Document:

Prepared by MERRILL CORPORATION

Exhibit 10.12

 

STRATEGIC MARKETING ALLIANCE AGREEMENT

 

THIS STRATEGIC MARKETING ALLIANCE
AGREEMENT (the “Agreement”) is entered into as of of December 31, 2001, by and
between ROCHE DIAGNOSTICS CORPORATION, an Indiana corporation (“RDC”)
BIO-REFERENCE LABORATORIES, INC., a New Jersey corporation (“BRLI”), and
CareEvolve.com, Inc, a New Jersey Corporation (“CareEvolve”).  (RDC, BRLI and CareEvolve are sometimes
referred to herein collectively as the “Parties” and each individually as a
“Party.”)

 

PRELIMINARY
STATEMENTS

 

A.            RDC is engaged in the business of manufacturing,
marketing and selling diagnostic equipment, reagents and other related supplies
and has an established customer and referral base of hospitals, laboratories,
alternative site testing facilities and health care professionals.

 

B.            BRLI, through its wholly owned subsidiary CareEvolve,
markets and provides a physician-patient and physician-payer electronic
communications service that is designed, among other things, to communicate
laboratory orders and results, e-mail prescriptions and refills, provide payer
eligibility, process payment claims, manage disease programs for specified
disease states, and provide other physician services (the “CareEvolve
Service”).

 

C.            The Parties have determined that it is in their
respective best interests to enter into a strategic marketing alliance, whereby
RDC would promote and provide support for the CareEvolve Service in exchange
for a portion of the revenues generated thereby.

 

D.            The Parties desire to enter into this Agreement in order
to establish the terms of this alliance.

 

TERMS

 

NOW, THEREFORE, in consideration
of the forgoing premises and the covenants set forth in this Agreement, and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:

 

  1.                           Strategic
Alliance.  The Parties hereby
establish a strategic marketing alliance (the “Alliance”), which shall be
governed by the terms set forth in this Agreement.

 

  2.           Obligations
of RDC.  RDC shall have the
following obligations in connection with the Alliance:

 

  (a)                         Employees.  During the Term, RDC shall cause its
Corporate Account Directors and Field Marketing Managers to be trained by
CareEvolve pursuant to Section 3(b) of this Agreement and will thereafter cause
its Corporate Account Directors and Field Marketing Managers to market the
CareEvolve Service along with other RDC services and products.

 

  (b)                         Payment
of Expenses.  Within thirty days of
the date of this Agreement, RDC shall pay to CareEvolve the sum of
$1,000,000.00, which sum shall be applied by CareEvolve in the manner specified
by the Steering Committee (as hereinafter defined). This sum shall be used by
CareEvolve during the term of this Agreement solely to fund those ongoing
operating expenses of CareEvolve set forth in the Steering Committee-approved
Annual Budget described in Section 5 (the “CareEvolve Operating Expenses”),
including the expenses associated with the employment by CareEvolve of the employees
specified in Section 3(a). RDC shall be obligated to make no other payments
with respect to the activities of the Alliance during the term, except for such
other expenses as may be approved in advance in writing by the Steering
Committee.

 

  (c)                         Managerial
Support.  During the Term, RDC shall
provide general managerial support to the Alliance and to CareEvolve, at no
cost or expense to CareEvolve.  For
purposes of this section and Section 3(c) of this Agreement, “general
managerial support” shall be deemed to mean general advice and consultation by
members of the mid-level to senior management of the party providing such
support. “General managerial support” shall not be construed to mean the
conduct of day-to-day operations of the CareEvolve business.

 

  (d)                         Sales
Efforts.  During the Term, RDC shall
cause its sales personnel to exercise commercially reasonable efforts to market
and sell the CareEvolve Service.

 

  (e)                         Exclusivity.  During the Term, RDC shall not (1) directly
or indirectly develop and/or market any other portal solution providing the
service of lab order test result reporting, (2)  enter into any other arrangements with CareEvolve competitors for
portal solutions for lab order test result reporting, or (3) enter into any
agreement or arrangement with MedUnite [Insert proper corporate
name of MedUnite] that could
reasonably be deemed to  interfere with
the relationship of CareEvolve with MedUnite.

 

  3.                           Obligations
of BRLI and CareEvolve.  BRLI and
CareEvolve shall have the following obligations in connection with the
Alliance:

 

  (a)                         Employment
of CareEvolve Employees. During the Term, CareEvolve shall employ the following
employees on a full-time basis: (a) one Marketing Manager and (b) three
marketing, sales, support and training persons. These employees (collectively,
the “CareEvolve Marketing Employees”) shall dedicate their time exclusively to
the business of marketing the CareEvolve Service on a full-time basis.  CareEvolve shall be solely responsible for
the payment of all expenses associated with the employment of the CareEvolve
Marketing Employees, including but not limited to salaries, fringe benefits,
withholding of taxes and other similar expenses.  The CareEvolve Marketing Employees shall be under the control and
direction of CareEvolve; however, that (1) the Steering Committee shall advise
and assist in the hiring and performance assessments of the CareEvolve
Marketing Employees, (2) no employee shall be hired as a CareEvolve Marketing
Employee without the consent of the Steering Committee and (3) the Steering
Committee may, at any time, require the termination and replacement of any
CareEvolve Marketing Employee.

 

  (b)                         Training.  Promptly following the execution of this
Agreement, CareEvolve shall provide one-time comprehensive technical and sales
training on the CareEvolve Service the Care Evolve Marketing Employees and all
of RDC’s Corporate Account Directors and Field Marketing Managers.  CareEvolve shall provide supplemental continuing
education and training from time to time thereafter, as directed by the
Steering Committee.  This training shall
be provided at no cost to CareEvolve, BRLI or RDC; the cost of such training
shall not be considered a CareEvolve Operating Expense.

 

  (c)                         Managerial
Support.  During the Term, BRLI
shall provide general managerial support to the Alliance and to CareEvolve, at
no cost or expense to CareEvolve.

 

  (d)                         Sales
Efforts.  During the Term, BRLI and
CareEvolve shall cause its sales personnel to exercise commercially reasonable
efforts to market and sell the CareEvolve Service.

 

  (e)                         Records
and Access.  During the Term and for
a period of eight years following the expiration or termination of the Term,
CareEvolve shall prepare, preserve and maintain reasonably detailed, complete
and accurate records of all marketing activities for, sales/commercialization
referrals for, gross revenues realized in connection with, and costs and
expenses incurred in connection with, the CareEvolve Service, the Alliance and
CareEvolve.  CareEvolve shall provide to
RDC or its designated agents, upon reasonable request, but no more than one
time in any given six month period of time or upon termination of this
Agreement as herein described in Paragraph 7, complete access to such records
for any purpose whatsoever.  RDC shall
be entitled to make and retain copies of such records, at RDC’s expense.

 

  (f)                          Exclusivity:  During the Term, neither BRLI nor CareEvolve
will enter into any agreement, arrangement or relationship relating to the
sale, marketing, promotion of the CareEvolve services with any other diagnostic
company that competes directly or indirectly with RDC for a similar strategic
marketing Agreement concerning the CareEvolve Service.

 

  (g)                         No
Other Agreements; No Sale of Equity. During the Term, without the prior
written consent of RDC, neither BRLI nor CareEvolve shall enter into an
agreement or arrangement with any other party respecting the distribution of
the income or revenue of CareEvolve, nor shall CareEvolve issue any
additional equity or debt securities to any party other than BRLI.

 

  4.                           Payments
to RDC. During the Term, CareEvolve shall pay to each RDC and BRLI an
amount equal to 50% of the net after-tax income generated in each quarter, in
each case not to exceed 50% of the net after-tax cash (computed without
deduction of any payments or accruals made by CareEvolve to RDC and BRLI
pursuant to this paragraph 4), generated through the sale, licensing or other
commercialization of the CareEvolve Service, unless the parties have jointly
agreed through the Steering Committee to waive disbursement in the best
interests of the operations of CareEvolve. On or before the fifteenth day next
following the last day of the last month of each calendar quarter (commencing
in the second calendar quarter of the Term), CareEvolve shall deliver to RDC
and BRLI an accounting of the net after-tax income received from the
commercialization of the CareEvolve Service during the prior calendar quarter,
and shall deliver payment contemporaneously with the delivery of the
accounting.

 

  5.                           Steering
Committee; Annual Budget.

 

  (a)                 Steering
Committee Responsibilities and Membership.  During the Term, the Parties each shall appoint three management
representatives to a committee that will oversee the Alliance and the activities
of CareEvolve, the strategic direction and management of the Alliance and
CareEvolve, and the performance of the Parties hereunder (the “Steering
Committee”).  The full Steering
Committee shall meet at least quarterly to discuss implementation of this
Agreement, issues relating to the continued development, marketing, promotion,
distribution and sale of the CareEvolve Service, and such other commercial
issues relating to the Alliance and CareEvolve that either Party believes is
appropriate for discussion by the Steering Committee.  In addition to the full Steering Committee, RDC and BRLI each
shall appoint one member of their respective Steering Committee panels to meet
on a more regular basis to oversee the regular operations of CareEvolve.  The Steering Committee shall be responsible
for all commercially or strategically significant decisions affecting the
Alliance or CareEvolve, including, without limitation, the establishment and
review of the Annual Budget per Section 5(b) and the disbursement of funds paid
by RDC to cover CareEvolve Operating Expenses in accordance therewith.  RDC’s initial appointees to the Steering
Committee are:  Dick Aderman, Tom Adkins
and David Quick.  BRLI’s initial
appointees to the Steering Committee are: 
Marc Grodman, Morton Topfer and Richard Faherty.  A Party may change one or more of its
representatives to the Steering Committee as well as the day-to-day appointee
by providing notice to the other Party in accordance with Section 15(d).

 

  (b)                 Annual
Generic Budget.  Each year, the
Steering Committee shall be responsible for setting an annual generic budget
(the “Annual Budget”) for the coming year’s CareEvolve operations, setting
forth the planned CareEvolve Operating Expenses for the year.  The Annual Budget for each year of the Term
shall be agreed upon by no later than the anniversary date of this Agreement on
which such year begins, provided, however, that the Annual Budget for the
initial year of this Term shall be agreed upon by the Steering Committee within
thirty days of execution of this Agreement. The Steering Committee shall review
the Annual Budget quarterly and make adjustments, if necessary, at the time of
such review. CareEvolve may pay any CareEvolve Operating Expenses which are
provided for in the Annual Budget, as adjusted quarterly, without further
approval of the Steering Committee. Any expense payments which are not provided
for in the Annual Budget (including any payments for operating expenses) must
be pre-approved in writing by the Steering Committee.

 

  6.                           Term;
Termination.  The term of this
Agreement (the “Term”) shall commence on the date hereof and continue for a
period of five years, unless earlier terminated in accordance with Section 7.

 

  7.                           Termination.  This Agreement may be terminated:

 

  (a)                         Mutual
Agreement.  Immediately, upon the
mutual written agreement of the Parties;

 

  (b)                         Anniversary
Dates.  On the first or any
subsequent anniversary of the date of this Agreement, by either Party, upon
written notice to the other Party provided at least thirty, but no more than
sixty, days prior to the applicable anniversary date;

 

  (c)                         Material
Breach.  Immediately, by the
non-breaching Party, upon written notice if a Party materially breaches this
Agreement and such breach is not curable, or if such breach is curable within
the thirty day period following the provision of written notice of such breach
to the breaching Party, if such breach is not cured within the thirty day
period;

 

  (d)                         Bankruptcy.  Immediately, by either Party upon written
notice, if the other Party (i) becomes insolvent; (ii) makes an assignment for
the benefit of its creditors; (iii) seeks or obtains protection under the
bankruptcy laws of the United States or any state, whether voluntarily or
involuntarily; (iv) develops or has developed a plan of arrangement or
composition agreement as a result of a general meeting of its creditors; (v)
has appointed a receiver, custodian, trustee or like officer to take possession
of all or any substantial part of its assets; (vi) has all or any substantial
part of its assets attached, executed or seized; or (vi) admits in writing its
inability to pay its debts as they mature;

 

  (e)                         Termination
of Reseller Agreement.  Immediately,
by RDC, if that certain Vendor Agreement made and entered into by and between
MedUnite, Inc., BRLI and CareEvolve, dated December 17, 2001, attached hereto
as Exhibit A, (the “MedUnite Reseller Agreement”) expires or is
terminated for any reason whatsoever, unless the MedUnite Reseller Agreement is
terminated with CareEvolve as a direct result of the acts, actions or failures
to act on the part of RDC.

 

  (f)                          Steering
Committee Deadlock.  Immediately, by
either party, if the Steering Committee is unable to reach agreement on a
material business issue relating to the CareEvolve business, and after
submission of the issue to management discussions in accordance with Section
15(c) the Parties are unable to resolve the deadlock.

 

  8.                           Effect
of Termination.

 

  (a)                         Termination
Generally.  Except as expressly
provided in Section 8(b) below, termination of this Agreement for any of the
causes specified in Section 7 shall not relieve either Party from the
performance of any commitment or obligation hereunder which survives
termination, or relieve either Party from the payment of monies owed to the
other Party pursuant to the terms of this Agreement.  Furthermore, the terminating Party shall retain all of its rights
and remedies at law and in equity upon such termination.

 

  (b)                         Return
on Investment. If RDC terminates this Agreement at any time for any of the
causes specified in Sections 7(c), (d) or (e), or if BRLI
terminates this Agreement pursuant to Section 7(b) effective during the
first two years next following the execution date of this Agreement, or if
either Party terminates this Agreement pursuant to Section 7(f) within
two years of the date of this Agreement, then:

 

  (i)                          Immediate
Return of Invested Capital.  Within
thirty days of termination, CareEvolve shall return to RDC an amount equal to
the monies advanced to CareEvolve by RDC less all budgeted CareEvolve Operating
Expenditures approved by the Steering Committee for the ongoing operation of
CareEvolve and paid on or prior  to the
date of termination pursuant to Section 4); and

 

  (ii)                         Entitlement
to Revenue Stream.  After the date
of termination, and during the five-year period following execution of this
Agreement, or at least two years after termination, whichever shall be longer,
CareEvolve shall pay to RDC amounts equal to 50% of the net after-tax income
generated through sales, licensing or commercialization of the CareEvolve
Service to RDC Accounts (as hereinafter defined) after collections.  Such amounts shall be calculated, paid and
accounted for quarterly in the manner contemplated in Section 4.  As used herein, “RDC Accounts” means
CareEvolve Service customers introduced to BRLI/CareEvolve by RDC personnel, or
customers acquired by BRLI/CareEvolve as a result of significant sales efforts
by RDC personnel.

 

  (iii)                        License.  Effectively immediately and automatically
upon any termination of the type described in this Section 7(b), RDC
shall have, and CareEvolve hereby grants to RDC, an irrevocable, worldwide,
perpetual, royalty-free, nonexclusive license to use (including to reproduce,
modify, create derivative works, distribute, transmit, publicly perform,
publicly display, and sublicense) the CareEvolve Service (including, without
limitation, the CareEvolve IP (as hereinafter defined)). After such
termination, at its option, RDC may assume the defense of any actual or
threatened infringement or claim of infringement of any patent, copyright,
trademark, trade secret, privacy, publicity, or other proprietary right of any
third party based on the CareEvolve Service or the CareEvolve IP or its use by
RDC, or follow such other course of action is it reasonably deems necessary to
protect its interest; provided, however, that RDC shall be indemnified by BRLI
for all reasonable costs incurred in such course of action in accordance with Section
12.

 

  9.                           Representations
and Warranties of RDC.  RDC hereby
represents and warrants to BRLI as follows:

 

  (a)                         Authority;
Binding Agreement; Noncontravention. 
RDC has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. 
This Agreement constitutes the valid and binding obligation of RDC,
enforceable in accordance with its terms. 
Neither the execution and delivery of this Agreement nor the
consummation of the actions and transactions contemplated herein will, with or
without the passage of time or the delivery of notice,  (i) conflict with, result in a breach of or
constitute a default under any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
RDC is a party or bound, (ii) violate any statute, ordinance or law or any
rule, regulation, order, writ, injunction or decree of any court,
administrative agency, commission or other governmental entity or
instrumentality, or (iii) violate any provision of the charter, bylaws or other
constituent documents of RDC.

 

  (b)                         Organization.  RDC is a corporation duly organized and
validly existing under the laws of the State of Indiana.

 

  (c)                         Consents.  No notice to, filing with or authorization,
consent or approval of any governmental entity or third party is necessary for
the consummation by RDC of the actions and transactions contemplated by this
Agreement.

 

  10.                         Representations
and Warranties of BRLI.  BRLI hereby
represents and warrants to RDC as follows:

 

  (a)                         Authority;
Binding Agreement; Noncontravention. 
BRLI has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. 
This Agreement constitutes the valid and binding obligation of BRLI,
enforceable in accordance with its terms. 
Neither the execution and delivery of this Agreement nor the
consummation of the actions and transactions contemplated herein will, with or
without the passage of time or the delivery of notice,  (i) conflict with, result in a breach of or constitute
a default under any note, bond, mortgage, indenture, license, franchise,
permit, agreement, lease or other instrument or obligation to which BRLI is a
party or bound, (ii) to the best of its knowledge, violate any statute,
ordinance or law or any rule, regulation, order, writ, injunction or decree of
any court, administrative agency, commission or other governmental entity or
instrumentality, or (iii) violate any provision of the charter, bylaws or other
constituent documents of BRLI.

 

  (b)                         Organization;
Stock Ownership.  BRLI is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey. BRLI is the sole shareholder of CareEvolve.

 

  (c)                         Consents.  No notice to, filing with or authorization,
consent or approval of any governmental entity or third party is necessary for
the consummation by BRLI of the actions and transactions contemplated by this
Agreement.

 

  (d)                         Ownership
of Intellectual Property.  BRLI, or
CareEvolve, owns all right, title and interest, free and clear of all
encumbrances, in and to all inventions (whether patentable or unpatentable and
whether or not reduced to practice), improvements,  patents, trademarks (registered and unregistered), service marks,
trade dress, trade names, mask works, domain names and URL’s, trade names,
copyrights (registered and unregistered) and other intellectual property used
or useful to BRLI in connection with CareEvolve and the development, marketing
and sale of the CareEvolve Service (collectively, the “CareEvolve IP”). To the
best of its knowledge, information and belief, no person has challenged, or to
BRLI’s knowledge has threatened to challenge, the validity of or BRLI’s rights
to the CareEvolve IP.  To the best of
its knowlede, information and believ, no act or omission of BRLI, including,
without limitation, the use, production, marketing, licensing or sale of the
CareEvolve Service generally, or the CareEvolve IP specifically, violates,
infringes or misappropriates, or has violated, infringed or misappropriated,
any intellectual property rights of any other person or entity.  BRLI or CareEvolve has the sole and
exclusive right to bring actions for the violation, infringement or
misappropriation of the CareEvolve IP.

 

  11.                         Representations
and Warranties of CareEvolve. 
CareEvolve hereby represents and warrants to RDC and BRLI as follows:

 

  (a)                         Authority;
Binding Agreement; Noncontravention. 
CareEvolve has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and binding obligation of
CareEvolve, enforceable in accordance with its terms.  Neither the execution and delivery of this Agreement nor the
consummation of the actions and transactions contemplated herein will, with or
without the passage of time or the delivery of notice,  (i) conflict with, result in a breach of or
constitute a default under any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
CareEvolve is a party or bound, (ii) to the best of its knowledge, violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any court, administrative agency, commission or other governmental
entity or instrumentality, or (iii) violate any provision of the charter,
bylaws or other constituent documents of CareEvolve.

 

  (b)                         Organization.  CareEvolve is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey. BRLI owns 100% of the issued and outstanding equity securities of
CareEvolve.

 

  (c)                         Consents.  No notice to, filing with or authorization,
consent or approval of any governmental entity or third party is necessary for
the consummation by CareEvolve of the actions and transactions contemplated by
this Agreement.

 

  (d)                         Ownership
of Intellectual Property. 
CareEvolve or BRLI owns all right, title and interest, free and clear of
all encumbrances, in and to all inventions (whether patentable or unpatentable
and whether or not reduced to practice), improvements,  patents, trademarks (registered and
unregistered), service marks, trade dress, trade names, mask works, domain
names and URL’s, trade names, copyrights (registered and unregistered) and
other intellectual property used or useful to CareEvolve in connection with
CareEvolve and the development, marketing and sale of the CareEvolve Service
(collectively, the “CareEvolve IP”). No person has challenged, or to
CareEvolve’s knowledge has threatened to challenge, the validity of or
CareEvolve’s rights to the CareEvolve IP. 
No act or omission of CareEvolve, including, without limitation, the
use, production, marketing, licensing or sale of the CareEvolve Service generally,
or the CareEvolve IP specifically, violates, infringes or misappropriates, or
has violated, infringed or misappropriated, any intellectual property rights of
any other person or entity.  CareEvolve
or BRLI has the sole and exclusive right to bring actions for the violation,
infringement or misappropriation of the CareEvolve IP.

 

  12.                         Indemnification
Provisions for the Benefit of BRLI and CareEvolve.  RDC shall indemnify, defend and hold
harmless BRLI and CareEvolve and their agents, shareholders, officers,
directors, affiliates, successors and assigns from and against any and all
actions, suits, proceedings, claims, demands, orders, damages, dues, penalties,
fines, costs, liabilities, obligations, losses, expenses and fees (including,
without limitation, attorneys fees and costs) resulting from (a) RDC’s breach
of any representation, warranty or covenant contained in this Agreement, or (b)
RDC’s gross negligence or willful misconduct in the course of its performance
of this Agreement.

 

  13.                         Indemnification
Provisions for the Benefit of RBC.

 

  (a) As to BRLI:

(i)             BRLI shall indemnify, defend and
hold harmless RDC and its agents, shareholders, officers, directors,
affiliates, successors and assigns from and against any and all actions, suits
proceedings, claims, demands, orders, damages, dues, penalties, fines, costs,
liabilities, obligations, losses, royalties, expenses and fees (including,
without limitation, attorneys fees and costs ) resulting from (a) BRLI’s breach
of any material representation, warranty or covenant contained in this
Agreement, (b) BRLI’s gross negligence or willful misconduct in the course of
its performance of this Agreement.

 

  (b) As to CareEvolve:

(i)             CareEvolve shall indemnify, defend
and hold harmless RBC and its agents, shareholders, officers, directors, affiliates,
successors and assigns from and against any and all actions, suits,
proceedings, claims, demands, orders, damages, dues, penalties, fines, costs,
liabilities, obligations, losses, royalties, expenses and fees (including,
without limitation, attorneys fees and costs) resulting from (a)) CareEvolve’s
breach of any material representation, warranty or covenant contained in this
Agreement, (b)) CareEvolve’s gross negligence or willful misconduct in the
course of its performance of this Agreement., (c) any injuries or death to
persons, damage to property or other losses or liabilities whatsoever realized
by a third party as a result of the marketing, sale, use, misuse,
administration, transmission or other operation of the CareEvolve Service, and
(d)) any actual or alleged violation, infringement, breach or misappropriation
by CareEvolve of any third party intellectual property rights caused or
allegedly caused by CareEvolve’s marketing, ownership, use, misuse, licensing,
sale, commercialization or any other utilization of the CareEvolve Service
and/or the CareEvolve IP.

 

  14.                         Confidentiality.  Each of RDC, BRLI and CareEvolve
acknowledges that in the course of its performance under this Agreement it
shall receive from the other Parties certain Confidential Information (as
hereinafter defined).  During the Term
and for a period of five years following the expiration or termination thereof,
no Party shall disclose such Confidential Information to third parties without
the prior written consent of the disclosing Party; provided, however, that RDC
may, without prior written consent, disclose BRLI or CareEvolve Confidential
Information to any affiliate controlled by or under common control with RDC,
except LabCorp Holdings, Inc., or any other LabCorp division, sub-division,
business unit or associated business operation of LabCorp Holdings, Inc..  Neither RDC nor BRLI nor CareEvolve shall
make any use, commercial or otherwise, of any of the other Party’s Confidential
Information for any purpose unrelated to its performance of its obligations
under this Agreement.

 

  (a)                         Public
Disclosure.  A Party shall be
relieved of confidentiality obligations under this Section 14 if (a) the
Party receiving the Confidential Information can demonstrate by written records
that the Confidential Information was already known to it, or to an affiliate,
at the time of the original receipt of the Confidential Information from the
other Party, (b) the Confidential Information was, at the time of disclosure to
the receiving Party, generally available to the public or later becomes
available to the public through no fault of the receiving Party, or (c) the
Confidential Information was made available to the receiving Party or an
affiliate of the receiving Party for its use or disclosure by a third party who
at the time of transmitting such Confidential Information had the right to do
so.

 

  (b)                         Confidential
Information – Defined.  For purposes
of this Agreement, “Confidential Information” shall mean confidential and
proprietary business information that, if disclosed in tangible form, is marked
as confidential at the time of disclosure by the disclosing Party, or if first
disclosed orally, is identified as confidential by the disclosing Party at the
time of disclosure and is summarized in writing within thirty days of such
disclosure.

 

  15.                         Miscellaneous.

 

  (a)                   Option
to Purchase Equity Interests.

(i)                RDC shall have the option to
initiate negotiation of a minority investment in BRLI. If RDC provides written
notice to BRLI of its desire to initiate such negotiations, BRLI shall
negotiate with RDC in good faith on such investment maters.

(ii)               For the nominal sum of $10.00
(the “CareEvolve Option Fee”), BRLI hereby grants to RDC an option (the
“CareEvolve Option”) to purchase an equity interest in CareEvolve from BRLI
equal to up to 50% of the ownership of CareEvolve.

(iii)              The CareEvolve Option shall
entitle RDC to make the equity investments at fair market value at the time of
the exercise of the respective Option.

(iv)              The CareEvolve Option shall become
exercisable upon the payment of the CareEvolve Option Fee and shall expire upon
the termination of this Agreement.

 

  (b)                         Right
of First Refusal:  BRLI hereby
grants RDC a right of first refusal to purchase CareEvolve from BRLI at
substantially the same price and upon substantially the same terms as any
valid, reasonable offer by a third party to purchase CareEvolve from BRLI which
BRLI is willing to accept.  BRLI
promptly shall provide to RDC written notice of any offer received by a third
party to purchase CareEvolve from BRLI that BRLI is willing to accept, which
notice shall include a detailed, complete description of the terms of the offer
provided by such third party.  RDC shall
have thirty days from the date of notice exercise such right of first refusal
by providing written notice to BRLI of RDC’s intent to exercise its right of
first refusal

 

  (c)                         Dispute
Resolution.  If a disagreement
arises between the Parties as to any matters within the scope of this Agreement
(including, without limitation, a disagreement among the Steering Committee
resulting in a deadlock), and the personnel of either Party responsible for
administering this Agreement are unable despite good faith efforts to resolve
the dispute among themselves, either Party may request that the issue of
disagreement be referred to members of Senior Management (as hereinafter
defined) of the Parties for resolution. 
(For the purposes of this Agreement, “Senior Management” shall be deemed
to include any member of management at the equivalent level of a vice-president
or above who has authority to settle such disputes.)  The Parties agree not to take any other action to resolve any
dispute relating to this Agreement until at least thirty days have elapsed
since the first communication between Senior Management representatives
pursuant to this Section 15(c); provided, however, that either Party may
seek injunctive relief if such Party believes in good faith that it will suffer
irreparable harm without such relief before such period of time elapses.  This Agreement shall remain in full force
and effect during the pendency of any dispute resolution procedures undertaken
pursuant hereto.

 

  (d)                         Notice.  All notices, requests, demands, approvals,
consents and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given (a) on the date of service if
served personally on the Party to whom notice is to be given, (b) on the
day of transmission if sent via facsimile transmission to the facsimile number given
below, provided that telephonic confirmation of receipt is obtained promptly
after completion of transmission, (c) on the second day after delivery to
any express courier, or (d) on the fifth day after mailing, if mailed to
the Party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and addressed as follows: If to RDC, to Roche
Diagnostics Corporation, 9115 Hague Road, Indianapolis, IN 46256, Attn: David
Quick, Telephone: 317/521-3896Fax: 317/521-2777 Copy to Law Department at same
address, Telephone: 317/845-2000; Fax: 317/521-2840.  If to BRLI, to: 
Bio-Reference Laboratories, Inc., Attention: Marc Grodman, MD, CEO, 481
Edward Ross Drive, Elmwood Park, NJ 07407 
Telephone 201-791-2600.  If to
CareEvolve, to:  CareEvolve.com, Inc.,
Attention: Richard L. Faherty, COO, 481 Edward Ross Drive, Elmwood Park, NJ
07407  Telephone 201-791-2600. Copy to :
Roger Tolins, Esq., Tolins & Lowenfels, PC, 747 Third Avenue, New York,
NY  10017.  Any Party may change its address for the purpose of this Section
15(d) by giving the other Party written notice of its new address in the
manner set forth above.

 

  (e)                         Relationship
of Parties.  Nothing in this
Agreement shall be construed to (i) create a joint venture, partnership, employer/employee
relationship, agency or any other relationship other than that of parties
contracting at arms-length, or (ii) to authorize either Party to assume or
undertake any obligations of any kind, express or implied, on behalf of the
other Party.

 

  (f)                          Expenses.  Except as explicitly provided in Sections
12 and 13 with respect to indemnification claims, each Party shall
bear its own expenses in connection with the negotiation, execution and
performance of this Agreement, including without limitation legal fees and
expenses.

 

  (g)                         Non-Solicitation.  During the Term and for a period of one year
following the expiration or termination thereof, neither Party, without the
consent of the other Party, shall solicit, recruit or persuade any person
performing under this Agreement to terminate his/her employment with the other
Party.

 

  (h)                         Succession
and Assignment.  This Agreement
shall be binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns.  Neither Party may assign or delegate this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval
of the other Party.

 

  (i)                          Taxes,
Duties and Other Charges.  BRLI and
CareEvolve shall indemnify and hold harmless RDC from and against any sales,
use, gross receipts, value-added, excise, property or other tax, tariff, duty
or assessment (excluding income taxes incurred by RDC) and related interest and
penalties collected, levied or imposed by national governments, state or
provincial governments, local governments or any subdivision of the foregoing
and arising out of or related to the operations of CareEvolve during the term
of this Agreement by CareEvolve..

 

  (j)                          Publicity.  Neither Party shall issue any press release
nor make any public announcement respecting the execution or the terms of this
Agreement without the prior approval of the other Party.

 

  (k)                         Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

  (l)                          Counterparts;
Facsimile Signatures.  This
Agreement may be executed in counterparts, each of which shall constitute an
original, and all of which together shall constitute one and the same
instrument.  Delivery by a Party of
executed counterparts of this Agreement by facsimile shall constitute execution
and delivery of such counterpart to the same extent as if such counterpart were
originally executed and delivered by such Party.

 

  (m)                        Severability.  If any provision of this Agreement shall be
held invalid, illegal or unenforceable in any jurisdiction, such provision
shall be ineffective to the extent of such invalidity, illegality or
unenforceability, the validity, legality or enforceability of the other
provisions hereof shall not be affected thereby, and there shall be deemed
substituted for the provision at issue a valid and enforceable provision as
similar as possible to the provision at issue, all without affecting the validity,
legality or enforceability of such provision in any other jurisdictions.

 

  (n)                         Amendment.  No provision of this Agreement may be
changed, waived, discharged or terminated orally, by telephone or by any means
except by an instrument in writing signed by the Party against whom enforcement
of the change, waiver, discharge or termination is sought and then the same
shall be effective only in the specific instance for which it is given.

 

  (o)                         Interpretation.  The Parties hereto acknowledge and agree
that this Agreement represents the product of negotiations conducted in good
faith and at arms-length and that this Agreement should not be interpreted in
favor of or against any Party because of such Party’s ability or inability to
control the drafting of this Agreement.

 

  (p)                         Entire
Agreement.  This Agreement contains
the entire agreement of the Parties relating to the matters addressed herein or
therein, superseding any and all prior agreements, whether written or oral.

 

  (q)                         Survival.  The provisions of Sections 8, 9,
10, 11, 12, 13, 15(b), 15(e), 15(f),
15(h), 15(m) and 15(o) shall survive the execution of this
Agreement and the expiration or termination of the Term and remain binding on
the Parties in accordance with their terms.

 

  (s)                         Guaranty.  BRLI hereby unconditionally, absolutely and
irrevocably guarantees the full and prompt payment by CareEvolve of any amounts
owed to RDC pursuant to any provision of this Agreement, and the full and
prompt performance by CareEvolve of all provisions of this Agreement.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

IN WITNESS
WHEREOF, this Agreement is executed as of the date first above written.

 

	
  ROCHE DIAGNOSTICS

  CORPORATION
(“RDC”)

  	
   

  	
  BIO-REFERENCE LABORATORIES,
  INC.(“BRLI”)

  
	
   

   

   

  By: /S/Richard W. Aderman

Printed: Richard W. Aderman

  
Title: Sr. V.P. & General Manager

  	
   

  	
   

   

   

  By: /S/Richard L. Faherty

  
Printed: Richard L. Faherty

  
Title:CIO

  
	
   

  	
   

  	
  CAREEVOLVE.COM,
  INC.
(“CareEvolve”)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  /S/Richard L. Faherty

  
Printed: Richard L. Faherty

  
Title: COO<PAGE>

                                                                   EXHIBIT 10.29

                   FOURTH AMENDMENT TO MODIFICATION AGREEMENT

         THIS FOURTH AMENDMENT TO MODIFICATION  AGREEMENT (this  "Amendment") is
made as of the 18th day of January, 2002 by and among STEELCLOUD, INC. (formerly
known as Dunn Computer Corporation and changed to SteelCloud, Inc. pursuant to a
certificate  of amendment  issued by the Virginia State  Corporation  Commission
effective  as  of  July  30,  2001),  a  Virginia  corporation,   DUNN  COMPUTER
CORPORATION,  a Delaware corporation,  INTERNATIONAL DATA PRODUCTS, CORP., STMS,
INC., PUERTO RICO INDUSTRIAL  MANUFACTURING  OPERATIONS  ACQUISITION,  CORP. and
DUNN COMPUTER OPERATING COMPANY  (collectively,  the "Borrower") and FIRST UNION
NATIONAL BANK,  holder of the Note (as defined below)  pursuant to an assignment
from First  Union  Commercial  Corporation  to First  Union  National  Bank (the
"Lender").

                                    Recitals

         R-1. The Borrower and the Lender entered into a Modification  Agreement
dated February 11, 2000, as modified by an Amendment to  Modification  Agreement
dated on or about November,  2000, a Second Amendment to Modification  Agreement
dated  July 26,  2001 and a Third  Amendment  to  Modification  Agreement  dated
November 28, 2001 (collectively,  the "Modification Agreement"), with respect to
the Line of Credit.

         R-2.  Capitalized  terms used herein and not otherwise  defined  herein
shall  have  the  meanings  set  forth  in  the  Modification   Agreement.   The
Modification   Agreement,   the  Modification  of  Revolving  Note,  the  Second
Modification of Revolving Note, the Third Modification of Revolving Note and any
other documents executed in connection with the Modification  Agreement shall be
deemed to be included  within the  definition of "Loan  Documents" as defined in
the Modification Agreement.

         R-3.  As of  January  11,  2002,  there is due under the Line of Credit
principal  of  Four  Million  Six  Hundred  Twenty-two  Thousand  Seven  Hundred
Sixty-two and 48/100 Dollars ($4,622,762.48) and interest of Five Thousand Eight
Hundred Twenty and 38/100 Dollars  ($5,820.38),  plus  attorneys' fees and other
costs which are payable under the Loan Documents.

         R-4. Pursuant to the Modification Agreement, the Line of Credit expires
on  February  28,  2002 (the  "Maturity  Date"),  at which  time all  principal,
interest and other sums then outstanding shall be immediately due and payable.

         R-5.  The Borrower has  requested  that the Lender  extend the Maturity
Date until March 31, 2003 and the Lender is agreeable to doing so subject to the
terms and conditions set forth in the Modification Agreement, as amended by this
Amendment.

       NOW, THEREFORE,  in consideration of the foregoing,  the mutual covenants
and agreements set forth herein,  the sum of Ten Dollars ($10.00) and other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged by the parties, the parties hereto covenant and agree as follows.

<PAGE>

         1.  Recitals.  The Recitals set forth above are a material part of this
Amendment.  The Borrower  acknowledges  and affirms the accuracy of the Recitals
set forth above.

         2. Increase in Line of Credit.  Upon execution of this  Amendment,  the
availability  under  the Line of Credit  shall be  increased  from a maximum  of
$5,000,000  to a  maximum  of  $7,500,000,  with  Advances  to be made in strict
compliance with the Line of Credit  Agreement,  as modified by the  Modification
Agreement and this Amendment.

         3. Monthly Interest Payments and Fee; Maturity.

                  (a)  Interest  shall be paid on the last day of each  month in
arrears for such month.

                  (b) In addition  to  interest,  a monthly fee of One  Thousand
Dollars ($1,000) shall be paid on the last day of each month in arrears for such
month.

                  (c)  Subject  to the  terms  and  conditions  set forth in the
Modification  Agreement and this Amendment,  the Maturity Date is extended until
March 31, 2003, on which date, if not sooner paid, the entire principal  balance
of the Note,  all  accrued  and unpaid  interest  thereon and all other sums due
thereunder shall be due and payable in full.

         4. Interest Rate. Commencing as of the date hereof and continuing until
repayment  in  full of all  sums  due  under  the  Note,  the  unpaid  principal
outstanding  from  time  to  time  under  the  Note  shall  bear  interest  at a
fluctuating  rate  which  is the  lower  of (a)  the  Lender's  Prime  Rate  (as
hereinafter  defined)  per  annum  or  (b)  the  LIBOR  Market  Index  Rate  (as
hereinafter  defined) plus two and one-half  percent (2 1/2%) per annum, as that
rate may change from day to day in  accordance  with changes in the LIBOR Market
Index Rate. Interest shall be calculated daily on the basis of the actual number
of days elapsed over a 360 day year.

                  "Prime  Rate"  means  the rate of  interest  announced  by the
Lender from time to time as its prime rate. The Borrower  acknowledges  that the
Lender's Prime Rate is not represented to be the lowest rate of interest offered
by the Lender.  The rate of interest shall change  automatically and immediately
as of the date of any change in the Prime Rate,  without  notice to the Borrower
or any endorser, surety or guarantor.

                  "LIBOR  Market  Index Rate"  means,  for any day, the rate for
1-month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m.,
London time, on such day, or if such day is not a London  business day, then the
immediately  preceding  London  business  day  (or if not so  reported,  then as
determined by the Lender from another recognized source or interbank quotation).

                                       2
<PAGE>

         5. Default  Interest.  Upon the  occurrence  of an Event of Default (as
hereinafter  defined),  the  principal  amount  outstanding  shall bear interest
thereafter,  until the Event of  Default  is cured,  at a rate equal to the then
applicable interest rate plus two percent (2%).

         6. Modification of Note.  Contemporaneously  with the execution of this
Agreement,  the Borrower  shall execute and deliver to the Lender a modification
of the Note reflecting the modified Maturity Date and the modified interest rate
as  set  forth  in  paragraphs  3(a)  and  (c),  4  and 5  above,  respectively,
substantially in the form attached hereto as Exhibit A.

         7.  Automatic  Debit of Checking  Account for  Interest  and Fees.  The
Borrower  authorizes  the  Lender to  continue  to debit on the last day of each
month account number  2065204298279 and/or any successor account with the Lender
(routing  number  051400549)  (the "Account") for all interest and fees then due
under the Note, the other Loan Documents, the Modification Agreement and/or this
Amendment.  The Borrower represents and warrants to the Lender that the Borrower
is the sole  owner of this  account  and  preauthorizes  these  periodic  debits
pursuant to its right of said ownership.

         8. Borrowing Base.

                  (a) Effective upon the execution of this Amendment, "Borrowing
Base" shall mean at the time in question the sum of: (a) ninety percent (90%) of
the Borrower's Eligible Government Accounts plus (b) eighty percent (80%) of the
Borrower's Eligible Commercial  Accounts,  provided that all Accounts of IDP and
PRIMO are Ineligible  Accounts and shall not be included in the Borrowing  Base.
No Advances shall be made against Inventory.

                  (b) "Ineligible  Accounts" shall mean "Ineligible Accounts" as
defined in the  Modification  Agreement and in addition  shall include  Accounts
which are owing by any account debtor whose accounts,  in face amount,  with the
Borrower exceed twenty-five  percent (25%) of the Borrower's  Eligible Accounts,
but only to the extent of such excess, provided that Accounts which are owing by
any account  debtor that  maintains an investment  grade rating of at least BBB-
from Standard & Poor's and Baa3 from Moody's  Investor  Services shall be capped
at  thirty-five  percent  (35%) and  Accounts  owing by shall be capped at fifty
percent (50%) and provided further that the Lender shall have the right to set a
cap lower than the  applicable  cap for or any other account debtor in the event
that in the Lender's  opinion there has been a material,  adverse  change in the
financial  condition,  results of  operations,  business or properties of or any
other account debtor. The Lender agrees to consider,  at the Borrower's request,
a cap higher than  twenty-five  percent (25%) on a case by case basis,  provided
that the Lender shall have no obligation  whatsoever to agree to such higher cap
and that the Lender's determination shall be conclusive.

                  (c)  In  the  absence  of   manifest   error,   the   Lender's
determination of the amount of the Borrowing Base shall be conclusive.

                                       3
<PAGE>

         9.  Federal  Tax  Refunds.  In the  Second  Amendment  to  Modification
Agreement  dated July 26, 2001, the Borrower  represented to the Lender that the
Borrower  would  receive a federal tax refund  (collectively,  the  "Federal Tax
Refund") by September 16, 2001. In the Third Amendment to Modification Agreement
dated  November  28,  2001,  the  Borrower  represented  to the Lender  that the
Borrower would receive the Federal Tax Refund within sixty (60) days thereafter.
As of the date of this Amendment,  the Borrower has not received the Federal Tax
Refund.  The Borrower  represents to the Lender that the Federal Tax Refund will
be in the aggregate  amount of $1,100,000 and that the Borrower will receive the
Federal Tax Refund  within the next ninety  (90) days.  Within two (2)  Business
Days after receipt of such Federal Tax Refund,  the Borrower  shall deliver such
Federal  Tax  Refund  to the  Lender  (in the form  received  together  with any
necessary  endorsements  to  the  Lender)  to be  applied  against  the  amounts
outstanding  under the Line of Credit in such order as the Lender  determines in
its sole  discretion,  provided  that the  Lender  agrees  to apply  part of the
proceeds of the Federal Tax Refund against the Overadvance in the event that the
Overadvance has not been sooner repaid in accordance with paragraph 10 below. In
the event that the Federal Tax Refund  delivered  by the  Borrower to the Lender
exceeds the amounts then outstanding under the Line of Credit, the Lender agrees
to deposit such excess funds in the  Borrower's  account with the Lender  within
two (2) business days after the Lender's receipt of immediately  available funds
from the Federal Tax Refund.

         10. Additional  Availability Over Borrowing Base. From the date of this
Amendment  until the  earlier of (a) the date the Federal Tax Refund is received
by the Borrower or (b) March 18, 2002, the Lender agrees,  at the request of the
Borrower  and  pursuant  to the  terms  and  conditions  of the  Line of  Credit
Agreement, to make an Advance to the Borrower in the maximum principal amount of
Five  Hundred  Thousand   Dollars   ($500,000)  over  the  Borrowing  Base  (the
"Overadvance").  The  Overadvance  shall bear interest at the rate applicable to
other Advances and the interest  accrued thereon shall be due and payable at the
same time as the interest on other Advances. The Overadvance shall be secured by
the Collateral (as defined in the Line of Credit  Agreement) and shall be repaid
in full on the earlier of (y) two (2) Business Days after the Borrower's receipt
of the  Federal  Tax Refund (in  accordance  with  paragraph  8 above)  from the
proceeds of same or (z) March 18, 2002,  provided  that the Borrower  shall have
until March 19, 2002 to repay the  Overadvance in the event that the Overadvance
is made on March 18, 2002.

         11. Termination for Convenience Monies. On April 11, 2001, the Borrower
filed a claim  against the U.S. Air  Force/U.S.  Government  (collectively,  the
"Government")  relating to the termination  for  convenience  clause in contract
number  N00140-98-C-H189,  which was  terminated  by the  Government on or about
August 31, 1999 (the "Claim"). In the Second Amendment to Modification Agreement
dated July 26, 2001,  the Borrower  represented to the Lender that the Claim was
in the amount of  approximately  , that the Borrower was  currently  negotiating
with the Government  regarding the Claim and that the Borrower believed that the
Claim would result in a settlement by October 31, 2001.  In the Third  Amendment
to Modification  Agreement dated November 28, 2001, the Borrower  represented to
the Lender that the Borrower and the Government were continuing to negotiate and
that the Borrower  believed  that the Claim would result in a settlement  within
sixty (60) days thereafter.  As of the date of this Amendment, the Claim has not
resulted  in a  settlement  and  neither  the  Borrower  nor any other party has
received  any monies or any other  consideration  as a result of the Claim.  The
Borrower  again  represents  to the  Lender  that the Claim is in the  amount of
approximately  and further  represents  that the Borrower and the Government are
continuing  to  negotiate  and that the  Borrower  believes  that the Claim will
result in a settlement  within the next sixty (60) days. Within two (2) Business
Days after receipt of all monies and any other  consideration  received by or on
behalf  of  the  Borrower  as a  result  of  the  Claim  (the  "Termination  for
Convenience  Monies") (or if such  Termination for  Convenience  Monies are paid
over time, within two (2) Business Days after receipt of each such installment),
the Borrower shall deliver such Termination for Convenience Monies to the Lender
(in the form received together with any necessary endorsements to the Lender) to
be applied  against  the  amounts  outstanding  under the Line of Credit in such
order as the Lender  determines  in its sole  discretion.  In the event that the
Termination  for  Convenience  Monies  delivered  by the  Borrower to the Lender
exceeds the amounts then outstanding under the Line of Credit, the Lender agrees
to deposit such excess funds in the  Borrower's  account with the Lender  within
two (2) business days after the Lender's receipt of immediately  available funds
from the Termination for Convenience Monies.

                                       4
<PAGE>

         12. Resolutions of the Borrower/Good  Standing.  Contemporaneously with
the  execution  of this  Amendment,  the  Borrower  shall  deliver to the Lender
resolutions  prepared by the Borrower  evidencing their consent to the execution
of this Amendment and the documents  executed in connection with this Amendment.
Contemporaneously with the execution of this Amendment,  the Borrower shall also
obtain and deliver to the Lender current good standing  certificates  for all of
the jurisdictions in which the Borrower is incorporated or doing business.

         13. Reaffirmation of Representations and Warranties. In order to induce
the Lender to enter into this Amendment, the Borrower represents and warrants to
the Lender that all representations and warranties set forth in the Modification
Agreement are true and correct as of the date of this Amendment.

         14.  Events of Default.  In addition to the Events of Default set forth
in the  Modification  Agreement,  the  occurrence  of one or  more of any of the
following events shall also constitute  Events of Default under the Modification
Agreement:

                  (a) Failure to comply with or perform as and when required, or
to observe,  any of the terms,  conditions or covenants of this Amendment within
five (5) Business Days after written notice from the Lender.

                  (b) If any  representation  or warranty  made herein or in any
report,  certificate,  financial  statement  or other  instrument  furnished  in
connection  with this Amendment,  shall prove to have been  materially  false or
misleading on the date as of which it was made.

                  (c)  Failure to deliver to the Lender the  Federal  Tax Refund
and/or the Termination  for  Convenience  Monies in accordance with paragraphs 9
and 11, respectively, above.

                  (d)  Failure  to repay  the  Overadvance  in  accordance  with
paragraph 10 above.

                                       5
<PAGE>

                  (e) If an  Event of  Default  occurs  under  any note or other
document executed and delivered in connection with any other indebtedness of the
Borrower to the Lender, whether now existing or hereafter incurred.

         15.  Release.  Each Borrower,  for itself and its directors,  officers,
employees,  agents,  members,  predecessors,   successors  and  assigns,  hereby
releases and forever waives and relinquishes all claims,  demands,  obligations,
liabilities and causes of action of whatsoever kind or nature,  whether known or
unknown,  which it or he has,  may have or might  have or  assert  now or in the
future as a result of events  occurring prior to or  contemporaneously  with the
execution of this  Amendment  against the Lender  (which term for the purpose of
this  paragraph  shall  mean both  First  Union  National  Bank and First  Union
Commercial  Corporation)  and/or  any  affiliates  or  entities  related to such
entity, and any of the directors,  officers,  employees,  agents, successors and
assigns, as the case may be, of all such entities,  in connection with, directly
or indirectly,  this  Amendment,  the Loan Documents,  any document  executed in
connection  with  this  Amendment  or any  transactions  contemplated  hereby or
thereby, any prior loan made or credit extended to the Borrower by the Lender or
otherwise   to  any   relationship   between  any   Borrower   and  the  Lender.
Notwithstanding  the  foregoing,  the  Borrower  does not  release  First  Union
National Bank from any claims, if any, the Borrower may have against First Union
National Bank in connection with the handling of check nos.  009786,  009787 and
009788  made by the  Borrower  to  various  payees  in the  aggregate  amount of
approximately  $58,000,  provided that the Borrower  shall not have the right to
claim any consequential or incidental damages.

         16. Further  Assurances and Corrective  Instruments.  The Borrower will
execute,  acknowledge  and  deliver or cause to be  executed,  acknowledged  and
delivered,  from  time  to  time,  such  supplements  hereto  and  such  further
instruments  and  documents,  as  the  Lender  may  require  in  its  reasonable
discretion  to  protect,  perfect  and  enforce  the  Lender's  interest  in any
collateral  security for the Line of Credit or to facilitate the carrying out of
the intentions of the parties to this Amendment.

         17. Costs and Expenses. Upon execution of this Amendment,  the Borrower
shall pay to the Lender in  immediately  available  funds all  actual  costs and
expenses,   including,  without  limitation,  costs  and  expenses  incurred  in
connection  with filing the amendments to the existing  financing  statements as
referenced  above and attorneys'  fees incurred by the Lender in connection with
the  preparation of this Amendment and otherwise in connection  with the Line of
Credit.

         18. Fee. Upon  execution of this  Amendment,  the Borrower shall pay to
the Lender a fee of $5,000 in immediately  available funds. The foregoing fee is
in consideration  of the Lender's  entering into this Amendment and shall not be
deemed a payment under the Line of Credit.

         19. Miscellaneous.

                  (a) Waivers by the  Lender.  Neither any failure nor any delay
on the part of the Lender in  exercising  any right,  power or remedy under this
Amendment or the Loan  Documents,  or under  applicable  law shall  operate as a
waiver  thereof,  nor shall a single or partial  exercise  thereof  preclude any
other or further exercises thereof or the exercise of any other right,  power or
remedy. No waiver or forbearance by the Lender as to any Borrower shall waive or
release  any rights or claims  which the Lender may now have or  hereafter  have
against any other person,  firm or  individual.  The Lender  reserves all rights
except to the extent expressly provided herein.

                                       6
<PAGE>

                  (b) Modifications.  No modification or waiver of any provision
of this  Amendment  or the Loan  Documents,  and no consent by the Lender to any
departure by the Borrower  therefrom shall in any event be effective  unless the
modification,  waiver or consent shall be in writing. Any such waiver or consent
shall be effective  only in the  specific  instance or for the purpose for which
given.  No notice to, or demand upon the Borrower in any case shall  entitle the
Borrower to any other or further notice or demand in the same,  similar or other
circumstances.

                  (c) No  Novation.  Nothing set forth in this  Amendment  shall
cause a novation nor shall it  extinguish,  terminate,  or impair the Borrower's
obligations  under the Loan Documents,  as amended by this Amendment,  or affect
the priority of the lien of the Lender established by the Loan Documents.

                  (d)  Applicable  Law.  The   performance,   construction   and
enforcement of this  Amendment and the Loan  Documents  shall be governed by the
laws of the Commonwealth of Virginia.

                  (e)  Survival;   Successors   and  Assigns.   All   covenants,
agreements, representations and warranties made herein and in the Loan Documents
shall  continue in full force and effect.  Whenever in this Amendment any of the
parties is referred to, such reference shall be deemed to include the successors
and  assigns of such  party.  All  covenants,  agreements,  representations  and
warranties by or on behalf of the Borrower which are contained in this Amendment
and the  Loan  Documents  shall  inure  to the  benefit  of the  Lender  and its
successors and assigns.

                  (f) Severability.  If any term, provision or condition, or any
part thereof,  of this Amendment or the Loan  Documents  shall for any reason be
found or held to be invalid or unenforceable by any court or governmental agency
of competent  jurisdiction,  such invalidity or enforceability  shall not affect
the remainder of such term,  provision or condition or any other term, provision
or condition,  and this  Amendment and the Loan  Documents  shall survive and be
construed as if such invalid or unenforceable  term,  provision or condition had
not been contained therein.

                  (g)  Merger  and  Integration.  This  Amendment  and the  Loan
Documents contain the entire agreement of the parties hereto with respect to the
matters  covered  and  the  transactions   contemplated  hereby,  and  no  other
agreement,  statement  or promise  made by any party  hereto,  or any  employee,
officer, agent or attorney of any party hereto, shall be valid or binding.

                                       7
<PAGE>

                  (h) Headings.  The headings and  subheadings  contained in the
titling of this Amendment are intended to be used for convenience only and shall
not be used or deemed to limit or diminish any of the provisions hereof.

                  (i) Gender,  Singular.  All references made (a) in the neuter,
masculine  or  feminine  gender  shall be  deemed  to have been made in all such
genders,  and (b) in the singular or plural  number shall be deemed to have been
made, respectively, in the plural or singular number as well.

                  (j) Time of Essence. Time is of the essence of this Amendment.

         20. No Modification of Loan Documents.  Except as expressly modified by
this Amendment,  the Loan Documents shall remain unchanged and shall be ratified
and confirmed to be and remain in full force and effect, without defense, offset
or counterclaim.

         21. Counterparts.  This Amendment may be executed simultaneously in any
number of  counterparts,  each of which shall be deemed an original,  but all of
which shall  constitute  one and the same  agreement.  Copies of this  Amendment
which have been executed and which are delivered by facsimile  will be valid and
effective for all purposes.

         22. Closing.  Closing on this Agreement must occur on or before January
18, 2002.

         IN WITNESS  WHEREOF,  the parties  hereto have executed or caused to be
executed, this Amendment under seal as of the date first written above.

WITNESS/ATTEST:                    BORROWERS:

                                   STEELCLOUD, INC.,
                                   a Virginia corporation

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                   DUNN COMPUTER CORPORATION,
                                   a Delaware corporation

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                       8
<PAGE>

                                   INTERNATIONAL DATA PRODUCTS,
                                   CORP.

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                   STMS, INC.

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                   PUERTO RICO INDUSTRIAL
                                   MANUFACTURING OPERATIONS
                                   ACQUISITION, CORP.

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                   DUNN COMPUTER OPERATING
                                   COMPANY

                                   By:  /s/ Edward Spear
----------------------------            ---------------------------------------
                                        Edward M. Spear
                                        President

                                   LENDER:

                                   FIRST UNION NATIONAL BANK

                                   By:  /s/ Abigail M. Matia
----------------------------            ---------------------------------------
                                        Abigail M. Matia
                                        Vice President

                                       9

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