company’s counsel, in
substantially the form attached hereto as Exhibit E.

 

(h)                       Closing
Balance Sheet.  The Company shall
have prepared and delivered to Parent the Closing Balance Sheet in a form
acceptable to Parent.

 

(i)                           Certificates
and Documents.  The Company and the
Stockholders shall have delivered to Parent at or prior to the Closing:

 

(i)                                     A
copy of the Company’s articles of incorporation and evidence of good standing,
with all amendments to date, certified by the Secretary of State of Alabama as
of a date within a reasonable period of time prior to the Effective Time,
together with true and correct bylaws of the Company, certified by its
secretary as of the Effective Time;

 

(ii)                                  A
copy of the Company Subsidiary’s articles of incorporation and evidence of good
standing, with all amendments to date, certified by the Secretary of State of
Georgia as of a date within a reasonable period of time prior to the Effective
Time, together with true and correct bylaws of the Company Subsidiary,
certified by its secretary as of the Effective Time;

 

(iii)                               Resolutions
of the board of directors of the Company authorizing and approving all matters
in connection with this Agreement and the Transactions, certified by a duly
authorized officer of the Company as of the Effective Time;

 

(iv)                              Complete
corporate minute books and stock register books for each of the Company and the
Company Subsidiary; and

 

(v)                                 Such
other documents relating to the transactions contemplated in this Agreement as
Parent may reasonably request.

 

(j)                           FIRPTA.  Either (i) the Company shall have
delivered to Parent and to the Internal Revenue Service notices that the shares
of Company Common Stock are not a “U.S. real property interest” in accordance
with Treasury Regulations under Sections 897 and 1445 of the Code, or
(ii) each of the Company Shareholders shall deliver to Parent
certifications that they are not foreign persons in accordance with the
Treasury Regulations under Section 1445 of the Code.  If Parent does not receive either the
notices or the certifications described above on or before the Closing Date in
a form reasonably satisfactory to Parent, Parent, Purchaser, and the

 

42

 

Surviving Corporation shall be permitted to withhold from the payments
to be made pursuant to this Agreement any required withholding tax under
Section 1445 of the Code.

 

(k)                        Appraisal
Rights.  No more than six (6%)
percent of the shares of the Company Common Stock shall have exercised or be
eligible to exercise Dissenters’ Rights in connection with the Merger.

 

(l)                           Termination
of Company 401(k) Plan.  The
Company’s Board of Directors shall have authorized and directed the termination
of the Company 401(k) Plan.

 

6.3                                                    Conditions to Obligations of the Company and the
Stockholders.  The Company’s
obligation to consummate the Merger at the Closing is subject to the
fulfillment to its reasonable satisfaction or waiver on or prior to the
Effective Time of each of the following conditions:

 

(a)                        Representations
and Warranties.  Each representation
and warranty of Parent and Purchaser contained in this Agreement shall be true
and correct in all material respects (unless any such representation or
warranty is qualified by materiality and in such case shall be true and correct
in all respects as so qualified) as of the Execution Date and as of the
Effective Time as though made as of the Effective Time, except as described in
the Parent Disclosure Schedule, and except to the extent such representations
and warranties expressly relate to an earlier date, in which case as of such
earlier date.  The Company shall have
received a certificate signed on behalf of Parent and Purchaser by duly
authorized executive officers of Parent and Purchaser to such effect.

 

(b)                       Performance.  All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by Parent or
Purchaser on or prior to the Effective Time shall have been performed or
complied with by Parent or Purchaser in all material respects. The Company
shall have received a certificate signed on behalf of Parent and Purchaser by
duly authorized executive officers of Parent and Purchaser to such effect.

 

(c)                        Funding
of the Exchange Fund.  At the
Effective Time, Parent or Purchaser shall have deposited the Cash Consideration
into the Exchange Fund and the Escrow Fund in amounts consistent with the terms
and conditions of Section 2.8, deposited the Parent Shares into the
Exchange Fund and the Escrow Fund in amounts consistent with the terms and
conditions of Section 2.8, and assumed, or caused the Surviving
Corporation to have assumed, the Third Party Debt.

 

(d)                       Consents.  All consents, the absence of which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent, shall have been obtained.

 

(e)                        No
Material Adverse Effect.  No fact or
development shall have occurred since the Execution Date and be continuing
which, individually or in the aggregate, has had or would have a Material
Adverse Effect on Parent.  The Company
shall have received a certificate signed on behalf of Parent by a duly
authorized officer of Parent to such effect.

 

43

 

(f)                          Legal
Opinion.  The Company shall have
received an opinion of Farella Braun + Martel LLP, Parent’s and Purchaser’s
counsel, in substantially the form attached hereto as Exhibit F.

 

(g)                       Listing
of Shares.  As of the Closing Date,
the Parent Class B Stock shall not have been delisted from the Nasdaq National
Market nor shall proceedings have been instituted or initiated therefor, and
Parent shall have paid all Nasdaq National Market listing fees required in
connection with the issuance of the Parent Shares.

 

(h)                       Certificates
and Documents.  Parent and Purchaser
shall have delivered at or prior to the Closing to the Company and the
Stockholders:

 

(i)                                     A
copy of Parent’s and Purchaser’s respective articles or certificates of
incorporation, with all amendments to date, certified by the Secretary of State
or similar officer of Parent’s and Purchaser’s respective jurisdictions of
organization as of a date within a reasonable period of time prior to the
Effective Time, together with bylaws of Parent and Purchaser, certified by
their respective secretaries as of the Effective Time;

 

(ii)                                  Resolutions
of the boards of directors of Parent and Purchaser, authorizing and approving
all matters in connection with this Agreement and the Transactions, certified
by the respective secretaries of Parent and Purchaser as of the Effective Time;
and

 

(iii)                               Such
other documents relating to the Transactions as the Company or the Stockholders
may reasonably request.

 

ARTICLE 7

POST-CLOSING COVENANTS

 

7.1                                                    Non-Competition
and Non-Solicitation by Stockholders.

 

(a)                        Noncompetition.  In consideration of: (i) the Equity Price to
be paid to each Stockholders in exchange for each share of Company Common Stock
held by such Stockholder at the Effective Time; (ii) the wide access the
Company grants to each Stockholder to review and become familiar with the
Company’s business, including certain valuable trade secrets and the
opportunity to contact and develop business relationships with the Company’s
clients, vendors, and business partners; (iii) to protect the Surviving
Corporation from the harm to its goodwill that would otherwise result; and (iv)
in view of other considerations; each Stockholder hereby covenants and agrees
that, commencing on the Execution Date and continuing for three (3) years
following the Closing Date (the “Non-Competition Period”), he will not
directly or indirectly own, manage, join, invest in, finance, control, accept
employment with, or provide consulting or advisory services to, directly or
indirectly, any Competitive Business.  A
“Competitive Business” is any
business (other than a business of Parent or the Surviving Corporation) that
markets, sells, provides or is actively developing hardware or software
technology that is competitive with the Company including, but not limited to,
IVR or WEB technology.  Nothing
contained in this Section 7.1 shall prevent any of Stockholders from
owning, directly or indirectly, solely for investment purposes up to an
aggregate of one percent (1.0%) of the

 

44

 

outstanding debt or equity securities of any privately held or publicly
traded corporation or other business entity which may otherwise be a
Competitive Business.

 

(b)                       Nonsolicitation
Covenant.  In consideration of (i)
the Equity Price to be paid to each Stockholders in exchange for each share of
Company Common Stock held by such Stockholder at the Effective Time; (ii) the
wide access the Company grants to each Stockholder to review and become
familiar with the Company’s business, including certain valuable trade secrets
and the opportunity to contact and develop business relationships with the
Company’s clients, vendors, and business partners; (iii) to protect the Company
from the harm to its goodwill that would otherwise result; and (iv) in view of
other considerations; during the Non-Competition Period, each of the
Stockholders agrees that he will not, directly or indirectly, for himself or
for the benefit of, or in conjunction with, any other Person:

 

(i)                                     call
upon any Person that was a customer of the Company at any time prior to the
Closing Date, for the purpose of soliciting, selling, diverting, taking away,
transferring or interfering with any of the customers’ trade with or patronage
of the Surviving Corporation;

 

(ii)                                  call
upon any Person which has been the subject of a solicitation, in the form of a
project proposal, submission of a bid or otherwise, by the Company prior to the
Closing Date;

 

(iii)                               solicit,
or attempt to solicit, any person employed by the Company on the Closing Date
in order to cause the termination of said employee’s employment with the
Company; or

 

(iv)                              divert,
take away, transfer or otherwise interfere with the relationship(s) of the
Company with any of its suppliers, manufacturers, licensors or consultants.

 

(c)                        If at any time during the
Noncompetition Period, any of the Stockholders desires to participate in an
activity that he believes might be prohibited by this Section 7.1, such
person may request in writing a determination by Parent as to whether such
proposed activity would violate this Section 7.1.  Such written request (a “Clarification
Request”) shall be sent by certified U.S. Mail, return receipt
requested, to the Parent notice parties set forth in Section 10.5
(Notices) and shall (X) provide reasonably sufficient written information to allow
Parent to evaluate the proposed activity and (Y) include a copy of this
Section 7.1.  Parent shall respond
in writing (a “Clarification Response”) to any Clarification Request that
complies with this Section 7.1(c) within twenty (20) business days of
receipt thereof from the requesting person. 
In the event that Parent fails to deliver a Clarification Response to
the requesting person within such twenty (20) business day period, Parent shall
be deemed to have (i) irrevocably consented to the activity proposed in the
Clarification Request and (ii) irrevocably determined that such activity as
described in the Clarification Request does not violate this Section 7.1.

 

7.2                                                    Further Assurances.  If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are reasonably
necessary, desirable or proper (a) to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation its right, title or interest in, to
or

 

45

 

under any of the rights, privileges, powers, franchises, properties or
assets of either Purchaser or the Company, or (b) otherwise to carry out
the purposes of this Agreement, the Surviving Corporation and its proper
officers and directors or their designees shall be authorized to execute and
deliver, in the name and on behalf of either of Purchaser or the Company, all
such deeds, bills of sale, assignments and assurances and to do, in the name
and on behalf of either Purchaser or the Company, at the Purchaser’s sole
expense, all such other acts and things as may be reasonably necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation’s
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Purchaser or the Company and otherwise
to carry out the purposes of this Agreement and the Merger.

 

7.3                                                    Employee
Seniority.  For the purposes
of all Parent employment policies and practices affected by seniority, to the
extent permitted by the terms of such policies and practices, the employees of
the Company (including, without limitation, the Stockholders) shall be deemed
to have seniority dating to the commencement of their respective employment
with the Company or the Company Subsidiary, as applicable.

 

7.4                                                    Rule 144.  Parent hereby agrees to use commercially
reasonable efforts, and to cause its officers, legal counsel and other
employees and representatives to use their respective commercially reasonable
efforts, to ensure that Parent satisfies the conditions set forth in paragraph
(c) of Rule 144 such that, if the Company Shareholders satisfy the other
conditions set forth in Rule 144 promulgated under the Securities Act (“Rule 144”),
the Company Shareholders may sell their Parent Shares under Rule 144 commencing
one year following the Closing Date. 
Without limiting the foregoing, Parent hereby agrees to respond in a
timely manner, and to cause its officers, legal counsel and other
representatives to respond in a timely manner, to requests by the Company
Shareholders or their brokers to sell Parent Shares under Rule 144 following
the Closing Date and at all times thereafter, including, without limitation, to
requests to have the applicable legends removed from the stock certificates
representing the Parent Shares sought to be sold.

 

ARTICLE 8

SURVIVAL AND INDEMNIFICATION

 

8.1                                                    Survival of Representations and Warranties.  The representations and warranties contained
in Articles 3 and 4 hereof shall survive the Effective Time for a period of
eighteen (18) months following the Effective Time, after which all such
representations and warranties shall terminate and be of no further force or
effect; provided, however, that
the representations and warranties contained in Sections 3.1 (Organization and
Authority), 3.2 (Capitalization of the Company and the Company Subsidiary), 3.8
(Taxes), and 3.20 (Hazardous Materials) shall survive the Effective Time and continue
until the expiration of the applicable statute of limitations.  If a claim or notice is given under
Article 8 with respect to any representation or warranty prior to the
expiration date, such representation or warranty shall continue indefinitely until
such claim is finally resolved.

 

46

 

8.2                                                    Recourse to
Escrow Fund.

 

(a)                        Subject
to the limitations set forth herein, for a period of eighteen (18) months from
and after the Effective Time, the Escrow Fund shall be available (and shall be
the sole and exclusive remedy) to compensate Parent, Purchaser and their
respective officers, directors, employees, agents (collectively, the “Parent Indemnified Parties”) for any loss,
liability, deficiency, damage, expense or cost (including legal expenses),
incurred or paid (collectively, “Losses”) by a Parent Indemnified Party (whether or not
involving a third party claim), which arise as a result of:

 

(i)                                     any
breach or failure of any of the representations and warranties of the Company
or the Stockholders contained in this Agreement;

 

(ii)                                  any
breach of, or failure to perform, any agreement or covenant of the Company or
the Stockholders contained in this Agreement;

 

(iii)                               any Action related to the
Intellectual Property initiated by, resulting from, or directly related to, any
Action initiated by any of the
following or their respective representatives: (A) Ronald A. Katz Technology
Licensing, L.P. or its licensing arm, A2D; (B) Next Generation Information,
Inc.; (C) MCI WorldCom, Inc.; (D) Bruce Dickens or Dickens 2000; (E) TouchNet
Information Systems, Inc.; or (F) Philip S. Jackson (collectively, the “A2D Parties”);
provided,
however, that neither Parent nor Purchaser may be indemnified
pursuant to the preceding clause to the extent such Action directly results
from Parent’s affirmative conduct; notwithstanding the foregoing clause,
Parent’s right to indemnification pursuant to this Section 8.2 shall not
be limited or qualified as a result of any lawful action or undertaking by
Parent reasonably necessary to determine the scope of the Intellectual Property
of the A2D Parties or to obtain rights to use such Intellectual Property.  For the avoidance of doubt, nothing
contained in Section 3.13 of the Company Disclosure Schedule shall
limit the rights to indemnification of the Parent Indemnified Parties arising
under this Section 8.2.

 

(iv)                              any
Action related to the Company 401(k) Plan.

 

(v)                                 the
failure of the Surviving Corporation to realize a Gross Margin of (A) at least
45% on the professional services component of the agreement between the Company
and the Virginia Employment Commission, (B) at least 45% on the professional
services component of the agreement between the Company and the Oklahoma
Employment Security Commission, and (C) at least 40% on the on the professional
services component of the notice of intent to award contract received by the
Company from the Georgia Department of Labor, in each case over the period of
time commencing on the Closing Date and ending, with respect to each such
agreement or contract, on the date of final client acceptance and satisfactory
completion of services performed in accordance with the terms of the agreement
or contract; provided, that the amount of Losses that the Parent
Indemnified Parties shall suffer on account of the failure of the Surviving
Corporation to achieve any such Gross Margin shall be deemed for all purposes
to be equal to the difference between (x) the Profit that would have had to
have been earned on such agreement or contract to generate the applicable
targeted Gross Margin set forth above and (y) the actual Profit earned on the
applicable agreement or contract; provided, further, that when calculating
the Gross Margin and Profit of an agreement or contract for purposes of

 

47

 

this
subsection 8.2(a)(v), any amendments, modifications or other changes made
to such agreement or contract following the Closing Date that (1) have been
agreed to in writing by Parent and the Shareholder Representative and (2) have
had a negative impact on the Gross Margin or Profit, shall be disregarded.

 

(b)                       The
Escrow Fund will be available to compensate the Parent Indemnified Parties for
any Losses (the “Parent Losses”)
only if Parent delivers to the Shareholder Representative written notice,
setting forth in reasonable detail the identity, nature and amount of Parent
Losses related to such claim or claims prior to the end of the eighteen (18)
month period following the Effective Time. 
The Parent Indemnified Parties may not make any claims against the
Escrow Fund unless the aggregate Parent Losses incurred exceed $100,000 (at
which such time claims may be made, subject to the limitations set forth
herein, for such Parent Losses incurred including the $100,000 threshold
amount).  Notwithstanding any other
provision hereof to the contrary, in no event will the aggregate indemnity
obligation hereunder with respect to Parent Losses exceed the aggregate value
at any time of the Escrow Fund, and the sole source of payment or recourse for
any claim by any Parent Indemnified Party with respect to any Parent Losses
shall be the Escrow Fund.  Parent and
the Surviving Corporation shall act in good faith and shall not take any action
the intent of which is to reduce or otherwise negatively impact the Gross
Margin or Profit earned on any agreement or contract that is described in
subsection 8.2(a)(v) above.

 

8.3                                                    Indemnification
by Parent.

 

(a)                        For
a period of eighteen (18) months from and after the Effective Time, Parent and
Purchaser jointly and severally agree to indemnify and hold harmless the
Company Shareholders and their respective heirs, administrators, executors,
trustees and assigns (collectively, the “Shareholder
Indemnified Parties”) against any Losses incurred or paid by any
Shareholder Indemnified Party (the “Shareholder
Losses”), as a result of (i) any breach or failure of any of
the representations and warranties of Parent or Purchaser contained in this
Agreement or (ii) any breach of, or failure to perform, any agreement or
covenant of Parent or Purchaser contained in this Agreement.  The Shareholder Indemnified Parties may not
make claims against Parent or Purchaser unless the aggregate Shareholder Losses
incurred exceed $100,000 (at which such time claims may be made, subject to a
limit of an amount equal to the agreed upon limit for Parent’s indemnity, for
such Shareholder Losses incurred including the $100,000 threshold).

 

(b)                       Parent
and Purchaser will be liable to the Shareholder Indemnified Parties for any
Losses only if the Shareholder Indemnified Parties deliver to Parent notice,
setting forth in reasonable detail the identity, nature and amount of Losses
related to such claim or claims prior to the eighteen (18) month anniversary of
the Effective Time.

 

8.4                                                    Procedure.  Promptly after receipt by a Parent Indemnified Party or a
Shareholder Indemnified Party (an “Indemnified
Party”) as the case may require) of notice of the commencement of
any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the indemnifying party under this Section 8.4, or may be
made following satisfaction of the minimum amounts set forth above, notify in
writing the indemnifying party of the commencement thereof.  In case any such action is brought against
any Indemnified Party,

 

48

 

and such Indemnified Party notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, subject to the
provisions hereof, with counsel reasonably satisfactory to such Indemnified
Party (provided that in matters of Tax indemnities, Parent shall control the
dispute to the extent that the Tax dispute could have an adverse effect on
Parent or any Affiliate for any period after the Closing).  Following notification to the Indemnified
Party of its election so to assume the defense thereof, the indemnifying party
shall not be liable to such Indemnified Party under this Section 8.4 for
any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of investigation.  The Indemnified Party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action, within a reasonable time after notice of commencement of the
action, with counsel reasonably satisfactory to the Indemnified Party; provided however, that the indemnifying
party shall be required to pay for Indemnified Party’s counsel if such
Indemnified Party shall have reasonably concluded, on reliance of the written
opinion of counsel experienced in such matters, that there may be defenses
available to it or him which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to direct the defense of the action).  No settlement of any action against an
Indemnified Party shall be made without the consent of the Indemnified Party,
which shall not be unreasonably withheld. 
In the event that any Indemnified Party should have a direct claim
against any indemnifying party hereunder that does not involve any third party
claim or claims asserted against the Indemnified Party, the Indemnified Party
shall transmit to the indemnifying party a written notice describing in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis of the Indemnified
Party’s request for indemnification under this Article 8.  If the indemnifying party does not notify
the Indemnified Party within 90 days from its receipt of such notice that the
indemnifying party disputes such claim, the claim specified by the Indemnified
Party in the indemnity notice shall be deemed a liability of the indemnifying
party hereunder.  If the indemnifying
party has timely disputed such claim, as provided above, such dispute shall be
resolved by binding arbitration pursuant to Section 10.2 hereof.  Except as provided in the last sentence of
Section 10.3, the parties agree that the sole and exclusive remedy which
any party hereto shall have against any other party hereto under this Agreement
shall be the right to proceed for compensation or indemnification in the manner
and only to the extent provided in this Article 8.

 

8.5                                                    Treatment of Indemnity Payments.  Any indemnity payment made to an Indemnified
Party pursuant to this Agreement shall be treated as an adjustment to the
Merger Consideration to the extent permitted by Law, provided that in the event
any Tax is imposed on an Indemnified Party in connection with the indemnity
payment, the Indemnified Party shall be grossed-up for such Taxes (and for any
additional Taxes imposed in connection with payments made pursuant to this
Section 8.5).

 

8.6                                                    No Contribution from the Surviving Corporation.  The Surviving Corporation shall under no
circumstance be required to indemnify or contribute to any party to satisfy any
claims for Losses owed the Parent Indemnified Parties in connection with this
Article 8.

 

49

 

8.7                                                    Indemnity not Affected by Knowledge. 
Subject to
Section 5.10 or as reasonably disclosed in the Company Disclosure
Schedule or the Parent Disclosure Schedule, the right
to indemnification under this Article 8 shall not be affected by any
knowledge of, examination made or investigation conducted by or on behalf of
the Parent Indemnified Parties or Shareholder Indemnified Parties, as the case
may be, or their respective legal, accounting or financial advisors or
consultants, or the acceptance by any of the foregoing of any certificate or
opinion or the consummation of the Closing.

 

ARTICLE 9

TERMINATION, AMENDMENT AND WAIVER

 

9.1                                                    Termination.  This Agreement may be terminated at any time prior to the Closing
(except as limited as to time in paragraph (b) below):

 

(a)                        By
the mutual written consent of Parent and the Company;

 

(b)                       By
Parent or the Company, if the Merger has not been effected on or prior to the
close of business on the 30th calendar date after the Execution Date; provided, however, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available
to any party if such party’s failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur prior to such date;

 

(c)                        By
the Company in the event a condition set forth in Section 6.1 or 6.3
becomes incapable of being fulfilled; or

 

(d)                       By
Parent in the event a condition set forth in Section 6.1 or 6.2 becomes
incapable of being fulfilled.

 

(e)                        By
Parent if, prior to the Closing, the Company’s board of directors shall have,
in any manner, withdrawn or materially modified or amended in any respect
adverse to Parent, or failed to issue, a recommendation that the Company
Shareholders vote in favor of the Merger and the other Transactions or shall
have resolved or announced an intention to do so.

 

50

 

9.2                                                    Effect of
Termination.  In the event of
the termination of this Agreement as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto; provided, however,
that nothing herein shall relieve either the Company or Parent from liability
for any breach of this Agreement or failure to perform hereunder prior to the
date of termination.  Notwithstanding
the foregoing, the obligations of the parties contained in Section 5.7
(Fees and Expenses), Article 8 (Survival and Indemnification), this
Section 9.2 (Effect of Termination), Section 10.1 (Entire Agreement),
10.2 (Dispute Resolution; Governing Law), 10.3 (Attorneys’ Fees), 10.4
(Headings), 10.5 (Notices) and Section 10.8 (No Third Party Beneficiaries)
shall survive any such termination.  If
this Agreement is terminated as provided herein, upon request therefor, each party
will re-deliver all documents, workpapers and other material of any other party
relating to the Transactions, whether obtained before or after the execution
hereof, to the party furnishing the same.

 

9.3                                                    Waiver. 
At any time prior to the Closing, any party may (a) extend the time
for the performance of any of the obligations or other acts of any other party
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein.  Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1                                              Entire Agreement.  This Agreement, including the exhibits,
schedules and other documents delivered pursuant to this Agreement, contain all
of the terms and conditions agreed upon by the parties relating to the subject
matter of this Agreement and supersede all prior and contemporaneous agreements
(including, but not limited to, the Letter Agreement, dated February 13,
2004, by and between the Company and Parent), negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting the
subject matter of this Agreement.

 

10.2                                              Dispute Resolution; Governing Law.

 

(a)                        Each
dispute, difference, controversy, question or claim arising under or relating
to this Agreement, the Transaction Documents, the Transactions, or the subject
matter hereof or thereof, between or among the parties to this Agreement (a “Dispute”)
shall be finally settled by binding arbitration held in the city of Atlanta,
Georgia, in accordance with the Commercial Arbitration Rules (the “Rules”)
of the American Arbitration Association (the “AAA”) In the event the
parties to the Dispute fail to agree upon an arbitrator from the first list of
potential arbitrators proposed by the AAA, the AAA will submit a second list in
accordance with the Rules.  In the event
the parties to the Dispute shall have failed to agree upon an arbitrator from
said second list, the arbitrator shall be appointed by the AAA in accordance
with the Rules.   The foregoing
arbitration proceedings may be commenced by any party to a Dispute by notice to
the other parties to the Dispute.  The
decision of the arbitrator shall be binding and conclusive upon the parties to
this Agreement.  Such decision shall be
written and shall be supported by written findings of fact and conclusions that
shall set forth the award, judgment or

 

51

 

decree of the arbitrator.  The
parties to this Agreement expressly acknowledge and stipulate that this
Agreement is in interstate commerce, as that term is defined in connection with
the Federal Arbitration Act, and that this agreement to arbitrate shall be
governed by the Federal Arbitration Act. 
Any challenges to the scope, validity, or enforceability of this
agreement to arbitrate, including, without limitation, any allegation that this
agreement to arbitrate was procured by fraud or procured under duress, shall be
determined by the arbitrator in accordance with the provisions of the Federal
Arbitration Act.

 

(b)                       Except
as provided in the Federal Arbitration Act and subject to the provisions of
this Section 10.2, the parties to this Agreement hereby exclude any right
of appeal to any court on the merits of the dispute.  The provisions of this Section 10.2 may be enforced in any
court having jurisdiction over the award or any party to the Dispute, and
judgment on the award granted in any arbitration hereunder may be entered in
any such court.

 

(c)                        This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.

 

10.3                                              Attorneys’ Fees.  In the event of any arbitration or litigation between the
parties, whether based on contract, tort or other cause of action, in any way
related to this Agreement or any of the Transaction Documents, the non-prevailing
party shall pay to the prevailing party all reasonable attorneys’ fees and
costs and expenses of any type, without restriction by statute, court rule or
otherwise, incurred by the prevailing party in connection with any action or
proceeding (including arbitration proceedings, any appeals and the enforcement
of any judgment or award), whether or not the dispute is prosecuted to final
judgment.  The “prevailing party” shall
be determined based on an assessment of which party’s major arguments or
positions taken in the action or proceeding could be fairly said to have
prevailed (whether by compromise, settlement, abandonment by the other party of
its claim or defense, final decision, after any appeals, or otherwise) over the
other party’s major arguments or positions on major disputed issues.  Any fees and costs incurred in enforcing a
judgment shall be recoverable separately from any other amount included in the
judgment and shall survive and not be merged in the judgment.

 

10.4                                              Headings. 
The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this Agreement.

 

10.5                                              Notices. 
All notices, requests, demands and other communications made in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery, if delivered to the persons identified
below, including delivery by facsimile provided sender receives telephonic
confirmation of delivery, on the next succeeding business day if delivered by
overnight courier, or five (5) days after mailing if mailed by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:

 

If to Parent or Purchaser:

 

Tier Technologies, Inc.

10780 Parkridge Boulevard

 

52

 

4th Floor

Reston, VA   20191

Attn:                    James R.
Weaver, President & CEO

Jeffrey A. McCandless, CFO

Fax:  (571) 583-1002

Telephone:  (571) 382-1027

 

With a copy to:

 

Farella Braun + Martel LLP

235 Montgomery Street, Russ Building

San Francisco, CA 94104

Attn:  Bruce R. Deming, Esq.

Fax:  (415) 954-4480

 

Telephone: (415) 954-4981

 

If to the Company:

 

EPOS Corporation

Attn: 
Michael A. Lawler

P.O. Box 3140

Auburn, AL 
36831-3140

Fax: (334) 321-7285

Telephone: (334) 321-7400

 

With a copy to:

 

Bradley Arant Rose & White LLP

One Federal Place

1819 Fifth Avenue North

Birmingham, Alabama 35203

Attn:                    James E.
Rotch, Esq.

James W. Childs, Jr., Esq.

Fax:                           (205)
488-6211

(205) 488-6207

Telephone: (205) 521-8000

 

Such persons and addresses may be changed, from time to time, by means
of a notice given in the manner provided in this Section 10.5.

 

10.6                                              Waiver. 
Waiver of any term or condition of this Agreement by any party shall not
be construed as a waiver of any subsequent breach or failure of the same term
or condition, or a waiver of any other term or condition of this Agreement.

 

10.7                                              Binding Effect; Assignment.  The parties agree that this Agreement shall
be binding upon and inure to the benefit of the parties and their respective successors
and assigns.

 

53

 

No party to this Agreement may assign or delegate, by operation of law
or otherwise, all or any portion of its rights, obligations or liabilities
under this Agreement without the prior written consent of all other parties to
this Agreement, which they may withhold in their absolute discretion; provided, however, that Purchaser may
assign this Agreement to any Affiliate of Parent.

 

10.8                                              No Third Party Beneficiaries.  Nothing in this Agreement shall confer any
rights upon any Person which is not a party or an assignee of a party to this
Agreement.

 

10.9                                              Counterparts.  This Agreement may be signed in any number of counterparts with
the same effect as if the signatures to each counterpart were upon a single
instrument.  All counterparts shall be
deemed an original of this Agreement.

 

10.10                                        Further Assurances.  After the Closing, the parties to this
Agreement shall take such further actions as are reasonably required to carry
out the Transactions.

 

10.11                                        Interpretation.  The phrase “including, but not limited to,” or words of similar
effect wherever used in this Agreement shall not be construed as limited to the
specified items listed.

 

10.12                                        Severability.  In case any provision in this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof will not in any way be affected or impaired
thereby.

 

[signature
page follows]

 

54

 

IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger on the Execution Date, effective as of the Effective Date.

 

	
   

  	
  TIER TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BAKER ACQUISITION CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EPOS CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  STOCKHOLDERS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  James F. Byrd

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Edward R. Graf

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Timothy A. Johnson

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Michael A. Lawler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SHAREHOLDER REPRESENTATIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Michael A. Lawler

  

 

 

EXHIBIT
A

 

FORM OF ARTICLES OF MERGER

 

A-1

 

EXHIBIT
B

 

FORM OF EMPLOYMENT AGREEMENTS

 

B-1

 

EXHIBIT
C

 

FORM OF ESCROW AGREEMENT

 

C-1

 

EXHIBIT
D

 

FORM OF LETTER OF TRANSMITTAL

 

D-1

 

EXHIBIT
E

 

FORM OF LEGAL OPINION OF COUNSEL TO THE
COMPANY

 

E-1

 

EXHIBIT
F

 

FORM OF LEGAL OPINION OF COUNSEL TO PARENT
AND PURCHASER

 

F-1

 

EXHIBIT
G

 

FORM OF INVESTOR REPRESENTATIONS LETTER

 

G-1

 

EXHIBIT
H

 

FORM OF WARRANT REDEMPTION AGREEMENT

 

H-1

 

SCHEDULE 1

 

COMPANY DISCLOSURE SCHEDULE

 

S1-1

 

SCHEDULE 2

 

PARENT DISCLOSURE SCHEDULE

 

S2-1Exhibit 10.1

 

AMENDMENT NO. 2 TO NOTE PURCHASE
AGREEMENT

 

THIS AMENDMENT NO. 2 TO
NOTE PURCHASE AGREEMENT, dated as of May 28, 2004 (this “Amendment”), is entered into
by and between Carriage Services, Inc., a Delaware corporation (the “Company”),
and each of the holders (the “Holders”) of the Notes of the Company
referred to in Recital B below.

 

RECITALS

 

A.                                   The
Company and the Holders (or their predecessors in interest) are parties to the
Note Purchase Agreement dated as of July 1, 1999, as amended by Amendment
No. 1 dated as of November 6, 2000 (as the same hereafter may be amended,
supplemented or otherwise modified from time to time, the “Agreement”; capitalized terms
used herein that are not defined herein and that are defined in the Agreement
shall have the same meanings as therein defined).

 

B.                                     The
Holders constitute the registered or beneficial holders of the 7.73% Senior
Notes, Series 1999-A, of the Company, due July 30, 2004, the 7.96% Senior
Notes, Series 1999-B, of the Company due July 30, 2006, and the 8.06%
Senior Notes, Series 1999-C, of the Company due July 30, 2008
(collectively, the “Notes”).

 

C.                                     As
a result of a change in GAAP, commencing with the financial reporting period
ended March 31, 2004, the Trust Convertible Preferred Securities are no
longer reflected in the Company’s consolidated balance sheet and have been
replaced with the Trust Debentures on the balance sheet.  The Company and the Holders have therefore
agreed, subject to the terms and conditions set forth herein, to amend the definition
of “Adjusted Consolidated Net Worth” in Schedule B to the Agreement to
reflect the addition to consolidated stockholders’ equity of either the Trust
Convertible Preferred Securities or the Trust Debentures, whichever is
reflected on the balance sheet in accordance with GAAP.

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Holders hereby agree as follows:

 

Section 1.                                          Amendment.  The definition of “Adjusted Consolidated Net
Worth” set forth on Schedule B to the Agreement is hereby amended in its
entirety to read as follows:

 

“Adjusted
Consolidated Net Worth”
means, as of any date, consolidated stockholders’ equity of the Company and its
Restricted Subsidiaries on such date, determined in accordance with GAAP, plus
(without duplication) the amount of outstanding Trust Convertible Preferred
Securities or outstanding Trust Debentures, as the case may be, that are
reflected on the consolidated balance sheet of the Company as of such date in
accordance with GAAP, less the amount by which outstanding Restricted
Investments on such date exceed 15% of consolidated stockholders’ equity of the
Company and its Restricted Subsidiaries on such date.

 

 

Section 2.                                          Effective
Date.

 

2.1                                 Effective
Date.  This Amendment shall become
binding upon the Company and each Holder upon its execution of a counterpart
hereof, subject to the condition that the following shall have been received by
each Holder on or before June 30, 2004:

 

(a)                                  counterparts
of this Amendment executed by the Company and the Required Holders;

 

(b)                                 written
evidence that the execution, delivery and performance by the Company of this
Amendment have been duly authorized by all requisite corporate action on the
part of the Company; and

 

(c)                                  from
March 31, 2004 until the foregoing conditions have been satisfied, there
shall have been no change in the financial condition, operations, business or
properties of the Company and its Restricted Subsidiaries which, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.

 

No party to this
Amendment may revoke its execution of this Amendment prior to June 30,
2004, but this Amendment shall not be deemed effective until all of the
foregoing conditions have been satisfied (the date on which such conditions are
satisfied being herein referred to as the “Effective Date”).  The Holders further acknowledge that the Company substituted the
Trust Debentures for the Trust Convertible Preferred Securities for purposes of
calculating financial ratios for the period ended March 31, 2004, as
reflected in the Officer’s Certificate for such period delivered pursuant to
Section 7.2 of the Agreement, and the Holders accept and agree to such
treatment for such period.

 

Section 3.                                          Representations
and Warranties.

 

The Company represents
and warrants, both on and as of the date hereof and on and as of the Effective
Date, to the Holders that:

 

3.1                                 The
Company has all requisite corporate power to execute, deliver and perform its
obligations under this Amendment.  The
Company has duly executed and delivered this Amendment, and this Amendment
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms.

 

3.2                                 Neither
the execution and delivery of this Amendment by the Company, nor the
consummation of the transactions contemplated hereby, nor fulfillment of nor
compliance with the terms and provisions hereof will conflict with, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any security
interest, lien or other encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, the charter or bylaws of the
Company or any of its Subsidiaries, any award of any arbitrator or any
agreement, instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any of its Subsidiaries is subject.

 

2

 

3.3                                 Neither
the nature of the business conducted by the Company, nor any of its properties,
nor any relationship between the Company and any other Person, nor any
circumstance in connection with the transactions contemplated by this Amendment
is such as to require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court or administrative or governmental
body or any other Person in connection with the execution and delivery of this
Amendment or the fulfillment of or compliance with the terms and provisions
hereof. Without limiting the generality of the foregoing, the execution and
delivery of this Amendment shall not require the consent or approval of or
notice to any lender or agent under the Company’s Credit Agreement dated
August 4, 2003.

 

3.4                                 Upon
the effectiveness of this Amendment, no Event of Default or Default shall exist
under the Agreement.

 

Section 4.                                          Miscellaneous.

 

4.1                                 This
Amendment shall be construed in connection with and as part of each of the
Agreement and the Notes, and except as modified and expressly amended by this
Amendment, all terms, conditions and covenants contained in the Agreement and
the Notes are hereby ratified and shall be and remain in full force and effect.

 

4.2                                 Any
and all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this Amendment may refer to the Agreement
and Notes without making specific reference to this Amendment but,
nevertheless, all such references shall include this Amendment unless the
context otherwise requires.

 

4.3                                 Other
than as expressly set forth herein, the execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy
of any Holder nor constitute a waiver of any provision of the Agreement, the
Notes or any other document, instrument or agreement executed and delivered in
connection with the Agreement.

 

4.4                                 The
Company confirms its agreement, pursuant to Section 15.1 of the Agreement,
to pay all costs and expenses of the Holders related to this Amendment and all
matters contemplated by this Amendment.

 

4.5                                 This
Amendment shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of Illinois, excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

 

4.6                                 This
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same document.  Delivery of this
Amendment may be made by telecopy of a duly executed counterpart copy hereof.

 

[Remainder of Page Intentionally Left Blank; Signature Page
Follows]

 

3

 

IN WITNESS WHEREOF, the
parties hereto have caused their duly authorized officers to execute this
Amendment as of the day and year first above written.

 

	
   

  	
  CARRIAGE SERVICES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Joseph
  Saporito

  	
   

  
	
   

  	
   

  	
  Joseph
  Saporito, Senior Vice President and

  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AIG ANNUITY INSURANCE
  COMPANY (Formerly

  AMERICAN GENERAL ANNUITY INSURANCE

  COMPANY)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERIT LIFE INSURANCE
  CO.

  	
   

  
	
   

  	
  AMERICAN GENERAL LIFE
  INSURANCE

  COMPANY (successor by merger to

  THE FRANKLIN LIFE INSURANCE COMPANY)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AIG Global Investment
  Corp., investment adviser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Peter
  DeFazio

  	
   

  
	
   

  	
   

  	
  Peter DeFazio, Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MASSACHUSETTS
  MUTUAL LIFE INSURANCE

  COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: David L. Babson
  & Company Inc. as Investment Adviser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Elisabeth A. Perenick

  	
   

  
	
   

  	
   

  	
  Elisabeth A. Perenick,
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C.M. LIFE INSURANCE
  COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  David L. Babson &
  Company Inc. as Investment

  Sub-Adviser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Elisabeth A. Perenick

  	
   

  
	
   

  	
   

  	
  Elisabeth A. Perenick,
  Managing Director

  	
   

  
								

 

4

 

	
   

  	
  BAYSTATE HEALTH SYSTEMS
  INC.

  	
   

  
	
   

  	
  By:

  	
  David L. Babson &
  Company Inc. as Investment Adviser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Elisabeth A. Perenick

  	
   

  
	
   

  	
   

  	
  Elisabeth A. Perenick,
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MINNESOTA LIFE
  INSURANCE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREAT WESTERN INSURANCE
  COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CATHOLIC AID
  ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PROTECTED
  HOME MUTUAL LIFE INSURANCE

  COMPANY (Now-National Guardian Life Ins. Co.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ R. A.
  Mucci

  	
   

  
	
   

  	
   

  	
  R. A. Mucci, Vice
  President & Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  National Guardian Life
  Insurance Company

  	
   

  
	
   

  	
  Investment Dept. (RAM)

  	
   

  
	
   

  	
  P. O. Box 1191

  	
   

  
	
   

  	
  Madison, WI  53701-1191

  	
   

  
								

 

5

 

	
   

  	
  REASSURE AMERICA LIFE
  INSURANCE COMPANY

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  SWISS RE ASSET
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/ John H.
  DeMaillie

  	
   

  
	
   

  	
   

  	
  John H. DeMaillie, Vice
  President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  EMC NATIONAL LIFE
  COMPANIES, formerly held by

  NATIONAL TRAVELERS LIFE COMPANY

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  MTL INSURANCE COMPANY

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  FARM BUREAU LIFE
  INSURANCE COMPANY OF

  MICHIGAN

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  	 

	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

										

 

6

 

	
   

  	
  FARM
  BUREAU MUTUAL INSURANCE COMPANY

  OF MICHIGAN

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  FARM
  BUREAU GENERAL INSURANCE

  COMPANY OF MICHIGAN

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  
	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  UNITY
  MUTUAL LIFE INSURANCE COMPANY –

  ANNUITY PORTFOLIO

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ADVANTUS CAPITAL
  MANAGEMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/
  Theodore R. Hoxmeier

  	
   

  	 

	
   

  	
   

  	
  Theodore R. Hoxmeier,
  Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  J. ROMEO & CO.,
  Registered Holder of Note No. BR-16

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  MONY LIFE INSURANCE
  COMPANY

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
    /s/ K.
  Duffy

  	
   

  	 

	
   

  	
   

  	
  K. Duffy, A Partner

  	
   

  	 

												

 

7

 

	
   

  	
  THE
  TRAVELERS INSURANCE COMPANY, for itself

  and for one of its separate accounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Denise
  T. Duffee

  	
   

  
	
   

  	
   

  	
  Denise T. Duffee,
  Investment Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  CANADA LIFE ASSURANCE COMPANY, as

  beneficial owner of Note numbers AR-9 and BR-18

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Eve
  Hampton

  	
   

  	
  By:

  	
    /s/ J. G.
  Lowery

  	
   

  
	
   

  	
  Eve Hampton, V. P.,

  Investments, U.S. Operations

  	
   

  	
  J. G. Lowery, Asst.
  V.P., Investments,

  U. S. Operations

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANADA
  LIFE INSURANCE COMPANY OF

  AMERICA, as beneficial owner of Note number AR-10

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Eve
  Hampton

  	
   

  	
  By:

  	
    /s/ J. G.
  Lowery

  	
   

  
	
   

  	
  Eve Hampton, V. P.,

  Investments, CLICA

  	
   

  	
  J. G. Lowery, Asst.
  V.P.,Investments, CLICA

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANADA
  LIFE INSURANCE COMPANY OF NEW

  YORK, as beneficial owner of Note number AR-11

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Eve
  Hampton

  	
   

  
	
   

  	
   

  	
  Eve Hampton, Vice
  President, Investments, CLAC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ J.G.
  Lowery

  	
   

  
	
   

  	
   

  	
  J.G. Lowery, Asst.
  V.P., Investments, CLAC

  	
   

  

 

8

 

	
   

  	
  GREAT-WEST
  LIFE & ANNUITY INSURANCE

  COMPANY, as beneficial owner of Note No. BR-19

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Eve
  Hampton

  	
   

  
	
   

  	
   

  	
  Eve Hampton, Vice
  President, Investments

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ James
  G. Lowery

  	
   

  
	
   

  	
   

  	
  James G. Lowery,
  Assistant Vice President, Investments

  	
   

  

 

9

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